Business Models and Tourism Social Entrepreneurship

Osterwalder and Pigneur (2002) suggest that in dynamic and uncertain environments BMs permit the identification and understanding of relevant elements in a specific field and how these relate to each other. In addition, they help to communicate and share the understanding of BMs among company stakeholders. These characteristics make BMs particularly suitable to evaluate social enterprises which are context specific, operate in uncertain environments, and rely heavily on stakeholders’ relationships for value creation (Fayolle & Matlay, 2010).

The literature on social entrepreneurship BMs is limited, with a handful of contributions conceptualizing BM in social entrepreneurship (SE). The BM proposed by Guclu, Dees, and Anderson (2002) comprises the operating model, resource strategy and social impact. The operating model is composed of activities, systems, structures, internal and external value partners that interrelate to create the proposed social value. The interaction amongst elements acts similar to a value chain. The resource strategy sustains the operating model through the provision of tangible and intangible resources. The operating model and the resource strategy are designed based on social value architecture and influenced by characteristics of the operating environment such as culture, markets, political environment, characteristics of the entrepreneur amongst others.

In contrast, Perrini and Vurro’s (2006) conceptual framework defines SE as the implementation process of social innovation; highlighting market, stakeholder, network orientation, organizational structures, and flexibility amongst the most important characteristics, highlighting the importance of value proposition.

Alter (2006) outlines a series of seven operational models to explain “how social value and economic value are created within the different social enterprise models”. These have been subsequently used by von der Weppen and Cochrane (2012) to identify various typologies of tourism related social enterprises. Mair and Schoen (2007) use the BM by Hamel (2000) to identify features and common patterns amongst three successful and well established SEs: Grameen Bank, Sekem and Mondragon Co-operative Corporation (MCC). The study reveals commonalities in their approaches in three areas: the creation of value networks, the procurement of strategic resources and the management of the customer interface. Similarly, Seelos and Mair (2007) use BM as a general concept to analyse three SE operations and their support structures.

Differences between social entrepreneurial BMs and traditional BMs are highlighted by Lehman-Ortega, Moingeon, and Yunus (2010) who extrapolate three main areas that set them apart: (1) value proposition, encompassing all stakeholders (not only customers); (2) value constellation, highlighting the importance of value creation networks and social value chain; and (3) the profit equation, focusing on recovering costs and capital to reinvest in the company and achieve self-sustainability.

Lastly, Sommerrock (2010) arguably, the most recent study on SE business models, provides a BM framework which incorporates elements of traditional and SE BM, specifically: value proposition, product design and market definition, internal architecture and external architecture as discussed in detail below and shown in Fig. 3:

  • • The value proposition is the BM core strategy, defining benefits for stakeholders, satisfying needs and encouraging cooperation. It is the justification for the organizations’ existence and influences all other dimensions.
  • • Product design and market definition satisfies a need of customers or create a benefit for other stakeholders. Product design fulfils the value proposition for customers or differentiates business from competitors, while market definition segments the market both commercially and socially.
  • • The internal value creation architecture is directly controlled by the organization. This includes organizational structure (legal and ownership), resources (human, economic—financial and physical, social capital), value chain steps and growth The external value creation architecture describes the area of value creation beyond the direct control and influence of the organization, including value creation partners and customers.

A more detailed analysis of the building blocks for BMs for social enterprises follows with specific emphasis on their applicability and relevance to tourism enterprises and combining key components of both the Sommerrock and Osterwalder and Pigneur’s approaches.

Business models dimensions. Source

Fig. 3 Business models dimensions. Source: Sommerrock (2010, p. 142)

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