Despite the growing interest in understanding the effects of income inequality on economic growth, the influence of entrepreneurship-related institutional constraints on the inequality–growth association remains less understood. Drawing on an institutional constraints perspective in the context of startup entry regulation and credit constraints, we propose that under increasing income inequality, ease of startup or access to credit from the financial sector is positively associated with per capita economic growth. In a sample of 92 countries, robust to alternate specifications, we find (...) support for our hypotheses. Our findings contribute to the debates about the income inequality–growth nexus and imply potential policy interventions in the form of lower startup regulations and domestic credit provision from the financial sector to enhance economic growth under increasing economic inequality. (shrink)

Recent work has emphasized the role of context in shaping the diversification strategies of social enterprises (SEs), but our understanding remains superficial. We identify two types of context-driven diversification strategies—market development diversification (MDD) and market functioning diversification (MFD)—depending on the type of voids being addressed. We then empirically test how these diversification strategies impact the performance of SEs on the twin dimensions of financial growth and social impact. Using a mixed-method approach of qualitative interviews and a longitudinal database of Indian (...) microfinance firms (MFIs), we find that while MFD positively impacts financial growth, MDD has a positive effect on social impact. Furthermore, we find that the strategic fit (or lack of it) between the SE’s legal form and the type of diversification enhances (undermines) financial growth. However, the strategic fit between the legal form and diversification choice does not amplify social impact. The study contributes to product diversification literature, which has paid limited attention to the role of context. (shrink)

This study draws on institutional theory to provide insights into how new forms of organizations gain legitimacy under institutional voids. Based on interviews with leaders of 42 Chinese social enterprises (SEs), we find that dominant stakeholders—the state—are ambivalent about new ventures’ agendas and practices, which is displayed in their being sometimes supportive and other times skeptical, even hostile. SEs favor the contingent engagement political strategy to develop mutually beneficial relationships with the state while keeping a healthy distance. This enables them (...) to gain sociopolitical legitimacy in a nonthreatening and acceptable way for survival and growth. The findings further highlighted the individual, organizational, and environmental factors that condition SE legitimation approaches, including the form of state control, leaders’ political capital, organizational social mission, and regional political environment. This study makes theoretical contributions to the institutional and SE literatures, highlighting stakeholder ambivalence as an essential characteristic of an institutional context fraught with institutional voids. (shrink)

This article underscores the need for entrepreneurship research in extreme contexts to conceptualize the idiosyncrasies of the geopolitical dynamics under which entrepreneurs operate, and to consider the ethical implications emanating thereof. Undertaking such a task will illuminate the contextual challenges that local entrepreneurs must routinely placate, or otherwise navigate, to survive. Drawing on rich qualitative data from the Occupied Palestinian Territory of the West Bank, this paper demonstrates one avenue by which to capture the nuances of an extreme context in (...) relation to its effects on the entrepreneurial process. Specifically, it shows how data collected at myriad institutional sites—from actors that are not only directly, but also tangentially, connected to entrepreneurship in the local market—can effectively unveil the vicissitudes of the extreme context. This article further contends that a comprehensive and a holistic understanding of the extreme context will move toward revealing the nature of political embeddedness of entrepreneurs in their institutionally unstable environment—a concern that is especially conspicuous in geopolitical areas that would qualify as being extreme. (shrink)

This article explores how and why high levels of income inequality result from configurations of different types of entrepreneurial activities and elements of the institutional context in a multicountry sample. A configurational approach is used to unpack the complexities associated with how income inequality arises from different types of entrepreneurial activities embedded in different institutional contexts associated with Whitley’s national business systems dimensions. The findings from fuzzy-set qualitative comparative analysis reveal that high levels of both high-growth and necessity entrepreneurial activity (...) are associated with income inequality in certain contexts that are characterized by distinct institutional complementarities. (shrink)