Leadership Behavioral Complexity as an Antecedent to Scaling Social Impact and Financial Performance

This study sought to understand whether leaders of nonprofit social enterprises could influence their organization's ability to pursue social and financial goals through developing necessary organizational capabilities. A mediation model where organizational capabilities (SCALERS, Structure and System) served as potential mediators of the proposed relationship between leadership behavioral complexity and perceptions of scaling social impact and financial stability was tested. Leaders with greater behavioral complexity were argued to have a wider portfolio of behaviors to develop organizational capabilities, which would in turn allow organizations to reach contradictory, social and financial goals. Eighty-three executives in the social sector (primarily nonprofit) completed an online survey. A sub-sample of 12 executives participated in follow-up qualitative interviews. Ordinary least square regression was used to test the study hypotheses. Results showed that organizational capabilities predicted perceptions of scaling social impact and financial stability. However, there was no support for organizational capabilities as a mediator between leadership behavioral complexity and the study outcome variables. Post-hoc, exploratory analyses revealed a subtler, unanticipated mediated relationship where specific capabilities (i.e., lobbying, earnings generation, replication and stimulating market forces) mediated the impact of organizational structure and system on perceptions of scaling social impact and financial stability. Moreover, the study shed new light on previously held assumptions about the relationship between social and financial goals in nonprofit social enterprises. Implications for theory, future research, and practice are discussed.