Journal of Business Ethics

https://doi.org/10.1007/s10551-020-04578-2

ORIGINAL PAPER

A Commons Strategy for Promoting Entrepreneurship and Social

Capital: Implications for Community Currencies, Cryptocurrencies,
and Value Exchange
Ana Cristina O. Siqueira1 · Benson Honig2 · Sandra Mariano3 · Joysi Moraes3

Received: 20 December 2018 / Accepted: 16 July 2020

© Springer Nature B.V. 2020

Abstract
Examining how new forms of currencies diffuse is important to uncover their impact on the organization of communities,
and thus motivates our study of community currencies. Community currencies provide a medium of exchange by using
alternative banknotes or electronic money, which circulates only within particular communities, allowing members to trade
goods, increase social cohesion, and achieve collective goals. In this study, we examine how community currencies help
facilitate social commons by serving as a setting for building community relationships and a catalyst for other social activities
beyond market relations. We analyze cases of community banks that provide microfinance and issue community currencies
in Brazil. We find that microfinance entrepreneurs who involve a greater diversity of stakeholders from public, private, and
nonprofit sectors in decision making even prior to startup, while also facilitating the formation of supportive social capital
from diverse cross-sector stakeholders, increase opportunities for developing new community currencies. By exploring
the implications of entrepreneurial actions that promote inclusive participation of diverse stakeholders for accomplishing
collective goals, our findings are relevant for other activities that create a common pool of resources while also developing
the vitality of the community, including initiatives that use cryptocurrencies and other emerging forms of currencies for
building social commons.

Keywords  Commons · Entrepreneurship · Social capital · Currencies · Microfinance

Introduction

The concept of money, which essentially represents a debt

obligation, encompasses one of the most binding and divi-
sive institutional aspects of nations, having expedited rev-
* Ana Cristina O. Siqueira olutions and insurrections, resulting in the destruction of
siqueiraa@wpunj.edu debt records, and the redistribution of land (Graeber 2012;
Benson Honig Rosales 2019; Sonenscher 1997). Focusing on the institu-
bhonig@mcmaster.ca tional nature of declared value, the chartalist perspective
Sandra Mariano holds that it is the state that determines how certain pay-
sandramariano@id.uff.br ments are made and what medium is utilized (Bell 2001).
Joysi Moraes According to the concept of embedded economy, markets
jmoraes@id.uff.br are institutions and economies are embedded within these
1 institutions (Polanyi 1944). As communities determine their
Cotsakos College of Business, William Paterson University,
1600 Valley Road, Wayne, NJ 07470, USA own conception of virtual economic and social value, they
2 have a new opportunity to influence supportive prosocial
McMaster University, DeGroote School of Business, 1280
Main Street West, Hamilton, ON L8S4M4, Canada activities by setting unique rules of exchange.
3 More recently, we observe the rise of decentralized vir-
Department of Entrepreneurship and Management,
Universidade Federal Fluminense, Rua Mario Santos Braga, tual currencies that represent debt and obligations, which
S/N ‑ 7o. Andar ‑ Centro, Niteroi, RJ 24020‑140, Brazil transcend national boundaries and physical constraints,

13
Vol.:(0123456789)

such as precious metals (Pieters 2017). Emergent innova-
tive blockchain assets, such as bitcoin and the proposed
Facebook libra, suggest the growing influence of globally
traded and unregulated alternative currencies, many of
which evade national regulation, certification, and taxation
(Pilkington 2019). As part of the increasing complexity of
value exchange systems, countries are exploring the possibil-
ity of issuing their own national digital currencies, such as
the crypto yuan, which is expected to be fully backed by the
central bank of China (Mukherjee 2019). Examining how
parallel currencies that exist alongside their traditional coun-
terparts diffuse and are leveraged represents an important
element of social and economic organization, which may
yield significant impact on the political and social organiza-
tion of communities, and thus motivates our study of com-
munity currencies.
Community currencies represent an important type of
commons, which have been promoted in various environ-
ments worldwide as a means to maintain wealth inside
marginalized areas, and thereby achieve social goals and
alleviate poverty (Meyer and Hudon 2017). Community cur-
rencies are defined as an alternative medium of exchange
by using banknotes or electronic money, which circulates
only within particular communities, allowing members to
trade goods and increase mutual support (Seyfang 2004).
From a commons perspective, we examine what facilitates
the diffusion of community currencies, the construction of a
“social commons” (Meyer and Hudon 2018), and their use as
a social adhesive or catalyst for other social activities beyond
market relations. Thus, we focus on the following question:
Research question  How do entrepreneurial actions and
interaction with diverse stakeholders influence the develop-
ment of social commons and new community currencies?
The study of community currencies is critical because
they provide a unique platform with which communities
can redefine their economic development. In this study, we
address the following topics. First, we develop our theoreti-
cal reasoning centering on how community currencies help
build and maintain social commons. Second, we analyze two
cases of community banks that provide microfinance and
issue community currencies in Brazil to understand stake-
holder interaction and development of social commons and
community currency. Third, we describe the findings from
our analysis and develop two propositions regarding the role
of interaction with diverse stakeholders and formation of
cross-sector support in the development of new community
currencies. Finally, we discuss the implications of the find-
ings and our propositions for theory, and how our findings
can be relevant to alternative new forms of currencies, such
as cryptocurrencies (Malherbe et al. 2019), and other com-
munity development activities for building social commons.
13
A. C. O. Siqueira et al.
Money, Debt, and Social Relations
Money represents a universal instrument of commerce,
through which goods of all kinds are bought and sold, or
exchanged for one another (Smith 1776). The view that
markets are efficient has essentially become the dominant
paradigm of neo-classical economics (Stiglitz 1988), with
economists identifying money as a medium of exchange,
a storage of value, and a measure for accounting purposes
(Mitchell and Mickel 1999). Yet, an alternative view is
that economic transactions emerged partially as a com-
munity building process, in which debt served as a reason
to engage in and maintain social relationships (Graeber
2012).
Anthropologists have examined the question of social
relations and exchange (Tax 1953), occasionally observ-
ing human activity that disputes Adam Smith’s notion of
the “invisible hand” (Smith 1776). For example, when
explaining the Algerian Kabyle relationships, Bourdieu
points out that what he observed was not simply a matter
of reciprocal exchange, but rather intricate social relations
(Bourdieu 1990). Moreover, recent research has made
an important distinction between a debt, something that
requires a precise quantification in terms of money, and
an obligation, something that generates expectations of
behavior in a certain way (Graeber 2012). Furthermore,
scholars (Polanyi 1944; Patomaki 2014) have highlighted
the view of the state as a site for regulation as well as the
rise of collective forms of governance, which aim at pre-
venting the destruction of social relations caused by undue
market commodification.
Community land trusts and worker cooperatives rep-
resent two examples of institutions that challenge the
commodification of land and labor (Peredo and Murdith
2019), invoking ownership qualities that expand beyond
supply and demand, bankruptcy and monetary policy,
toward common ownership and the decommodification of
labor in support of collective decision making. Numerous
scholars have pointed toward similar decommodification
of goods as diverse as carbon markets (Stuart et al. 2019),
food labels (Guthman 2008), agricultural markets (Mer-
cado et al. 2018), and the information highway (Rosen and
Carr 1997). Perhaps the most impactful arena for examin-
ing collective forms of governance rests in the utilization
of currency, and we turn now to its context, followed by
its relation to the commons.
Some scholars argue that paper money is an unbacked
social construction reflecting a collective agreement, and
that people should be able to create and use their own
forms of money to fill the gap caused by a lack of state-
created money (North 2018). Determining and enforcing
rules to regulate transactions provides both an opportunity
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…
and a responsibility absent in top-down currency para-
digms. Social movement theory recognizes identity poli-
tics in challenging existing institutional structures in order
to gain control and reformulate categories established by
the state (Bernstein 2005). Thus, it is important to pay
attention to the selection of incentives, cost-reducing
mechanisms, and career benefits that typically shape col-
lective behavior (McCarthy and Zald 1977).
Social capital plays an important role in establishing this
collective consciousness through the development of social
networks of multilateral reciprocal exchange (Williams
1996; Dolfsma et al. 2009). Integrating peripheral individu-
als into new networks of collective behavior requires cred-
ibility and trust (North 2006). Trust is leveraged by bonding
social capital, which is also referred to as closure between
members of tightly connected groups, as well as bridging
social capital, which is accomplished by linking networks
and utilizing weak ties (Putnam 2000; Granovetter 1973;
Coleman 1988).
Social capital sometimes reduces entrepreneurship,
instead of always promoting it, when the social capital of
powerful groups prevents subordinate groups from equally
participating in entrepreneurship (Adler and Kwon 2002).
Indeed, in Old Harbor, Alaska, Alutiiq people have abun-
dant social capital but did not employ their social capital
for commercial entrepreneurship (Light and Dana 2013).
Conversely, certain middleman minorities endorsing busi-
ness ownership as a vocation compared to other ethnic and
immigrant minorities have demonstrated greater levels of
entrepreneurship (Light and Gold 2000). In this way, poten-
tial detrimental effects of social capital can be transcended
by enabling the formation of social capital supportive of
entrepreneurship or the construction of social commons.
Community Currency and the Commons
Community currency represents an important avenue for
the provision of resources and incentives for the establish-
ment of community commons, by unlocking identity politics
and reestablishing innovative and new social relations to
solve existing institutionalized problems (Hudon and Meyer
2016). Definitions of the commons vary by scholarship; for
example, one perspective has focused on the impact of the
enclosure laws whereby the poor lost their share in the com-
mon with the consequential dislocation and forced migration
to the cities (Polanyi 1944). Another perspective has been
operationalized as self-managed common-pool resources
based on design principles, such as defined boundaries,
congruence between appropriation and provision rules,
collective-choice arrangements, and recognition of rights to
organize (Ostrom 1990; Hudon and Meyer 2016). In addi-
tion to economic objectives, community currencies seek to
develop social equity and community building, which are
typical characteristics of the commons. They do so by facili-
tating the creation of social exchange networks, as well as
providing access to credit not normally extended to margin-
alized persons (Williams 1996).
The commons paradigm encompasses shared knowledge
including digital content, such as Wikipedia and free soft-
ware, as well as urban spaces and citizen protest movements
(Bollier 2007; Harvey 2012; Ostrom 1990). Community cur-
rencies represent an opportunity for a special type of com-
mons, which have been promoted in various environments
worldwide as a means to maintain wealth inside marginal-
ized areas, and thereby achieve social goals while fostering
community self-sufficiency. Because they carry a commu-
nity-oriented message instead of an individually based one,
they can act as catalysts for civic participation and commu-
nity development (Meyer and Hudon 2017).
An emphasis on community currency as social commons
is consistent with the perspective of “communion” by Bra-
zilian social theorist Paulo Freire (1970). From Freire’s per-
spective, human development is best accomplished through
communion (Medeiros 2008; Romao 2008). This perspective
highlights the notion of liberation from individualism, antag-
onism, and isolation, while pursuing a better reality through
fellowship and solidarity (Freire 1970; Henz 2008). Freire’s
construct of communion is congruent with the concept of
“social commons” by Meyer and Hudon, given that social
commons refer to a system based on the values of solidarity,
reciprocity, and stewardship, which prioritizes social cohe-
sion and sustainable development (Meyer and Hudon 2018).
Beginning in the 1980s, hundreds of community curren-
cies have been introduced in North America, Europe, Aus-
tralia, and Japan (Helleiner 2000). Between 1991 and 2004,
there were eighty two community currencies operating in
the United States (Collom 2011). Community currencies
have been promoted in a wide range of environments, with
estimates of as many as 2500 operating worldwide (Grover
2006). For instance, the community currency known as
“Ithaca Hours” in Ithaca, United States, were printed locally
(Salstrom 1997) and a website was used to track policies
(Crowther et al. 2002). Over 10,000 Ithaca Hours have been
issued to thousands of participants and spent at 400 busi-
nesses, inspiring at least 82 attempts to create other com-
munity currencies in the United States (Collom 2011).
Table 1 shows definitions of community currency in the
existing literature. The journals listed in the table are gener-
ally from the economics, development, social science, and
social policy literatures. Notably, studies on community cur-
rencies in the management and entrepreneurship literature
are scarce (Meyer and Hudon 2017). Although studies in
13
 A. C. O. Siqueira et al.

Table 1  Definitions of community currency

Source Journal Terminology Definition

(Clayton 2010) Social and Economic Studies Local currency (1) A local currency is, in effect, a reinvention of
local banking which, by supplying money, can
play a positive but transitional role in improving
social cohesion and thereby encouraging economic
regeneration in poor areas within otherwise pros-
perous countries. (p. 243)
(2) The basic idea is to generate credit and foster
exchanges of goods and services within a com-
munity, partly in order to increase the number
of people who can take part in (legitimate) local
economic activity, and partly to confine the pur-
chasing power thereby created in the area… (pp.
254–255)
(3) Local currencies are a form of soft money, with
easy borrowing, and they are limited to particular
geographic areas. (p. 272)
(Pacione 1999) Debates and Reviews Local currency [A]n independent currency system, operating along-
side a national currency (p. 65)
(Richey and Ikeda 2009) Social Science Quarterly Community currency Community currencies reward volunteers who
contribute to the local area with credits they can
use only in local stores or governmental facilities.
(p. 91)
(Seyfang and Pearson 2000) The Society for International Community currency Community currencies are local initiatives which let
Development people exchange goods and services without using
conventional money. (p. 57)
(Seyfang 2004) Journal of Social Policy Community currency These are local initiatives which provide a comple-
mentary medium of exchange to mobilize informal
mutual support, by allowing members to trade
goods and services among themselves without
using cash. (p. 50)
(Seyfang 2006) Regional Studies Community currency (1) [L]ocal exchange systems using new types of
money (p. 783)
(2) [T]he generic term for a wealth of contempo-
rary alternative exchange systems which exist
alongside mainstream money, and which have
been springing up in developed and developing
countries since the 1990s as a response to social,
economic and environmental needs. (p. 784)
(Seyfang and Longhurst 2013) Ecological Economics Complementary currencies [T]he term complementary currencies is used to
reflect the broader family of parallel money sys-
tems that exist in a range of different forms, from
loyalty points systems to business barter schemes.
(p. 65)
(Meyer and Hudon 2017) Organization Community currency alternative currencies exist alongside their con-
ventional counterparts, circulate within a defined
geographical region or community, and arbitrate
the exchange of goods and services without bear-
ing interest (p. 630)

the existing literature shown in Table 1 have provided con- Methods

tributions to document and describe community currency
initiatives, currently there is little theoretical development
regarding factors that influence the development of com-
munity currencies.
Case Study Method
This study employs a case study approach based on the Gioia
methodology (Gioia et al. 2012). When the state of prior the-
ory is nascent, the Gioia methodology is particularly helpful
(Edmondson and McManus 2007). To our knowledge, the

13
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…
state of prior theory and research is nascent because there
are very few studies on community currency in management
and entrepreneurship journals thus far, as shown in Table 1.
Due to the nascent state of the management literature on
community currency, approaches such as the Gioia method-
ology (Gioia et al. 2012) can be helpful to identify patterns
in qualitative data as a means to open up nascent lines of
research (Edmondson and McManus 2007).
We used semi-structured interviews which are typically
the most important data source in the Gioia methodology
because they provide both retrospective and present accounts
by individuals experiencing the phenomenon of theoreti-
cal interest (Gioia et al. 2012). We focused on founders
and leaders at each bank who have sufficient knowledge
to speak comprehensively and authoritatively about their
organizations and community currencies. The goals of our
semi-structured interview protocol were to focus on the
research question, avoid the use of terminology that could
lead interviewees in their answers, and maintain flexibility
to explore spontaneous themes during the interviews (Gioia
et al. 2012). To achieve these goals, the interview protocol
centered on the context faced by each bank and on the events
and issues that led to creation of each community currency.
We interviewed the banks’ founders and also borrowers of
the banks, employees of the banks, as well as representatives
of influential organizations that are part of the microfinance
environment in the country. Two coauthors traveled to dif-
ferent states to conduct most of the interviews in person at
the banks’ premises. Subsequent interviews for clarification
took place by phone when required. Twenty-six participants
were interviewed, either once or across multiple sessions
in 2012, 2013, and 2014. The interviews typically lasted
between 30 min to two hours and were audio-recorded and
transcribed.
In addition to the interview data, we used published
information about the community currencies in various
Table 2  Community currencies Currency Location
in the study
C City of Sao Joao
do Arraial, state
of Piaui, Brazil
A City of Sao Paulo, Bank A
state of Sao
Paulo, Brazil
documents (Myers 2009), which included websites of the
banks, magazine articles, and interviews with the founders
of the banks issuing the community currency. They are con-
sistent with the multiple data sources that are common in the
Gioia methodology, such as archives and media documenta-
tion (Gioia et al. 2012). We used these materials to obtain
information about the environment and context of each bank
and community currency.
Case Selection
Our goal was to select community currencies for which we
could investigate their launching process, while focusing on
entrepreneurial actions and the context for the development
of the community currency in each community. Cases are
helpful in a case study design when they enable researchers
to “learn” from them (Stake 2005) to generate theoretical
insights. To that end, we selected the cases of two commu-
nity currencies: Currency C issued by Bank C in the state
of Piaui, and Currency A issued by Bank A in the state of
Sao Paulo.
To select our cases, we used theoretical sampling, which
refers to the notion of pursuing new interviews that are
increasingly focused on the concepts and themes under
study, until a saturation point when the goal of enabling
theoretical insights is fulfilled (Gioia et al. 2012). We were
able to reach the point of theoretical insights from our two
cases because they provided sufficiently rich contextual data.
On the one hand, both community currencies were launched
by banks that provide microfinance to low-income individu-
als. These two banks are a part of a countrywide system
of microfinance organizations (Palmas 2019), linked to the
emergence of the first Brazilian community bank in a grass-
roots manner (Siqueira et al. 2014b).
However, what makes our data particularly rich is the
fact that our two cases share major differences. The two
Issued by Community where the community currency circulates
Bank C (Com- Circulates within a rural community, which is one of
munity Bank), the poorest Brazilian municipalities, ranking 5444
founded in out of 5565 in the Human Development Index of
2007 Municipalities in Brazil (PNUD 2013). In 2005,
a survey conducted by the city administration
concluded that most products were purchased and
produced outside the municipality (Costa 2014)
Circulates within an urban community of low-income
(Community residents served by Bank A, which has provided
Bank), founded microfinance for community members to cover
in 2010 their expenses or to start new businesses (Garcia
2011). A law provided governmental funding for the
creation of this community bank and its community
currency, and regulations established that such
governmental funding should be managed by public
agencies
13

community currencies were launched in communities
located in different states, were developed by banks that
experienced different founding processes with distinct
founders, and the development of these currencies were
characterized by different circumstances in each commu-
nity. Table 2 summarizes different contextual characteristics
of the foundation of the community banks and their com-
munity currencies. Notably, even though Bank A is part of
the Brazilian Network of Community Banks, Bank A was
not started in a grassroot manner but instead by a top-down
law by the government. Thus, the contextual data from our
two community currencies are ideal for us to develop our
investigation, while focusing on entrepreneurial actions and
interaction with stakeholders involved in the creation of each
community currency.
The Gioia methodology can be effectively used to ana-
lyze samples with a smaller number of cases like the one
in our study. The Gioia methodology is different from the
multiple case studies approach (Eisenhardt 1989) because
it does not focus on comparing a certain number of cases
(Eisenhardt and Graebner 2007). Instead, the Gioia meth-
odology centers on eliciting a data structure composed of
first-order, second-order, and aggregate dimensions based on
theoretical sampling (Gioia et al. 2012) sufficient to generate
theoretical insights.
Data Analysis
One of the coauthors led the data coding and analysis pro-
cess guided by the Gioia methodology (Gioia et al. 2012)
in interaction with two other coauthors. The Gioia meth-
odology refers to the notion of using independent coders
and reporting intercoder agreements as positivist practices
that can be seen as incongruent with interpretive studies
that use the Gioia methodology, so we aligned our analyti-
cal process with an interpretative orientation (Gioia et al.
2012). In doing so, we used the following approach. If agree-
ment between coauthors about some interviewees’ terms and
interpretations were low, we revisited the data and engaged
in mutual discussions to arrive at interpretations that multi-
ple coauthors understood as reflecting the data. To reinforce
our confidence in our assertions and interpretations, in addi-
tion to our interview data, we used published documents,
such as newspaper articles and websites of various organiza-
tions (Gioia et al. 2012), for triangulation to ensure multiple
points of information about the history and context of each
bank and community currency.
Our analytical procedure entailed three main phases of
coding, which generated a data structure characterizing
first-order, second-order, and final theoretical dimensions.
This type of data structure does not represent a chain of
events and interactions among concepts, but instead it is
ordered according to hierarchical categories representing
13
A. C. O. Siqueira et al.
informant terms, then themes, and finally aggregate theo-
retical dimensions (Gioia et al. 2012). Figure 1 summarizes
the data structure.
First, we identified first-order categories based on our
interviews with individuals who influenced the develop-
ment of the community currencies. Our first categories rep-
resent descriptive labels for the activities they described.
The categories portrayed the vocabulary of the interviewees
in an initial phase, which we conceptualized later during
our analytical procedure. For instance, we changed “engag-
ing public, nonprofit, and/or private constituencies to create
the bank” to “interacting with public, nonprofit, and private
agents prior to startup.” As a result, this iterative process
produced four main categories: “interacting with public,
private, and nonprofit agents prior to startup,” “involving
cross-sector stakeholders in decision-making processes,”
“building a cross-sector support system,” and “building on
the community’s internal culture.”
Second, we developed second-order constructs by ana-
lyzing the first-order categories to identify themes. We
conducted this second phase through an iterative process to
identify more abstract constructs. For example, congruent
with Mair et al. (2012), when we analyzed the categories
that referred to “interacting with public, private, and non-
profit agents prior to startup” and “involving cross-sector
stakeholders in decision-making processes,” we realized that
founders’ experiences prior to startup and their cross-sector
interaction were connected with the way they developed
their organization’s capability of issuing a community cur-
rency. To represent this notion, we developed a second-order
construct named “developing a new organization that can
issue a community currency.” Using this process, we gener-
ated the following two second-order constructs: “developing
a new organization that can issue a community currency”
and “encouraging cross-sector support for a new community
currency.”
Third, we identified key theoretical dimensions derived
from the second-order constructs. One dimension repre-
sented conditions that inspired the creation of a new com-
munity currency, while another represented conditions
that impacted the diffusion or adoption of the community
currency. Building on these ideas, we named these two
dimensions “launching a new community currency” and
“expanding the adoption of a new community currency.”
Both theoretical dimensions represent the data and provide
guidance to help understand the development of new com-
munity currencies.
Next we advanced from the data structure described
above to relationships between concepts (Gioia et al. 2012).
For this purpose, we used our data to formulate a set of
theoretical propositions. Propositions represent a contribu-
tion because they provide a description or explanation of
emergent theories, which help make them extensible to other
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…

Fig. 1  Categories and coding First-order Second-order Theoretical

categories constructs dimensions

Interacting with Developing a Launching a new

public, private, new organization community
and nonprofit that can issue a currency
agents prior to community
startup currency

Involving cross-
sector
stakeholders in
decision-making
processes

Building a cross- Encouraging Expanding the

sector support cross-sector adoption of a
system support for a new community
new community currency
currency

Building on the
community’s
internal culture

domains (Gioia et al. 2012), while providing direction for
future research.
Findings
The two banks in our study are part of a system in Brazil
emphasizing the notion of “solidarity economy,” which gen-
erally fits main criteria (Ostrom 1990) in identifying factors
that support a community commons. The Brazilian solidar-
ity economy is a strategy for inclusion of populations living
in poverty, which may include associativism, cooperativism,
as well as collective action, such as collective purchases of
inputs and collective marketing of products (SEDS 2015).
To coordinate the country’s solidarity economy system, in
2003 the Brazilian government created the National Office
of Solidarity Economy (Secretaria Nacional de Economia
Solidaria), which supports community banks that offer
microfinance and community currency (Singer 2009).
Brazil’s National Office of Solidarity Economy adopted
the methodology developed by Palmas Institute as a refer-
ence to develop community banks in the country. Created
as a microfinance solidarity organization, Palmas Bank was
the first community bank in Brazil, designed by its local resi-
dents to provide small loans to local entrepreneurs. Palmas
Bank developed a methodology for the creation of the new
community banks, and formed Palmas Institute to dissemi-
nate its methodology across the country. In 2006, Palmas
Institute created the Brazilian Network of Community Banks
(Siqueira et al. 2014b), now with over 100 banks nationwide
(Palmas 2019), which includes the two banks in our study.
Community banks are an association initiative involving
residents in a specific community, who seek a solution to
problems in their living conditions by promoting the creation
of socioeconomic activities (Franca Filho 2007). Table 3
presents representative quotations from the interviews and
summary of findings.

13

Table 3  Representative quotations from the interviews and summary of findings
13
Com- Interacting with public, private,
munity and nonprofit agents prior to
currency startup
C We took a bus with teachers,
business owners, legislators,
members of community groups,
and union representatives, and
we went there [to Palmas Bank,
considered the most influential
microfinance organization in
the country, located in the city founder)
of Fortaleza]. Palmas Bank had
indeed an interesting experi-
ence. When we came back, we
decided to create Bank C. It
took some time [to define] who
in fact would own the bank: the
City Administration, the union,
[etc.] (Co-founder)
A We noticed the need to generate
income in this community…
once members have housing.
Then assemblyman Robert G…
wrote an amendment to provide
R$1,000,000 [US$325,956] for
the development of the local
solidarity economy…With this
funding, there was a partnership nity banks cannot do directly
between the Housing Move-
ment, SP University [a major
public university], and the
Ministry of Labor (Founder)
Involving cross-sector stakehold-
ers in decision-making processes
We decided to create a “mixed”
organization…The bank belongs registering the businesses [that
to a nonprofit organization,
Center C, and the City Admin-
istration is part of its local
Board…We make decisions, so
we have everyone there (Co-
Bank C is directed by Center C,
an institution that makes all
decisions concerning the bank… paid in community currency. So,
The Center C is composed of
representatives from the City
Administration, legislators, rural
workers, unions, churches, rural
and urban associations, [etc.]…
Twelve individuals representing
each institution…Center C is a
nonprofit organization we cre-
ated…(Senior employee)
We have a partner named
Nonprofit N, which is part of
SP University [a major public
university]…It is a Civil Society
Organization of Public Interest,
an entity that can administer
funds from the government, for
example, which the commu-
because they would have to be
a Civil Society Organization
of Public Interest legally…The
legal form [of the community
bank] is an Association of Inclu- accept the [community] cur-
sion and Local Development…a
non-governmental organization”
(Founder)
Building a cross-sector support
system
In the beginning, we started
would accept the community
currency]… We walked from
one business to another, all of
them…We explained how Bank
C was going to work (Senior
employee)
There is a regional cultural
festival in which all awards are
the awards are spent in the city
(Co-founder)
“[Business owners] ask what
advantages they would have
by accepting the [community]
currency…I say that it can
increase your clientele, com-
munity members will purchase
from you because you accept
the [community] currency, you
will sell more…Then he [says
he] will think and provide his
answer later. It is a daily strug-
gle, every day you have to go
there, and ask whether they will
rency” (Founder)
Adoption of the community cur-
rency
700 or 800 businesses…about 90
percent of the businesses [in the
community] (Senior employee,
Bank C)
We even have been paying 25
percent of the salary of govern-
mental employees in Bank C’s
[community] currency. It is a
municipality law (Co-founder)
Interviewer: Do you know how
many local businesses accept
Bank A’s community currency?
Founder: Almost 20. Those who
really accept it…, who go [to
Bank A] exchange Brazilian
reais for Bank A’s community
currency, so they have change
in community currency for
customers
Summary of findings
Stakeholders in decision-making
processes:
Broad range of stakeholders from
public, nonprofit, and private
sectors
Supportive social capital:
Higher levels of supportive social
capital toward Bank C’s com-
munity currency, deriving partly
from pre-startup engagement of
diverse stakeholders
Impact:
Higher impact, with over 700 busi-
nesses accepting the currency,
and 25% of the salary of public
employees paid in community
currency
Stakeholders in decision-making
processes:
Narrow range of stakeholders,
primarily focused on stakeholders
from the public sector
Supportive social capital:
Lower levels of supportive social
capital toward Bank A’s com-
munity currency, partly due to
limited engagement of stakehold-
ers
Impact:
Lower impact, with less than 20
businesses accepting the com-
munity currency
A. C. O. Siqueira et al.
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…
Launching a New Community Currency
One main distinct feature between our cases is how entrepre-
neurs have interacted with cross-sector actors prior to start-
ing up their microfinance organizations and respective com-
munity currencies. In this way, we help illuminate resource
acquisition and the role of the state and other nonaffiliated
groups in facilitating a social movement’s resource mobiliza-
tion (McCarthy and Zald 1977; North 2006). Building on his
role as a governmental representative in the municipality, the
co-founder of Bank C proactively interacted prior to startup
with a diverse range of public and private agents, such as
business practitioners, representatives of nongovernmental
organizations, and public officials. As he stated:
We took a bus with teachers, business owners, leg-
islators, members of community groups, and union
representatives, and we went there [to Palmas Bank,
considered the most influential microfinance organiza-
tion in the country, located in the city of Fortaleza].
Palmas Bank had indeed an interesting experience.
When we came back, we decided to create Bank C. It
took some time [to define] who in fact would own the
bank: the City Administration, the union, [etc.] (Co-
founder, Bank C)
By contrast, the founder of Bank A interacted mostly
with public agents prior to startup. One main reason was
that Bank A was created by the government in a top-down
manner, when a law was passed to provide governmental
funding for the creation of new community banks and new
community currencies. As the founder of Bank A stated:
We noticed the need to generate income in this com-
munity…once members have housing. Then assem-
blyman Robert G…wrote an amendment to provide
R$1,000,000 [US$325,956] for the development of the
local solidarity economy...With this funding, there was
a partnership between the Housing Movement, SP Uni-
versity [a major public university], and the Ministry of
Labor (Founder, Bank A)
Moreover, Bank A has faced regulations that have encour-
aged interaction with mainly public actors. These regulations
restrict how governmental funding can be administered.
Partly due to these legal circumstances, the founder of Bank
A interacted mostly with public agents prior to startup. For
example, Bank A has involved in decision-making process
representatives of organizations like Nonprofit N as part of
SP University, which are mostly public representatives. As
the founder of Bank A said:
We have a partner named Nonprofit N, which is part of
SP University [a major public university]…It is a Civil
Society Organization of Public Interest, an entity that
can administer funds from the government, for exam-
ple, which the community banks cannot do directly
because they would have to be a Civil Society Organi-
zation of Public Interest legally…The legal form [of
the community bank] is an Association of Inclusion
and Local Development…a non-governmental organi-
zation (Founder, Bank A)
Interestingly, Bank C’s co-founder has helped create a
“mixed” organization, which includes public and private
stakeholders in charge of decisions concerning the bank.
He used the term “mixed” for including diverse cross-sector
representatives in decision making. As he explained:
We decided to create a ‘mixed’ organization…The
bank belongs to a nonprofit organization, Center C,
and the City Administration is part of its local Board…
We make decisions, so we have everyone there (Co-
founder, Bank C)
Accordingly, Bank C has involved public and private
stakeholders in decision-making processes. As one inter-
viewee stated:
Bank C is directed by Center C, an institution that
makes all decisions concerning the bank…Center C is
composed of representatives from the City Administra-
tion, legislators, rural workers, unions, churches, rural
and urban associations, [etc.]…Twelve individuals
representing each institution...Center C is a nonprofit
organization we created (Senior employee, Bank C)
Bank C has been able to develop its community currency
further than Bank A. According to one interviewee:
[Bank C’s leaders] registered about 700 or 800 busi-
nesses... So, I believe that about 90 percent of the
businesses [in the community] accept the community
currency (Senior employee, Bank C)
In contrast, Bank A engaged considerably fewer busi-
nesses than Bank C. The interviewer asked Bank A’s
founder: “Do you know how many local businesses
accept Bank A’s community currency?” Bank A’s founder
answered:
Almost 20. Those who really accept it…, who go [to
Bank A] exchange Brazilian reais for Bank A’s com-
munity currency, so they have change in community
currency for customers (Founder, Bank A)
As a result, the pattern evident in our data is that involv-
ing cross-sector stakeholders in decision-making processes
is likely to increase opportunities for developing new com-
munity currencies, particularly when the founder interacts
with multi-sector stakeholders prior to startup. Thus, we
develop the following proposition.
13

Proposition 1:  Entrepreneurs who involve stakeholders in
decision making tend to increase opportunities for devel-
oping new community currencies, and these effects amplify
when they interact with a greater diversity of stakeholder
groups even prior to startup.
Expanding the Adoption of a New Community
Currency
Bank C’s leaders have obtained strong support from local
businesses by visiting each business and explaining the con-
cept of the community currency. They have taken initiatives
to build an extensive support base involving not only actors
of the public and nonprofit sectors, but also representatives
of private businesses. As one senior employee of Bank C
stated:
In the beginning, we started registering the businesses
[that would accept the community currency]… We
walked from one business to another, all of them…
We explained how Bank C was going to work (Senior
employee, Bank C)
In contrast, Bank A’s leader has been able to foster only
limited support from private businesses, while having sup-
port mostly from public sector representatives. Support from
local business owners who agree to accept the community
currency has been particularly difficult. As the founder
explains:
[Business owners] ask what advantages they would
have by accepting the [community] currency…I say
that it can increase your clientele, community mem-
bers will purchase from you because you accept the
[community] currency, you will sell more…Then he
[says he] will think and provide his answer later. It is
a daily struggle, every day you have to go there, and
ask whether they will accept the [community] currency
(Founder, Bank A)
Our analysis reveals the existence of political and legal
circumstances capable of influencing attitudes among com-
munity members toward their community currencies. In the
case of the community of Bank C, a city law established that
the salaries of governmental employees in that community
must be paid partly in community currency. As Bank C’s
co-founder states:
We even have been paying 25 percent of the salary
of governmental employees in Bank C’s [community]
currency. It is a municipality law (Co-founder, Bank
C)
This community is one of the country’s poorest
municipalities, ranking 5444 out of 5565 in the Human
13
A. C. O. Siqueira et al.
Development Index of Municipalities in Brazil (PNUD
2013). Additionally, a survey conducted by the City Admin-
istration in 2005 concluded that most products were pur-
chased and produced outside the municipality (Costa 2014).
Thus, governmental employees have reasons to support their
payment in community currency, in order to maintain wealth
within the municipality and thereby alleviate poverty in their
community.
In Bank C’s community, in addition to the law regarding
the partial payment of public employees’ salaries in com-
munity currency, other payments have also been made in
community currency. As the co-founder of Bank C states:
There is a regional cultural festival in which all awards
are paid in community currency. So, the awards are
spent in the city (Co-founder, Bank C)
In the community of Bank C, there is evidence of political
and legal circumstances facilitating the formation of sup-
portive social capital toward the adoption of its community
currency.
By contrast, the founder of Bank A indicates much less
supportive social capital in Bank A’s community. Bank A’s
founder states that:
A city in the Northeast [unlike the Southeast metropol-
itan location of Bank A], a small city is good because
you know everyone, you trust people. Also, someone
who does not pay her bills…will not receive credit in
local businesses. A small city is good because of this
(Founder, Bank A)
The founder of Bank A alludes to their location in a large
Southeast urban center, which promotes a different culture
inside their communities compared to that in a Northeastern
small rural city, like the community of Bank C. Further, the
absence of political and legal frameworks, such as a local
law establishing that the salaries of governmental employees
in Bank C’s community must be paid partly in community
currency, resulted in lower levels of supportive social capital
toward Bank A’s community currency.
In conclusion, our analysis suggests that the formation of
supportive social capital moderates the development of new
community currencies. The pattern we observed in our data
was that the political and legal conditions in Bank C’s com-
munity facilitated the formation of supportive social capital
to a greater extent than those of Bank A’s community. This
made it easier for Bank C’s to develop its community cur-
rency, such as through the expansion of its adoption by local
businesses and community members. Thus, we develop the
following proposition.
Proposition 2:  Entrepreneurs who involve stakeholders in
decision making tend to increase opportunities for devel-
oping new community currencies, and these effects amplify
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…

when they facilitate the formation of supportive social
capital.
Discussion
This study has examined how interaction with diverse
stakeholders and a community’s supportive social capital
influence the development of social commons and new com-
munity currencies. Given the rise of cryptocurrencies that
are supported by communities as opposed to governments
(Fantacci 2019), we believe our findings have implications
about the use of social capital beyond the applicability to
community currencies. By conducting a qualitative analysis
of community currencies in two different low-income loca-
tions, our comparative study provided theoretical insights on
which we built propositions. In the next section, we discuss
the theoretical implications of this research.
Table 4 shows the comparative features of the two dif-
ferent community currencies we examined. While there is
much similarity in the physical, virtual, and geographical
characteristics of the two currencies, they differ in terms of
their governance. Having a wide range of actors invested in
the community currency, by engaging pre-startup discussion
with diverse community members, had significant implica-
tions in acceptability. As shown previously in Table 3, cur-
rency from Bank C accounted for 25 percent of public salary
disbursement, and incorporated over 700 local businesses.
This community “buy-in” generated through decision
making conducted by a diverse array of participating stake-
holders, including rural residents, churches, business own-
ers, legislators, and unions, likely led to the widespread
adoption of the currency. These findings are insightful for

Table 4  Features of the currencies

Dimension Features Currency A Currency C

Physical currency Paper banknotes are issued by the community bank ✓ ✓

Virtual currency
Community identification
Geographical coverage
Component of public employees’ wages
Governance of the bank issuing the currency “Top down” decision making mainly by public actors:
Community members exchange the community currency for the coun-
try’s currency (Brazilian reais) in the community bank
Business owners in the community receive the community currency
from customers and exchange it for Brazilian reais in the community
bank
Potential of enabling methods created by Palmas Bank and dissemi- ✓ ✓
nated by Palmas Institute for solidarity economy development,
through which the community currency serves as an instrument
to enhance social cohesion and the circulation of financial capital
within the community, such as:
Mobile-enabled currency: the customer opens an account with the
community bank, the business owner opens an account with the
partner governmental bank (Caixa), and the customer receives a
chip from the partner mobile phone company. When the customer
makes a purchase from the cell phone with the chip, the payment
is transferred from the customer’s account to the seller’s account.
The virtual currency is enabled only inside the specific community
(Siqueira et al. 2014a)
Governmental deposits: community members can receive governmen-
tal benefits (bolsa familia) by opening an account with the commu-
nity bank, which has electronic terminals from the partner govern-
mental bank (Caixa), in Brazilian reais or community currency
(Siqueira et al. 2014a)
Name of currency mirrors the name of the community ✓ ✓
Currency circulates only within the community ✓ ✓
Municipality’s government pays 25% of the salary of governmental ✓
employees in community currency
✓
Government established a law that provided funds to create the bank
Nonprofit organization that is part of a public institution administers
the funds
“Bottom up” decision making by cross-sector actors: ✓
Group of representatives from public, private, and nonprofit sectors
initiated the creation of the bank
Nonprofit organization comprising representatives from public, pri-
vate, and nonprofit sectors administers the bank

13

individuals or organizations seeking to develop community-
led social activities, including those employing blockchain
and cryptocurrencies for community development purposes
(Gomber et al. 2018). For example, community development
activities may include fundraising campaigns for charity
(Gomber et al. 2018) and, as in the case of Bank C, provision
of awards in community currency at cultural festivals in low-
income communities, which enabled the awards to be spent
within these communities for local economic development.
Implications for Theory
This study contributes to the literature on commons and
community currency in the following ways. First, our find-
ings our congruent with a chartalist perspective on cur-
rency that supports the conception of embedded economies
(Polanyi 1944). Chartalist theory examines the social as well
as the historical value of money, including nonmarket-based
factors (Bell 2001). State-backed currency is designed as a
method of taxing a population and encouraging economic
activity. Community currencies, and potentially new emerg-
ing forms of cryptocurrencies (Costantini 2019), provide
opportunities to build a common pool of resources, while
also developing the vitality of the community. In theory, a
municipality could offer community currency in exchange
for socially regarded activities, such as quality child care.
Opportunities for developing exchange markets and eco-
systems with cryptocurrencies could lead to similar trans-
actions, which clearly reflect the concept of an embedded
economy. Their ability to cross national borders also sug-
gests important opportunities for community-to-community-
level transactions and exchanges.
Second, our study shows that stakeholder diversity helps
increase opportunities to launch new community-specific
enterprises. Our Proposition 1 maintains that entrepre-
neurs who involve stakeholders in decision making tend to
increase opportunities for developing new community cur-
rencies, and these effects amplify when they interact with a
greater diversity of stakeholder groups even prior to startup.
This proposition contributes to underscore the importance of
broader stakeholder diversity in the context of “social com-
mons,” as a system that prioritizes development goals and
the involvement of members in decision-making processes
(Meyer and Hudon 2018).
The participation of multiple community members may
involve public and private stakeholders (Babiak and Thiba-
ult 2009). For instance, the involvement of governmental
stakeholders can provide resources such as improved infra-
structure important to entrepreneurs (Musacchio et al. 2015).
Enterprises that reconcile private and collective interests
often try to mobilize a wide range of tangible and intangi-
ble resources such as financial capital and political support
13
A. C. O. Siqueira et al.
(Pinkse and Groot 2015). This has the effect of transform-
ing adherents into constituents (McCarthy and Zald 1977).
Just as governments set the rules of currency, thereby deter-
mining the economic value of labor and its taxation, so our
example of bottom-up community organization, particularly
as depicted by Bank C, demonstrates the importance of
socially embedded “buy-in.” In this way, community cur-
rencies open a door to participation and exchanges relevant
to a community, transcending the centralized governmen-
tal system while aligning the participation of cross-sector
stakeholders.
Third, we provide new theoretical connections between
the literature on commons and the concept of communion
and solidarity by Brazilian social theorist Paulo Freire.
Our Proposition 1 emphasizes cross-sector interaction with
representatives from governmental, nonprofit, and private
sectors. An emphasis on cross-sector interaction is consist-
ent with Freire’s (1970) perspective of “communion.” For
Freire, individuals live in a world shaped by social, cultural,
and historical conditions, which they impact not in isolation
but through interaction and communion (Henz 2008).
Freire’s work is known by many for his arguments sup-
porting individuals’ liberation from oppression and social
injustices, but it is less known that Freire also developed
the complementary construct of “communion.” This con-
struct entails the pursuit of social change while avoiding
an excess of power by a particular agent or social group
(Rossato 2008). Community currency relates to collective
engagement and development (Taub 1988). Our Proposition
1 addresses the role of cross-sector interaction in the devel-
opment of community currencies. Our findings support the
involvement of cross-sector community members inclusive
of individuals with ties to multiple sectors (Siqueira et al.
2014a), while not excluding private capital and those that
shepherd capitalism, including bankers (Taub 1988). Rather,
our findings point to the relevance of interaction with an
entire constellation of actors that yield these often comple-
mentary approaches to community and collective capitalism.
Freire’s concept of communion is aligned with the notion
of social commons. This is because social commons repre-
sents a system that pursues sustainable development, while
encouraging participative governance, social cohesion, and
collective actions that benefit users and the community as a
whole (Meyer and Hudon 2018).
Fourth, this study helps uncover the processes involved
in establishing linkages throughout different networks
including government and civil society, which contribute
to develop community currencies and social commons. Our
Proposition 2 states that entrepreneurs who involve stake-
holders in decision making tend to increase opportunities
for developing new community currencies, and these effects
amplify when they facilitate the formation of supportive
social capital. This proposition emphasizes the moderator
A Commons Strategy for Promoting Entrepreneurship and Social Capital: Implications for…
role of supportive social capital. In our study, social capital
supportive of new community currencies was enabled by
political and legal actions, which included a municipality
law defining that the wages of governmental employees in
that particular community should be paid partly in commu-
nity currency. Given that this community currency circulates
only inside this particular community, these political and
legal actions helped maintain wealth within that community,
while also promoting supportive social attitudes toward the
use of the currency.
Considering this case as an example, entrepreneurs are
more likely to expand the adoption of new community cur-
rencies when there are such conditions that enable sup-
portive social capital. We can also envision community-
to-community linkages being established by employing
cryptocurrency (Costantini 2019), as relevant actors in
two or more cooperating communities can determine these
exchanges, despite geographical constraints. Possibilities
might open up to enhance vertical integration by bypassing
intermediaries and connecting both producers directly with
manufacturers. As new opportunities for micro-lending and
micro-investing emerge with cryptocurrency (Varma 2019),
our study suggests the importance of supportive social capi-
tal for these activities.
One important theoretical implication of Proposition 2 is
that the presence of social capital in a community will not
necessarily facilitate the development of community cur-
rencies, unless there are conditions that enable supportive
social capital. In our study, both communities have social
capital, but not all of them have conditions that enable social
capital supportive of their respective community currencies.
Therefore, conditions that enable supportive social capital
are necessary to expand adoption of community currencies.
Future Directions
This study generates several opportunities for future
research. We developed our analysis with a set of commu-
nity currencies in low-income locations in Brazil utilizing a
particular research method. One of our challenges was the
collection of data from marginalized areas due to transpor-
tation difficulties and safety concerns. New studies should
explore further factors and conditions that influence and
moderate the development of community currencies, as well
as the implications of utilizing emerging forms of curren-
cies, such as cryptocurrencies, for economic development
(Sudzina 2018).
One important avenue of future research is the examina-
tion of the influence that various constituents have on the
overall outcome of the currency system. Future scholarship
should examine whether community currencies or the pro-
motion of cryptocurrencies contribute to the improvement
of inequality or simply its reproduction (Fama et al. 2019).
Future studies may benefit from examining other cases from
developing and developed countries, gathering information
from different sources, and using diverse qualitative and
qualitative research methods.
Conclusion
This study has emphasized that microfinance entrepreneurs
who involve a greater diversity of stakeholders from public,
private, and nonprofit sectors in decision making even prior
to startup, while also facilitating the formation of support-
ive social capital from cross-sector stakeholders, increase
opportunities for developing new community currencies.
Our propositions link entrepreneurial actions and interaction
with stakeholders to the development of community curren-
cies. In this way, this study helps answer a recent call for
research exploring entrepreneurial actions that benefit others
and how actors in resource-constrained environments can
still create new ventures to alleviate others’ suffering, which
are lines of research viewed as sources of vitality for the
future of the entrepreneurship literature (Shepherd 2015).
This study serves as a basis for future research by offering
propositions on the development of community currencies,
on which new studies can draw as a foundation to extend the
study of this important type of social commons. They may
also apply our findings to the diffusion of cryptocurrencies
or other emerging forms of currencies, while focusing on
building social commons (Gomber et al. 2018). Rather than
criticizing the use or effectiveness of community currencies,
including those issued by microfinance organizations with
either a successful or unsuccessful pattern, we uncovered
specific multi-stakeholder entrepreneurial actions and their
different contexts that were associated with greater com-
munity currency development. Our findings are relevant to
other community development activities, including initia-
tives that use emerging forms of currency, such as cryptocur-
rencies (Costantini 2019), by exploring the implications of
entrepreneurial actions that promote inclusive participation
of diverse stakeholders for accomplishing collective goals.
Funding  Funding was provided by Duquesne University (Paluse Fac-
ulty Research Grant).
Compliance with Ethical Standards 
Conflict of interest  Ana Siqueira has received a Paluse Faculty Re-
search Grant from Duquesne. The other authors declare that they have
no conflict of interest.
Ethical Approval  All procedures performed in studies involving human
participants were in accordance with the ethical standards of the insti-
13

tutional and/or national research committee and with the 1964 Helsinki
declaration and its later amendments or comparable ethical standards.
Informed Consent  Informed consent was obtained from all individual
participants included in the study.
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