Financing the Transition of Social Entrepreneurship in Morocco: The "Missing Middle" Challenge Through the Lens of Intermediary Signaling Theory

Abstract

Social entrepreneurship has emerged as an innovative paradigm for territorial development and social cohesion in Morocco. However, while early-stage initiatives multiply under the auspices of state programs like the National Initiative for Human Development (INDH), local social ventures suffer from extreme financial fragility and remain trapped in a small-scale "missing middle" transition. While Reichert, Hudon, Szafarz, and Christensen (2021) developed an intermediary signaling framework validated through a microfinance case, and Rihihil et al. (2019) documented the operational realities of Moroccan social ventures, no prior study has bridged these two strands to diagnose how subsidy design can resolve the structural financing bottleneck in an emerging-market ecosystem. This paper addresses that gap by applying the eight-proposition intermediary signaling framework to the secondary empirical data collected by Rihihil et al. (2019) in the Casablanca-Settat region (a dual-sample survey of 20 social entrepreneurs and 300 citizens, conducted in 2017). The authors of the present article did not collect these primary data; they reinterpret them through a novel theoretical lens. The reanalysis reveals that extreme information asymmetry characterized by a 20% public awareness rate and a 62% public reluctance to grant procurement contracts prevents commercial capital acquisition. By mapping the eight theoretical propositions onto the empirical bottlenecks, this study achieves a proposition-to-bottleneck correspondence rate of 100%, demonstrating that every theoretical mechanism in the intermediary signaling model finds a direct empirical anchor in the Moroccan context. The analysis argues that transitioning Moroccan social enterprises from grant dependency to financial self-sufficiency requires shifting from "addictive" operational subsidies to "smart," time-limited, and performance-conditioned instruments. The paper proposes a prioritized policy matrix emphasizing public credit guarantees, private-sector corporate mentoring as intangible in-kind grants, and a structured post-break-even transition to preferential debt, thereby providing a clear pathway to crowd-in commercial finance and scale local social innovation.

JEL Classification: O55

Type du papier: Theoretical research (reanalysis of secondary empirical data)