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Clean Energy Entrepreneurship in Sub-Saharan Africa
Abstract
Many clean energy ventures, particularly those in the early stage and operating in the developing world, never get off the ground because traditional sources of capital like banks tend to shy away from sectors that seem unfamiliar or too risky. As highlighted most recently in the COP21 Paris Climate Change summit in December 2015, there is a critical gap in market understanding of and limited scholarly research on the role clean energy entrepreneurship can play in addressing energy poverty and sustainable business model development in the developing world. To address these gaps, this chapter seeks to connect the theory and practice of clean energy entrepreneurship in sub-Saharan Africa. Three issues and questions will be explored in this chapter. First, what are the critical differences in terms of sustainability and entrepreneurship between industrialized OECD countries and emerging markets and developing countries? Second, what key issues and questions need to be addressed in order to design, build, and scale a clean energy entrepreneurial ecosystem in sub-Saharan Africa? Third, what is the future outlook for clean energy entrepreneurship in sub-Saharan Africa?
... In addition, Knuckles [33] argues that most studies typically overlook the nuances of firm-level processes in BoP settings. Moreover, the critical issue of entrepreneurial efforts has been under-examined in the literature on low-income markets, as Park [48] indicates. The current case study attempts to fill the research gap concerning firm-level processes by focusing on the mini-grid operations and entrepreneurial efforts of HPS. ...
... Therefore, a process-centric view of social entrepreneurship [9] has a number of distinct advantages, while we acknowledge other interpretations of social entrepreneurship [80]. First, the process-centric framework helps interpret nuances related to the firmlevel processes (as Knuckles [33] suggests) and entrepreneurial efforts (as asserted by Park [48]) of HPS. Second, this framework fits the multidimensional nature of mini-grid operations involving market imperfections and resource constraints in the rural BoP environment. ...
... To augment the findings of previous studies on business models (see [33,34,45,49,51]), we propose a new business model framework (see Table 3) that takes into account the on-site experiences and HPS's firm-level processes. This framework embraces entrepreneurial efforts, as suggested by Park [48]. Furthermore, unlike user-centric business models (e.g., [133]),the framework adopts an organisational perspective. ...
Policy-makers struggle with the following wicked problem in the energy access context: if existing socio-technical solutions can alleviate energy poverty, why is the energy transition slower than expected in rural Bottom of the Pyramid (BoP) markets? Here, social enterprises are starting to play a vital role. Using Husk Power Systems (HPS) as a longitudinal case study, we analyse how a social enterprise in India attempts to serve low-income customers. In this study, we aim to address the following research question: how and to what extent can a mini-grid based social enterprise resolve the technical and organisational challenges associated with providing services in a rural BoP environment? Our interdisciplinary approach navigates the landscape between social entrepreneurship and socio-technical aspects of mini-grid operations in the rural BoP market using a Multi-Level Perspective (MLP). We rely on narrative analysis to delineate the complexities of mini-grid operations in low-income settings to integrate on-site experiences and firm-level processes to energy access discourse. The paper argues that continuous conflicts exist between social and commercial objectives concerning the socio-technical configuration of mini-grids in the rural BoP markets. As this case study reveals, social enterprises need to manage the socio-technical complexities inherent to mini-grid processes; otherwise, customer affordability and business viability become an unsolvable paradox. The sustainability of a business model depends on how socio-technical aspects of the mini-grid are designed, managed and operated. Finally, this study proposes a business model framework integrating social and technical aspects employing socio-technical regimes in the MLP.
... In addition, Knuckles [33] argues that most studies typically overlook the nuances of firm-level processes in BoP settings. Moreover, the critical issue of entrepreneurial efforts has been under-examined in the literature on low-income markets, as Park [48] indicates. The current case study attempts to fill the research gap concerning firm-level processes by focusing on the mini-grid operations and entrepreneurial efforts of HPS. ...
... Therefore, a process-centric view of social entrepreneurship [9] has a number of distinct advantages, while we acknowledge other interpretations of social entrepreneurship [80]. First, the process-centric framework helps interpret nuances related to the firmlevel processes (as Knuckles [33] suggests) and entrepreneurial efforts (as asserted by Park [48]) of HPS. Second, this framework fits the multidimensional nature of mini-grid operations involving market imperfections and resource constraints in the rural BoP environment. ...
... To augment the findings of previous studies on business models (see [33,34,45,49,51]), we propose a new business model framework (see Table 3) that takes into account the on-site experiences and HPS's firm-level processes. This framework embraces entrepreneurial efforts, as suggested by Park [48]. Furthermore, unlike user-centric business models (e.g., [133]),the framework adopts an organisational perspective. ...
... This implies that environmental degradation is minimized when industrialization is effectively implemented with caution and the use of renewable resources. Feleke et al. (2021), Imasiku et al. (2020), andPark (2016) all emphasized the importance of incorporating bioeconomy and renewable energy into existing institutional frameworks. ...
This study explores the nexus between natural resource depletion, renewable energy use, and environmental degradation in 48 sub-Saharan African (SSA) countries from the period 2000 to 2020 using generalized panel quantile regression. The findings show that, at 90th quantiles the magnitude of natural resource depletion is positive and stronger associated with environmental degradation in SSA. This is probably attributed by countries with higher natural resource depletion such as Congo Republic (37.10%), Equatorial Guinea (27.60%), Angola (21.14%), Gabon (12.84%), Chad (12.19%), Burundi (8.92%), Uganda (6.16%), and Congo Democratic (5.24%). Furthermore, at lower quantiles (30th and 10th), natural resource depletion negatively affects environmental degradation in SSA. This might be attributed by countries with negligible natural resource depletion like Carbo Verde (0.16%), Central African Republic (0.04%), Comoros (1.17%), Eswatini (0.01%), Gambia (0.92%), Guinea-Bissau (0.33%), and Madagascar (0.07%). Moreover, the findings show that renewable energy use reduces environmental degradation and is statistically significant at almost all quantiles. Finally, the findings reveal that industrialization, trade, and economic growth all contribute to environmental degradation (i.e. carbon emissions) in SSA. The policy implication is to adopt measures that reduce poverty, which is linked to natural resource depletion, and scale up renewable energy use technologies for SSA. Policymakers should develop strategies to reduce carbon dioxide emissions and enable better use of natural resources by enforcing environmental laws. Concurrently, we propose natural resource management to be multi-sectoral and integrated into institutional structures by allocating funds to the natural resources sector for intervention programs in SSA countries.
... Governments should provide a conducive environment for RE entrepreneurs to participate in transitioning towards a clean energy system. Entrepreneurs in developing and emerging countries such as African countries face multifaceted challenges in attempting to invest in and develop clean energy infrastructure (Park, 2016). Comparatively, countries have inconsistent levels of information regarding the state of their RE contexts, let alone the contexts regarding RE IPPs. ...
... This paper attempts to fill the knowledge gap of the relatively recent phenomenon of DRE entrepreneurship in SSA focusing on a review of the key technologies and business models and the market-enabling factors for scale and impact [18]. Literature relating to renewable energy (RE) entrepreneurship topics can be clustered into five main themes: (1) RE technologies, business models, market, and industry analyses; (2) energy access journal articles, policy notes, market studies, and practitioner insights, especially relating to DRE, sustainable energy, and rural electrification; (3) entrepreneurship and innovation research and market trends in SSA; (4) entrepreneurship, inclusive business, social enterprise, and enterprise-based solution practitioner insights and policy recommendations; and (5) RE startup, entrepreneur, investor, entrepreneur support programs databases, blogs, websites, and press releases. ...
Purpose of Review
This review of distributed renewable energy (DRE) entrepreneurship analyzes the market demand and unique market characteristics in sub-Saharan Africa (SSA) that drive technology-enabled DRE entrepreneurial solutions through innovative business models. It further examines how policy and regulatory challenges need to be overcome for scale and impact.
Findings
The unmet energy demand in SSA provides significant opportunities for DRE entrepreneurs to complement and/or substitute grid-based systems through renewable energy solutions. The characteristics of DRE solutions such as affordability, modularity, flexibility, and sustainability endow competitive advantages in small-scale price-sensitive market segments especially in rural and remote settings. The viability and scalability of business models in the DRE sectors are highly dependent on a conducive policy and regulatory-enabling environment.
Summary
DRE entrepreneurs are disrupting energy markets by combining technologies in renewable energy, energy efficiency, mobile payment, and data management systems to meet energy demand especially in price-sensitive, rural and remote markets.
The Global South comprising economically disadvantaged regions of the world face various challenges such as limited access to electricity, clean water, industrialization, and food security. Solar energy, as a sustainable and abundant resource, holds great potential to address these challenges. Despite its immense potential, the Global South encounters hurdles related to technology adoption, infrastructure, and financial constraints. This review examines the history, classifications, global statistics, merits, and demerits of solar technology in the Global South. Furthermore, it delves into various applications of solar energy, including extreme environments, residential electricity generation, transportation, and industrial usage in this region. This study concludes by providing new insighths and highlighting the significant role solar energy can play in shaping the future of the Global South if challenges are adequately addressed, and opportunities are embraced.
This study explores the nexus between natural resources depletion, renewable energy and environmental degradation in 48 sub-Saharan African (SSA) countries from the period 2000 to 2020 using generalized panel quantile regression. The findings show that, at 90th quantiles the magnitude of natural resources depletion is positive and stronger associated with environmental degradation in SSA. This is probably attributed by countries with higher natural resources depletion such as Congo Republic (37.10%), Equatorial Guinea (27.60%), Angola (21.14%), Gabon (12.84%), Chad (12.19%), Burundi (8.92%), Uganda (6.16%) and Congo Democratic (5.24%). Furthermore, at lower quantiles (30th and 10th ), natural resources depletion negatively affects environmental degradation in SSA. This might be attributed by countries with negligible natural resource depletion like Carbo Verde (0.16%), Central African Republic (0.04%), Comoros (1.17%), Eswatini (0.01%), Gambia (0.92%), Guinea-Bissau (0.33%) and Madagascar (0.07%). Moreover, the findings show that renewable energy reduces environmental degradation and is statistically significant at almost all quantiles. Finally, the findings reveal that industrialization, trade and economic growth all contribute to environmental degradation (i.e. carbon emissions) in SSA. The policy implication is to adopt measures that reduce poverty levels, which is linked to natural resources depletion and scaling up renewable energy use technologies for SSA. Concurrently, we propose the natural resource management to be multi-sectoral and integrated into institutional structures by allocating fund to the natural resources sector for intervention programs in SSA countries. All these initiatives will help to reduce carbon emissions and protect the environment in future.
A deeper, a more nuanced examination of Kenya’s solar energy enterprise development has the potential to generate new theoretical and practice insights into energy and sustainability transition process in a developing country context. Based on a review of energy/sustainability transition articles on Kenya, East Africa, and sub-Saharan Africa published in select energy, sustainability, and management journals, this article highlights four issues and questions related to Kenya’s solar energy enterprise development that represent fertile ground for further scholarly analysis. Firstly, how can transition policies be designed and developed with strong social and gender justice orientations? Secondly, how can market development be more effectively linked to the sustainable development of local communities? Thirdly, how can politics and power dynamics be better aligned with the transition process? Fourthly, how can the private sector work with greater collaboration with the public sector to achieve more integrated policy and market outcomes?
Sub-Saharan Africa (SSA) is one of the least electrified regions in the world and also a region that is characterized by poverty and inequality due to high levels of climate change vulnerability. In order to reduce greenhouse gas emissions and facilitate the attainment of the Sustainable Development Goals, SSA policymakers are compelled to devise new innovative strategies and policies to enhance investments in renewable energy technologies (RETs). Accordingly, this chapter provides an assessment of some strategies to accelerate RET deployment and the potential of polycentric governance systems to improve RET deployment. The assessment concluded that even though renewable energy investments through climate finance and microfinance modalities are not at a level sufficient to ensure that universal energy access can be attained in the region, SSA can still accelerate its progress on RET deployment by utilizing nationally determined contributions as instruments to direct South-South aid, trade, and investments into priority renewable energy sub-sectors.
This study aims to develop a model for the enablers, critical success factors (CSF) and barriers to frugal innovation (FI). A systematic literature review (SLR) conducted on 372 documentaries of five databases and semistructured interviews conducted with active industrial and academic experts in the innovation field. Then, factors obtained from SLR and interviews placed in two questionnaires with Likert spectrum and the questionnaires were submitted to 200 convenient samples to determine the importance of factors and then ranked through the Friedman test. Based on the findings, ‘optimization of energy consumption in industries, collaborating with local companies, management supports, paying attention to the needs of the local market and reducing the profit margin’ are among the enablers and CSFs of FI. ‘Lack of business acumen among local partners, senior management reluctances, challenging in R&D, challenges of prototyping in product development and currency fluctuations’ are among the barriers of FI.
Some studies indicate that climate change policy failures are endemic to policymakers in both developed and developing countries. Consequently, the increased vulnerability of people in Sub-Saharan Africa (SSA) can partly be attributed to developed-country stakeholders’ inability to understand climate change vulnerability in the context of SSA and a fear on the part of policymakers to implement substantive policy innovations. In order to determine how social innovation and entrepreneurship can be harnessed to enhance climate change resilience and improve the implementation of the Sustainable Development Goals (SDGs), an inductive analysis using secondary data consisting of research articles, policy briefs, project reports and case studies was undertaken. Agribusiness development–focused entrepreneurship and social innovation were noted to have the potential to facilitate the development of new institutions and social systems that can correct structural inequalities and improve investments in SSA’s agriculture sector, thereby reducing local vulnerabilities to climate change and facilitating the attainment of SDG 16 (i.e., promote peaceful and inclusive societies for sustainable development). This article is among the foremost in highlighting how climate change policies that integrate entrepreneurship and rural-to-rural migration as means to reduce vulnerability can reduce youth unemployment and support the ‘leave no one behind’ principle.
Going Green has increasingly become a global trend recently because of its potential benefits to the society, environment, economy, and future of life. Using case studies, theories, and various intertwined principles, Chap. 1 demonstrates the way Going Green entails embracing five fundamental principles which are important for making sure that we embrace sustainable lifestyles. Apart from the five principles, the chapter describes the various critical ways of going green at the individual, organizational as well as national level. The case studies of the Maasai in East Africa and Fulani in West Africa are used for bringing out the concept of the Tragedy of the Commons. In addition to the case studies, the first chapter also critically discusses the benefits related to going green, with the major pros identified being cost, environment, reputation, improved health, sustainable development, invention, and innovation. A notable contribution to the green initiative in this chapter is Wangari Maathai’s Green Belt Movement. Also, future trends are identified to predict the future of going green.
Sub-Saharan Africa (SSA) is one of the least electrified regions in the world and also a region that is characterized by poverty and inequality due to high levels of climate change vulnerability. In order to reduce greenhouse gas emissions and facilitate the attainment of the Sustainable Development Goals, SSA policymakers are compelled to devise new innovative strategies and policies to enhance investments in renewable energy technologies (RETs). Accordingly, this chapter provides an assessment of some strategies to accelerate RET deployment and the potential of polycentric governance systems to improve RET deployment. The assessment concluded that even though renewable energy investments through climate finance and microfinance modalities are not at a level sufficient to ensure that universal energy access can be attained in the region, SSA can still accelerate its progress on RET deployment by utilizing nationally determined contributions as instruments to direct South-South aid, trade, and investments into priority renewable energy sub-sectors.
The relationship between Growing economies have recovered from the global financial crisis faster than many developed economies and increased the consumption significantly over the past years. In light of the role of their consumption growth in global sustainability, this paper analyzes the decisive factors leading to a virtuous cycle between consumption propensity and investment in growing economies. An empirical analysis was conducted to identify the contributing factors to such a cycle in 40 countries. They could be divided into three economic groups by the marginal propensity to consume. The results suggest that growing economies suffer from an autarky cycle between consumption and GDP due to insufficient investment elasticity against consumption elasticity while advancing and advanced economies allow GDP growth to induce investment efficiently. A possible trigger for inducement of investment by growth in growing economies can be 'frugality'.
Economic development is a priority for all nation-states, whether developing or developed. In recent times, a few among the developing nations often referred to as the emerging economies have attracted the world s attention because of their fast pace of economic growth. While the similarities among these nations (for example the BRICS) in the pattern of their economic growth are highlighted and discussed, the differences are often glossed over. This book, therefore, attempts to present the diverse ways in which entrepreneurship is facilitated in emerging economies, through a compilation of research papers from six different countries (India, China, Singapore, Hong Kong, Nigeria and New Zealand) belonging to the class of emerging economies. The papers included in this book cover a variety of topics related to the creation and management of an entrepreneurial ecosystem, such as intercultural interactions, IPR issues, government policies for SMEs, social entrepreneurship, opportunity identification, green entrepreneurship, employee entrepreneurship, symbiotic ventures and social capital, social fluidity mapping for reducing failure stigma, green awareness in the corporate world and among entrepreneurs, venture capital for growth, immigrant entrepreneurs, entrepreneurial success and life satisfaction, among others. The contributions are supported by an introductory chapter that provides an integrative framework by unifying the diverse patterns of economic development in the different countries under various institutional inadequacies as a process of muddling-through to development, necessitated by the non-systematic development of the ecosystem for new venture creation. This book is indeed a must-read for those interested in understanding the process of entrepreneurship and economic development in emerging economies.
Much effort goes into building markets as a tool for economic and social development; those pursuing or promoting market building, however, often overlook that in too many places social exclusion and poverty prevent many, especially women, from participating in and accessing markets. Building on data from rural Bangladesh and analyzing the work of a prominent intermediary organization, we uncover institutional voids as the source of market exclusion and identify two sets of activities - redefining market architecture and legitimating new actors - as critical for building inclusive markets. We expose voids as analytical spaces and illustrate how they result from conflict and contradiction among institutional bits and pieces from local political, community, and religious spheres. Our findings put forward a perspective on market building that highlights the on-the-ground dynamics and attends to the institutions at play, to their consequences, and to a more diverse set of inhabitants of institutions.
Management scholarship has grown tremendously over the past 60 years. Most of our paradigms originated from North America in the 1950s to the 1980s, inspired by the empirical phenomena and cultural, philosophical, and research traditions of the time. Here following, we highlight the contextual differences between the East and the West in terms of institutions, philosophies, and cultural values and how they are manifest in contemporary management practices. Inspired by theory development in management studies over time, we offer insights into the conditions facilitating new theories, and how these might apply to emergent theories from the East. We discuss the contributions of the six papers included in this special research forum as exemplars of integrating Eastern concepts and contexts to enrich existing management theories. We highlight the difficulty with testing Eastern constructs as distinct from Western ones by discussing the properties of equivalence, salience, and infusion in constructs. We provide directions for future research and encourage an agentic view to creating new theories and paradigms.
The bottom of the pyramid (BOP) in the global distribution of income has been promoted as a significant opportunity for companies to grow profitably. Under the BOP approach, poor people are identified as potential customers who can be served if companies learn to fundamentally rethink their existing strategies and business models. This involves acquiring and building new resources and capabilities and forging a multitude of local partnerships. However, current BOP literature remains relatively silent about how to actually implement such a step into the unknown. We use two BOP cases to illustrate a strategic framework that reduces managerial complexity. In our view, existing capabilities and existing local BOP models can be leveraged to build new markets that include the poor and generate sufficient financial returns for companies to justify investments.
We develop the institutional configuration perspective to understand which national contexts facilitate social entrepreneurship (SE). We confirm joint effects on SE of formal regulatory (government activism), informal cognitive (postmaterialist cultural values), and informal normative (socially supportive cultural norms, or weak-tie social capital) institutions in a multilevel study of 106,484 individuals in 26 nations. We test opposing propositions from the institutional void and institutional support perspectives. Our results underscore the importance of resource support from both formal and informal institutions, and highlight motivational supply side influences on SE. They advocate greater consideration of institutional configurations in institutional theory and comparative entrepreneurship research.
This paper gives a comprehensive overview of the commonly used terms jugaad, frugal innovation, frugal engineering, constraint-based innovation, Gandhian innovation, catalytic innovation, grassroots innovation, indigenous innovation, and reverse innovation. Based on that, a conceptual framework is introduced consisting of three core dimensions: sophistication, sustainability, and emerging market orientation. On the basis of these dimensions, analogies and distinctions between the terms are identified and general tendencies are explored such as the increasing importance of sustainability in social and ecological context or the growing interest of developed market firms in approaches from emerging markets. Hence, the presented framework supports further research in new paradigms for research and development (R&D) in developed market firms (DMFs), particularly in relation to emerging markets. This framework enables scholars to compare concepts from developed and emerging markets, to address studies specifically by using consistent terms, and to advance research into the concepts according their characterization.
In recent years recurring political, economic, and environmental crises require questioning and re-evaluating dominant pathways of human development. However, political and economic frameworks seem to encompass deeply rooted resistance to fundamental changes (e.g., global financial crisis, climate change negotiations). In an effort to repair the system as fast as possible, those paradigms, mechanisms, and structures that led into the crisis are perpetuated. Instead of preserving conventional patterns and focusing on continuity, crises could be used as an opportunity for learning, adapting, and entering onto more sustainable pathways. However, there are different ways not only of arguing for sustainable pathways of development but also of conceptualizing continuity and change. By focusing on institutions, we illustrate the tension between the concepts of continuity and change, how they interact, and how they build or degrade institutional resilience. The analysis draws on empirical research in South Africa and Uzbekistan, which were locked in persistent regimes over decades. Faced with the challenge to transform, Uzbekistan chose a pathway of institutional continuity, while South Africa opted for comprehensive reforms and a high level of change. Based on these case studies, we illustrate the advantages and disadvantages of institutional continuity and change. Elements of institutional continuity during times of transformation include preserving key institutions, which define how the rules are made; maintaining social memory; providing transparency of reform processes and allowing them time to take effect. Elements of institutional change required during phases of consolidation include flexible legislation; regular reviews; and adaptation of legislation during and after implementation.
Initially hailed as a miracle crop for biofuel production, Jatropha has recently attracted criticism for competing with food
production, causing adverse biodiversity impacts, and jeopardizing land access by rural populations in tropical countries.
This article analyzes the contested development of Jatropha biofuel sector in Tanzania by anchoring two new concepts of “organizational
models” and “institutional arrangements” to the sectoral systems of innovation perspective. The notion of “organizational
models” brings into relief the heterogeneity of actors in an innovation system and the ways in which the actors form networks,
within and across national borders, to organize innovative activities. The concept of “institutional arrangements” refers
to the ensemble of formal and informal institutions assembled during Tanzania’s colonial and postcolonial eras, which directly
govern innovative activities in specific organizational models. Based on a location-specific and historically grounded institutional
analysis within the innovation system framework, implications are drawn for the future development of Tanzania’s Jatropha
sector including its links with European markets and for the regulation of “next-generation” biofuels.
Rapidly developing countries like India face numerous challenges related to social and environmental sustainability, which are associated with their fast economic growth and rising energy demand, climate change, and widening disparities between the rich and the poor. Recently, a number of claims have been made in the literature that the prospects of alternative development pathways in emerging economies in Asia are becoming more likely, and that these economies might even leapfrog Western initiatives. This paper contributes by reporting on the five most visible and established initiatives in the area of off-grid PV solar energy in India, specifically homing in on the innovative business models that are evolving. We develop a new typology of upscaling dimensions in order to analyze these five initiatives. They are found to be quite successful, but have difficulty in terms of reaching the poorest of the poor (deep upscaling) and bringing about required institutional change (institutional upscaling).
Innovation and community action are two important strands for sustainable development. Yet they have not hitherto been linked. Community action is a neglected, but potentially important, site of innovative activity. Bridging this divide offers a novel theoretical approach to the study of community-level action for sustainability. The opportunities presented by grassroots innovation are discussed, as are the challenges confronting activity at this level, and a new agenda for community-level sustainable development research and policy.
Purpose – Social entrepreneurial organizations have gained in awareness and interest among researchers, yet we know relatively little about how these organizations are able to create social and economic value. This paper seeks to understand how such organizations have managed to achieve scale and sustainability in developing economies – often lacking the institutions, networks and resources required to support their growth – whilst also maintaining their focus on a social mission. Design/methodology/approach – The paper presents a comparative case analysis of three social entrepreneurial organizations based in Bangladesh, Egypt and Spain that have been widely recognized as successful. It utilizes an explorative research approach with data gathered from many sources including published and unpublished articles, existing case studies, personal interviews and internet sources. Findings – Analysis of these three business models reveals common patterns in the use of strategic resources, in their value networks, and in customer interface. The findings suggest that successful social entrepreneurial organizations: proactively create their own value networks of companies that share their social vision; develop resource strategies as an integral part of the business model; and integrate their target groups into the social value network. Research limitations/implications – There are limitations in the sampling and data analysis approach, however, this study provides a first step towards a more inclusive empirical research agenda in the future. Practical implications – The paper offers interesting insights for existing for-profit multi-business companies to rethink their business models, particularly for developing country contexts. Originality/value – This paper encourages managers to think beyond the creation of economic value and demonstrates how social entrepreneurs achieve sustainable growth based on building complementary networks of stakeholders and resources integrated into the value chain. It provides propositions regarding the business models of successful social entrepreneurial organizations and hopes to stimulate managerial interest in alternative business models and future empirical research which builds on these qualitative findings.
Purpose – Although the crucial role of business, and of business-based approaches, in development is increasingly emphasised by academics and practitioners, we lack insight into the ‘whether and how’ of viable business models, in environmental, social and economical terms. This article analyses private-sector involvement in development, including a business perspective of firm-level factors, taking the case of sustainable energy in developing countries. Design/methodology/approach – In the framework of the international business and development debate, we examine the ‘state of the art’ on sustainable energy and business involvement, and present our own research on illustrative cases from local companies involved in renewable, off-grid rural electrification. Implications are discussed, viewed from the broader perspective of business models. Findings – Existing studies on sustainable energy take macro-economic and/or policy-oriented approaches, containing specific case studies of rural electrification and/or recommended financing/delivery models. We categorize them on two dimensions (levels of subsidies and public/private involvement) and conclude that market-based models operating without subsidies do hardly exist in theory – and also not in practice, as our study shows that companies can at best have part of their portfolio non-subsidized based on customer segmentation or require socially-oriented investors/funders. Research limitations/applications – This exploratory study can be a starting point for further indepth analyses. Practical implications – The article outlines challenges faced by companies/entrepreneurs when aiming for viable business models, and provides insights to policy-makers who want to further the role of business in sustainable (energy) development. Societal implications – Sustainable energy and development are crucial and interlinked issues highly relevant to global society, as exemplified by the UN year of Sustainable Energy for All and Rio+20. Originality/value – The article contributes new dimensions and perspectives that have been left unexplored, and that are crucial for reducing poverty and stimulating sustainable (energy) development.
This article explains how entrepreneurship can help resolve the environmental problems of global socio-economic systems. Environmental economics concludes that environmental degradation results from the failure of markets, whereas the entrepreneurship literature argues that opportunities are inherent in market failure. A synthesis of these literatures suggests that environmentally relevant market failures represent opportunities for achieving profitability while simultaneously reducing environmentally degrading economic behaviors. It also implies conceptualizations of sustainable and environmental entrepreneurship which detail how entrepreneurs seize the opportunities that are inherent in environmentally relevant market failures. Finally, the article examines the ability of the proposed theoretical framework to transcend its environmental context and provide insight into expanding the domain of the study of entrepreneurship.
In many developing countries those living in poverty are unable to participate in markets due to the weakness or complete absence of supportive institutions. This study examines in microcosm such institutional voids and illustrates the activities of an entrepreneurial actor in rural Bangladesh aimed at addressing them. The findings enable us to better understand why institutional voids originate and to unpack institutional processes in a setting characterized by extreme resource constraints and an institutional fabric that is rich but often at odds with market development. We depict the crafting of new institutional arrangements as an ongoing process of bricolage and unveil its political nature as well as its potentially negative consequences.
As well as review the literature on the notion of institutional entrepreneurship introduced by Paul DiMaggio in 1988, we propose a model of the process of institutional entrepreneurship. We first present theoretical and definitional issues associated with the concept and propose a conceptual account of institutional entrepreneurship that helps to accommodate them. We then present the different phases of the process of institutional entrepreneurship from the emergence of institutional entrepreneurs to their implementation of change. Finally, we highlight future directions for research on institutional entrepreneurship, and conclude with a discussion of its role in strengthening institutional theory as well as, more broadly, the field of organization studies.
Multinational enterprises (MNEs) face a range of challenges when entering developing countries, including the need to adapt their business models to local markets' cultural, economic, institutional and geographic features. Where they lack the tangible resources or intangible knowledge needed to address these challenges, MNEs may consider collaborating with non-profit nongovernmental organizations (NGOs) to help facilitate new modes of value creation. In such cross-sector partnerships, parties contribute complementary capabilities along each stage of the value chain to develop products or services that neither could produce alone, creating and delivering value in novel ways while minimizing costs and risks. Our conceptualization broadens the business model concept to incorporate cross-sector collaborations, arguing such partnerships can create and deliver both social and economic value, which can be mutually reinforcing. We highlight, in particular,the competencies and resources NGOs can bring to such partnerships, including market expertise, legitimacy with clients/customers, civil society players and governments, and access to local expertise and sourcing and distribution systems. Beyond contributing to particular value chain activities, NGOs and companies can offer missing capabilities to complete each other's business models, or even co-create new and innovative multiorganizational business models. We stress four strategic imperatives for the success of corporate-NGO developing market partnerships e innovative combinations of firm and NGO resources and skills; the importance of trust-building, and of fit between the two organizations' goals; and supporting and understanding the local business infrastructure and environment.
We investigate the challenge how the outcomes of innovation for inclusive growth, the novel organizational recipes, can be scaled to match the dimension of poverty. We conceptualize scaling as sustained event regularities between doing A and expected outcomes B. Building on a critical realist perspective, we develop an analytical framework of organizational closure and apply it to an extreme case, an organization with an inclusive growth model that has sustained event regularities for more than two decades. Our analysis reveals closure as an organizational competence with important implications for achieving scale in the context of poverty. We develop of a number of propositions between the link of organizational closure and scaling with implications for practice and further academic research.
For decades, Africa was generally perceived as the dumping ground for obsolete technologies. In recent years, technological leapfrogging, which is associated with the newly industrialized economies in Asia, has transpired in some key industries. In this article, we present the solar photovoltaic industry as one such industry and an integrated model of scaling up solar technologies. We identified five unique models aimed at scaling up solar energy in Africa: state-led, nongovernmental organization and other agency–led, emerging-market multinational enterprises–led, Avon, and pay-as-you-go models. Our analysis focused on four countries in particular (Ghana, Nigeria, South Africa, and Kenya) and Africa in general. Despite the promising opportunities of this industry, a number of factors such as high up-front capital costs and limited end-user financing schemes have limited the technological process. We conclude by outlining the implications of the findings for theory and practice. © 2014 Wiley Periodicals, Inc.
Although theoretically the importance of sustainable business models has become widely accepted in the literature, little is known about how managers deal with practical issues such as differences in stakeholder interests. In this paper, we focus on the question: What strategies can help decision-makers to better connect with stakeholders and overcome the challenges of conflicting interests when considering sustainability in their business models? Our research draws on two case studies in the Brazilian energy sector: the national oil company Petrobras and its attempts to develop biodiesel, and the national electrical utility Eletrobras and its attempts to provide electricity to impoverished communities. This paper is based on original qualitative data derived frominterviews with 138 key informants conducted between 2003 and 2010 with supply chain members and other stakeholders, as well as secondary sources. We draw from a number of literature streams to develop our paper. One stream relates to sustainable supply chain and the recognition of the relationship among economic, environmental and social values rather than only focusing on economic and/or environmental aspects. Another stream suggests that BOP (Bottom of the Pyramid) settings present potential ideal opportunities to connect business with sustainability. Finally, we use stakeholder theory to analyze how sustainable values can drive the operationalization of sustainable business models. We suggest that a combination of approaches promoting the participation of a diverse number of local stakeholders, encouraging both learning and capability building and shifting stakeholder values from single to multiple objectives are critical to overcome the challenges of stakeholders conflicting interests.
OVERVIEW: The quality and number of innovations developed by multinational companies from emerging countries is increasing dramatically. In particular, frugal innovations—“good-enough, affordable products that meet the needs of resource-constrained consumers—have created tremendous demand in emerging markets. While the development of such products has largely been the domain of local corporations in emerging countries, Western corporations have recently started to engage in frugal innovation as well. This is a difficult task for Western firms, however, because their business models and organizational structures are traditionally designed for the development of advanced products for the affluent few at the top of the economic pyramid. Using Swiss weighing-instrument manufacturer Mettler Toledo as a case example, this article suggests that frugal innovations are largely developed by local R&D subsidiaries of Western firms in emerging countries. A substantial degree of autonomy for those local R&D subsidiaries, including product-portfolio responsibilities, can facilitate the development of frugal innovation.
Organizations struggle when trying to manage an existing business and a related new strategic experiment simultaneously.The new venture must forget much of what has helped the corporation become successful but must borrow its resources at the same time.Case studies of ten companies conducted by the authors, and additional case studies by others, were the basis of this research. To overcome the challenges posed by strategic innovation, organizations must adopt a dual-purpose design. In dual-purpose organizations, the core business and the new venture are distinct subunits within the corporation and have very different DNA.To create its own organizational DNA, the new business must forget the core firm's business definition and competences, as well as the predictability associated with its proven business.The new firm must also hire outsiders at the operational and management level, create its own business functions and processes, develop its own performance measures, and establish its own unique culture of experimentation and learning. Once the new firm has overcome the difficulties that accompany borrowing, it can borrow, among other things, the core enterprise's physical assets (such as manufacturing capacity), brands, expertise, and process outputs.Illustrations of each borrowing strategy are offered.In order to become a distinct organization capable of exploiting links to the core firm, the new strategic venture must be carefully supervised by an executive sponsor. (SAA)
This study undertakes an analytical comparisonbetween social and commercial entrepreneurship using a model from commercialentrepreneurship. It is an exploratory analysis of the extent that elementsapplicable to commercial entrepreneurship are transferable to socialentrepreneurship. Conversely, it explores the ways insights from social entrepreneurship canilluminate an understanding of commercial entrepreneurship. Socialentrepreneurship can be defined broadly or narrowly, but the authors define itas an innovative, social-value creating activity that can occur within oracross the nonprofit, business, or government sectors. The comparative analysis is guided by four theoretical propositions focusingon four variables: (1) market failure, (2) mission, (3) human and financeresource mobilization, and (4) performance measurement. These will createdifferences between social and commercial entrepreneurs. A commercial entrepreneurship model is proposed in order to approach thesocial entrepreneurship process more systematically and effectively. This modelstresses the dynamic fit among the people, the context, the deal, and theopportunity. For each element, the similarities and differences between socialand commercial entrepreneurship are examined. The analysis draws out lessonsuseful for both social and commercial entrepreneurs. Finally, a revised social entrepreneurship model is proposed. At the centeris a Venn diagram in which the intersection of opportunity, capital, and peopleis a core social value proposition. Surrounding the Venn diagram are the tax,regulatory, sociocultural, macroeconomy, political, and demographics forces. Todeliver the social value proposition effectively, all components must achieve astate of alignment. (TNM)
This research explores the need to establish new sustainable business models in China and uses multiple objectives to examine in a sample of Chinese companies the reality of the level of sustainable development, environmental awareness and performance, community responsibility, performance barriers and drivers and other sustainability issues. A mixed methodology was adopted, using a questionnaire survey and interviews with 20 manufacturing companies in Guangzhou and Shenzen. Evidence from the small sample of companies demonstrates the lack of significant sustainable development practices in China, although small and medium sized companies appeared to show interest in this area and would like to further contribute to for example triple bottom line objectives. Increasing concerns are found from the company level regarding the need to use renewable energy, source alternative sustainable materials, close the loop of the supply chain, improve the quality of products produced rather than reducing cost, export to Europe and treat employees as an asset. The lack of skills, finance and knowledge are found to be prohibiting the effective embedment of sustainable development within companies and hence cause an under-performance in this regard. The study concludes that the establishing of a new business model for sustainable development in China is needed urgently, and this should be a joint effort with the Chinese government. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.
This paper reviews the opportunities and strategic choices facing banks considering branchless banking options. Technology, and in particular the spread of real-time mobile communications networks, permits financial service providers to delegate 'last mile' cash management and customer servicing functions to third-party retail outlets. By making basic deposit, withdrawal, and payment functions available securely through retail shops that exist in every village and neighborhood, there is an opportunity to dramatically increase the physical footprint of financial service providers in developing countries and to transform the basic economics of low-balance savings.
Summary This paper explores the role of indigenous and foreign innovation efforts in technological upgrading in developing countries, taking into account sectoral specificities in technical change. Using a Chinese firm-level panel dataset covering 2001-05, the paper decomposes productivity growth into technical change and efficiency improvement and examines the impact of indigenous and foreign innovation efforts on these changes. Indigenous firms are found to be the leading force on the technological frontier in the low- and medium-technology industries, while foreign-invested firms enjoy a clear lead in the high-technology sector. Collective indigenous R&D activities at the industry level are found to be the major driver of technology upgrading of indigenous firms that push out the technology frontier. While foreign investment appears to contribute to static industry capabilities, R&D activities of foreign-invested firms have exerted a significant negative effect on the technical change of local firms over the sample period.
We explore different business ventures in low-income markets in order to understand the factors influencing business model innovation in this context. Grounded in the rich data obtained from multiple case study analyses and in the received theory in strategy in low-income markets and business models, we identified a set of contingency factors that permitted us to distinguish between isolated and interactive business models. Isolated business models widen its entrance into new markets by leveraging firm's current resources and capabilities for taking advantage of existing opportunities. Interactive business models require a firm to combine, integrate and leverage both internal resources with ecosystem's capabilities to create new business opportunities. Finally, we discuss the main implications on value creation from these business models.
Behavioral scientists routinely publish broad claims about human psychology and behavior in the world's top journals based on samples drawn entirely from Western, Educated, Industrialized, Rich, and Democratic (WEIRD) societies. Researchers - often implicitly - assume that either there is little variation across human populations, or that these "standard subjects" are as representative of the species as any other population. Are these assumptions justified? Here, our review of the comparative database from across the behavioral sciences suggests both that there is substantial variability in experimental results across populations and that WEIRD subjects are particularly unusual compared with the rest of the species - frequent outliers. The domains reviewed include visual perception, fairness, cooperation, spatial reasoning, categorization and inferential induction, moral reasoning, reasoning styles, self-concepts and related motivations, and the heritability of IQ. The findings suggest that members of WEIRD societies, including young children, are among the least representative populations one could find for generalizing about humans. Many of these findings involve domains that are associated with fundamental aspects of psychology, motivation, and behavior - hence, there are no obvious a priori grounds for claiming that a particular behavioral phenomenon is universal based on sampling from a single subpopulation. Overall, these empirical patterns suggests that we need to be less cavalier in addressing questions of human nature on the basis of data drawn from this particularly thin, and rather unusual, slice of humanity. We close by proposing ways to structurally re-organize the behavioral sciences to best tackle these challenges.
Pursuit of sustainable development requires a systems approach to the design of industrial product and service systems. Although many business enterprises have adopted sustainability goals, the actual development of sustainable systems remains challenging because of the broad range of economic, environmental and social factors that need to be considered across the system life cycle. Traditional systems engineering practices try to anticipate and resist disruptions but may be vulnerable to unforeseen factors. An alternative is to design systems with inherent "resilience" bytaking advantage of fundamental properties such as diversity, efficiency, adaptability, and cohesion. Previous work on sustainable design has focused largely upon ecological efficiency improvements. For example, companies have found that reducing material and energy intensity and converting wastes into valuable secondary products creates value for shareholders as well as for society at large. To encourage broader systems thinking, a design protocol is presented that involves the following steps: identifying system function and boundaries, establishing requirements, selecting appropriate technologies, developing a system design, evaluating anticipated performance, and devising a practical means for system deployment. The approach encourages explicit consideration of resilience in both engineered systems and the larger systems in which they are embedded.