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.