Nonprofit and Voluntary Sector Quarterly 2016, Vol. 45(4S) 61S–77S © The Author(s) 2016 Reprints and permissions: sagepub.com/journalsPermissions.nav DOI: 10.1177/0899764016643611 nvsq.sagepub.com Article A Critical Assessment of Social Entrepreneurship: Ostromian Polycentricity and Hayekian Knowledge Peter M. Frank 1 and Gordon E. Shockley 2 Abstract We offer a microfoundation of social entrepreneurship through the work of Vincent and Elinor Ostrom on polycentricity (Ostromian polycentricity) and that of Friedrich Hayek on the economics of knowledge (Hayekian knowledge) that reveals both the main strength and main weakness of social entrepreneurship. Problematizing social entrepreneurship in terms of the political economy of knowledge and based on Ostromian polycentricity and Hayekian knowledge, we first find the main strength of social entrepreneurship is that local, decentralized social entrepreneurs usually are the most appropriate and best-positioned—indeed, the most efficient—actors to solve their communities’ social problems. Also based on the work of the Ostroms and Hayek, we identify the main weakness of social entrepreneurship: the lack of institutional safeguards to social entrepreneurship. The localized decision-making process, however, might mitigate to some degree the potential for large-scale abuse. Keywords social entrepreneurship, polycentricity, knowledge, Elinor Ostrom, Vincent Ostrom, Friedrich Hayek Muhammad Yunus and Lamia Karim in their books set up a fundamental and appar- ently contradictory account of microfinance that goes to the heart of the social entre- preneurship movement. Yunus in Creating a World Without Poverty (Yunus, 2007) advocates the development of social businesses owned by the poor to address poverty 1 Wingate University, Wingate, NC, USA 2 Arizona State University, Phoenix, AZ, USA Corresponding Author: Gordon E. Shockley, School of Community Resources and Development, Arizona State University, 411 N. Central Avenue, Suite 550, Mail Code 4020, Phoenix, AZ 85004, USA. Email: Gordon.Shockley@asu.edu 643611NVS XX X 10.1177/0899764016643611Nonprofit and Voluntary Sector QuarterlyFrank and Shockley research-article 2016