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1. Introduction
Social enterprises (SEs) play a vital role in society by solving social problems through commercial solutions (Doherty et al., 2014). SEs are different from profit-seeking firms because the social mission comes before profitability in SEs (Bornstein, 2007; Liu et al., 2015). They are also different from non-profit organizations where the funding sources do not have to come from organizational profit (Austin et al., 2006). In many cases, the products and services of SEs compete directly with those of for-profit firms (Kachlami, 2016). As a form of hybrid organization fulfilling both social and economic objectives, SEs are accountable to multiple audience and subject to conflicting institutional pressures (Pache and Santos, 2013; Blessing, 2015; Maibom and Smith, 2016). This hybrid nature poses significant challenges for SEs to gain both social and economic legitimacy (Dart, 2004). Gaining legitimacy is, however, essential for a SE to survive and succeed (Dart, 2004; Dacin et al., 2011; Doherty et al., 2014).
Current literature on how a SE achieves legitimacy typically suggests that the SE should engage relevant stakeholders in its governance structures (Bennett, 2016). These stakeholders may include, for example, investors (Carrick-Cagna and Santos, 2009; Reiser and Dean, 2013), beneficiaries (Sloan et al., 2014) and communities (Sarpong and Davies, 2014). While the legitimacy of a SE can come from various internal and external stakeholders (Bitektine, 2011; Rueede and Kreutzer, 2015), the legitimacy of a SE in the eyes of customers is essential for the SE's sustainability. This is because when there are conflicts between SEs' social missions and economic profitability, SEs need to put their social missions first, which means that their products and services may not be as competitive as those of for-profit firms in terms of price and/or quality. Thus, SEs need to rely more heavily on customers' personal identification with the SEs' social missions, i.e. organizational legitimacy in the eyes of customers, to promote positive customer behaviors such as repeated purchases, providing feedback, referring the products or services to others and forgiving suboptimal quality of products and services, all of which can be essential for the long-term sustainability of SEs (Groth, 2005; Claudia, 2012; Choi et al., 2016).
Despite the importance of gaining legitimacy in the eyes of customers...