Background: This study explores how social enterprises create value with their business models. In Sweden specifically, food poverty is on the rise, and social welfare is deteriorating. Simultaneously, the concept of social supermarkets has been implemented in Sweden since 2015. 

Research questions: This study deals with the issue of social enterprises creating value with their business models in three ways. Firstly, it looks at how institutional influences affect value creation. Secondly, it looks at how the business model navigates hybrid tensions. Thirdly, it looks at the key factors for social enterprises’ hybridity. 

Methodology: Case-study of a social supermarket in Sweden that also works with work integration. 

Findings: Depending on the operations, institutional influences on value creation are mainly shaped by government and local municipalities, particularly in terms of funding and budgetary constraints, or by social enterprises’ need to maintain legitimacy across governments, local communities, and the private sector. Social enterprises’ business models can navigate hybrid tensions by integrating social and commercial goals through adaptive financial structures, community partnerships, inclusive and value-driven governance, and iterative innovation. They can balance mission-driven social impact with operational sustainability, even when resources are constrained and regulations change.  Social enterprises maintain hybridity by aligning mission-driven values with operational strategies like inclusive hiring, reinvestment, and community partnerships. These practices balance social and commercial goals, preventing one from dominating and enabling sustainable dual-purpose impact. 

Discussion: The findings align with institutional theory in areas like legitimacy through partnerships and hybrid hiring. However, they diverge in legitimacy sources, emphasising local presence over strategic logic use. Public perception, regional identity, and cultural context also play key roles, which existing theories often overlook or underemphasise.