Human capital, Institutional Environment and Social Entrepreneurship - A multilevel analysis of determinants for social entrepreneurship

Abstract: European policymakers are increasingly interested in encouraging and supporting social entrepreneurship. Addressing the goal, this thesis analyses the relationship between human capital and an individual’s propensity for social entrepreneurship in European countries. Additionally, it is investigated how institutional environment moderates this relationship. Utilising a dataset of the Global Entrepreneurship Monitor (GEM) from 2015, a multilevel logistic model is applied. Comparing an individual’s propensity for social against commercial entrepreneurship in a European context, the results show that: (1) Higher education has a positive relationship with the propensity to engage in social entrepreneurship, whereas (2) entrepreneurial skills are negatively correlated with social entrepreneurship. (3) Characteristics of the institutional environment can positively or negatively moderate the relationship between an individual’s endowment with human capital and the propensity for social entrepreneurship. These findings imply that European policymakers should encourage the acquirement of and create opportunities for tertiary education. Further, it is recommended to introduce a greater focus on the social and environmental objective within programmes that develop entrepreneurial skills. Also, policymakers may pursue policies that increase the ease of doing business.