Formal institutional environment influence on social entrepreneurship in developed countries

Abstract

The existence of social entrepreneurs is beneficial for the establishment of a stable and just society dedicated to serving the needs of individuals and the creation of innovative market solutions. However, social entrepreneurs need an institutional environment of a proper quality to be able to function efficiently. On the one hand, the institutional environment should promote the development of social entrepreneurship, on the other, there is a need for designing direct-action social entrepreneurship institutions that would provide support and ensure the development of socially-oriented businesses, and promote grassroots initiatives in this sphere. Despite the fact that researchers are interested in this issue, there are very few quantitative studies assessing the impact of institutional environments for social entrepreneurs on a global scale. Furthermore, no attempts have been made to look at this phenomenon from an economic development standpoint, by assessing it in developed countries. The subject of the study is social entrepreneurship development and the role of formal institution environment on this process. In this study, the formal institutional environment of social entrepreneurship for developed countries will be investigated econ-ometrically. From this aspect, this study aimed to empirically evaluate whether regulative and normative institutions affect social entrepreneurship growth. As a result of the hypothesis testing, it is determined that a normative institutional environment such as investment freedom or economic growth have a positive influence on the development of social entrepreneurship in developed countries. These findings indicate that social entrepreneurship for its development needs fundamental economic changes and sustainable development. © 2018, Economic Laboratory for Transition Research. All rights reserved.