Social Entrepreneurship: Does Institutional Environment Make a Difference?

Social Entrepreneurship: Does Institutional Environment Make a Difference?

Susana Bernardino (Politécnico do Porto, Portugal), José Freitas Santos (Politécnico do Porto, Portugal) and José Cadima Ribeiro (Universidade do Minho, Portugal)
DOI: 10.4018/978-1-4666-9567-2.ch022
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The purpose of this chapter is to contribute to a better understanding of the link between social entrepreneurship and institutional environment in Portugal. A quantitative approach is used in the study, with primary data collected through an online survey. A questionnaire was emailed to both Portuguese Non-Governmental Organizations and projects available on the Portuguese Social Stock Exchange. In the analysis of the data, we used descriptive statistics, factorial analysis and t-student tests in an attempt to validate the research hypotheses. The results show that a favorable institutional environment has low importance in the decision to develop social entrepreneurial initiatives. This conclusion supports the idea that many social entrepreneurs can emerge even in developing regions where the institutional environment is weak. Therefore, social entrepreneurship could be an instrument of regional development and contribute to attenuating the social and economic differences among Portuguese regions.
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Since the work of Schumpeter, the central role played by the entrepreneur on economic growth and development is no longer questioned. The entrepreneur as innovator capitalises on profitable opportunities and achieves a temporary competitive advantage in the marketplace until competitors imitate or supersede the innovation (Cadima Ribeiro & Freitas Santos, 2008). Also, social entrepreneurship has been recognized as a helpful instrument of social and economic policy, particularly when dealing with unemployment, social exclusion and sustainable regional and local economic development (Alvord, Brown & Letts, 2004; Borzaga & Galera, 2012; Friedman & Desivilya, 2010; Lambru, 2012; Parente, Barbosa & Vilhena, 2012a; Quintão, 2004).

The focus on the role of social entrepreneurs in regional economic development is based on the idea that social organizations have a key role in solving or attenuating social problems by taking risks and developing new approaches to do things differently. If social entrepreneurs are successful they will induce regional productivity, employment growth and regional economic development (Acs, 2010; Karlsson, Johansson & Stough 2010; Mitra, 2012).

The European Commission (EU) recognised very early the importance of social organisations in economic growth and social innovation, through the contribution of such organisations to the development of societies endowed with higher levels of democracy, activism and social cohesion (European Communities, 2011).

Friedman and Desivilya (2010), based on their empirical work, have underlined the importance of social entrepreneurship for regional development in divided societies. Similarly, Azmat (2013) argued that social entrepreneurship could contribute to more sustainable growth in developing countries. According to the same author, social entrepreneurs usually adopt innovative approaches with the potential to take a positive and critical role in poverty reduction and to help with the promotion of sustainable growth in developing countries, even in hostile environments. In the same way, Yiu, Wan, Ng, Chen and Su (2014) argue that social entrepreneurship plays an important role in the community development of emerging economies, and Nega and Schneider (2014) highlight the significant role of social entrepreneurship in economic development.

For McAnany (2012), social entrepreneurship has a great potential to contribute to: (i) social change; (ii) the development of local communities; (iii) the enhancement of economic growth; (iv) poverty reduction; and (v) environmental sustainability. Thus, social entrepreneurship can be seen as an important instrument of regional development and a way of attenuating social and economic differences among Portuguese regions, particularly when dealing with less developed regions and with low levels of economic dynamism.

This paper approaches the aforementioned issue using empirical data collected through an online survey, which takes as its object of analysis the behaviour of the promoters of the Portuguese Non-Governmental Organizations and projects available on the Portuguese Social Stock Exchange. Our main goal is to understand whether the institutional environment is capable of promoting or inhibiting the development of social entrepreneurship initiatives.

Key Terms in this Chapter

Entrepreneurial Ecosystem Approach: Approach that emphasizes the role of governmental and non-governmental institutions in creating a regulatory framework and support system for improving the activities of social entrepreneurs.

Social and Solidarity Economy: Autonomous branch of economic activity included between the public and the private sphere, composed of entities or organisations aimed at promoting the general interest of the society.

Regional Development: Set of activities carried out in order to reduce social and economic inequalities between developed and less developed regions.

Social Entrepreneurs: Individuals inspired by a desire for social change who focus their efforts on designing, conceiving and developing an entrepreneurially social organization whose main purpose is the resolution of a social problem.

Institutional Void Theory: Theory that claims that social organisations are created to fill the vacuum left by the existing formal institutions.

Portuguese Social Stock Exchange: Financing platform created in Portugal, which replicates the environment of a traditional stock exchange and aims to mobilize resources for promising social entrepreneurial ventures.

Social Entrepreneurship: Field of activity dedicated to the identification and exploration of social value-creating opportunities. This field employs innovative models and entrepreneurial practices in order to create social value in a sustainable and lasting way.

Institutional Perspective: Approach that highlights the critical importance of the environment that surrounds the social entrepreneur in the development of new social ventures.

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