Local context and post‐crisis social venture creation

Abstract

Research summary We investigate the effects of local market and government failure on the creation of social ventures in the context of post‐crisis recovery during the period following the dot‐com crisis and ending before the housing bubble burst across all Ohio counties. Drawing on social embeddedness theory, we posit that social venture creation rates vary across local contexts and are higher in communities characterized by market and government failures. Longitudinal contextual data from 88 Ohio counties indicates that situations characterized by failures of both types are especially conducive to the creation of local social enterprises. We address the shortage of longitudinal quantitative studies focused on the emergence of social entrepreneurship and identify conditions where the relationship between local context and social venture creation is important. Managerial summary The purpose of this article is to examine how local context affects the rate of social venture creation in the United States. We study these rates in every county in Ohio in the aftermath of a crisis and find that local government responses and local market conditions singly and in combination lead to increased rates of local social venture creation. Fewer social ventures emerge when transfer (welfare) payments are high. However, rates rise in response to high unemployment, even when welfare payments are high, and are greater when welfare payments are low. This means the extent and type of local market and government failures influence the rate of local social venture creation. Findings advance the study of domestic social entrepreneurship in the aftermath of crises.

Seizing the moment—Strategy, social entrepreneurship, and the pursuit of impact

“…Importantly, this is largely due to several issues noted throughout the special issue regarding the need to account for diverse stakeholder interests (Teasdale et al, 2023) and concepts of value across different contexts (Anokhin et al, 2023;Hechavarría et al, 2023) when assessing long-term social performance.…”

“…The focus on creating positive changes has often overlooked the fact that, like many-even most-entrepreneurial ventures, social entrepreneurship initiatives often fail and/or drift substantially from their initial objectives (Teasdale et al, 2023). In the social value space, the harm may be far beyond the loss of investor capital and some degree of entrepreneur reputation (Anokhin et al, 2023). What do local communities do with half-built schoolhouses or unfinished vaccination campaigns?…”

“…As indicated in the table, the special issue papers broadly addressed theoretical questions across three primary themes. One paper (Teasdale et al, 2023) focuses on the influences of diverse actors' characteristics; two papers (Anokhin et al, 2023; Hechavarría et al, 2023) explore how competing environmental factors shape social entrepreneurship; and two papers (Boulongne, 2023; Yan et al, 2023) examine specific outcomes of social entrepreneurship.…”

“…bound organizational decision‐making options. To further develop our understanding of the environment and social entrepreneurship, Anokhin et al (2023) explore how external contextual factors can enhance the likelihood of social venture creation within a given region. Specifically, they examine how local market and government failures relate to the creation of social ventures after a significant crisis.…”

“…As indicated in the table, the special issue papers broadly addressed theoretical questions across three primary themes. One paper(Teasdale et al, 2023) focuses on the influences of diverse actors' characteristics; two papers(Anokhin et al, 2023;Hechavarría et al, 2023) explore how competing environmental factors shape social entrepreneurship; and two papers(Boulongne, 2023;Yan et al, 2023) examine specific outcomes of social entrepreneurship.1.1.1 | Diverse actors and social entrepreneurship Teasdale et al (2023) delve into an important failing in the field of social entrepreneurship-social entrepreneurs often seek (and claim) to make radical change, but true systemic change is rarely realized. This is consistent with…”