The institutional factors also play one of the key roles in development and promotion of social entrepreneurship. Institutions need to provide the climate in which social entrepreneurship should develop. The institutional context and the institutional set-up and efficiency in general are important for the implementation of policies and strategies for the development of social entrepreneurship, for good multiplier effects of expenditures in this context as well as for well targeting the support of social enterprises in order to deliver greater effects.

Institutional indicators provide insight into countries institutional environment as a pre-condition for development of social businesses.

Subdimension: Efficiency

In general, efficiency means the highest score with the least cost. In the context of social entrepreneurship we can talk about the efficiency of public spending, the efficiency of the administration (which will process the projects in the appropriate domain), the efficiency of the planning process and other. 

Efficiency Indicators

It refers to the efficiency in resolving economic disputes and with an effective legal framework that has a positive impact on the cost-effectiveness of social enterprises.

This indicator is important because the higher the efficiency of spending on social entrepreneurship, the more dynamic this sector will have growth and development rates.

Subdimension: Protection

Protection is important in the entrepreneurial world. From the aspect of starting your own business, it is important to have a guarantee of industrial and intellectual property rights, shareholder rights and investor protection in order to have a greater motivation for entrepreneurial and innovative ventures. Higher level of investor protection will contribute to a larger number of social enterprises, and thus a greater number of social innovations and greater competitiveness of the sector and the economy in general.

Protection Indicators

Financial reporting standards are important for the prudence of companies. Financial reporting and corporate governance standards are related to entrepreneurial risk management and the quality of accounting information that are the starting point for decision making.

Stakeholder management is crucial in today’s business environment, especially given the models of social responsibility. Good stakeholder management also has a positive impact on the performance of businesses.

Investor protection has an exceptional impact on entrepreneurial behavior given the fact that investors and entrepreneurs prefer security and are largely aversive to risk.

Subdimension: Education

The role of education is more than clear in the context of the growth and development of the economy, but the education system should also contribute to social development in general. Given that social entrepreneurship has an economic (business) component, the education system should be aimed at creating entrepreneurial skills in order to increase entrepreneurial activity.

Education Indicators

This indicator is important in the context of the development of entrepreneurial education which should increase the entrepreneurial spirit, and thus entrepreneurial activity in the field of social entrepreneurship. 

Education has a positive effect on the economic performance of companies. This is quite expected given the quality of human capital and its role in productivity growth.

Employee training and development are predictors of their performance. Hence, every company in its business policy should have planned development programs for employee training.

This type of support will provide greater capacity to develop the business model and strategies of social enterprises.

Capacity transfer through counseling and mentoring programs is important for SMEs. Mentoring and technical support support the growth of family businesses and their performance.

This indicator is important for the social enterprise support system. Accelerators, incubators and hubs can be considered as support structures that can improve the basis for the development of social enterprises.

In order to raise entrepreneurial activity, a systemic approach and setting a good business environment in all segments, a developed system for financial support, a stable political environment, setting a strategic framework for the development of entrepreneurship and developed entrepreneurial education are needed. The development of entrepreneurship at all levels and in all segments can be a mechanism for encouraging and developing social entrepreneurship.

Subdimension: Government Transparency

Transparency of government policy-making is important for proper strategic planning of enterprises. If there is a change in state aid to social enterprises, they can plan it accordingly.

Government Transparency Indicators

Transparent policy design is an institutional relationship between policy makers and citizens. Traditionally, they have been a control mechanism for government institutions, corporations, and other public, private, and third-sector actors to publish factual data to reduce the risks that those institutions and / or organizations create or the shortcomings of their operations.

Budget transparency is important for improving institutional quality in general. Mechanism for controlling public expenditures, which may also refer to expenditures or investments in social entrepreneurship.

Subdimension: Social Enterprises Inclusion

Inclusiveness is important in the very process of creating strategies and policies for the development of social entrepreneurship in order to have consistency in planning, and thus greater effectiveness of policies for the development of social entrepreneurship. In this context, it is important to define indicators that will measure the inclusion of social entrepreneurship starting from the inclusion in the planning process, to the outputs in the process of social enterprises and social entrepreneurship in general.

Social Enterprises Inclusion Indicators

Social enterprises always have been in the business of social work in that it refers to a wide range of activities for incorporating economic and social goals in the pursuit of community well-being.

Cooperation between institutional bodies is key to a sustainable social entrepreneurship system. Greater coordination between institutional bodies enables the development of feasible projects, sustainability and efficient planning in general.

The process of developing policies for the development of social entrepreneurship plays a key role in the development of the sector at several levels. This can best be described through the vertical and horizontal coherence of policy development.