Revenue drift, incentives, and effort allocation in social enterprises

Theodor Vladasel; Simon C. Parker; Randolph Sloof; Mirjam van Praag

doi:10.1111/jems.12590

Revenue drift, incentives, and effort allocation in social enterprises

Theodor Vladasel^*, Simon C. Parker, Randolph Sloof, Mirjam van Praag

^*Corresponding author for this work

Management and Organisation

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

Revenue drift, whereby insufficient attention is given to economic, relative to social, goals, threatens social enterprise performance and survival. We argue that financial incentives can address this problem by redirecting employee attention to commercial tasks and attracting workers less inclined to fixate on social tasks. In an online experiment with varying incentive levels, monetary rewards succeed in directing worker effort to commercial tasks; high-powered incentives attract less prosocial employees, but low-powered incentives do not alter workforce composition. Social enterprises combining monetary rewards with a social mission not only attract more workers but are also able to guard against revenue drift.

Original language	English
Pages (from-to)	630-651
Journal	Journal of Economics and Management Strategy
Volume	33
Issue number	3
DOIs	https://doi.org/10.1111/jems.12590
Publication status	Published - 2024

Bibliographical note

Publisher Copyright:
© 2024 The Authors. Journal of Economics & Management Strategy published by Wiley Periodicals LLC.

Funding

We thank audiences at Copenhagen Business School, Vrije Universiteit Amsterdam, the SEI Junior Faculty Consortium, 1st IESE‐LUISS Conference on Hybrid Organizations, Oxford Residence Week for Entrepreneurship Scholars, Organization Science Special Issue Conference on “Experiments in Organizational Theory,” SMS 2021, DRUID23, DRUID Academy, and Stefano Brusoni, April Franco, Orsola Garofalo, Lisa Hehenberger, Henry Sauermann, Markus Simeth, and Angelique Slade Shantz for valuable comments on previous drafts. We gratefully acknowledge the financial support of the Mærsk‐McKinney‐Møller Chair in Entrepreneurship at Copenhagen Business School; Vladasel also acknowledges support from the Spanish Agencia Estatal de Investigación (AEI) through the Severo Ochoa Programme for Centres of Excellence in R&D (BSE CEX2019‐000915‐S), funded by MCIN/AEI/10.13039/501100011033. Part of this research was carried out while Vladasel was a Fox International Fellow at Yale.

Funders	Funder number
Copenhagen Business School
Agencia Estatal de Investigación	MCIN/AEI/10.13039/501100011033
Agencia Estatal de Investigación

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Revenue drift, incentives, and effort allocation in social enterprises

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