Does trade dependency lead social enterprises to achieve better performance?

The effects of current socio-economic and political challenges pursuing a social mission while relying on trade dependency strategy (i.e., depending more on market-based income than non-market-based income) have created tensions for social enterprises about which they should choose between trade vs. grant dependency strategy to achieve the dual objectives. Building on a sample of 164 UK social enterprises, this study demonstrates that relative to grant dependency, trade dependency has a more substantial positive effect, direct and indirect through learning orientation, on social performance, and only indirect through learning orientation on economic performance. However, this study also shows that as social enterprises strengthen the market share growth strategy relative to grant dependency, trade dependency has a stronger positive effect on economic performance but, surprisingly, no significant impact on social performance. These findings contribute to our understanding of the role of trade dependency in the context of social enterprises and provide guidance to social enterprise managers on whether they should focus on creating a learning environment in their enterprises, and growing market share while depending more on income obtained from the trade of goods and services than from grant, donations, and funding.