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Social entrepreneurship is widely promoted as a way to solve social problems while generating sustainable business income, but a 2026 study by Mildayanti, Dwiyanti, and Asriyani Amrullah of Universitas Negeri Makassar warns that socially driven businesses can also create unintended harm. Published in the International Journal of Applied and Advanced Multidisciplinary Research (IJAAMR), the study identifies four major risks: mission drift and governance problems, exploitation of beneficiaries and employees, socialwashing, and the displacement of local businesses. The findings matter because social enterprises are increasingly used in Indonesia to address poverty, unemployment, environmental challenges, and community development.
Why the “Dark Side” of Social
Entrepreneurship Matters
Social entrepreneurship combines
two different priorities. The first is a social mission, such as improving
community welfare or protecting the environment. The second is commercial
sustainability, which requires organizations to generate revenue and control
costs.
This hybrid structure is one of
the strengths of social entrepreneurship, but it can also create tension. When
financial pressures become stronger, organizations may gradually prioritize
revenue, growth, investors, or market performance over the communities they
originally intended to serve.
The issue is increasingly
relevant in Indonesia. The study notes that social entrepreneurship has
expanded across areas including creative-economy empowerment, waste management,
community-based tourism, and other community initiatives. Universities, incubators,
development organizations, government programs, and impact-investment
initiatives have also promoted social entrepreneurship as a tool for inclusive
economic development.
However, the authors point out
that the positive narrative surrounding social entrepreneurship has often
received more attention than its potential negative consequences.
A Literature-Based Examination
Mildayanti, Dwiyanti, and
Amrullah conducted a qualitative, conceptual study using a narrative literature
review. Rather than collecting primary data from social enterprises, the
researchers synthesized findings from existing academic literature.
The review examined publications
from 2011 to 2026 using databases including Scopus, ScienceDirect, Emerald
Insight, SpringerLink, and Google Scholar. Search terms included “dark side of
social entrepreneurship,” “unintended consequences social enterprise,” “mission
drift,” and “hybrid organizing tension.”
The researchers grouped recurring
findings into themes and developed a conceptual framework explaining how the
tension between social and commercial priorities can produce unintended
consequences. Because the study relies entirely on secondary sources, the
authors stress that its findings are conceptual propositions rather than
statistically validated cause-and-effect conclusions.
Four Risks Identified by the
Study
The literature synthesis
identified four interconnected categories of risk.
1. Mission Drift and
Governance Risk
The first risk is mission
drift, which occurs when an organization gradually shifts its priorities
from social goals toward commercial targets.
This can happen when financial
performance is easier to measure and reward than social outcomes.
Profitability, revenue, and cash flow have established measurement tools, while
social impact can be more difficult to quantify.
The researchers argue that weak
accountability can allow this shift to continue unnoticed. In Indonesia, the
authors connect the risk to the absence of a dedicated legal framework and
mandatory social-impact reporting system for social enterprises.
2. Exploitation of
Beneficiaries and Employees
A social mission does not
automatically guarantee ethical treatment.
The review highlights situations
in which employees may face psychological pressure, stigma, or unsafe working
conditions, while beneficiaries may have limited influence over decisions
affecting them. Because social enterprises are commonly viewed as organizations
that “do good,” internal problems may receive less scrutiny.
The authors warn that
beneficiaries should not be treated merely as objects of social programs.
Effective social entrepreneurship requires recognizing them as stakeholders
with autonomy and a meaningful voice.
3. Socialwashing and Loss of
Public Trust
Another concern is socialwashing,
where organizations make social-impact claims that exceed what their actual
activities or measurable outcomes demonstrate.
The problem becomes particularly
serious when claims of social impact are used for marketing, fundraising, or
attracting investors without reliable verification. According to the review,
weak external verification can create an environment in which the appearance of
social impact becomes more valuable than measurable social outcomes.
Over time, socialwashing can
damage trust not only in one organization but across the wider social
entrepreneurship sector. Genuine social enterprises may also find it harder to
convince the public that their impact claims are credible.
4. Crowding Out Local
Businesses
The fourth risk involves
unintended effects on local markets.
Large or rapidly expanding social
enterprises can sometimes compete directly with local micro, small, and medium
enterprises that serve similar communities. When a social enterprise receives
subsidies, donor funding, or other forms of external support, smaller local
businesses operating with limited capital may struggle to compete.
The study therefore warns that
scaling social impact without assessing local market conditions can produce a
paradox: an initiative designed to empower communities may unintentionally
weaken the local businesses that already support those communities.
The Problem Is Structural, Not
Simply Individual
One of the central messages from
Mildayanti, Dwiyanti, and Amrullah is that the dark side of social
entrepreneurship should not be viewed simply as the result of dishonest or
unethical individuals.
The researchers argue that these
risks can emerge from the structure of hybrid organizations themselves. Social
enterprises must continuously balance social responsibilities with commercial
demands. Pressure from investors, donors, competitors, government agencies, and
professional standards can gradually push organizations toward commercial
priorities.
In the authors’ analysis, mission
drift and governance weaknesses can become conditions that make other problems
more likely. When accountability to the social mission declines, organizations
may become more tolerant of exploitative labor practices, exaggerated impact
claims, or market-distorting expansion.
Implications for Indonesia
The findings have implications
for entrepreneurs, universities, incubators, investors, and policymakers.
Social enterprises can strengthen
accountability by regularly measuring and verifying their social impact,
establishing clear theories of change, and creating complaint mechanisms for
employees and beneficiaries.
Universities can also play a role
by teaching students about both the opportunities and risks of social
entrepreneurship. The researchers recommend that entrepreneurship programs move
beyond success stories and introduce case studies involving mission drift,
governance failures, impact measurement, and stakeholder exploitation.
Incubators and grant-making
organizations can require social enterprises to submit credible impact plans
and periodic impact reports. Such practices could help identify problems before
organizations become too large or deeply committed to a problematic direction.
For policymakers, the authors
recommend establishing a more permanent legal framework for social enterprises
in Indonesia. Clearer regulation could provide stronger foundations for
accountability and oversight of social-impact claims.
Academic Insight
Mildayanti, Dwiyanti, and
Amrullah of Universitas Negeri Makassar emphasize that the social
entrepreneurship model should be approached with greater reflection and
accountability. Their review shows that the pursuit of social impact does not
automatically prevent harm; organizations must actively manage the tension
between social mission and commercial logic.
The authors also stress that
their four-category framework should be treated as a guide for reflection
rather than a diagnostic tool. Because the study is based on secondary
literature, empirical research is still needed to determine how these risks
develop within Indonesian social enterprises in practice.
Author Profile
Mildayanti — Universitas
Negeri Makassar. Mildayanti is the corresponding author of the article. The
supplied article does not state an academic degree or individual
specialization, although the article focuses on social entrepreneurship, hybrid
organizations, governance, and unintended social impacts.
Dwiyanti — Universitas
Negeri Makassar. Dwiyanti is a co-author affiliated with Universitas Negeri
Makassar. The supplied article does not specify an academic degree or
individual field of expertise.
Asriyani Amrullah —
Universitas Negeri Makassar. Asriyani Amrullah is a co-author affiliated with
Universitas Negeri Makassar. The supplied article does not provide an academic
degree or separate specialization.
Source
Article Title: “The Dark
Side of Social Entrepreneurship: Uncovering the Unintended Consequences of
Socially Impactful Business Practices”
Authors: Mildayanti, Dwiyanti, and Asriyani Amrullah
Journal: International Journal of Applied and Advanced
Multidisciplinary Research (IJAAMR)
Publication Year: 2026
Volume: 4, Number 7, pp. 673–686
DOI: 10.59890/ijaamr.v4i7.276
Official Journal: https://nvlmultitechpublisher.my.id/index.php/ijaamr/index
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