Social entrepreneurial ventures aspire to generate both social and economic value. Yet their ability to actually do so has hardly been theoretically justified or empirically validated. We address this gap by examining how a social venture’s strategic choices that lead to stronger social performance tend to negatively affect economic performance, and vice versa. We focus on two choices related to the fundamentals of business strategy: competitive scope of activities and source of competitive advantage. Using a unique panel data of charter schools in Texas (1997-2007), we find evidence that both a broader scope and a differentiation strategy improve a school’s academic performance, but reduce its economic performance. The trade-offs from the opposing effects become even more pronounced in a more turbulent environment: the positive impact of differentiation on academic performance would vanish, whereas the negative impact of scope expansion and differentiation on economic performance would increase even further. Our findings provide insights on how theories of strategic management and the public and nonprofit management literature can illuminate the challenges of performance in social entrepreneurship.

Chao Guo is Professor and Faculty Director of Master’s in Nonprofit Leadership (NPL) Program in the School of Social Policy and Practice at the University of Pennsylvania. Chao’s research interests focus on the intersection between nonprofit and voluntary action and government. He has many published articles in highly respected and influential journals, and has published two books: Social Entrepreneurship: An EvidenceBased Approach to Creating Social Value (Wiley, 2014; co-authored with Wolfgang Bielefeld); and The Quest for Attention: Nonprofit Advocacy in a Social Media Age (Stanford University Press, 2020; co-authored with Gregory D. Saxton). His research has been recognized by his peers and won awards from multiple disciplines.

Chao is actively involved in professional and community service activities. He has served on the Board of Directors of the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA) (2009-2015). He has also served as a co-Editors-in-Chief of Nonprofit & Voluntary Sector Quarterly, the premier journal in the field (2016-2022). Globally, he has helped ARNOVA create a regional conference series in Asia (ARNOVA-Asia). In 2019, he received the Distinguished Achievement and Service Award from ARNOVA. At Penn, he serves as Faculty Director of Penn Restorative Entrepreneurship Program (PREP), an innovative program geared towards helping formerly incarcerated individuals become entrepreneurs, participate in civic engagement, and advocate for social