Public policy rules and norms in choice of a nesting place of a social enterprise : Firm or nonprofit?

Purpose – The purpose of this paper is to consider how public policy rules and norms embedded in the operation and financing of firms and nonprofits may affect the choice of one or the other for nesting a social enterprise while reducing the risk of failure due to an initial bad choice. Design/methodology/approach – The paper is conceptual and literature based. It identifies and evaluates factors in public policy that are embedded in the rules and norms of operating and financing firms and nonprofits that could materially affect the choice of a nesting place of a social enterprise. It treats the choice as a two-stage process: whether firm or nonprofit and what type of firm or what type of nonprofit. Findings – The choice of a structural form for nesting a social enterprise is dependent upon the public policies embedded in each form that affect the probability of venture success and entrepreneurial remorse. Research limitations/implications – This paper suggests that public policy norms and rules are deserving variables in the empirical and experimental determinants of choice and success in social enterprises. Practical implications – This paper may be used for conducting experiments of choice, as a teaching or other pedagogical tool, and for guiding entrepreneurs in making informed choices as to where to nest a social enterprise. Originality/value – The literature contains several articles on how personality, alertness, opportunity, context, and similar factors affect entrepreneurial behavior. This paper is unique in that it adds public policy to that list by demonstrating that the norms and rules derived from policy (federal and state) are determinative of an informed choice.