Social Entrepreneurship: The Role of Institutions

A relatively small segment of business, known as social entrepreneurship (SE), is increasingly being acknowledged as an effective source of solutions for a variety of social problems. Because society tends to view “new” solutions as “the” solution, we are concerned that SE will soon be expected to provide answers to our most pressing social ills. In this paper we call into question the ability of SE, by itself, to provide solutions on a scope necessary to address large-scale social issues. SE cannot reasonably be expected to solve social problems on a large scale for a variety of reasons. The first we label the organizational legitimacy argument. This argument leads to our second argument, the isomorphism argument. We also advance three other claims, the moral, political, and structural arguments. After making our arguments, we explore ways in which SE, in concert with other social institutions, can effectively address social ills. We also present two examples of successful ventures in which SEs partnered with governments and other institutions.     

Optimal borrowing constraints and growth in a small open economy

Chinese high growth has been accompanied by government restrictions on international borrowing (capital controls). In this paper, we ask: are such restrictions a useful policy tool to facilitate growth? We provide a theory of borrowing constraints on households as a tool to correct a learning-by-doing externality. Borrowing constraints operate as a policy tool through two channels: (i) increasing labor supply and (ii) reallocating labor towards traded goods. We find that welfare gains are closest to that of the First-Best Planner allocation when the externality is not too large. We compute the sequence of optimal constraints along the growth path and show how the use of this policy tool contributes to repressed wages, current account balance, and slow real exchange rate appreciation.     

The effects of tourism development on rural livelihoods in the Okavango Delta,Botswana

The Community-Based Natural Resource Management (CBNRM) program in Botswana aims to achieve biodiversity conservation and rural development in rich biodiversity areas like the Okavango Delta. CBNRM assumes that if rural communities derive benefits from natural resources, they will be obliged to use such resources sustainably. Using the sustainable livelihoods framework, this study analyzes the effects of tourism development through CBNRM on rural livelihoods at Khwai, Sankoyo and Mababe in the Okavango Delta, Botswana, using primary and secondary data sources. Results of long-term surveys and in-depth interviews indicate that the three communities have forgone traditional livelihood activities such as hunting and gathering, livestock and crop farming to participate in tourism through CBNRM. Livelihoods in these villages have been improved as a result. Basic needs such as shelter, employment and income and social services like water supply systems, transportation, scholarships and payment of funeral expenses are now provided to community members and funded with income from CBNRM. Social capital has been built up in order to agree, manage and develop the CBNRM process. These results show that tourism development in these villages is achieving its goal of improved livelihoods, contradicting claims that community development projects are failing to achieve rural development.     

The Fish River SDI: New hope for industrial regeneration in the Eastern Cape?

This article reports on a case study of the Fish River Spatial Development Initiative which is spatially focused on the cities of Port Elizabeth and East London in the Eastern Cape Province. Major elements of the SDI, including the two industrial development zones which form part of it, are discussed The SDI is characterised as a nationally driven initiative which aims to create ‘sustainable ‘jobs by increasing the profile of Port Elizabeth and East London as international investment destinations, and thereby attracting large, new export‐oriented investment projects to the region. It is argued that even if the Fish River SDI succeeds in attracting such investment, it is only likely to lead to a once‐off increase in investment and employment rather than sustained industrial regeneration in the region. To ensure such industrial regeneration requires a regional industrial strategy which builds the capacity for learning and innovation in the region.     

The impact of the Saldanha Steel Project on the West Coast economy

This article reports the results of a study which evaluated whether the erection of the steel plant at Saldanha/Vredenburg supports the main objectives of the SDI programme and has resulted in sustainable growth for the region. It investigates the reasons for locating the steel plant here and factors which may affect the long‐term economic success of the plant. It also records the experiences of business people in the region on the impact of the investment on the area's economy to date and their perceptions of its likely impact in the future. From a national perspective, it asks whether the growth in foreign exchange earnings and the extension of a waning industry's lifespan is enough to justify public sector investment in the infrastructure at Saldanha Bay. On a local level, it probes and reports on the extent to which the erection of the steel mill spurred further growth via an enlarged set of activities, higher average productivity, higher savings, and improved actual and expected prospects for earning income.     

Does it pay to remediate? An analysis of the internal and external benefits of remediation

We examine the internal and external benefits associated with the remediation, or correction, of material weaknesses in internal controls over financial reporting. We document that firms that remediate material weaknesses exhibit higher performance and reporting quality than firms that never reported any weaknesses. These results suggest that the remediation of material weaknesses, an indication of an improved internal control system, is associated with internal benefits. Moreover, we find that remediating firms experience significantly lower audit fees and betas (i.e. external costs) than non-material weakness firms. However, these lower external costs are contingent on a firm's level of performance and information quality. These results suggest that remediation offers firms a chance to re-examine and correct their internal controls and this leads to better performance and information quality. Furthermore, external stakeholders are not necessarily swayed by remediation alone but need to observe tangible evidence of the corrected internal control system before reassessing a firm's risk downward.