Mission alignment with employees and financiers: Probing into the workings of B Corp certification

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Missionalignmentwithemployeesandfinanciers:Probing intotheworkingsofBCorpcertification

FacultyofEconomicsandBusinessEconomics, DepartmentofAccountancy,Corporate FinanceandTaxation,GhentUniversity, Ghent,Belgium

Correspondence

PhilippeVanCauwenberge,Facultyof EconomicsandBusinessEconomics, DepartmentofAccountancy,Corporate FinanceandTaxation,GhentUniversity, Sint-Pietersplein7,9000Ghent,Belgium. Email: philippe.vancauwenberge@ugent.be

Abstract

Sustainableenterprisesarebecomingmorepopularandplayanimportantrolein tacklingenvironmentalandsocialchallenges.Theirhybridnature,thatis,thecombinationoffinancialandsocietalgoals,makesthempronetoexternallegitimacyissues andcompetinginternallogics,whichresultsinmissiondrift.Weinvestigatewhether andhowBCorpcertificationhelpsremedymissiondriftbyconductingsemistructuredinterviewswith16keyemployeesin13DutchandBelgiancertifiedB Corpsfromvariousindustries.OurfindingsshowthatBCorpcertificationhelps ingrainthemissionintohumanresourcemanagement,inboththerecruitmentand employeeengagementprocesses,whichcontributestointernalalignmentandlowers theriskofmissiondrift.Inaddition,certificationhelpsarticulatethecompany'sdual naturetofinanceprovidersandfindfinancingsourcesthatrelatemorewiththe mission.

KEYWORDS

certifiedBcorps,hybridenterprise,missiondrift,sustainabilitycertification,sustainable enterprise

1 | INTRODUCTION

Sustainableormission-drivenenterprisesareclassifiedashybrid enterprisesbecausetheyarecommittedtodeliveringpositiveenvironmentalandsocialimpactswhileachievingtheirprofitobjectives (Kirstetal., 2021;Nigrietal., 2020a).Thishybriditymakesthem pronetoexternallegitimacyissuesandcompetinginternallogics, whichmightcausemissiondriftwherebyenterprisesforfeittheir socialorsustainablemissioninfavoroffinancialgoalsorviceversa (Espositoetal., 2022).ThisstudyaimstoexaminehowcertifiedB Corps,whicharesustainableenterprisesthathavetheirsocialorenvironmentaleffortscertifiedbyBLab,engagewithkeyprovidersof laborandcapital(RQ1),andwhetherandhowBCorpcertification helpspreventmissiondrift(RQ2).Specifically,weaimtounderstand whethercertificationingrainsthemissionintohumanresourcemanagementandmakesthechoiceoffinancingmodesandproviders morealignedwiththemission.Asthenumberofsustainableenterprisesisrapidlygrowing,thisissueistimelyandimportantbecause sustainableenterprisesplayanimportantroleinaddressingsocietal

andenvironmentalproblems,ashasbeenrecognizedbytheUnited Nations(Kirstetal., 2021;Tabares, 2021).

TheBCorpmovement,whichstartedin2006,aimstocatalyze theemergenceandgrowthofsustainablecompaniesby(a)certifying companiesthatdemonstratehighsocialandenvironmentalperformance,(b)advocatinglegalformsthatareadaptedtothedualmissionsofcompanies,(c)acceleratingimpactinvestingthrougharating system,and(d)sharingsuccessstoriesofbusinessesthatcombine profitandpurpose(Caoetal., 2017).Themovementhasgrownrapidlyworldwide(Kirstetal., 2021),asmorethan5000companiescurrentlyhaveaBCorpcertificate(BLab, 2022a).Fromanacademic perspective,interestintheBCorpmovementisgrowing(Diez-Busto etal., 2021;Kirstetal., 2021).Variousstudieshaveanalyzedthe emergenceandcharacteristicsofcertifiedBCorps(Harjoto etal., 2019;Hickmanetal., 2014),examinedthemotivationstopursuecertification,andinvestigatedtheimplicationsofcertificationfor sustainabilitystrategy(Kimetal., 2016;Villelaetal., 2021;Wilburn& Wilburn, 2015)andthefinancialandnon-financialperformanceofB Corps(Chen&Kelly, 2015;Gazzolaetal., 2019;Parkeretal., 2019;

RESEARCHARTICLE
ValeriePaelman
Received:13July2022Revised:3November2022Accepted:11December2022
©2022ERPEnvironmentandJohnWiley&SonsLtd. 1
DOI:10.1002/csr.2440 CorpSocResponsibEnvironManag. 2022;1–13. wileyonlinelibrary.com/journal/csr

Romietal., 2018).However,littleisknownabouthowBCorpcertificationhelpsindealingwithemployeedemandsandexternalpressures fromshareholdersandothercapitalproviders(Kirstetal., 2021). Hybridcompanies,however,struggletofindasuitableplacebetween thefor-profitandnon-profitsectorsintheirquestforaccesstocapital andlabor(Battilanaetal., 2012).Inaddition,institutionaltheoryand resourcedependencytheorysuggestthattherelationshipwithkey resourceprovidersiscrucialinsustainingthecompany'shybridnature astheycanexertpressuresandgeneratetensionsthatleadtomission drift(Cornforth, 2014;Stubbs, 2017a;Stubbs, 2017b).

ThisstudycontributestotheBCorpandhybridorganizationliteraturebyexamininghowcertifiedBCorpsengagewithprovidersof keyresources(RQ1)andwhetherandhowBCorpcertificationhelps preventmissiondrift(RQ2).Weconductsemi-structuredinterviews with16respondentsworkingfor13differentBCorpsfromvarious sizesandsectors,allheadquarteredinBelgiumortheNetherlands.To distillthekeythemesthatprovideinsighttoourresearchquestions, weconductaninductivethree-stagecodingprocess.Thisexploratory researchapproachisespeciallyusefulforstudyingtopicsthathave attractedlittleformaltheorizingandresearch(Stubbs, 2019).Our findingsshowthatBCorpcertificationhelpsincorporatethemission inhumanresourcemanagementandinfluencestherecruitmentprocessand,subsequently,employeeengagement.AstheBCorpcertificateprovidesameanstoexplainthebusinessmodeland requirements,itnotonlyincreasesthelegitimacyofthecompany whenattractingnewemployeesbutalsokeepsemployeesawareof thesocialorsustainablemission,makingitfunctionalforimproving theinternalalignment.Inaddition,theBCorplabelclearlyhelpsarticulatethehybridnatureofthecompanywithfinanciers,oftenresulting inabetterfitbetweenthecompany'smissionandthefinanceproviders'aspirations.OurstudyrevealsthatthatBCorpcertification seemstotriggerandfacilitateatrendwherebycompaniesaremoving towardsacollectiveownershipmodelinwhichstakeholders(mainly employees)becomeownersofthecompany.

Ourstudycontributestotheliteratureonsustainableenterprises andBCorpcertificationinseveralways.First,weaddtothehybrid organizationliteraturebyexploringhowsustainableenterprises a primeexampleofhybridorganizations copewiththesometimesconflictingcommercial,social,and/orenvironmentallogicsandhowBCorp certificationmayhelprestrainmissiondrift.Second,ourstudy enhancestheBCorpliteraturebyprovidinginsightsintotherelationshipsbetweencertifiedBCorpsandsomekeystakeholders (i.e.,employeesandfinanciers).ExistingEuropeanqualitativestudieson certifiedBCorpsmainlyfocusontheItalianBCorps(Kirstetal., 2021; Nigrietal., 2020a;Nigrietal., 2020b).Italyhasimplementedthe “SocietàBenefit” legalstructure,asadvocatedbytheBCorpmovement. Sincethereisnolegalstructureaimedatmission-drivencompaniesin BelgiumandtheNetherlands(similartothemajorityofjurisdictions aroundtheworld),ourstudyisconductedinaninstitutionalcontext thatislesssupportiveoftheBCorpmovementandwhere,byconsequence,theriskofmissiondriftmightbemorepertinent.

Theremainderofthispaperisorganizedasfollows.Section 2 discussesthetheoreticalframeworkandelaboratesontheBCorp

movement.Section 3 providesanoverviewofourresearchmethodology.Section 4 presentsourfindings.Section 5 concludesthestudy.

2 | LITERATUREREVIEW

2.1 | Theoreticalframework

2.1.1|Mission-drivenbusinessashybridenterprise

Overthepastfewyears,companiesthatcombinefinancialgoalswith socialorsustainableaimshaveincreased.Thesesustainablecompaniesaredeemedpromisingdriversforthecreationofsocialandcommercialvalue(Sabeti, 2011)andcanbeconsideredaprimeexampleof hybridenterprises,thatis,companiesthatspandifferentinstitutional fieldsandfaceconflictinginstitutionallogics(Dohertyetal., 2014). Thisgrowthcorrespondstoagrowingnumberofconsumers,investors,andworkersseekingtoreconciletheirpurchases,investments, andemploymentdecisionswiththeirvalues(Marquis, 2020).Comparedtocommercialenterprises,sustainablecompaniesexperience tensionduetoconflictinginstitutionaldemandsresultingfromcommercialandsocialorsustainablelogicsthatareembeddedindifferent regulatory,social,andculturalenvironments(Pache&Santos, 2010).

2.1.2|Missiondrift

Managerialtensionsthatemanatefromcombiningconflictinglogics mightpromptmissiondrift,wherebythecompanyabstainsfromits socialorsustainablemissioninpursuitoffinancialsustainability (Ebrahimetal., 2014).Missiondriftjeopardizesthecompany'shybrid natureandmighthamperstakeholders'perceptionsofthecompany's legitimacy(Dart, 2004).Severalstudiesconceptualizethecausesand implicationsofmissiondriftandthewaysinwhichhybridenterprises canaddressthisphenomenon(Cornforth, 2014;Ebrahimetal., 2014; Ramus&Vaccaro, 2017).Institutionaltheoryandresourcedependencytheoryaretwosuitableframeworksforexaminingthepressuresandmechanismsthatleadtomissiondrift(Cornforth, 2014).

Institutionaltheory exploresfactorsrelatedtotheemergenceand survivalofinstitutions,andtheprocessesthathelpthemgainlegitimacy (Smithetal., 2013).Institutionaltheoristsarguethatbyconformingto socialnorms,rules,andvaluesimposedbytheinstitutionalenvironment, companiesgainlegitimacy,whichgrantsthemstatusandaccessto resources(DiMaggio&Powell, 1983;Meyer&Rowan, 1977;Pache& Santos, 2010).DiMaggioandPowell(1991)concludethatwithinorganizationalfields,thatis,networksoforganizationsthatproducesimilar productsorservices,severalideasandpracticesbecometakenfor granted,leadingto ‘institutionalisomorphism’ (i.e.,allorganizations adoptuniformideasandpracticesinpursuitoflegitimacy)(DiMaggio& Powell, 1991).Theconceptof ‘institutionallogic’ isfirstintroducedby AlfordandFriedland(1985)andisdefinedas “thesociallyconstructed, historicalpatternsofmaterialpractices,assumptions,values,beliefs,and rulesbywhichindividualsproduceandreproducetheirmaterial

2 PAELMAN ETAL

subsistence,organizetimeandspace,andprovidemeaningtotheir socialreality.” (Thornton&Ocasio, 1999,p.804).FriedlandandAlford (1991)conceptualizesocietyasaninterinstitutionalsystemofsocietal sectorsinwhicheachsectordenotesdistinctexpectationsregarding socialrelationsandorganizationalbehavior.TheydistillfivekeyinstitutionalsectorsinWesternsociety:thecapitalistmarket,bureaucratic state,democracy,nuclearfamily,andChristianreligion.Eachsectorhas itsowninstitutionallogic.Organizationsmaybesubjecttoseveral potentiallycontradictoryinstitutionallogics,leadingtoconflictsand choices(Pache&Santos, 2010).This “institutionalpluralism” mayhave positive(e.g.,institutionallogicsmightbecomplementary)andnegative consequences(e.g.,goalambiguity,fragmentation,conflictandinstability)(Kraatz&Block, 2008).Hence,hybridorganizations,whicharesubjecttoinstitutionalpluralism,mightfacepressuretoadhereto conflictinginstitutionaldemands,i.e.thesocialwelfare/communitylogic (valuecreation)versusmarket/commerciallogic(valuecapture) (Pache&Santos, 2010;Santos, 2012).Spanningtheseinstitutional boundariesoftenimpliesatrade-offbetweenvaluecreationandvalue capture(Santos, 2012)andmighteventuallyleadtotensionsandprioritizationofonelogicoveranother(Dohertyetal., 2014).

Resourcedependencytheory statesthatanorganization'sexternal environmentisregardedastheorganizationsthatafocalfirmdepends onforresourcesandsupport(Pfeffer&Salancik, 1978).Thetheory buildsontheideathatresourcesarefundamentalfororganizational success,andthataccesstoandcontrolovertheseresourcescreatea positionofpower.Hence,organizationsinneedofresourcesmust carefullyconsiderstrategiesthatpreserveopenaccesstothese resources.Accordingly,thecompanyisheavilydependentonother actorswhenmakingdecisionsregardingfunding,staffselection,board ofdirectors'composition.Threefactorsdetermineanorganization's levelofdependenceonotheractors(Cornforth, 2014):importanceof resourcestotheorganization,providers'degreeofcontrol,andwhether theproviderhasamonopoly.PfefferandSalancik(1978)showthat organizationsaremorepronetocomplywithdemandsofexternalfactorsthatarecrucialforkeyresources,whiletheypresumablyforsake thedemandsofactorsonwhichtheydonotdependon.Hence,pressurefromactorsonwhichtheorganizationheavilydependsonfor scarceresourcesmightbeasourceofmissiondrift(Cornforth, 2014).

Cornforth(2014)proposesthreeinstruments governancemechanisms,compartmentalization,andintegrativestrategies thatcan safeguardacompany'smissioninthepresenceofmultiplemarket pressuresandresourcedependencies.

Governancemechanismsincludeconstitutionalandregulatory safeguards,externalaccreditation,andboardcomposition.Thecompanycouldincludeitssocialorsustainablemissioninitsarticlesof incorporationtoavoidmissiondrift.However,constitutionscanbe modifiedoroverlooked.Consequently,severaljurisdictionshavenew legalformsthatadapttothefirm'smission-drivenpurpose (Haldar, 2019;Kirstetal., 2021).Cornforth(2014)alsorecommends voluntaryexternalaccreditationtosafeguardacompany'smission. Basedontheresourcedependencytheory,Cornforth(2014)alludes toincludeintheboardpeoplewhoareincontrolofkeyresourcesas awayofmanagingexternaldependencies.

Compartmentalizingcommercialandsocial/sustainablemission activities,whichinvolvesseparatingcommercialandnon-commercial activities,mightbeawaytodealwiththeriskofmissiondrift (Cornforth, 2014;Pache&Santos, 2013a;Stubbs, 2017a).

“Integration” strategieshelpmanagetensionsresultingfrommultipleinstitutionallogicsanddemandsofkeyactors.Onamicrolevel, carefulselectionandsocializationofemployeescanbeaneffective strategytocopewithmissiondrift(Cornforth, 2014).Hiringpolicies delineatewhocanenteranorganization.Socializationpoliciesfurther developdesiredbehaviorsinhires.Bothcancontributetobuildinga commonidentityinsustainableenterprises(Battilana& Dorado, 2010;Besharov&Smith, 2014).Attheorganizationallevel, thecompanycouldcompromise,applyselectivecouplingstrategy,or attempttomanageresourcedependencies.Acaseinpointofcompromiseisapricingstrategythatisaccessibletounderservedpeople withoutjeopardizingtheviabilityofacompany(Pache& Santos, 2013b).Underaselectivecouplingstrategy,companiesselectivelyadoptpracticesbasedondifferentinstitutionallogics.Companiescanmanageresourcedependenciesbydiversifyingfunding sourcestoreducedependencyonfunders,astherelationshipwith financiersisperhapsthemostimportantinter-organizationalrelationship(Battilana&Lee, 2014).Siqueiraetal.(2018)arguethatthe longer-termorientationofmission-drivencompaniesresultsinlower leverageratioscomparedtothatofpurelycommercialfirms,asthe socialorsustainablemissionishardtoreconcilewithperiodicinterest payments.Onamacrolevel,companiescanengagewithwidersocial movementstogainlegitimacyfortheirbusinessmodelandsustain thevalueswithintheorganization(Cornforth, 2014).

2.2 | BCorpmovement

TheBCorpmovementisinitiatedbythenon-profitorganizationBLab in2006.Themovementconsistsoffourinterrelatedinitiatives: “afirmlevelcertificationstandard,astate-levellegislativetemplateauthorizing anewlegalformoforganization,amarket-levelinvestmentratingsystem,andconsumeroutreachthroughbrandbuildingandstorytelling” (Caoetal., 2017,p.2).ThemovementoriginatesintheUnitedStates andaimstocreateanewclassofpurposefulbusinessesthatfocuson thetriplebottomlineofpeople,planet,andprofits(Marquis, 2020). ThecertifiedBCorpsareattheheartofthismovement.Thesecompaniesvoluntarilycommittopositiveoutcomesforstakeholdersandthe environmentaspartoftheirbusinesspractices,meetingthestandards ofBLab(Nigrietal., 2020b).TobecomeacertifiedBCorp,acompany mustcomplywith threerequirements (Diez-Bustoetal., 2021).First,the companymustmeet performancerequirements.Todoso,thecompany mustcompletetheBImpactAssessment(BIA),afreeonlinetoolthat measuresacompany'spositiveimpactinthefollowingfivedomains: governance,workers,community,environment,andcustomers.Ifthe companyscoresatleast80outof200points,thenBLabverifiesthis scoreduringarigorousreview(BLab, 2022b).Second,thecompany mustcomplywith legalrequirements.Thisimpliesthatthecompany mustsignanagreementwherebyitcommitstoconsideringthe

PAELMAN ETAL 3

interestsofallstakeholdersinthedecision-makingprocess,also referredtoasstakeholdergovernance(BLab, 2022c).Thislegalframeworksafeguardsthecompany'smissionduringcapitalraisesandleader changes.Dependingonthecorporatelawthatappliestothecompany's jurisdiction,thecompanycanupdateitsArticlesofIncorporation,reincorporateasabenefitcorporation,ormakeotherstructuralchanges (BLab, 2022b).Third,thecompanymustshow transparency byallowing itsBImpactReport,whichcontainsthecompany's(sub)scoresineach ofthefivedomains,tobepublishedontheBCorpwebsite (BLab, 2022b).Thecompanymustalsopayayearlyfeebasedonits sales.Besidescertification,BLaboffersanonlinerecruitmentplatform forcertifiedBCorpsandbenefitcorporations,whichhelpsinhiring like-mindedemployees(BLab, 2022d).

TheBCorpmovementhasgrownexponentiallyworldwide,and therearecurrentlymorethan5000certifiedBCorps.Initially,theBCorp modelwasmainlyengagedwithsmall-andmedium-sizedcompanies.In thelastfewyears,largercompanieshavebeguntoshowinterestinthe BCorpmovement.BLabhascreatedaseparatecertificationtrackfor largemultinationalsthatismorecomplexandrigorous(Marquis, 2020).

Fromalegalperspective,theBCorpmovementisprogressing. Thebenefitcorporationlegalform,whichbridgesthefor-profitand non-profitlegalforms(Nigrietal., 2020a),isavailablein38statesin theUnitedStates,theprovinceofBritishColumbiainCanada, Colombia,Ecuador,andItaly(Cao&Gehman, 2021).Nevertheless, certifiedBCorpsandbenefitcorporationsaredifferentconcepts. Whilethebenefitcorporationisalegalform,theBCorpcertificateis avoluntarycommitmenttomeetverifiedsocialandenvironmental standards.Whilebenefitcorporationsmustcreateanannualimpact reportusingathird-partystandard,thereisnospecificminimumperformancerequirementorreportingframeworktoadhereto.Incontrast,BCorpsmustmeethighstandardsandshowtransparencyby publishingtheirBImpactReportontheBLabwebsite.However,both formshavesimilarities.Bothaimtocatalyzestakeholdergovernance. Inaddition,ifthebenefitcorporationisalegalforminthestateor countryofacertifiedBCorp,meetingthelegalrequirementforB Corpcertificationentailschangingthecorporateformtobenefitcorporation.Furthermore,benefitcorporationsmightusetheBIAto meetthetransparencyrequirementsthatbenefitcorporationsentail. Hence,theBCorpcertificationandbenefitcorporationlegalformcan becomplementary(BLab, 2022c).

3 | RESEARCHMETHODOLOGY

3.1 | Datacollection

BecauseBCorpcertificationisrelativelynewasaresearchtopic (Diez-Bustoetal., 2021),wechooseaqualitativeresearchapproach (Nigrietal., 2020a;Stubbs, 2017a;Stubbs, 2019)toprobehowB Corpcertificationaffectsinternalprocessesandexternalrelations. Themainsourceofdataarein-depthsemi-structuredinterviewsare 16keypeoplefrom13Dutch-orBelgian-certifiedBCorps.These dataareaugmentedwithfollow-upemailconversationsand

secondarysources,suchascompanies'BImpactreports,company documents(e.g.,codeofethics,integratedreport),andnotesfrom eventsorganizedbytheBelgianBLabpartnerorganizationwhere someoftheparticipatingfirmspresented.AlistofallcertifiedBCorps isobtainedfromBLab1 andnarroweddowntocompanieswithheadquartersinFlanders(Belgium)ortheNetherlands,wheretheofficial languageisDutch,astheinterviewsaregoingtobeconductedinthe nativelanguageoftheinterviewerandinterviewee.Next,companies areselectedbasedontheirpotentialtoextendtheemergenttheory (Eisenhardt, 1989).Hence,weaimforvarioussizes,industries,and timessincethecertification.WecontactthecompaniesviatheBelgianBLabpartnerorganization,emailorcontactformsoncompany websites,andreminderssentviaLinkedIn.FifteenBCorpsarewilling toparticipateinthestudy(intheformofpreliminarydiscussionsor semi-structuredinterviews).Wedonotreachouttonewcompanies afterconductingsemi-structuredinterviewswiththe16employees, aswefeelthattheoreticalsaturationisreached(i.e.,nonewinformationorthemesweredetected).Thisnumberalignswithguidelinesfor non-probabilisticsamplesizes(Guestetal., 2006).Table 1 presentsan overviewoftherespondents.

Todevelopacompletetopicguidefortheinterviews,weparticipateinearlydiscussionswithoneDutchandoneBelgianB Corp.TheDutchBCorpisquestionedinacollectiveQ&Asession forresearchers,whilecommunicationwiththeBelgianBCorpare doneviaemail.Afterconductingthefirstinterview(withCompany A),wefurthercalibrateandslightlyaugmenttheinterviewtopic guidebasedonournewinsights.Thefinalinterviewguidecovers theparticipant'sbackground,company'smissionandbusiness model,financingoptionsforthecompanyandrelationshipwith financiers,recruitmentprocessandengagementofemployees,and theBCorp'sbehaviorintheinternationalBCorpcommunity.The questionsareopen-ended,andtheprobingtechniqueisusedto elaborateoninterestingresponses.Thepilotinterview(withCompanyA)isheldinpersonattheparticipant'soffice.Allotherinterviewsareheldonlineviavideocalls,asmeasuresagainstthe COVID-19pandemicatthetimeofdatacollectionnolonger allowedon-siteinterviews.Theinterviews'durationisbetween 45and85fiveminutesandtheaveragedurationis66minutes. Eachinterviewisrecorded(withtheparticipant'spermission),manuallytranscribedimmediatelyaftertheinterview,andsentbackto theparticipantforverification.Duringthetranscription,adenaturalizedapproachisfollowedtokeepeverydetailoftheinterview andavoidincorrectadjustments(Bucholtz, 2000).However,for citationsfrominterviews,anaturalizedapproachisfollowedto enhancereadability.

3.2 | Dataanalysis

Wefollowathree-stagecodingapproachtoanalyzeandidentify themesfromthedata.Wedonotattempttofitthedataintoapre1https://data.world/blab/b-corp-impact-data

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TABLE1 Overviewstudiedcompanies

CompanyCountrySectora

Size(employees)b Personinterviewed

CompanyA(Pilot)BelgiumServicewithMinorEnvironmentalFootprint1–9Founder

CompanyBBelgiumServicewithMinorEnvironmentalFootprint1–9Manager(HR)

CompanyCBelgiumWholesale/Retail10–49Manager(Supplychain)

CompanyDBelgiumWholesale/Retail10–49Manager(Impact)

CompanyETheNetherlandsServicewithMinorEnvironmentalFootprint1–9Co-founder

CompanyFTheNetherlandsManufacturing50–249Co-founder

CompanyGTheNetherlandsServicewithMinorEnvironmentalFootprint250–999ChiefExecutiveOfficer

CompanyHTheNetherlandsServicewithMinorEnvironmentalFootprint10–49Owner

CompanyITheNetherlandsServicewithMinorEnvironmentalFootprint1–9Co-founder

CompanyJBelgiumWholesale/Retail10–49Manager(Marketing)

CompanyKTheNetherlandsServicewithMinorEnvironmentalFootprint10–49P1:Founder P2:AssociatePartner

CompanyLTheNetherlandsServicewithMinorEnvironmentalFootprint10–49P1:Managingpartner P2:Director

CompanyMTheNetherlandsServicewithMinorEnvironmentalFootprint10–49P1:Founder P2:Director

aCompanysectorasgroupedbyBLab.

bNumberofemployeesatthetimeoftheinterviews.

existingcodingframebutgeneratethemesinductivelyfromtheraw data(Braun&Clarke, 2006).Inthefirstroundof ‘open’ coding,we codechunksoftextthatarerelevantforansweringourresearch questionsonasentenceandparagraphlevelusingcodesderivedfrom participants'wording.StraussandCorbin(1998)refertoopencoding as “theanalyticprocessthroughwhichconceptsareidentifiedand theirpropertiesanddimensionsdiscoveredindata” (p.101).Inthe second “axial” codinground,wegroupthefirstordercodesintocategories, “linkingcategoriesatthelevelofpropertiesanddimensions” (Strauss&Corbin, 1998,p.123).Inthethird “selective” codinground, wedrawoutkeythemesthatencompassourfindings.Straussand Corbin(1998)refertothiscodingstageas “theprocessofintegrating andrefiningthetheory” (p.143).Dataanalysisisconductedusingthe computer-assistedqualitativedataanalysissoftware(CAQDAS)packageNVivo.Fourkeythemesemergeduringthecodingprocess:

indual-purposeorganizations(Battilana&Dorado, 2010; Cornforth, 2014).TenoutofthirteenstudiedBCorpsmanagetofind suitableemployees,eveninatightlabormarket.Onerespondent describestheexperienceasfollows.

Itisverydifficulttofindgoodpeople,butIthinkwe aredoingrelativelywell.Wehavenowattractedafew peoplefromlargerfirmswithmoreexperience.Ithink thatisbecauseofourmodel.Ifwehadbeenaregular andtraditionalDutchfirm,Idon'tthinkwewouldhave succeededinthis.[CompanyK,P1].

NoneoftheBCorpsuseBLab'srecruitmentplatform.SeveralB Corpsfeelthattheoutstandingpositionsarespecific,andthreeof themprefersector-specificrecruitmentplatforms.However,ten respondentsexplainthattheyusetheirBCorpstatusintheirlabor marketcampaigns,vacancies,orintakeconversations.Eventhough prospectiveemployeesareunawareaboutBCorp,variousrespondentssaythatBCorpleadstointerestingconversationswithjobcandidates.Onerespondentstatesthefollowing:

Wedousethecertificateonthewebsite,butwefind thatpeopleoftenoverlookthis[…]Itcomesintoits ownwhenwearehavingconversations.[CompanyE].

4 | RESEARCHRESULTS

4.1 |

Hiringlike-mindedpeople

Recruitmentandsocializationpracticescanbeusedasa “micro-level strategy” tomanagetensionsandreducethechancesofmissiondrift

AnothercompanyreferstotheBCorpcertificateas “somekind ofyardsticktohaveaconversationabout” [CompanyL,P2],sincethe BCorpmodelkeepsthemsharpandallowsthemtocheckagainst qualitystandards.Fromacandidate'spointofview, “doinggood things” [CompanyL,P2]isimportant.Nineparticipantsexplainthat thecandidatesareattractedtothecompany'ssocialorsustainable

3.Financingthehybridorganization
1.Hiringlike-mindedpeople 2.Engagingemployees
4.Meetingfinanciers'demands Table 2 presentsthethemes(selectivecodes)andaccompanying categories(axialcodes)resultingfromthecodingprocess.
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TABLE2 Codingoutcome

ThemesCategoriesExamplequotes

Hiringlike-minded people Recruitingemployees

Candidatesonquestfor impact

Person-organizationfit Diversityandinclusion

[CompanyJ] Youhavepeoplewhoactuallyhavenoaffinityatallwiththat[sustainability], Ithink thatisperhapsamoredifficultfit. Ontheotherhand, ifyouhavepeoplewhoare100%committed tosustainability, itmightnotbeafiteither

Retainingand engaging employees

Financingthehybrid

Meetingemployees' expectations Employeeengagement

[CompanyB] Iamabitofamediatorbetweentheteamandthefounder. Ifhetakesacertain decisionandIfeelthatitisnotagoodmatchontheotherside, thenBCorpisthereferencefor ‘yes, butweareBCorp’ . […]Thattermalonegivesmeagoodguidelinetobeabletojustifythings sometimes

[CompanyH] Banksfinditextremelycomplicated(ourbusinessmodel)[ ]andthateveryoneowned thecompanywasreallyabridgetoofar ‘Becausewhoisthenliable?’; ‘Wearealltogether ’; ‘no thatisnotpossible. ’ ItispossiblewithaSTAK[i.e., aDutchtypeoffoundationthatseparatesthe votingrightsandprofit-sharingrights], thatisallfine, onlytheydonotwanttofinanceit So, Ido notthinkthatbanksareverymuchconcernedwithfinancingthefutureorrunninginnovative companies

Meetingfinanciers'

[CompanyB] Ithinkit'sstillabitofawaitandsee, evennowwiththatinvestor, forexample, they willsetcertaintargets Andiftheysayyessorryguysbutifyoucannotmanageitwithonlyyour sustainableprojectsthenyougobackanddoitanotherway[ ] Thatisnotreallyexpressedso preciselyatthemoment, butImustsaythatIpersonallyamafraidthatthiscouldbea consequence, thatyouwillhavetosacrificeyourfreedom.

vision.Sixcompaniesencountercandidatesthatspecificallyreferto theBCorpmodelwhenapplyingforaposition.Onerespondent revealsthefollowing:

Youhavealotofpeopleandinternswhoreallywant toworkforaBCorp,sotheysearchveryspecifically for ‘IwanttoworkforaBCorp’ andtheyallendup withusandthosearetheoneswewant.[CompanyA].

TeninterviewedBCorpsattachgreatimportancetothecultural fitwithcandidatesduringtheselectionprocess.Onerespondent revealsthat:

Inconversationswithpeople,Iamprimarilyinterested inwhattheirpersonalviewsare,howtheyperceive developmentsinsociety,muchmorethanIwouldgrill themonresumésandcompetencies.[ ]Intheexpansionoftheteam,Iaminitiallylookingforpeoplewith intrinsicmotivation.[CompanyE].

OneBCorphasanonboardingprocessfocusingonthecompany'smissionandvision.Carefulrecruitment,induction,andmentoring,whichAiken(2002)referstoas “protectiveentrystrategies,” supportsthereproductionoforganizationalvalues.TwoBCorpsindicatethatfindingemployeesthatcancombineaprofitandpurpose perspectivecanbechallenging;onerespondentdescribesthisas “the bestofbothworlds” [CompanyJ].Anotherrespondentdescribesthe recruitmentpracticeasfollows:

ThatisactuallytheDNA,andthatisalsothemostdifficultpart.Alotofpeopleapplyatusbecausetheylike

thefactthatwedosocialwork,butwedosocialwork withacommercialslant.[…]Wealsoreallywanttosell somethingandthatcombinationisjustabittricky.So peopleareeithertoocommercialandthenitdoesn'tfit withhowsubstantiveweactuallyare,orpeoplearein socialfairylandthattheycanhardlyimaginethatyou alsohavetopaythebillsandthereforehavetomake choices.[ ]Youneedtohaveaspecificformofpragmaticidealism.[CompanyH].

Thisrespondentalsoexpressessomedifficultyinexplainingwhat theyarelookingfor.However,therespondentfeelsthatBCorpcan help,asitshowsthetypeofcompanytheyare,andcandidatestendto delveintothis.Hence,theorganizationcanuse “categorymembership” togainlegitimacyamongkeystakeholders(Chauhan&O'Neill, 2020). BattilanaandLee(2014)indicatetherarityofhiring ‘hybrid employees’,thatis,individualswhohaveexperiencewithbothsocial andcommerciallogic.Forthecompaniesstudied,thistranslatestohiringpeoplewithdifferentprofessionalbackgrounds.Sevenrespondents revealthattheirorganizationsplantobemorediverseintermsofethnicbackground,gender,andability.Onestatesthefollowing:

Wearestillawhitemaleorganization.However,-and thisispartlyduetoBCorp-weareawarethatthings havetochange.So,wehavealsosetourselvesobjectivesinthisrespect,inwhichwehavesaidthatatransitionwilltakeplaceinthecomingperiod. [CompanyG].

Despiteeffortstoemphasizeinclusivehiringpractices,mostcompaniesthataspireforgreaterdiversityfeelthattheinflowof

organization Financingsources Collectivethinking Financingconstraints Financingpreferences
demands Valueofmission Meetinginvestors' returnexpectations Profitdistribution
6 PAELMAN ETAL

candidatesisnotoverlydiverse.Onerespondentdeclaresthatthe companyaimstoimplementananonymousapplicationprocessfor theirnextrecertificationround,aspiringtoattractamorediverse workforce.Bycontrast,fourcompaniesstatethattheycouldemploy adiversegroupofcandidates.Twocompaniesevenhaveprogramsin placetoassistpeoplewhohavedifficultyfindingwork.

4.2 | Engagingemployees

Hybridorganizationsmightexperiencetrade-offsregardinghighsalaries.Whilehighsalariesallowthemtoattractskilledemployees,they reducetheresourcesavailabletocreatesocialorsustainablevalue andmakeorganizationslessattractivetoimpactinvestors(Doherty etal., 2014).Sixrespondentsrevealthatcandidatesarewillingto acceptlowersalariestohavemoreimpactfuljobs.Onecompany explainsthat “wedonothavethegildedcagebuttheycometousfor thetotalpicture” [CompanyM,P1].However,threerespondentsrecognizethatsalariescanbeanissueifthedifferencebetweenexpectationsandtheofferbecomeslarge.Onerespondentexplainsthat:

ThesalariesweofferfitaBCorpandthesocialorganization[ ]Wechoosenottogoforprofitmaximizationand thatmeansyouneithergoforsalarymaximizationand that'swhereitsometimesbouncesoff.[CompanyH].

Nevertheless,mostoftheinterviewedcompaniesmanageto retainemployees.Onerespondentstatesthefollowing:

So,Ithinkthat'salsoanadvantageofourmodelorour cultureandwealso[ ]havevirtuallynoburn-outsor anythinglikeitandifitisthecase,ithasnothingtodo withthefirm.Ialwaysthinkthatisagoodsign, becauseatotherfirmsandalso[ ]atmypreviousfirm, peopleregularlydroppedoutwithseriousstresscomplaints.[CompanyK,P1].

Mostrespondentsreportthatemployeesarecommittedtothe socialorsustainablemissionofthecompany.Threerespondentsindicatethatpeoplewhoinitially(i.e.,atthetimeofhiring)orthosewho arealreadyworkingforthecompany(i.e.,beforeittransitionedinto itsdualpurpose)expresslittleinterestinthesocialorsustainable visionortransitionintoit.Onerespondentconveysthefollowing:

Itdoeshappenquiteoftenthatyoungpeople(trainees orgraduates)inparticulararenotconstantlyawareof this,whereasweare.So,itissometimesthecasethat they[ ]havetobuysomethingandthentheyforget tolookatthesustainableaspect.Thenwehaveto blowthewhistleonthem: ‘You'redoingagreatjob, butifyouincludesustainabilityinyourdecision,will theoutcomebethesame?’ [ ]Ifyou'retalkingabouta

differenceindisciplineofBCorpthinking,thenit's moreingrainedwithusthanwithpeoplewhohaven't beendoingitforsolong.[CompanyI].

ThisisaninstanceofwhatAiken(2002)referstoas “valuecarriers.” Thesepeopleareactiveinorganizationsthatseektochampionorganizationalvaluesandplayakeyroleinreproducingorganizationalvalues. Threerespondentsassertthatemployeestrytosharpenthemissionand “keeptheambitionalive” [CompanyE].SixBCorpsindicatethattheyfirst needtogrowinternalsupportfortheirtransitiontoaBCorporamore sustainableorsociallyorientedorganization.Asonerespondentexplains:

Whatweshouldalwaysrememberisthatwearein transitionandthattransitiontakestime.Also,inorder togainsupportandweighupeverythingproperly,you havetotakethattime.[CompanyG].

Onerespondent,whousedthecertificationprocedureasaguide forthesustainabilitytransitionnoticesthattheyhadcommunicated thesustainabilitystrategyexternallybeforetheyclarifiedeverything internally,makingithardtocreateacoherentstory.Anothercompany feelsunpreparedtounlockthefullpotentialofcertification,sincenot alldepartmentswereinvolvedinorawareofthecertificationprocess. Incontrast,fivepeoplestatethattheBCorpcertificationprocess enablesthecompanytogeteveryone'sinsightsregardingthecompany'sstrategy.Arespondentresponsibleforthecertificationprocedurerevealsthefollowing:

Itwasawayofincludingtheentireteaminshaping thefutureofthecompany.AsItalkedatthestartto theteamaboutthis,theycamebacktomewithprioritiesofthingstheywantedtofocusonandalsothe workingpoints.Thingswherewehadtoimprove, thingsthathadtobedonebytheteamasateam,not bymyselfonmyown.[CompanyD].

Inaddition,afterthecertifica tionprocedure,BCorpmembershipseemstoincreaseengagem entamongteammembers,assix respondentsdeclarethatitcreatesawarenessandkeepsthem attentive.Onerespond entreferstoBCorpas “ akindofsynonym forsustainable ” [CompanyM]thathelpsthemtoaddressmatters. EightcompaniesstatethattheyusuallyrefertotheBCorpmodel forthealignmentofday-to-daydecision-making.Fiverespondents indicatethattheBCorpmodelmediatesbetweentheteamand management,asithelpsjustifychoices.Onemanagerpoints outthat:

Whenwehaveadecisionaheadofus-anddecisions sometimeshavedifficultsides-thenIsay ‘butweare aBCorp.Dowewantthis?Doyouwanttowalkon thisedge?Doyouwantthisornot?Doesthatmake sense?’ [CompanyG].

PAELMAN ETAL 7

TABLE3 Financingsources

CompanyFinancingsources

CompanyAInternalfinancing;Governmentalsupport;Leasing (minorasset)

CompanyBInternalfinancing;COVIDloan;Governmental support;Conversationswithexternalinvestors

CompanyCInternalfinancing;Creditfacility(bank)

CompanyDInternalfinancing;Leasing(minorasset); Conversationswithexternalinvestors

CompanyEInternalfinancing;External(impact)investors(debt + equity)

CompanyFConcessionalfinancing;Convertibledebt(impact investor);Governmentalsupport;Conversations withexternalinvestors

CompanyGInternalfinancing;Leasing;Issuanceofparticipation certificates

CompanyHInternalfinancing;Governmentalsupport;Loan(bank)

CompanyIInternalfinancing

CompanyJInternalfinancing;Governmentalsupport

CompanyKInternalfinancing;Loan(bank)

CompanyLInternalfinancing;Loan(bank);Issuanceof participationcertificates

CompanyMInternalfinancing;Governmentalsupport;Leasing (minorasset)

Hence,employeescanidentifywithBCorpvalues,whichmight benefitinternalalignmentandincreaseengagementwiththecompany'ssocialorsustainablemission(Kurland, 2018).

4.3 | Financingthehybridorganization

Althoughsecuringfinancingiscrucialfororganizationalsuccess (Choi&Gray, 2008),organizationalhybriditymightcomplicatethe acquisitionofresourcessuchasfinancialcapital(Battilana& Lee, 2014;Bergset, 2017).Table 3 showsthattheinterviewedB Corpsaccessvariousfinancingsources.

FortwelveBCorps,internallygeneratedprofitsaretheirprimaryfinancingsource.OnefirmobtainedaCOVIDloan,asinternal financingwasnolongersufficientduringthepandemic.Onecompanyhasacreditfacilitytomanageliquidity,whilethreecompanies havearelativelysmallloanwithabank.Onecompanyalsohasa loanfromaprivateimpactinvestor.Anothercompanyhassecured convertibledebtfromanimpactinvestor,whileanotherhas acquiredanequityinvestmentfromaprivateimpactinvestor. Threeothercompanieshavenegotiatedwithinvestorsregardingan equityround.Sixcompanieshavebenefitedfromgovernmental supportthroughsubsidiesorconcessionalfinancing.Fourcompanieshaveleaseassets,butforarelativelysmallamount.Twocompanieshavesecuredfinancingbyissuingcertificateswithintheir cooperatives.

Twocompanieshavealreadyorganizedasacollectivelyowned companybeforecertification.Oneisownedbyemployees,andthe othercompanyisownedbyorganizationsthatsharethemissionof thecompany.Onerespondentrevealsthat:

Afewyearsagowewerestrugglingabit ‘whatisthat [employeeparticipation]?’.Becauseyoucanexplainit positively,itisprettynicethatyourstaffparticipates. Youcanalsoexplainitnegatively,itisaniceconstructiontopayyourstaffalittledividendinatax-friendly way.So,thenwesaid ‘butwedothinkwearedifferent;wedothinkwemakedifferenttypesofdecisions, moreforthelongerterm.[ ]BCorpfittedinvery nicelywithaquestwewereontoactuallygiveeven moresubstancetoemployeeparticipationandalsoto ourorganization.[CompanyG].

TheotherrespondentindicatesthatBCorpinspiresthemto rethinkandredesigntheircooperative,withtheintentofgetting morestakeholderstoparticipate.Therespondentdeclaresthat theBCorplabelmightalsohelpattractexternalparticipants. FourcompanieshavetakenstepstobecomeacooperativeorganizationsincetheyhaveobtainedtheBCorpcertificate.Allcompaniesmentionthatemployeesshouldbenefitifthecompanies dowellfinancially.Hence,theBCorpcertificationprocesshas inspiredalmosthalfoftherespondentstoorganizetheircompaniesasastakeholder-ownedco mpany.However,somecompanies'roadtocollectiveownershipisstillinitsinfancy.Two companiesexpressthatthewaytheyorganizeissometimesmisunderstoodbytheinstitutionalenvironment.Onecompany sharesthefollowing:

Ithinkthereisakindofprejudicethere,andthat's whatyourunupagainstinthepolicychoicesthatyou makeasacompany.Wewouldliketodocertain things,butsimplytax-wiseorlegally,weareprevented fromdoingthemthisway.Whichmeansthattheway inwhichwewanttosharetheprofitswithourpeople andsocietybecomesverycounterintuitive. [CompanyL,P2].

Onerespondentmentionsthatthecompany'sfinancialstructure isdeliberatelykeptsimple,asemployee-ownershipisconsidereda flexiblewaytofinancethecompany.Therespondentconcludesthe following:

Wehavenowcreatedamodelthatismuchmore accessibleforpeopletobuyinto.Andthatreallydoes makeabigdifference[ ]lettingeveryonebecome ownerforalowercapitalinvestment,ratherthanone personhavingtobuyinforafewmillion. [CompanyL,P1].

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Hence,thismightreducetheconstraintsonobtainingnewliquidity.Indeed,securingexternalfinancialcapitalmightbechallengingfor hybridenterprises,astheydonotcorrespondtowell-establishedcategories(Battilana&Lee, 2014).SomeoftheinterviewedBCorps regardaccesstofinanceasdifficult.Onecompanyconsiderssecuring finance “thebiggestchallengethereis” [CompanyF].Fourcompanies recognizethattheyarenoteligibleforaloanwithabank,notonly becauseoftheirfinancialpositionbutalsobecausethewaytheyare organizedortheir(hybrid)businessmodelissometimesmisunderstoodandconsideredhigh-risk.Threecompanieshavesuffered severelyfromtheglobalpandemic,andonehasstruggledtosurvive andsecurefinancing.Onecompany,whichhastransitionedtowardsa sustainablebusinessmodelshortlybeforethepandemic,recognize thatthereisnoroomtobecriticaltowardspotentialprovidersof financialcapitalintermsofasustainablemindset.Therespondent statesthat:

Wearenowatapointwherewealmostnolonger haveachoice[betweeninvestors].So,it'skindoflike ‘whowants,pleasehelp’ [CompanyB].

Whenconsideringnewfinancingoptions,twocompanies mentionthattheylookforinvestorsinimpactspheresthatcan endorsethedevelopmentofthecompanyanditssocialmission. Threecompaniespreferfinancin gfromimpactinvestorsorpeople intheirnetworksoverbankfinancing.OneBCorpexplainsthis preference:

Withinvestorswehadmorecertaintythatitwasan investmentbasednotjustonthecommercialopportunitybutalsoonintrinsicmotivation[ ]Idonotthink thataclassicalorganizationorabigbankfitsourbrand andourmission.[CompanyE].

Anotherrespondentalsostatesthefollowing:

Wearenotsokeentoborrowfromabank[…]Iwould actuallynevergoforjustaninvestorwhowantsa quickreturnoninvestment.Ijustdon'tthinkmuchof financialinstitutionsandthereforealsoofinvestors whojustwanttoseetheirmoneybackveryquickly andwhoactuallyaskyouduringthefirstmeeting ‘whatisyourexitstrategy’.[ ]Idon'tthinkthat'sa sustainablesolution.[CompanyI].

Bothrespondentshintthatiftheyneedbankfinancing,they wouldoptforbankswithsustainablefocus,preferablyaBCorp.One BCorpmentionsthatit “wouldnotevenconsiderabank” [Company H].Hence,thesefindingscorroborateSiquieraetal.'s(2018)conclusionthatgoingbeyondcommerciallogicresultsindifferentcapital structuredecisionsoffor-profitsocialenterprisescomparedtocommerciallydrivenfirms.Inaddition,ourfindingsshowthathybridfirms notonlydistinguishbetweenthetypesoffinancing,butalsobetween

thetypesoffinanceproviders.Onecompanyhasswitchedtowardsa moresustainablyorientedbankforaloanandassumedtheBCorp certificatehasfacilitatedthis:

Wehavearelativelysmallloan,butlastyearweconsciouslysaid ‘we'regoingtoanotherbank’,soamore sustainablebank.YounoticethatsuchaBCorpcertificatehelps,thatyoucanreallydemonstratethatyou haveasustainablestrategyandbusinessoperations.I don'tthinkitwouldhavebeenpossibletomakethat switchotherwise.Ithinkwewouldhavehadtheloan fromanotherbank,butwewantedtoborrowfromthis bankbecauseit'sasustainablebankandthatwas importanttous.Theyalsocheckcompaniestoseeif theyactuallyhaveasustainablestrategyandwhether itsuitsthem,anddemonstratingthatiswhereBCorp helped.[CompanyL,P2].

4.4 | Meetingfinanciers'demands

TwocompaniesrevealthattheirsustainablevisionandBCorpcertificatehasattractedtheattentionofmainstreambanks.However, tworespondentsperceivethat(private)investorsshowgreater appreciationforacompany'ssustainableorsocialmissionthan banks.Onecompanyisapproachedbyamainstreaminvestorinterestedinitssustainableapproachtodoingbusiness.ThreecompaniesthinkthatthemissionandvisionismorecrucialthanBCorp status;although,BCorpcanleadtointerestingconversationswith investorsaboutthewaythecompanydoesbusiness.OnerespondentreferstotheBCorpmodelas “ aconfirmationofsomething they[potentialinvestors]alread ythoughttheysawinourbusiness model,anunderlining,anaffirmation ” [CompanyE].FourcompaniesrevealthattheappreciationforBCorpamongprovidersof financialcapitalisdisappointing.Thismaybebecauseofthelackof knowledgeabouttheBCorpcertificate.Inaddition,otherfactors, suchasacompany'sfinancialhealth,mayplayamoreimportant rolethanlabelsorcertificates.OneBCorpstronglybelievesthat ESGisbecomingincreasinglyimportant,andthatinthefuture, markerssuchasBCorpcertificationisgoingtomakeadifference as “ impactinvestorsalsowanttohearfromathirdpartythata partyisactuallysustainable ” [CompanyF].

Threecompaniesdisclosethatcompanyfoundersandexternal investorshaveacceptedlowerreturnexpectations,providedtheyare investinginasocialorsustainablemission.Thisallowscompaniesto planforthelongerterm,asmentionedbyonecompany:

Ifyouarenotmaximizingprofit,youinvestdifferently inyourbusiness.Youdon'thavetoanswertoashareholderwhoexpectsX%return.So,wecanaffordto hiresomeoneextra,investextrainmarketing,orto investextraintraining.Becauseevenifitisinthe minus,youaredoingitforthefuture.[CompanyM].

PAELMAN ETAL 9

Onecompanyhasanoutstandingloanwithaprivateinvestorthat isopentodiscussionsaboutreturnexpectations: “Wemadevery friendlyagreementsonrepaymentsandtheinterestrate.Still,we havetriedtogetascloseaspossibletothemarketrate,butitisnot assharpastheaveragefintechhockeystickmodel[characterizedby highgrowth]” [CompanyE].ThisfindingconfirmsCooperand Weber's(2021)conclusionthatinvestorsaresometimeswillingto sacrificepersonalfinancialgainsforthesocialgood.Onerespondent assertsthatevenimpactinvestorsareusually ‘greedyformoney’ [CompanyF].Anotherrespondentfearsthatexternalinvestorsmight jeopardizethecompany'ssustainablemissioniftheycannotmeetcertaintargets;however,thisrespondentalsodisclosesthefollowing:

Italsostrengthensme-thanksinparttoBCorp-to beabletotalktoinvestorsaboutambitionsinadifferentwayandtobeabletochallengethatpurelyfinancialpointofview,somehow.[CompanyB].

TABLE4 Summaryofmainfindings

ThemeMainfindings

Hiringlike-minded people

BCorpsaredoingrelativelywellinfinding goodemployees

BCorpsconsidertheculturalfitofthe candidateswiththefirmessential(i.e., candidatesneedtohavesocial/sustainable andcommercialvision)

BCorpsundertakeeffortstocreatemore diversityandinclusion

TheBCorpmodelappealsprospective employees

TheBCorpstatusispartoftherecruitment process(labormarketcampaign,vacancies, intakeconversations,andonboarding process)

Hybridenterprisesmayopttoreinvestprofitsintothecompany (i.e.,intothesocialandsustainablemission),limitingtheportionof profitthatisdistributedtoshareholders(Stubbs, 2017b).WhilefourB Corpsarecurrentlynotpayingoutdividends,oneBCorpdistributes allprofitseveryyear,andanotherBCorphasofficialrulesregarding dividendpaymentsandprofitreinvestments.Twointerviewedcompaniescommittodonatingafixedpercentageoftheirprofittononprofitorganizationsthatarecloselyassociatedwiththem.Onecompanyalsosupportsotherprojectstheybelievein.Onecompanydoes notdonatemoneytonon-profitorganizations;although,itsprofitis lowerasitprovidesdiscountstonon-profitorganizations:

Attheendofthefinancialyear,wearealwaysonthe vergeofmakingaprofit,butthatispurelybecausewe alsoservealotofnon-profitsandwethensay ‘wewill doa €20.000projectfor €5.0000 ,sotospeak.We oftendothatsimplytoincreasetheimpact. [CompanyA].

Anothercompanysupportscharitiesinkind.Twocompaniesconveytheirintenttoinvestprofitinsustainableprojects,buttheyhave notyetdoneit.

Table 4 presentsthemainfindingsforthethemesdiscussed.

Retainingand engaging employees

Overall,BCorpsexperiencehighemployee retention.

Employeesarecommittedtothesocialor sustainablemission.

TheBCorpcertificationprocesshelps employeesengageinthesustainableand socialstrategy.

TheBCorpmodelisusedforday-to-day decisionmakingandtomediatebetween teamandmanagement.

SomeBCorpemployeesacceptthatlower salaryformoreimpact,butsalarycanbean issue.

5 | DISCUSSIONANDCONCLUDING REMARKS

Financingthehybrid organization

Certificationincreasesthefitbetweentypes offinancingandfinanceprovidersand mission.

Hybridcompaniesaresometimes misunderstoodandconsideredashigh-risk bytraditionalbanks.

BCorpcertificationinspiredsomecompanies toredefineownershipand/orbecome stakeholder-owned.

Meetingfinanciers' demands

BCorpcertificationisatopicofconversation withinvestorsandaconfirmationof sustainable/socialvision.

Someinvestorsacceptlowerreturnsfor moreimpact,whichallowscompaniesto thinklongtermduringdecisionmaking.

Thisresearchonsustainableorganizations specificallyonBCorps aimstoanswerthefollowingresearchquestions:HowdocertifiedB Corpsinteractandengagewithkeyresourceproviders?DoesBCorp certificationhelphybridenterprisespreventmissiondrift?Andifso, how?Providersofkeyresourcesarecrucialinsustainingthedualpurposeofthesehybridorganizations(Cornforth, 2014).Ourfindings showthatcertificationseemstoimpacttherelationshipofthecompanieswiththeirkeyresourceproviders,thatis,employeesandprovidersoffinancialcapital,inthesensethatthedualmissionismore articulatedandcredible.CertifiedBCorpsstronglyconsidertheir socialorsustainablemissionintheselectionandsocializationofnew employees.BCorpcertificationplaysaroleinrecruitinglike-minded employeesandcommunicatingcompanyvaluesinternally.Thisaligns withNigrietal.'s(2020a, 2020b)conclusionregardinginternalalignmentresultingfromtheBCorpcertificationprocedure.Additionally,a company'ssocialorsustainablemissionisimportantinselectingfinancialcapitalproviders.Duringnegotiations,theBCorplabelhelps emphasizethecompany'smission.Hence,theBCorpcertificatehelps companiesexplaintheirdualpurpose,acombinationthatisnot alwaysproperlyunderstood(Battilana&Lee, 2014),tokeyproviders

10 PAELMAN ETAL

orresources.Theselike-mindedemployeesandfinanciersaresometimeswillingtoacceptlowerfinancialcompensationinconsideration ofthecompany'ssocialorsustainablemission.Almosthalfofthe studiedcompaniesare(intheprocessofbecoming)collectivelyowned bykeystakeholders(mainlyemployees).Thissteward-ownershipnot onlyhelpscatalyze “stakeholdergovernance” andplanforthelonger term(BBLab, 2022e;Nigrietal., 2020a),whichisproventocontributetoexternalstakeholderengagement(Winkleretal., 2019),butalso helpsfacilitateaccesstofinance.

Basedonthetheoreticalframeworkofhybridcompaniesandmission drift,weconcludethatBCorpcertificationisconsideredagovernance mechanismthathelpscompaniespreventmissiondrift(Cornforth, 2014). Inaddition,thecertificatealsosupportstheso-calledintegrativestrategiesthatCornforth(2014)putforwardasadditionalstrategiesthatmight preventmissiondrift.Atthemicrolevel,carefulrecruitmentandsocializationofnewemployeesareproposedtoensureinternalsupportforthe socialandeconomicvaluespursuedbythecompany(Aiken, 2002; Battilanaetal., 2012;Cornforth, 2014).TheBCorpcertificationnotonly helpsattractlike-mindedemployees,butalsosupportsthevaluetransfer andengagementofemployeeswiththecompany'ssocialorsustainable mission.Attheorganizationallevel,managingresourcedependenciesis consideredimportantinpreventingmissiondrift.Ourfindingsshowthat managingresourcedependenciesgoesbeyonddifferentiatingbetween financingsources(Battilana&Lee, 2014).Thestudiedcompaniesactively searchforfinanciersthatarenotjustinterestedinfinancialreturns,which mayleadtothediscoveryoffinanciersthatembracethedualobjectives arequirementadvocatedbyBattilanaetal.(2012) tomitigatetheriskof missiondrift.ThismightalsoexplainSiqueiraetal.'s(2018)findings regardingthedifferentcapitalstructuresoffor-profitsocialpurposeorganizationscomparedtopurelycommercialfirms.Somerespondentsindicatethatfurtherdiscussioncouldbemadeonthesocialorsustainable purposeofthecompanywith(impact)investorsthanwithbanks.Inaddition,whenchoosingdebtfinancing,theprovideroftheloanisofimportance.Thatis,therespondentspreferprivatefinanciersorsustainably orientedbanksoverpurelycommercialbanks.Atamacrolevel,linking withwidersocialmovementsisconsideredastrategytoinhibitmission drift(Cornforth, 2014).BybecomingacertifiedBCorp,companies becomepartofawidersocialmovement,whichcanhelpthemgainlegitimacyasitestablishesneworganizationalformsthatembodynewbeliefs, norms,andvalues(Raoetal., 2000).OurfindingshighlightthattheB Corpmovementhelpscompaniesgainlegitimacy.Moreover,identificationwiththismovementalsofeedsbacktolower-levelintegrativestrategies,asthecompaniesusethismovementtorecruitandsocialize employeesanddiscussthepurposeoftheorganizationinconversations withfinanciers.Thus,BCorpcertificationhelpscreateaninstitutional environment,whichisespeciallysuitedtoattractemployeesandinvestorsthatunderwritethedualpurposesofthecompanyandhelpsgain legitimacyamongthem.Theselike-mindedprovidersofkeyresources reducetheriskofmissiondrift.

Ourstudyhaspracticalimplicationsforhybridcompaniesthat pursuesocial/sustainableandfinancialmissions.Ourfindingsshow thatBCorpcertificationmightaidcompaniesinmanagingemployees andtheirrelationshipwithfinanciers,asithelpsshowcasethe

companies,attractlike-mindedemployeesandfinanciers,andopena conversationaboutthesocialorsustainablemission.Besides,our studyinspirescompaniestoconsidernewfinancingsourcesand implement “stakeholdergovernance.” Inaddition,forestablished companies,BCorpcertificationmightbeacatalystforthetransition tobecomemoresustainableorsociallyorientedandhelpgaininternal supportfromemployees.

Ourstudyhaspracticalimplicationsforpolicy-makersandBLab. First,ourfindingsshowthatBCorpcertificationandthewiderBCorp movementmighthelpcompaniessustaintheirvalues.Hence,ifgovernmentsintendtomovetowardsmoreinclusivestakeholdercapitalism,promotionoftheBCorpmovementandimplementationof benefitcorporationlegislationmightbeastepinthisdirection.Second,anotherpolicyimplicationistoreassessandpromotelegalforms adaptedtocollectiveownership,assomerespondentsstruggleto identifythemostappropriatewaytobecomecollectivelyowned eitherbyemployeesorotherstakeholders.

Ourstudyhassomelimitationsthatcanbeexploredinfuture research.First,wequalitativelyanalyzein-depthsemi-structured interviews,whichdoesnotallowustogeneralizetheconclusions. Studiesthatemployquantitativetechniquescouldfurtherassess employeeengagementoracquisitionoftherequiredfinancingand drawconclusionsonamoregenerallevel.Second,thisstudyonly interviewsoneortwoemployeespercompany.Third,weonlyinclude activeBCorpsinBelgiumandtheNetherlands.Neithercountryhasa benefitcorporationlegalstructure.Hence,studiesfocusingonother jurisdictionscouldaugmentourfindings.Morespecifically,future studiesmightconsiderconductingin-depthcomparativecasestudies oncompaniesthatareactiveinenvironmentsthatvaryintermsof institutionalsupportforsustainableorsocialentrepreneurshipand assesswhethertheresultsdiffer.Fourth,thisstudyonlyfocuseson small-andmedium-sizedenterprisesthatareprivatelyheld.AstheB Corpmovementattractslargerandlistedfirms,thefuturestudies couldexplorewhetherourconclusionsalsoholdforthem.Lastly,our findingsarebasedontheviewpointofkeypeoplefromcertifiedB Corps.FuturestudiescouldexamineBCorpcertificationanditsrole inpreventingmissiondriftfromtheperspectiveof(prospective) employeesandfinanciers.

ORCID

ValeriePaelman https://orcid.org/0000-0002-5660-7341

PhilippeVanCauwenberge https://orcid.org/0000-0002-98385185

HeidiVanderBauwhede https://orcid.org/0000-0003-2757-3573

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