Necessity is Not the Mother of Invention: Social Entrepreneurship, Poverty, and Innovation

Social enterprises (SEs) are often depicted as highly innovative. However, there is little systematic evidence on the drivers of innovation by SEs or on how they compare to commercial enterprises (CEs) in this regard. This research compares innovation and radical innovation by SEs and CEs in a nationally representative sample of 903 UK small and medium enterprises (SMEs). We find that SEs are 78% more likely to innovate than CEs and 107 % more likely to introduce radical innovations. Contrary to expectations working alongside the government and being located in areas of poverty decreases, rather than increases, the likelihood of innovation by SEs. However, working with the government positively moderates the relationship between radical innovation and SEs. Our study offers a perspective on innovation and social entrepreneurship by proposing that pursuing dual goals stimulates both types of innovation in SEs.