As delineated in the introduction of this article, a survey conducted by the OBISF revealed that 17 SIBs, constituting 25% of those established in Florianópolis, ceased operations between 2017 and 2022.

The three cases were selected based on criteria defining social enterprises as SIBs. These criteria included a mission focused on addressing social-environmental issues through their products, services, or processes; ventures with at least one year of commercialization history; active presence on social media platforms; availability of secondary data; active forms of contact with entrepreneurs; and willingness to participate in interviews. The cumulative application of these criteria led to the identification of three SIBs.

The dimensions elucidated in the subsequent section of this article emerged from the triangulation of data from interviews with key stakeholders, which are instrumental in contextual analysis and documentary research. The interview script involved information identifying the enterprise, including type, leading promoters of the initiative, target social-environmental problem, target audience, main problems faced, actors who provided support (partners, financiers, among others), as well as reasons for the death of the enterprise. Documentary research involved mining content from social media platforms and news sites. Interviews were conducted with managers, investors, and representatives from supporting organizations. Table 1 provides a comprehensive overview of the organizations involved in the research.

Table 1 Table 1 Organizations participating in the research and their representatives Table 1 Organizations participating in the research and their representatives

Table 1
Organizations participating in the research and their representatives
Organizations	Type of organization	Interviewee
SIB 1	Social Impact Business	Responsible for decision-making in the enterprise.
SIB 2	Social Impact Business	Responsible for decision-making in the enterprise.
SIB 3	Social Impact Business	Responsible for decision-making in the enterprise.
SO 1	Support organization	Representative responsible for the organization’s department specialized in supporting impact businesses.
SO 2	Support organization	Representative responsible for the SO 2 Program.
SO 3	Support organization	Representative responsible for the SO 3 Program.
SO 4	Support organization	Representative responsible for the SO 4 Program.
SO 5	Support organization	Representative of SO 5.
SO 6	Support organization	Representative responsible for the organization SO 6.
Note: Elaborated by the authors.

Note: Elaborated by the authors.

A total of 9 interviews were carried out, with an average duration of 50 minutes each.

Thematic analysis was employed to scrutinize the data, facilitating a nuanced and comprehensive description of specific themes or groups of themes (Braun & Clarke, 2006). These themes can be discerned at two levels. One is the semantic level, where “themes are identified within the explicit or surface meanings of the data, and the analyst is not looking for anything beyond what a participant has said or what has been written”, The other is the latent level, where the analyst “starts to identify or examine the underlying ideas, assumptions, and conceptualizations – and ideologies – that are theorized as shaping or informing the semantic content of the data” (Braun & Clarke, 2006, p. 84).

The data were analyzed using the following phases: Familiarization with the data, generation of codes, searching for themes, review of themes, definition and naming of themes, and report writing.

This study identified six latent themes based on primary data and supplemented by secondary sources: performance of support systems, the commercial social-environmental landscape, scalability, metrics, business model, and the influence of managers. These themes emerged from the joint analysis of the three cases, revealing recurring patterns among the social enterprises studied.

To delineate the reasons behind the discontinuation of the social impact businesses under scrutiny, these themes were reconceptualized into causes of closure based on the interpretation of both primary and secondary data. In interpreting the data, terms such as “social-environmental dimensions” and “commercial dimensions” were utilized, inspired by the article “Managing Social-Business Tensions: A Review and Research Agenda for Social Enterprise” by Smith et al. (2013). These dimensions emerged from the collected data and reflect the social, environmental, and commercial perspectives that shape the conflicts of these organizations. By deepening the interpretation of these dimensions, it was possible to identify the tensions and barriers that contributed to the reasons for the closure of social enterprises, demonstrating the direct relationship between these tensions and their failure.

The reason for the discontinuation, “the shortage of financiers in the commercial social-environmental field”, was identified through observations indicating that support organizations classified as “financiers” and associated with social-environmental causes were not directly engaged with SIBs. Despite programs targeting such enterprises in other regions of Brazil, data revealed a scarcity of this form of support in Santa Catarina.

This lack of support was acknowledged by a representative of the SO 5, who noted that “[...] we do not have any support, any specific program for social impact business companies [...].” Similarly, a representative of SO 3 stated that the program is “more generic” and does not specifically cater to impact businesses. The interviewee further explained that the program’s focus varies with each edition, depending on the financiers. For instance, the 2023 edition, funded by Fundo Vale, Bradesco, Itaú, and Santander, aimed at creating innovative businesses and startups focused on the bioeconomy throughout the region known as Amazônia Legal (Legal Amazon) (Jornada Amazônia, 2023).

These shifts in program focus align with the interests of the primary client, i.e., the financier. For instance, programs launched by the Fundação de Amparo à Pesquisa e Inovação do Estado de Santa Catarina (FAPESC) prioritize the development of the state’s economy. This economic orientation is evident in publications like the book “Sinapse da Inovação: Estratégia Catarinense na Geração de Empreendimentos Inovadores” (Strategy of Santa Catarina in the Generation of Innovative Ventures) (Fundação CERTI, 2014), which emphasizes estimated returns on investment based on the tax profile of the created companies, highlighting economic interests over social impacts. While these programs aim to foster an “entrepreneurial culture,” they focus on economic outcomes rather than social impacts.

SO 2, in one of its social media posts, reported a "lack of support" for enterprises with a social-environmental mission. This lack of support remains an issue today:

There is a lack of support for businesses with social-environmental missions. [...] There was a significant gap in support for entrepreneurs in the stage between an idea and its proof of concept before putting it into practice. There were idea competitions and startup accelerators, but no program truly addressed the challenges faced by those taking their first steps in the entrepreneurial journey (Andrade, 2017).

The interviews revealed a “belonging tension” (Smith et al., 2013), with stakeholders like SO 5 and SO 3 predominantly aligned with market activities rather than social innovation. Consequently, they do not directly support social enterprises, contributing to the vulnerability of SIBs as they compete for resources with traditional companies. The SO 3 representative noted that SIBs “usually have greater difficulty finding a steady, scalable revenue model that guarantees their sustainability.” This sentiment was echoed by the SIB 2 representative:

[...] I remember that I sought the SO 5 acceleration program. My business went to the second stage, where I presented the pitch. [...]. At this stage, they told me about SO 2. There, I managed to effectively reach the impact business niche.

As reported by the SO 3 representative, while participating in support programs at the outset of a company’s life cycle can help address initial challenges, even technology-based ideas like SIB 2 faced hurdles in finding suitable support avenues, underscoring the tension of belonging (Smith et al., 2013). Consequently, identifying support organizations primarily engaged in commercial activities is a formal (or public) institutional barrier (Robinson, 2006), hindering access to support for SIBs. Hence, the belonging tension and institutional barriers appear directly related to the identified cause of “the shortage of financiers in the social-environmental and commercial field”, as support activities are closely tied to investment funds.

Despite these challenges, some support organizations have programs for SIBs in other regions of Brazil. These regional distinctions arise because these actors receive financial resources from public or private institutions to conduct programs in specific areas based on the financiers’ criteria. Consequently, formal (or public) institutional barriers emerge (Robinson, 2006), stemming from the absence of financing institutions focused on social enterprise activities.

Table 2 shows how the identified dimensions associated with tensions and barriers lead to the interpretation that the cause of SIBs' discontinuation was “the shortage of financiers in the commercial social-environmental field.” In this case, support activities are generally shaped according to the financier’s purposes or interests.

Table 2 Table 2 Summary of Tensions and Barriers Related to the Cause “The Shortage of Financiers in the Commercial and Social-environmental Field” Table 2 Summary of Tensions and Barriers Related to the Cause “The Shortage of Financiers in the Commercial and Social-environmental Field”

Table 2
Summary of Tensions and Barriers Related to the Cause “The Shortage of Financiers in the Commercial and Social-environmental Field”
Tensions and Barriers	Social-environmental Dimensions	Commercial Dimensions
Belonging tensions (Smith et al., 2013)	Search for support organizations that work directly with SIBs.	Generalist support organizations focused on commercial activities.
Formal (or public) institutional barriers (Robinson, 2006)	Search for local investment in programs aimed at SIBs.	Local investment in programs aimed at SIBs depends on political issues in the territories.
Cause of the failure of SIBs #1: The shortage of financiers in the commercial and social-environmental field.
Note: Elaborated by the authors.

Note: Elaborated by the authors.

The study developed by Da Silva et al. (2023) and Alvarenga (2016) shows that the lack of working capital to develop traditional ventures in the early stages and the entire process that this decision requires, combined with the lack of access to financing, is one of the reasons for the failure of SMEs. Therefore, this is a known reason for the failure of many traditional ventures in Brazil. If there is a lack of financial support for traditional ventures, the context of impact businesses is even more challenging because, in addition to demonstrating economic performance, impact businesses must fulfill their social-environmental mission.

The failure of social impact businesses is also attributed to the lack of alignment of support organizations with the local context, characterized by a limited understanding of market activities and local challenges. According to Smith et al. (2013), local ties and trust-building with the community facilitate commitment to the social-environmental mission. The same applies to support organizations: the more targeted the support, the greater its understanding of the field. Thus, more focused support organizations can provide better strategies for engaging businesses with social-environmental missions in the field. Collaboration between a social-environmental mission-driven company and its local operational field, involving other local organizations, is essential for developing responses to specific social-environmental issues.

Robinson (2006) associates this lack of local understanding with social entry barriers. Traditional support aimed at scaling tends to assist social impact businesses in seeking strategic connections that may not always align with local demands and sustainable territorial development. Their focus is often on scalability, growth potential, and financial return, rather than local realities. Support mechanisms tailored to SIB’s nature of operation help these businesses align with real needs and promote regional sustainable development.

Data from two support organizations studied in this research revealed the discontinuation of programs directly supporting SIBs. Among the reasons cited for this decision is the perception that there were an excessive number of similar programs. According to the representative from SO 2, “[...] what we observed during that time was that countless other organizations started to do the same thing that we offered [...],” a perception that led to the cessation of activities, as disclosed by the interviewed representative from SO 1: “[ ] there were other actors here in Santa Catarina who had been working with this, SO 2 and SO 6, and then, there was perhaps a lot of overlap zone between these, and then, SO 1 ended up not continuing and acted there in 2016, 2017, and 2018.”

This discontinuity can be analyzed in light of discussions by Barki (2015) in the article entitled “Negócios de Impacto: Tendência ou Modismo?” (Impact Business: Trend or Fad?). At the time of publication, the term gained popularity in Brazil, and there was a significant movement toward both research and action within the realm of “impact business.”

The question posed in this article was whether the heightened interest and expansion of the social impact business field would be a transient trend or a lasting practice. Our research found that support programs developed by SO 1 and SO 2 were established between 2012 and 2016, during which the concept of social impact businesses garnered attention. However, as highlighted by Pires (2021), a proliferation of the impact industry failed to consolidate, suggesting that a robust movement eventually dissipated. Consequently, the notion of cultivating an “ecosystem” seems to have given way to a competitive system.

The discontinuation of programs can generate confusion within the field: which support organizations are currently explicitly dedicated to SIBs? The discontinuity of programs specializing in the social-environmental mission of social enterprises creates instability within this ecosystem. It may impede access to social networks in the social-environmental sphere, thereby fostering social entry barriers (Robinson, 2006) and exacerbating misalignment concerning the impact field.

Table 3 shows the different dimensions of tensions and barriers identified in the field, which contributed to the understanding that the “misalignment of support organizations” is one reason for the failure of SIBs.

Table 3 Table 3 Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context” Table 3 Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context”

Table 3
Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context”
Tensions and Barriers	Social-environmental Dimensions	Commercial Dimensions
Social entry barriers (Robinson, 2006)	Broad support with little understanding of local issues.	Broad support with little understanding of local market activities.
	Discontinuation of programs with expertise in local social-environmental purposes aimed at SIBs.	Discontinuation of programs with expertise in the financial sustainability of SIBs applied to the local context.
Cause of the failure of SIBs #2: Misalignment of support organizations
Note: Elaborated by the authors.

Note: Elaborated by the authors.

According to the representative of SO 3, fostering an “entrepreneurial culture,” even within the realm of social impact businesses, entails alignment with the concept of business models, delineating the trajectory entrepreneurs must navigate to gain expertise. For SO 3, this journey is synonymous with the startup model, wherein entrepreneurs aspire to establish a profitable venture. However, in SIBs, motivation often transcends mere profit, stemming from a desire to establish an enterprise with a meaningful societal impact.

Interviewees frequently cited financial challenges as a significant hurdle, grappling with the complexities of financial sustainability. How can these entrepreneurs be encouraged to persist in facing such obstacles? How can the notion of resilience be fostered under such circumstances?

In the case of SIB 1, the partners acknowledged their shortcomings as salespeople, which manifested in their marketing capabilities. To address this, they sought assistance from individuals with market experience, reevaluating the business model to ensure the enterprise’s commercial viability. However, this approach proved inadequate. The partners lacked affinity for commercial activities and lacked trained personnel to handle them. Consequently, a sense of disconnect emerged (Smith et al., 2013), with the lack of alignment with commercial activities seemingly contributing to the failure of these enterprises. Caffrey (2020) elucidates this point, underscoring how an entrepreneur’s disposition can become a barrier when they fail to resonate with commercial activities. Conversely, a stronger identification with commercial pursuits can potentially divert attention from the social mission (Vázquez-Maguirre & Portales, 2018; Ometto et al., 2019; Sarhangi et al., 2021).

Table 4 outlines the themes “commercial social-environmental field,” “business model,” and “influence of managers,” along with the associated tension, dimensions, and reasons for the failure of the SIBs.

Table 4 Table 4 Summary of tensions and barriers related to the cause of “imbalance in social-environmental and commercial activities” Table 4 Summary of tensions and barriers related to the cause of “imbalance in social-environmental and commercial activities”

Table 4
Summary of tensions and barriers related to the cause of “imbalance in social-environmental and commercial activities”
Tensions and Barriers	Social-environmental Dimensions	Commercial Dimensions
Belonging tensions (Smith et al., 2013).	Managers identify more with the social-environmental mission than with the commercial purpose.	Managers identify more with commercial activities than with the social-environmental purpose.
Cause of the failure of SIBs #2: Imbalance in social-environmental and commercial activities.
Note: Elaborated by the authors.

Note: Elaborated by the authors.

Managers of social impact businesses often hail from the social-environmental sector, consequently lacking commercial experience. During the interviews, representatives of

support organizations suggested numerous times, directly and indirectly, that SIB managers often start businesses driven by a dream, whether to contribute within the social-environmental domain or translate their experiences into products and/or services. This managerial profile also correlates with the fourth reason for the discontinuation of the SIBs studied: the challenge of defining a sustainable business model.

Many entrepreneurs embarked on ventures driven by a dream: to work in the social-environmental domain. This aspect sheds light on the fourth reason behind the failure of the studied enterprises: the challenge of formulating a sustainable business model.

One significant tension contributing to the difficulty in defining a sustainable business model is the personal motivation of the manager when launching an SIB. This tension, often termed in the literature as the clash between family and professional life (De Mon et al., 2022), emerges prominently. The managers’ lack of commercial expertise exacerbates this tension, as highlighted by the representative of SO 1, who pointed out bureaucratic hurdles faced by all types of companies. However, these challenges manifest differently in social enterprises (De Mon et al., 2022), especially concerning the endeavor to translate a purpose-driven initiative into a financially viable entity.

SIB 2, for instance, pursued both environmental objectives and a social mission by creating employment opportunities in the local community. Employees were aligned with the business purpose and believed in its success, and their remuneration was linked to the company’s revenue generation. However, this arrangement posed challenges since employees were compensated only when the enterprise made profits, leading to financial insecurity. Consequently, sustaining the team became untenable, and employees sought alternative sources of income. A similar predicament was faced by SIB 1, where partners reinvested profits into the business and could not derive personal income. As one partner expressed, “We did not manage to make a living out of the business. This is one of the reasons we decided to end the operation.” Therefore, the history of SIB 1 reveals that the partners’ profiles influenced the fate of the SIB. The representative of the SIB declared numerous times during the interview that the entrepreneurs were young and at the beginning of their careers, which was another determinant of the decision to cease operations.

Pricing is also a dimension associated with the reasons leading to the discontinuation of SIBs. Some reports show that the business models adopted in these enterprises are unique, where production methods, workforce, and/or operations are more focused on social-environmental issues. This characteristic makes it difficult to assign prices that balance costs, expenses, and income, reaching the average value, obtaining sufficient revenue, and having an attractive price for customers (Sebrae, 2014). Economic entry barriers arise when practices, resources, and competitive advantage in a given field prevent the social enterprise from accessing the market (Robinson, 2006). In the three social impact businesses studied, social-environmental education was a strategy used to demonstrate the value of the products and/or services offered.

For instance, SIB 1 and SIB 2 maintained blogs that discussed the social-environmental issues central to their missions, showcasing the relevance of their offerings. Similarly, SIB 3 engaged in awareness-raising activities in schools and maintained a professional presence on social media platforms, sharing content on environmental issues related to organic waste mismanagement. However, despite these efforts, representatives of these enterprises reported difficulties in effectively conveying the relevance of their products and services to their target audience. This challenge in raising public awareness can be interpreted as cultural entry barriers (Robinson, 2006), which consist of cultural traits that are essential for a social enterprise’s success in gaining stakeholders’ trust. Cultural traits consist of attitudes, beliefs, and expectations about behavior in the market (Robinson, 2006).

In the social-environmental field, legislation on SIBs also plays a significant role in their discontinuation. Currently, no legal framework is specifically tailored to enterprises with social-environmental missions. Even if these businesses prioritize such goals, they must fit into existing legal structures, typically under purely mercantile or associative formats. This highlights a systemic issue related to the institutional environment. For instance, in the case of SIB 3, which focused on organic waste management, its classification under the National Classification of Economic Activities (CNAE) was “collection of non-hazardous waste.” To operate formally under this CNAE category, the business must obtain various licenses and environmental authorizations, varying across Brazil's different regions (Receita Federal, 2023). Navigating these bureaucratic requirements poses a significant challenge for any enterprise. However, the compliance burden can be particularly costly for small businesses, given their limited resources. Larger enterprises often benefit from their larger structures and financial capabilities, facilitating compliance with regulations. While regulatory compliance is essential for all companies, it represents an even more significant challenge for SIBs. In this context, formal (or public) institutional barriers emerge (Robinson, 2006), linked to difficulties in accessing the market due to legal reasons.

As depicted in Table 5, these factors contribute to the interpretation that one of the primary reasons for discontinuation is the difficulty in defining a sustainable business model. In the cases studied, SIB 1, SIB 2, and SIB 3 pursued various strategies to achieve financial sustainability. In addition to traditional business activities, they also focused on raising public awareness about the importance of their initiatives.

Table 5 Table 5 Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context” Table 5 Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context”

Table 5
Summary of Tensions and Barriers Related to the Cause “Misalignment of Support Organizations with the Local Context”
Tensions and Barriers	Social-environmental Dimensions	Commercial Dimensions
Tensions related to family vs. professional life (De Mon et al., 2022)	Individuals open SIBs for a personal dream.	Difficulty in transforming this dream into a financially sustainable company.
	Employees become aware of and engaged with the company’s social-environmental mission.	Financial difficulties in the company prevent employees from being paid.
Economic entry barriers (Robinson, 2006)	Production method, workforce and/or operation focused on social-environmental issues.	Assign pricing that balances the company’s costs, expenses, and revenue. Achieve the average market value. Make enough profit. Present an attractive price (Sebrae, 2014).
Cultural entry barriers (Robinson, 2006)	Products and/or services that promote sustainable development.	The target audience is uninterested in the products and/or services of the SIB.
Formal (or public) institutional barriers (Robinson, 2006)	Enterprises that have social-environmental missions.	Formalization of the enterprise in a legal format similar to that of purely commercial companies.
Cause of the failure of SIBs #2: Difficulty in defining a sustainable business model.
Note: Elaborated by the authors.

Note: Elaborated by the authors.

While these causes are discussed in isolation here for clarity, they are dynamically interconnected in practice. The micro (entrepreneur), meso (enterprise), and macro (specific and macro-environment) levels influence each other in complex and recursive ways, rendering the reality of these ventures extremely intricate.