Turning Risk Into Opportunity: How Institutions Shaped Social Entrepreneurs’ Perception of the COVID-19 Pandemic

Abstract

Social entrepreneurs (SEs) are increasingly being recognized for their ability to address societal challenges, particularly during times of crisis. Understanding how SEs responded to the COVID-19 pandemic across different institutional contexts is therefore important. Grounded in Institutional Theory, this study investigates how cultural risk aversion (CRA) and government financial support (GFS) influenced SEs’ perception of the pandemic as an opportunity. Using a multi-level regression approach, this study combines individual-level data from the 2021-2023 GEM surveys with country-level data from GLOBE and the IMF. Contrary to expectations, the results indicated that higher levels of CRA were positively associated with SEs’ perception of the pandemic as an opportunity. Additionally, GFS was found to have a positive relationship with this opportunity perception, and it negatively moderated the relationship between CRA and SEs’ perception of the pandemic as an opportunity. These findings challenge traditional assumptions about the negative impact of CRA on entrepreneurial behavior and highlight the importance of institutional support in fostering social entrepreneurship. This study contributes to the literature on institutional theory by offering new insights into how institutional factors shape SEs' responses to crises.The findings have important implications for policymakers, emphasizing the need for tailored GFS to enhance the ability of SEs to perceive opportunities during times of crisis.