Value Co-creation in Social Ventures: A Missing Link in the Effectual Logic–Performance Relationship

We examine how effectual logic is related to value co-creation activities of social ventures and how value co-creation impacts the performance of these firms. We hypothesise that, in the face of uncertainty, social ventures with higher effectual logic are better able to identify and capitalise on opportunities for alternative forms of organising. We focus on value co-creation as an alternative form of organising and suggest that social ventures that co-create value with their stakeholders, such as donors, beneficiaries, and government agencies, will perform better. To test these hypotheses, we use structural equation model to analyse data collected from top executives of 172 social ventures in China. The results largely support the hypotheses, and the findings provide important implications for social innovation via value co-creation, especially in rapidly-growing economies.