THE MEDIATING EFFECTS OF FUNDING SOURCES ON THE RELATIONSHIP BETWEEN BOARD CHARACTERISTICS AND SUSTAINABILITY OF SOCIAL ENTERPRISES

Abstract

The Malaysian government acknowledges the importance of social enterprise in delivering the government’s mission, which is to provide social or environmental solutions to the society as recently published Social Entrepreneurship Blueprint Malaysia 2030 (SEMy2030). However, this emerging sector may have been faced with difficulties in sustaining, developing, and surviving in ensuring the continuation of its activities. This study emphasizes on the internal governance mechanism, specifically on the importance of board characteristics in social enterprises. These characteristics are for the access to the resources that are essential for the survival and sustainability of the organization in the long term. In addition to the internal governance mechanisms (board characteristics), access to financial or sources of funding are perceived to be highly crucial for the implementation and sustainability of social enterprises. Furthermore, the financial access or financial resources for the social enterprises can be obtained through the internal and external funding that is available for the continuation of their operation. Ideally, these enterprises require strong financial performance and sufficient financial support for the sustainability of their operation prior to offering impactful activities to the society. In overall, it can be inferred that the absence of proper governance system and the ability to secure adequate funding, either in the early stages or the growth stages, indicate the social enterprises’ lack of ability to survive over the long run.