Responsible entrepreneurship, social innovation, and value creation for grand challenges

Drawing insights from the stakeholder theory, this study offers a fresh theoretical account of how and when responsible entrepreneurship contributes to value creation in addressing grand societal challenges. Using insights from the literature on responsible entrepreneurship and social innovation, we develop a moderated-mediation model that demonstrates (a) how responsible entrepreneurship enhances a firm’s capacity to create value in addressing grand challenges through social innovation (the ‘why’), and (b) how commitment to the Sustainable Development Goals (SDGs) influences this mediated effect (the ‘when’). Using survey data from 409 small and medium-sized enterprises (SMEs) in South Africa, we found that responsible entrepreneurship positively affects firms’ engagement in value creation for grand challenges and that social innovation mediates this relationship. Moreover, when firms exhibit higher commitment to the SDGs, the indirect effect of responsible entrepreneurship on value creation for grand challenges through social innovation becomes stronger. These findings advance research on responsible entrepreneurship by highlighting the social innovation mechanism and specifying SDG commitment as a critical boundary condition.