Responding to failure: the promise of market mending for social enterprise

Erynn E. Beaton and Elena Dowin Kennedy

Public Management Review, 2021, vol. 23, issue 5, 641-664

Abstract: As more non-profits embrace social enterprise, it is important to examine the role social enterprise plays in society. Market failure is the prevailing economic theory explaining non-profits’ existence, and applies to social enterprise. However, market failure theory presents a contradiction: how can social enterprise activities address market failures if they use the market-based strategies that led to that failure? We resolve this contradiction by identifying two responses to market failure: market reallocation and market mending. We examine how these responses align with social enterprise and non-profit conceptions. We discuss implications for strategy, public policy, and research.

Date: 2021
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DOI: 10.1080/14719037.2020.1865438

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