Developing moral markets: The limits of intermediary interventions in supporting social entrepreneurship in Colombia

Social enterprises operate in moral markets in which consumers and other stakeholders recognize and reward ethical considerations in economic exchanges, often by paying price premium for products that create moral value. However, moral markets are generally underdeveloped in emerging economies such as Colombia, which forces social enterprises to rely on the material and technical support of Western and Western-funded intermediary organizations. Although entrepreneurship scholarship on the role of intermediaries in emerging economies is growing, it mostly documents their positive roles and fails to offer a critical analysis of their (unintended) negative effects. In this study, we draw on extensive qualitative data from Colombia to examine how intermediary interventions shape the business model choices and outcomes of Colombian social enterprises. The findings show that intermediaries attempt to develop moral markets by connecting, capacitating, and legitimizing social enterprises. We identify three social entrepreneurship business models that target local consumers, local businesses, and international moral markets. These business models differ systematically in their level of social impact and risk of resource dependence on Western intermediaries. This study contributes to research on intermediaries and social entrepreneurship by advancing a nuanced and critical account of the effects of Western-led market development initiatives in emerging economies.