How Policy-enabled Resources Reconcile Conflicts over Institutional Logics: Evidence from China's Residents' Committee-led Social Enterprises

Urban communities, as a cornerstone of national governance, often face resource constraints and community dilemmas. Community social enterprises that combine the strengths of business and public welfare and that have been introduced by local governments have achieved partial success. However, this phenomenon presents a paradox: why have community social enterprises—a model historically difficult to develop—succeeded in certain local areas?

From the perspective of institutional logic, community social enterprises led by residents' committee face the dilemma of an “impossible triangle” among administrative, market, and community logics. The conflicts between market and administrative logics are particularly prominent, as community social enterprises are caught between risk-taking and risk-avoidance. The conflicts between administrative and community logics are manifested in property rights conflicts and conflicts over decision-making power. In view of this, this article employs an inductive case study method to explore the successful models and mechanisms of community social enterprises in Chengdu.

In terms of community social enterprise business models, the article constructs a classification framework based on two dimensions: market risk and degree of community relevance. In reality, there are generally three types of models: that of “low relevance-low risk”, “high relevance-low risk”, and “high relevance-high risk”. From the case analysis, it is evident that an “impossible triangle” among the three logics exists in practice. The issue of how conflicts among these logics can be avoided to achieve sustainable operations has become a core challenge in developing community social enterprises.

This research finds that the path taken by most community social enterprises can be summarized by the “nest-borrowing and phoenix-attracting” model. “Nest-borrowing” refers to shaping a “policy space” through higher-level policies, thereby legitimizing the use of various resources. This approach resolves the resource constraints and reduces market competition. A “phoenix-attracting” model involves shifting from direct operations to indirect operations, thereby alleviating constraints on operational capacity. This research also introduces the concept of “policy-enabled resources” to explain the success of community social enterprises led by residents' committee. This concept emphasizes the ability of policies to “create” resources. Specifically, “policy-enabled resources” consist of three levels: First, financial and other resources obtained directly through policies; second, the “legitimate” use or “benefits” derived from non-property-rights resources; and third, the existence or endorsement of policy intent, which legitimizes the use of resources within the existing system.

This study broadens research on hybrid organizations. That residents' committee can effectively integrate the three identities of administrative, community, and business organizations entails some policy implications. However, despite partial success via “policy-enabled resources”, community social enterprises face certain limitations, such as asset shortages, unresolved incentives, insufficient sustainability of the business and subsidy models, and lack of formal institutional confirmation for resource use. Moreover, the property rights attributes of the concept of “policy-enabled resources”, their relationship with the bureaucratic system, and their theoretical significance require further exploration. Accordingly, this research constitutes a first step in addressing these issues.