Impact Investment Readiness and Social Venture Growth: The Roles of Organizational Legitimacy and Stakeholder Trust
Abstract
Social enterprises play a critical role in addressing social and environmental challenges while pursuing sustainable economic activities. However, achieving long-term growth often requires access to impact-oriented investments and strong stakeholder support. This study examines the effect of impact investment readiness on social enterprise growth in Indonesia, with organizational legitimacy and stakeholder trust serving as mediating variables. A quantitative research approach was employed using survey data collected from 145 founders, managers, and executives of social enterprises operating across Indonesia. Data were measured using a five-point Likert scale and analyzed through Structural Equation Modeling–Partial Least Squares (SEM-PLS 3). The results reveal that impact investment readiness significantly and positively influences organizational legitimacy and stakeholder trust. Furthermore, organizational legitimacy) and stakeholder trust significantly enhance social enterprise growth. The mediation analysis demonstrates that organizational legitimacy and stakeholder trust partially mediate the relationship between impact investment readiness and social enterprise growth. The model explains 65.8% of the variance in social enterprise growth, indicating substantial predictive power. The findings suggest that social enterprises with stronger investment readiness are more capable of building legitimacy and fostering stakeholder confidence, which subsequently supports organizational expansion and social impact creation. This study contributes to the literature on social entrepreneurship and impact investing by providing empirical evidence from Indonesia and offers practical insights for social enterprise managers, investors, and policymakers seeking to strengthen organizational growth through improved investment preparedness, legitimacy, and stakeholder relationships.
Keywords
Impact Investment Readiness
Organizational Legitimacy
Stakeholder Trust
Social Enterprise Growth
Social Entrepreneurship
References
- Aisjah, S., Arsawan, I. W. E., & Suhartanto, D. (2023). Predicting SME’s business performance: Integrating stakeholder theory and performance based innovation model. Journal of Open Innovation: Technology, Market, and Complexity, 9(3), 100122.
- Amini, N., Setiono, B., Pangaribuan, C. H., & Princes, E. (2021). The Impact of Cash Management Practices toward Financial Performance of Small and Medium Enterprises in Indonesia. Journal Of Business, Management, And Social Studies, 1(1), 35–47.
- Anggahegari, P., Yudoko, G., Rudito, B., Mulyaningsih, H. D., & Ramadani, V. (2021). Female social entrepreneurship in Indonesia: a critical literature review. International Journal of Entrepreneurship and Small Business, 43(3), 315–331.
- Apprilisda Ranica Putri, Devi Maria Saadah, Iis Nurkamillah, Silven Yonathan, Sucya Sri Yuliana, & Ricky Firmansyah. (2023). Peran E-commerce Sebagai Media Komunikasi Bisnis Dalam Peningkatan Penjualan UMKM Salaut Di Universitas Teknologi Digital. Jurnal Kajian Dan Penelitian Umum, 1(3 SE-Articles), 1–16. https://doi.org/10.47861/jkpu-nalanda.v1i3.181
- Aydın, K., Kantarcı, T., & Yildirim, S. (2023). Female Entrepreneurs and Employees Among the Economy: Selected Indicators From Turkey. In Female Entrepreneurship as a Driving Force of Economic Growth and Social Change (pp. 111–135). IGI Global.
- Blaze, E., Cingolani, N., Nair, A., Vescera, N., & Gershenson, J. (2021). Academic Social Entrepreneurship in Higher Education and its Impact on Students Entering the Workforce. 2021 IEEE Global Humanitarian Technology Conference (GHTC), 241–246.
- Calvo, S., Lyon, F., Morales, A., & Wade, J. (2020). Educating at scale for sustainable development and social enterprise growth: The impact of online learning and a massive open online course (MOOC). Sustainability. https://www.mdpi.com/2071-1050/12/8/3247
- Cameron, J. (2010). Business as usual or economic innovation?: work, markets and growth in community and social enterprises.[Paper in special issue: Social Enterprise and Social …. Third Sector Review. https://doi.org/10.3316/ielapa.201100739
- Carter, M., & Carter, C. (2020). The creative business model canvas. Social Enterprise Journal. https://doi.org/10.1108/SEJ-03-2019-0018
- Dogru, T., Line, N., Mody, M., Hanks, L., Abbott, J., Acikgoz, F., Assaf, A., Bakir, S., Berbekova, A., Bilgihan, A., Dalton, A., Erkmen, E., Geronasso, M., Gomez, D., Graves, S., Iskender, A., Ivanov, S., Kizildag, M., Lee, M., … Zhang, T. (2023). Generative Artificial Intelligence in the Hospitality and Tourism Industry: Developing a Framework for Future Research. Journal of Hospitality & Tourism Research, 10963480231188664. https://doi.org/10.1177/10963480231188663
- Fanggidae, H. C., Sutrisno, S., Fanggidae, F. O., & Permana, R. M. (2023). Effects of Social Capital, Financial Access, Innovation, Socioeconomic Status and Market Competition on the Growth of Small and Medium Enterprises In West Java Province. The ES Accounting And Finance, 1(02), 104–112. https://doi.org/https://doi.org/10.58812/esaf.v1i02.69
- Fernández-Guadaño, J., & Diez, R. M. (2023). Social Entrepreneurship Impact in Ten EU Countries with Supportive Regulations. Journal of the Knowledge Economy, 1–18.
- Fici, A. (2006). The new Italian law on social enterprise. In … entrepreneurship: possible paths for social enterprise …. vates.fi. https://www.vates.fi/media/tyollistamisen_ammattilaiset/raportit_julkaisut_tutkimukset/the-new-italian-law-on-social-enterprise.pdf
- Goyal, K. A., & Sharma, P. (2020). A Flashback of MSME in India: Role in Employment Generation. Pacific Business Review International, 12(12), 107–114. https://doi.org/10.35629/5252-05021924
- Gunawan, J., & Fraser, K. (2016). Exploring young and green entrepreneurship in Indonesia: An introduction. Journal of Asian Business Strategy, 6(9), 185–194.
- Herlina, H., Disman, D., Sapriya, S., & Supriatna, N. (2021). Factors that influence the formation of Indonesian SMEs’ social entrepreneurship: a case study of West Java. Entrepreneurship and Sustainability Issues, 9(2), 65.
- Hermanto, B. (2017). Entrepreneurship ecosystem policy in Indonesia. Mediterranean Journal of Social Sciences, 8(1), 110.
- Hussain, A., Ahmad, S. A., Mia, S., Ahmed, F., & Prommee, P. (2023). Relationship between business information, business networking, access to finance and financial performance of social enterprises: Perspective of resource-based view and signalling theory. Cogent Business and Management, 11(1). https://doi.org/10.1080/23311975.2023.2285062
- Hynes, B. (2009). Growing the social enterprise–issues and challenges. Social Enterprise Journal. https://doi.org/10.1108/17508610910981707
- Ishak, S., Che Omar, A. R., & Abd Manaf, A. (2021). Entrepreneurial leadership in the micro and small enterprises (MSES) research context: a literature review. International Journal of Academic Research in Business and Social Sciences, 11(5), 397–404.
- Jilenga, M. T. (2017). Social enterprise and economic growth: A theoretical approach and policy recommendations. In International Journal of Academic Research in …. academia.edu. https://www.academia.edu/download/68899155/Article_05_Social_Enterprise_and_Economic_Growth.pdf
- Laksito, H., & Ratmono, D. (2021). Increasing the competitiveness of creative industries based on information technology and good corporate governance in central Java. International Journal of Data and Network Science, 5(2), 83–90. https://doi.org/10.5267/j.ijdns.2021.3.002
- Lamperti, S., Sammut, S., & Courrent, J. M. (2023). From incubator’s knowledge transfer to sustainability start-ups’ impact: a case study in a French support program. Journal of Knowledge Management, 27(9), 2393–2413. https://doi.org/10.1108/JKM-09-2022-0690
- Liang, C.-L. K. (2020). A Proposed Logic Model to Examine Innovation and Entrepreneurship to Support/Enhance Long-Term Resilience and Social/Economic Mobility in Rural Communities. Agricultural Research & Technology: Open Access Journal, 23(5), 63–67.
- Lyon, F., & Fernandez, H. (2012). Scaling up social enterprise: strategies taken from early years providers. TSRC. http://eprints.mdx.ac.uk/20635/
- Margiono, A., Kariza, A., & Heriyati, P. (2019). Venture legitimacy and storytelling in social enterprises. Small Enterprise Research. https://doi.org/10.1080/13215906.2019.1570318
- Mathkur, N. M. (2023). Accessible Finance for Social Entrepreneurship: The Saudi Context. Scientific Journal of King Faisal University, Humanities & Management Sciences, 24(2).
- Miller, T. L., Grimes, M. G., McMullen, J. S., & ... (2012). Venturing for others with heart and head: How compassion encourages social entrepreneurship. … of Management Review. https://doi.org/10.5465/amr.2010.0456
- Nalini, S. N. L. (2021). Dampak Dampak covid-19 terhadap Usaha MIkro, Kecil dan Menengah. Jesya (Jurnal Ekonomi & Ekonomi Syariah), 4(1), 662–669. https://doi.org/10.36778/jesya.v4i1.278
- Nicholls, A. (2010). The legitimacy of social entrepreneurship: Reflexive isomorphism in a pre–paradigmatic field. Entrepreneurship Theory and Practice. https://doi.org/10.1111/j.1540-6520.2010.00397.x
- Noorali, M., & Gilaninia, S. (2017). The Role of Small and Medium - Sized Enterprises in Development. Nigerian Chapter of Arabian Journal of Business and Management Review, 4(4), 36–40. https://doi.org/10.12816/0040342
- Ozkazanc-Pan, B., & Clark Muntean, S. (2018). Networking towards (in)equality: Women entrepreneurs in technology. Gender, Work and Organization, 25(4), 379–400. https://doi.org/10.1111/gwao.12225
- Rachmawati, E., Endratno, H., & Pramono, H. (2025). Assessment of the Quality of Administrative Staff Services. Asian Journal of Management, Entrepreneurship and Social Science, 5(01), 374–390.
- Rustiarini, N. W., Bhegawati, D. A. S., & Mendra, N. P. Y. (2022). Intellectual Capital and Financial Performance: the Mediating Effect of Sustainability Performance. International Journal of Management and Sustainability, 11(4), 221–232. https://doi.org/10.18488/11.v11i4.3210
- Sarapung, S. D., Furqan, A. C., & Zahra, F. (2024). The Role of Credit Facilities and Micro and Small Enterprises (MSEs) in Enhancing Rural Development Performance (A Study in Villages in Central Sulawesi Province). KnE Social Sciences, 413–433.
- Sarpong, D., & Davies, C. (2014). Managerial organizing practices and legitimacy seeking in social enterprises. Social Enterprise Journal. https://doi.org/10.1108/SEJ-05-2013-0019
- Susilowati, E., Permadi, A., Hariyanti, S., Munir, M., & Wahyudi, A. (2023). Analysis of the Implementation of Digitalization of Financial Statements in Micro, Small, and Medium Enterprises. Open Access Indonesia Journal of Social Sciences, 6(4), 1048–1054.
- Tasci, A. D. A. (2021). A critical review and reconstruction of perceptual brand equity. International Journal of Contemporary Hospitality Management, 33(1), 166–198. https://doi.org/10.1108/IJCHM-03-2020-0186
- Warm, J. J. (2004). From good to gold: Predicting nonprofit engagement in entrepreneurial activity. search.proquest.com. https://search.proquest.com/openview/584eb905198d89ab585955c2081e80ea/1?pq-origsite=gscholar&cbl=18750&diss=y
- Weerasekara, S., & Bhanugopan, R. (2023). The impact of entrepreneurs’ decision-making style on SMEs’ financial performance. Journal of Entrepreneurship in Emerging Economies, 15(5), 861–884. https://doi.org/10.1108/JEEE-03-2021-0099
- Yarima, Y. A., Gamawa, A. I., & Ladan, A. (2023). SURVEY OF THE IMPACT OF SOCIAL INVESTMENT PROGRAMS TOWARD BENEFICIARIES’ECONOMIC EMPOWERMENT AND ENTREPRENEURSHIP DEVELOPMENT IN NIGERIA.
- Yuda, T. K., Setiawan, H. H., Habibullah, Susantyo, B., & Suyatna, H. (2023). Institutionalized Social Entrepreneurship in Indonesia: A report on the challenges of state-driven social entrepreneurship promotion within the Five Cities’ social assistance program. Asia Pacific Journal of Public Administration, 1–17.
- Zhang, L., Yang, X., Zhu, S., & Xia, Z. (2023). Business Model Innovation and Performance of Startups: The Moderating Role of External Legitimacy. In Sustainability (Vol. 15, Issue 6). https://doi.org/10.3390/su15065351
How to Cite
Suhara, A., Ahmadi, A., & Soesanto, D. R. (2026). Impact Investment Readiness and Social Venture Growth: The Roles of Organizational Legitimacy and Stakeholder Trust. Journal of Social Entrepreneurship and Impact Economics, 1(1), 49–64. Retrieved from https://badrionpress.com/index.php/jseie/article/view/8
Copyright & License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
© 2026 Ade Suhara, Ahmadi Ahmadi, Dasa Rahardjo Soesanto
