What makes community businesses durable?

As part of Power to Change’s Open Call for research, the Delft University of Technology, Cyta Consulting Ltd and Erasmus University Rotterdam set out to uncover which conditions help community businesses to be durable over time. Amelia Byrne is the Research Officer at Power to Change, managing commissioned and grant-funded research into the community business sector.

What is durability and why does it matter?

The authors have defined durability within a community business to mean the business is financially stable, recognised within the community, and has the staff needed to continue their work in the long-term. For communities, having durable community businesses means that they can reap the benefits of that business – whether around wellbeing, access, or other – for a sustained period of time.

Within this research, the authors look to understand which conditions matter for a community business and how they work together to enhance durability. More particularly, the research moves beyond identifying single success factors to reveal how combinations of conditions affect durability.

Which conditions lead to durability?

After reviewing the literature, the authors identified five conditions which lead to durability in community businesses. These are:

  1. Collective leadership
  2. Community engagement and accountability
  3. Strong business model
  4. Aligned entrepreneurial culture
  5. Strong networks and partnerships.

 

Are all of these conditions needed to achieve durability?

The study looked to uncover which of these conditions, or combinations of conditions, are needed for durability and which support durability.

A ‘necessary’ condition is always present whenever a community business is durable.

A ‘sufficient’ condition or combination of conditions leads to durability.

Not all five conditions need to be present for a community business to be durable, however, there was one condition which is necessary for durability.

Which condition is necessary for durability?

The study found that there is one condition is necessary for durability – which is aligned entrepreneurial culture. As this condition is necessary, it would be very difficult for a community business survive in the long term without it. The study found that even if a community business has all of the other conditions present, this cannot compensate for not having an aligned entrepreneurial culture.

Meeting only this condition alone does not mean that the business will be durable, but it is very likely to be found where a business is durable. For durability, as we’ll see, a combination of conditions is helpful.

Aligned entrepreneurial culture means that entrepreneurial values are embedded within the community business and shared among those involved. This enables everyone engaged in the business to pull together in the same direction. Whilst not part of the authors’ definition, since the fieldwork underlying this study took place before the Covid-19 pandemic, this culture may be particularly prominent at this current moment in time. This is because we’re seeing community businesses working hard to adapt and to continue to provide services amid the crisis, where staff and volunteers alike are willing to embrace change and develop new ways of working.

Which conditions are sufficient for durability?

The study found two combinations of conditions which lead to durability in community businesses:

  1. Aligned entrepreneurial culture, collective leadership, and strong networks
  2. Aligned entrepreneurial culture, high levels of community engagement and accountability, and a strong business model and strong networks.

 

These two combinations show that there is not only one way to achieve durability for community businesses. Having one of these combinations is very likely to ensure the business is durable in the long term. As you can see, an aligned entrepreneurial culture is present in both, as the necessary condition.

Why are these important?

Having the knowledge about which conditions and combinations of conditions can help promote durability is useful in a number of ways. For community businesses, they may be able to reflect on their own business to understand if there are any conditions or cultures which they can foster to increase chances of durability. For funders, this could be useful to help identify which businesses are more likely to continue running in the longer-term, which could influence which businesses to fund.

The importance of an aligned entrepreneurial culture to durability is – and will continue to be – critical in the experiences of community businesses during Covid-19. As lockdown eases, we may be able to see where the presence of this condition has provided the emphasis, drive and flexibility for businesses to continue operating through this turbulent time. This crisis will be a true test of durability for all businesses, and we hope that the prevalence of an aligned entrepreneurial culture will help community businesses to pull through.

If you’d like to learn more about the conditions which lead to durability within community businesses, please read the full report below.

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