Social enterprises are an increasingly common organizational form for delivering social impact through market-based activity. However, their hybrid nature—balancing social and commercial goals—poses unique challenges to financial sustainability and long-term survival. This study proposes that a social enterprise’s foundational form (founded as a hybrid, transformed from a commercial enterprise, or transformed from a charity) shapes its structural attention biases and influences its financial performance, survival, and growth trajectory. To test our hypotheses, we analyze a longitudinal dataset of 5,202 firm-year observations from Community Interest Companies (CICs) in the United Kingdom (2005–2023). Our findings largely support our theoretical framework, demonstrating that a social enterprise’s foundational form significantly affects its financial performance and likelihood of survival. Notably, we find that social enterprises founded as hybrids are both more profitable in the long run and less likely to fail. These insights challenge assumptions about the fragility of hybrid forms and offer valuable implications for policymakers seeking to develop legal frameworks that support social enterprises in addressing societal grand challenges.
