Published in: Journal of Social Entrepreneurship
Cited as: Lee, C. K., S. A. Simmons, A. Amezcua, J. Y. Lee and G. T. Lumpkin (2020). “Moderating Effects of Informal Institutions on Social Entrepreneurship Activity.” Journal of Social Entrepreneurship: 1-26.
Using the legitimacy lens from institutional theory and a multi-level analysis of 29,175 Global Entrepreneurship Monitor respondents from 16 countries, we examine how national culture and societal attitudes influence individual level decisions to allocate entrepreneurial talent into revenue generating and not-for-profit social enterprises. We find the stigma of business failure to be positively associated with the probability that individuals will invest their entrepreneurial talents into a social venture. We also find that in both performance-based cultures and socially supportive cultures, the positive effects of the stigma of business failure on social entrepreneurship entry are decreased. Our findings suggest that informal institutions significantly influence the revenue generating-strategy of social entrepreneurship. However, they have no significant correlation to the nonprofit-strategy of social entrepreneurship. These findings underscore the complexity of balancing the competing logics of profit maximisation with social value maximisation in the decision to organise start-ups as social enterprises.
Visit the journal website to see access options for this document.
Recommendations from this resource
Limitations: in his study, sample over-represents middle and high-income countries, compared to low-income countries, and it also only included the measurement year for social entrepreneurship activity. There is also an under-representation of environmental social entrepreneurship, and international social enterprises created outside of one’s home country.
1. Future analysis should be repeated on a larger sample of countries with more years of data. Also, investigations should be extended into the impact of other institutional forces and country differences on different types of social entrepreneurship.
2. Finally, findings should be re-examined from the lens of the formation of intentions to become an entrepreneur; examining, for example, the effects of the stigma of business failure on the social entrepreneurship activity of experienced entrepreneurs; and whether the rates of failed entrepreneurs in an environment influences cultural practices or stakeholder expectations.
3. Future researchers should explore other cultural variables and interact them with individual level attributes to determine decisions and behaviours of social entrepreneurs.
4. And if stigma has a positive influence on entrepreneurial risk-taking. Similarly, general human capital variables, like education, that are associated with the pursuit of entrepreneurship should also be examined.
1. Policymakers should survey the environment for the presence of other social enterprises, philanthropists, government agencies, NGOs and organisations with corporate social responsibility (CSR) initiatives for signals, as to whether social problems addressable via entrepreneurial means are addressed by pre-existing initiatives.
2. Where feasible, pragmatic initiatives, such as media campaigns and training programmes can be enacted to shift societal attitudes about the need and value of different forms of social enterprises.
3. Finally, although this study focussed on social enterprises, it is important to note the symbiotic relationship between the revenue generating strategy of social enterprises and the for-profit motives of commercial enterprises. This multiplier effect may be more evident in developing economies, whereby both social and commercial firms take different forms and play different but complementary roles work synergistically to achieve economic growth. Hence, there is a policy argument that a synergistic balance of social and commercial entrepreneurship should be encouraged in a country.
Where feasible, pragmatic initiatives, such as media campaigns and training programmes can be enacted to shift societal attitudes about the need and value of different forms of social enterprises.