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Explaining Social Enterprise: Toward A Theoretical Model

Author

Listed:
  • ALEJANDRO MUNGARAY-LAGARDA

    (Autonomous University of Baja California, Faculty of Economy and International Relations, Tijuana, Mexico)

  • GERMÁN OSORIO-NOVELA
  • NATANAEL RAMIREZ-ANGULO

Abstract

This paper introduces the maximization of installed capacity instead of profit maximization, as an element that allows for understanding the economic behavior of Informal Social Enterprise (ISE) in the market. The reconsideration of the theoretical framework that explains the competitive behavior of this type of firm, according to the Social Business Type 2 (SB2) Yunus proposal or necessity-driven entrepreneurship, is important because they are recognized as a mechanism to mitigate the poverty effects of recessionary period faults in the distribution of wealth. The results obtained through the contrast between theoretical evidence and the essential assumptions of industrial organization theory suggests that ISEs have a Cournot competition behavior.

Suggested Citation

  • Alejandro Mungaray-Lagarda & Germán Osorio-Novela & Natanael Ramirez-Angulo, 2020. "Explaining Social Enterprise: Toward A Theoretical Model," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 25(01), pages 1-10, March.
    • Handle: RePEc:wsi:jdexxx:v:25:y:2020:i:01:n:s1084946720500053
    DOI: 10.1142/S1084946720500053
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    References listed on IDEAS

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