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Year: 2018
Published in: Journal of Business Research, Volume 107, February 2020, Pages 104-117
Cited as: Sreevas Sahasranamam, M.K. Nandakumar, Individual capital and social entrepreneurship: Role of formal institutions, Journal of Business Research, Volume 107, 2020

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Abstract

Drawing on capital theory and institutional theory, we hypothesize the contingent role of a country’s formal institutions (financial, educational, and political) on the relationship between individual capital (financial, human and social capital) and social entrepreneurship entry. Using the Global Entrepreneurship Monitor data, we find that all three forms of individual capital are important for social entrepreneurship entry. Moreover, we find that this relationship is contingent on the formal institutional context such that (i) philanthropy-oriented financial systems have a positive moderating effect on investment of financial capital; (ii) educational systems have a positive moderating effect on investment of human capital; and (iii) political systems have a positive moderating effect on investment of both human and financial capital. We make substantial contributions to the literature on social entrepreneurship by ascertaining the nature of contingent effects of formal institutions on the relationship between individual capital and the emergence of social enterprises.

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