Social problem scale, public investment and social entrepreneurship action

Social entrepreneurs engage in action because social entrepreneurs want to solve social problems. Consequently, to see more social entrepreneurship in contexts with the most severe social problems is expected. This paper argues that this is an oversimplification of the problem-action nexus in social entrepreneurship and that action does not necessarily correspond to the observed scale of social problems. Drawing on the theoretical framing of crescive conditions, this relationship is affected by forms of public investment as institutions that distinctively promote engagement and public interest amongst social entrepreneurs. Thus, this paper assesses the relationship between varying levels of social problems and social entrepreneurship action (SEA) and how and to what extent public investment types – as more and less locally anchored crescive conditions – affect this relationship.

The hypotheses are tested with a series of random-effects regression models. The data stem from the Global Entrepreneurship Monitor's (GEM) 2015 social entrepreneurship survey and Chile's 2015 National Socioeconomic Characterisation Survey (CASEN). The authors combined both data sets and cross-matched individual-level data (action and investment) with commune-level data (social problem scale) resulting in unique contextualised observations for 1,124 social entrepreneurs.

Contrary to current understanding, this study finds that SEA is positively associated with low-social problem scale. This means that high levels of deprivation do not immediately lead to action. The study also finds that locally anchored forms of investment positively moderate this relationship, stimulating action in the most deprived contexts. On the contrary, centralised public investment leads to increased social entrepreneurial action in wealthier communities where it is arguably less needed.

The findings contribute to the literature on SEA in deprived contexts, social and public investment as well as policy-level discussion and broader issues of entrepreneurship and social problems.