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Introduction
Embracing a business model and transforming it into a social venture has recently become a popular survival strategy among non-profit organizations (Bull, 2008; Guo, 2006; Maier et al., 2016; Nicholls, 2006; Pearce, 2003). This especially happens in developing nations where domestic and foreign grant-making organizations gradually reduce their funding support to local non-profits during the phasing-out period (Aldaba et al., 2000; Parks, 2008). The British Council (2017), for example, offers world-wide programs that facilitate various local NGOs in different countries to transform into social ventures – an entrepreneurial form of organizations that combine social, or public benefit aims with business-like management (Anheier and Ben-ner, 2003; Becchetti and Borzaga, 2010; Borzaga and Defourny, 2001).
Adopting a business model and becoming a social venture is the strategy of choice for them because emerging social ventures can embrace alternative funding sources, such as from trading and market revenues (Froelich, 1999), and invite social financial investors (Austin et al., 2006; Miller and Wesley, 2010). Seeking profit and opening up to social investors allows the emerging social ventures to survive and to grow (Vickers and Lyon, 2014). In fact, the proponents of the marketization of non-profits believe that more beneficiaries will benefit from this particular approach (e.g. Shoham et al., 2006).
In the social entrepreneurship literature, much research has placed significant emphasis on this matter. Authors have investigated various income-generation strategies that non-profits may adopt (e.g. Khieng, 2013), discussed the definitions and the nature (e.g. Dart, 2004; Kerlin and Pollak, 2011) and the processes and the performance of this transformation (e.g. Davis et al., 2011; Gras and Mendoza-Abarca, 2014; Guo, 2006). This “earned income school of thought” in the social entrepreneurship literature discusses broadly “the use of commercial activities by non-profit organizations in support of their mission” (Defourny and Nyssens, 2010, p. 40).
Yet, despite extensive discussions and research on how non-profits become social ventures, there is surprisingly limited research that focuses on the effective types of business models that these transforming non-profits may adopt. Defined as “the system of interdependent activities performed by a focal firm and its partners and the mechanisms that link these activities to each other” (Amit and Zott, 2015, p. 331), business models of social ventures essentially describe how...