The signaling effect of ambidexterity of social enterprises on acquiring financial resources in South Korea

Financial resources are critical for any young social enterprise. This study investigates the impact of social and economic signals on those social enterprises receiving loans from a social finance institution. Analysis of a sample of 109 social enterprises in South Korea showed that social entrepreneurship and management capabilities at the CEO level, and the corporate pursuit of social values and validity of business plans at the firm level, have a positive impact on getting loans approved by a social finance institution. We also found that those social enterprises that perform well on both social and economic dimensions, namely ambidextrous enterprises, are at a disadvantage when it comes to securing loan approval. Such a trade‐off is counterintuitive, making the financial resource strategies and consequent signals of social enterprises more complicated than previously assumed.