The Threshold-Level Determinants of Social Entrepreneurial Activity

Abstract

Market failures and governmental inadequacies often result in activities related to social entrepreneurship. If this is the case, why and how do social entrepreneurial activities (SEA) exist in developed countries like Norway, Switzerland or USA where macro-level factors are conducive to organised and efficient business and entrepreneurial practices? Additionally, since social entrepreneurship is expected to exist among institutional voids and BOP markets, SEA should occur in abundance in developing or least developed countries due to their fractured economic, cultural or socio-political structures. The purpose of this paper is to incorporate Companys and McMullen’s (2006) distinctive framework based on supply and demand side theories on entrepreneurial opportunities to empirically test the macro-level factors that stimulate or impede SEA. By employing a number of robust empirical tests across fifty-three countries, this study makes theoretical and practical contributions by proposing that in addition to the existence of certain institutional voids and BOP markets related to weak governance, unpredictable GDP, wealth disparity and lack of personal freedom, a minimum threshold level of economic, cultural or socio-political infrastructure is often necessary in a country for an unstinted amount of SEA to occur. Theoretical and practical implications as well as limitations are discussed.