Abstract
Social ventures operate in challenging environments that make it difficult to create financially sustainable businesses. We discuss four types of market failures that social ventures commonly seek to address, and suggest that each of these arises from a local institutional void. We then identify four common business models that are adopted by social entrepreneurs in pursuit of their hybrid mission. We predict that the presence of each of these types of market failures will result in demand that is unmet by traditional business firms and dictate the choice of a specific business model. We test our hypotheses using a sample of 202 international technology social ventures. Our findings have implications for the pre-founding capabilities that enable social entrepreneurs to build sustainable ventures for each type of market failure.
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