Social enterprises may be instrumental to overcome the well-known difficulties of State provision of social welfare services. Considering the impressive movement of social entrepreneurship and innovation witnessed in most European societies, coincident with the decline of economic growth and the rise of unemployment, the idea of a transition from a welfare state to a welfare mix gains interest.

For social enterprises to meet the challenge, they need to scale up operations. Moreover, for that purpose they should be able to diversify the finance resources used, instead of relying mainly on subsidies and donations. However, so far not much progress has been made in that direction what led (Daggers & Nicholls, 2016) to identify as a critical research topic: how do social investment markets develop? That research question was investigated in the Portuguese context.

Besides a conceptual framework, literature review allowed to identify the factors that currently are believed to determine demand in social investment markets: i) impact; ii) return; iii) double cost issue; iv) financial dead zone; v) investment readiness; vi) ecosystem. Theory development was greatly enhanced from the contacts made with the Project Manager of an ongoing applied research project launched by European Investment Bank Group on a similar topic: “Social Enterprises Access to Finance – An exploration into the constraints around social businesses access to finance in Portugal”.

The importance of the research question becomes clear from the fact that, in spite of all the knowledge and attempts, for some reason not yet identified, social investment market does not grow. The investigation revealed that the key to the problem had to be looked in the demand side of the market and that there is reason to believe that social and cultural characteristics of demand agents are being overlooked. This supported the main theoretical proposition: Portuguese social investment market development will be unlikely to occur as expected from current understanding about how the market operates, unless prevailing characteristics of the social and cultural structure of demand agents are also taken into account.

The investigation was conducted through case study research. A rival theory was elaborated and study propositions were defined for both main and rival theory. Multiple sources of evidence were collected and from the respective analysis the study propositions of the main theoretical propositions were corroborated. None of the study propositions of the rival theory were corroborated.

The conclusion was that initiatives for growth of Portuguese social investment market will have to integrate a factor that so far has been neglected. Indeed, social and cultural characteristics are a determinant a demand that needs to be considered.