Social enterprise has become a hot issue in the development of the third sector in the West. With new patterns of organization and behavior，it has evolved a distinct relationship between society and market and changed the interaction dynamic between government and the third sector. However，the situation displays different pictures in Europe and US respectively due to divergent institutional frameworks. The paper attempts to find out how laws or institutions have influenced the divergent approaches that different countries have applied in fostering the social enterprises. Furthermore，the paper analyzes the impact of institutional changes by comparing the different outcomes of social cooperatives and other types of social enterprises in Italy. In conclusion，it implies the significance of institutional embeddedness in the development of the third sector.