The Hybrid Middle Ground in Contemporary Entrepreneurship: A Conceptual Discussion with NYC-Based Clean Technology Enterprises as Cases in Point June 13, 2012 Bala Mulloth, PhD, Central European University Business School
Overview Changing Sources of Innovation Diverse Forms of Entrepreneurship Social Entrepreneurship Overview Social Venture Models Overarching Representation of Contemporary Entrepreneurship Research Approach Illustrative Cases: The NYC Cleantech Sector Observations + Discussion 2
Changing Sources of Innovation Modern Innovation is a complex phenomenon: Large scale industrial R&D Government High technology entrepreneurialism (Silicon Valley, etc) Digital based innovation, e.g., ebusiness (Silicon Alley, etc) User generated content and emerging networks of innovation (open source, social networking platforms) Innovation Is a Moving Target in the 21 st Century Rise of knowledge-intensive industries and high-value services Increasing public-private partnerships to meet social needs of all kinds (social innovation) Deepened legacy of Schumpeter's (1934) concept of creative destruction Growing expansion of the meaning and practice of entrepreneurship Entrepreneurship is increasingly recognized as an important driver of economic growth, productivity, innovation and employment (Timmons and Spinelli, 2009).
Diverse Forms of Entrepreneurship Varying Types of Activities Prevalent in Entrepreneurship Traditional business/commercial activities Not-for-profit entrepreneurial activities focused on social outcomes Activities focused on social problems that trigger entrepreneurial behavior Rise of social entrepreneurial activities Entry of discussion and solution of social problems into the sphere of business (Seelos and Mair, 2004; Thompson, Alvy and Lees, 2001) Is social entrepreneurship a special form of entrepreneurship? There appears to be plenty of evidence that social entrepreneurship exists, particularly when measured by the rapidly increasing number of conferences, case studies, and funders interested in the topic. - Paul Light, Paulette Goddard Professor of Public Service, NYUWagner However, as a research topic, social entrepreneurship remains relatively elusive from mainstream management literature. 4
Social Entrepreneurship Overview The definitions of social entrepreneurship may be traced back to writings on non-profit organizations (Hansmann 1980; Young 1986), corporate social responsibility (Kanter 1999; Wartick & Cochran 1985) and entrepreneurship (Gartner 1985; Shane & Venkatraman 2000). Significant Conflicts in Definitions For some scholars, social entrepreneurship refers to the creation of positive social change, regardless of the structures or processes through which it is achieved (Tracery and Phillips, 2007). Success is measured by the extent to which they achieve social transformation. A second strand in the literature focuses on generating earned income in the pursuit of social outcomes (Boschee, 2001; Oster et al, 2004). From this perspective, social entrepreneurship is concerned with enterprise for a social purpose and involves building organizations that have the capacity to be both commercially viable and socially constructive. The literature in this field seems to be dividing and coming together at the same time.
Social Entrepreneurship/Entrepreneurs Defined Social entrepreneurs endeavor to be good as well as successful by simultaneously achieving economic (profit), environmental, and social goals the so-called triple bottom line (Elkington, 1997). Author Mair & Marti (2004) Haugh, (2007) Definition Social entrepreneurship is defined as the innovative use of resources to explore and exploit opportunities that meet a social need in a sustainable manner Social entrepreneurship combines the economic benefits of entrepreneurship with the delivery of social and environmental outcomes, and has the potential to assist the economic and social development of individuals and societies around the world Light (2006) A social entrepreneur is an individual, group, network, organization, or alliance of organizations that seeks sustainable, large-scale change through pattern-breaking ideas in what and/or how governments, nonprofits, and businesses do to address significant social problems.
A Few Salient Features Shifting the emphasis Reducing the need for charity Engaging people to take responsibility Leading to sustainable improvements Privatization of public services Engaging in strategic approach 7
Social Enterprise It Matters Because. New Models of Opportunities and Innovation (Blended Value Approach) New Models of Sustainability and Development New Models of Scale and IMPACT.. New Opportunities for Teaching and Learning 8
A Few Recent Trends Many of today's social entrepreneurs are blurring boundaries between the nonprofit and for-profit sectors, as they: Search for more sustainable and systemic solutions to social problems. Explore ways to improve organizational effectiveness and efficiency. 9
Social Venture Models Source: Academy for Entrepreneurial Leadership 10
Overarching Representation of Contemporary Entrepreneurship 11
Research Approach In-depth qualitative case study approach (Yin,1994; Eisenhardt, 1989; Martin,2010) Case study research in close interaction with practitioners who deal closely with the organizations of study (Amabile et al.,2001; Leonard-Barton,1990; Gibbert, Ruigrok and Wicki, 2008) Qualitative Interview Question Methodology (Spardeley,1979; Seidman,1991; Charmaz,2003) Data collection and analysis in several phases (Strauss,1987; Charmaz,2003; Thomas,1993) 12
Illustrative Cases: The NYC Cleantech Sector Cleantech represents more than just a business opportunity. Becoming involved in cleantech provides a chance to do good (Woetzel, 2009). Companies included in study: Verdant Power and Green Map Systems both cleantech entrepreneurial endeavors in NYC Total population of companies belonging to an incubator exclusively devoted to nurturing urban based clean technology companies, the New York City Accelerator for a Clean and Renewable Economy (NYC ACRE) of NYU-Poly Portfolio Companies at NYC ACRE 13
Observations + Discussion Drawing on Horwitch and Mulloth's comparative study of Verdant Power (VP) and Green Map Systems (GMS), both of which are in the broadly defined clean technology arena, and are also entrepreneurial endeavors, it can be stated that attaining success in cleantech entrepreneurship requires "balancing" social and commercial objectives (Horwitch and Mulloth, 2010). The companies in NYC ACRE exhibited a combination of traditional for-profit approaches as well as socially-driven approaches. The companies in the accelerator appeared to reach the hybrid middle ground very rapidly, almost from the beginning. 14
Observations + Discussion 15
Observations + Discussion Organizations in the hybrid middle ground seek to: Address the inadequacies of not-for-profit activities by proactively attempting to commercialize their products and/or services; and at the same time, To have an environmental and/or social impact. The pace of evolution of the eight NYC ACRE cleantech firms were quite different from that of Verdant Power or Green Maps System. The eight incubator-nourished firms entered the hybrid middle at a very early stage of their development. The role of the incubator is to help these companies reach the hybrid middle ground very rapidly, as in the case of NYC ACRE. 16
Observations + Discussion The hybrid middle ground emphasizes the "conflict" of balancing social and commercial objectives: Human resource allocation Funding allocation Organizational structure Changing missions, and Strategic orientation Further advances in understanding the inherent "conflicts" will extend our understanding of social entrepreneurship, which is growing and attracting increasing numbers of individuals and groups. Using a perspective that emphasizes the hybrid middle ground for both research and practice will facilitate development of effective managerial strategies for entrepreneurship and will assist those who undertake social enterprises. 17