Social enterprises that convincingly put purpose before profit can influence collaborating businesses to act in support of their purpose to a remarkable extent. Businesses do so with enthusiasm if a few conditions are met.  

When we were researching a social enterprise producing natural cosmetics, we made a surprising observation: Even though this social enterprise was small and its order quantities for many of its suppliers were peanuts, it had a remarkable influence on them. Puzzled by this observation, we decided to research the social enterprise’s relationships with the key suppliers it approached. We hoped to find out how a small social enterprise could manage to influence businesses to do extraordinary things such as providing unpaid services, proactively making an effort to be more purpose-aligned, or even revealing their cost structure. We have recently published this research in the Journal of Management Studies.  

From Purpose Work to Purpose Borrowing 

What we found out was that it all began with the actual purpose pursued by the social enterprise and the top priority it was given beyond all other considerations including profit. The social enterprise strictly adhered to this “purpose before profit” mentality and communicated the fact to collaborating businesses. It was important for the social enterprise to make it clear that it was different from usual businesses, and that its social purpose was of paramount importance. In addition, it also “walked the talk” and put this purpose mentally into action, for example by regarding the properties of the supplies sourced from suppliers (and some service providers). We call this “purpose work”, because of the conscious effort put into communicating and actually living a purpose-priority in its relations with collaborating businesses.  

In light of this, collaborating businesses quickly sensed that the social enterprise genuinely prioritised the pursuit of a social purpose, and that this social and ecological purpose was more important to them than profit. And this might well have been the end of the story. However, despite the fact that they were employed in regular companies, the managers of the collaborating businesses we talked to were open for non-economic considerations. They were interested in sustainability and were so fascinated by the fair-trade approach of the social enterprise, that they began to sympathize with the social enterprise’s purpose. With those managers who sympathized with their collaborating social enterprise’s purpose and who had agency within their companies (e.g., managing owners), the most unexpected things began to happen: They engaged in the advancement of the social enterprise’s purpose, almost as if their collaborating partner’s purpose had become their own: Suppliers started to provide unpaid services to the social enterprise, because it had become a purposeful thing for them to do. One of the suppliers even made its cost structure transparent in order to charge prices that the social enterprise could afford and allow it enough leeway to pursue its purpose. Other suppliers proactively searched for supplies that would be more aligned with the purpose of the social enterprise and would thus contribute to it more effectively. These business managers reported that they were motivated by the joy of being able to contribute to a purposeful endeavour, and not primarily by business considerations.  

When Does Purpose Borrowing Emerge?  

We observed some specific conditions under which purpose borrowing emerged. This does not necessarily mean that it cannot emerge under other circumstances. It is simply more likely to emerge when the following criteria prevail: 

• Purpose before profit: Purpose borrowing does not emerge on the basis of a claimed social purpose; the purpose needs to be actually lived and given priority ahead of other interests such as profit.  

• Partner’s openness for non-economic considerations: The boundary spanners at partner organizations – i.e. the people interacting directly with the social enterprise (e.g., sales managers or owner managers of suppliers) – need to be open for non-economic considerations such as those addressed by the purpose pursued by the social enterprise. 

• Absence of social purpose at the partner organization: If partner organizations already have an authentic social purpose of their own, i.e., if they are social enterprises themselves, they are less likely to be able to advance another organization’s purpose. Advancing their own social purpose is usually complicated enough.  

• Boundary spanners with agency within their organization: The boundary spanners of partner organizations should have enough agency within their own organization to be able to engage in advancing another organization’s purpose. This tends to be the case in rather small- and medium-sized companies, because their boundary spanners are often higher in the hierarchy.  

• Informal contracting: The relationship between the social enterprise and the collaborating businesses should not be over-regulated through a tight web of contracts (which would leave little flexibility to advance the social enterprise’s purpose) but should leave an informal space within which acts of purpose borrowing can emerge.  

What Can Purpose-Oriented Organizations Learn From This? 

If you pursue a social purpose for that exclusive reason, you are not on your own. Purpose has become a buzz-word that many businesses try to use to their advantage. But the moment you decide to put your social purpose ahead of profit interests and actually walk the talk with external partners, that purpose becomes a force attracting support from other businesses. This does not happen directly and automatically. However, engaging in purpose work helps, and carefully selecting collaborating businesses as well as keeping an informal space within the collaboration are promising steps to take. In the end, purpose-oriented organizations have much to offer to collaborating businesses – the possibility, that is, to contribute to an authentic social purpose. As it turns out, many managers in collaborating businesses do just that with growing pleasure.