Institutional Voids and Social Entrepreneurship: How are Social Entrepreneurs Developing Unique Strategies to Cope with Institutional Voids?

Abstract

A firm’s performance is shaped by its ability to effectively manage the institutional context of its operations. With the institutional settings of developing countries varying greatly from those of developed countries, institutional voids are expected to impact social enterprises (SEs) differently due to their hybridity, in comparison to their western counterparts as well as their local counterparts (traditional for-profit businesses). Thus, whilst developing strategies to cope with institutional arrangements is important everywhere, it is more critical for SEs in particular, and entrepreneurs in general, operating in developing countries due to the underdeveloped institutional regimes that those entrepreneurs face. Yet theories and findings have been dominated by observations of, and insights derived from, developed market contexts with the few conducted in developing countries focusing largely on MNEs. Relying on an exploratory multiple-case study approach, this study seeks to strengthen and deepen our understanding of “social entrepreneurship” in and around institutional voids such as those found in developing countries. Specifically, the study explores how social entrepreneurs are developing unique strategies to cope with formal market institutional voids. Through a multiple case study of nine social enterprises, this paper theorizes a model, herein referred to as the Creative action-Connection-Capability-building and education model (3C model) that depicts the three key strategies that social entrepreneurs rely on in order to achieve their aims while overcoming institutional voids. The study contributes to the literature on institutional strategizing by illustrating how micro and small firms respond to formal market voids.