Butterfly Change of Commercial Enterprise into Social Enterprise: Based on Mechanism and Case Study of Institutional Capital

Advancing commercial forces into the field of innovative social products to deliver sustainable solutions has gained widespread attention in recent times. This paper reviews social enterprises and related literature, including institutional logic transformation and organisation, service dominant logic, and institutional capital theory, and examines a recent trend in China in respect to the conversion of commercial enterprise to social enterprise and the underlying mechanisms through the lens of the ‘ChenGuo’ company using the grounded theory method. The contributions of this paper are as follows: (i) It solves the problem of mission drift triggered by conflicting commercial means and public goods goals of social enterprises through institutional capital theory. (ii) It gives a conceptual framework is given for the transformation of commercial enterprises into social enterprises. (iii) It points out a higher perspective to social entrepreneurs to consider the benefits of institutional capitalisation for more effective social goods through value co-creation. It gives practitioners and policymakers with a framework for developing sustainable social entrepreneurship strategies.