Social entrepreneurship orientation and company success: The mediating role of social performance

•Examination of the impact of social entrepreneurship orientation (SEO) on the social and financial performance of a sample of 1156 companies.•SEO-financial performance relationship is partially positively mediated by social performance even though the direct effect is negative.•Social performance compensates for the otherwise negative effect SEO has directly with financial performance.•Fostering an understanding of the mechanisms by which an SEO affects firm performance. We examine the impact of social entrepreneurship orientation (SEO), a behavioral measure of the social entrepreneurship of the organization, on the social and financial performance of a sample of Austrian firms. Despite growing research interests in social entrepreneurship, the field remains fragmented and this has led to calls for a careful examination of the implications of social entrepreneurship for firms. We draw on stakeholder theory and hybrid organizing to hypothesize that social performance mediates the SEO-financial performance relationship. By analyzing a sample of 1,156 companies, we find that the SEO-financial performance relationship is partially positively mediated by social performance even though the direct effect is negative. Our results show that social performance compensates for the otherwise negative effect SEO has directly with financial performance. We contribute to an understanding of the mechanisms by which an SEO affects firm performance and provide richer insights into the various aspects of performance. We discuss the future implications of our study and suggest promising avenues for further research on the SEO construct.