Factors Influencing the Failure of Rural Social Enterprise: The Cases Study of Temanggung, Central Java, Indonesia

The capacity of social enterprises to tackle social problems in remote, limited-resource environments makes this approach promising for rural development strategies. Rural areas might nurture or challenge the sustainability of social enterprises. Some studies have discussed the supportive and hindering factors of rural social enterprise development, but significant development does not always lead to the viability of a business. This study aims to examine the factors affecting the viability of social enterprise organizations in the rural area by drawing on a qualitative study of two samples on unsustainable and sustainable social enterprises in Indonesia. This article questions the factors that influence the rural social enterprises in the two samples to find the different factors that significantly affect the viability of social enterprise organizations. Findings suggest that although the two cases have applied a similar business model and take place in an almost similar business environment, the legitimacy from all community members is vital to ensure business viability, which is determined by the inclusivity at the initial stage of the social enterprise formation.