Entrepreneurship and Innovation at the Base of the Pyramid: A Recipe for Inclusive Growth or Social Exclusion?

Policy makers often see entrepreneurship as a panacea for inclusive growth in underdeveloped ‘Base of the Pyramid’ (BOP) regions, but it may also lead to unanticipated negative outcomes such as crime and social exclusion. Our objective is to improve the understanding of how entrepreneurship policies can lead to socially inclusive growth at the BOP. Drawing on data collected from Brazilian tourism destinations with varying entrepreneurship, innovation, and social inclusion policies, we argue that weak institutions coupled with alert entrepreneurs encourage destructive outcomes, especially if entrepreneurship policies are based solely on economic indicators. Policies addressing both economic and social perspectives may foster more productive entrepreneurial outcomes, albeit at a more constrained economic pace. The study extends the related BOP, entrepreneurship, global value chain, and sustainable tourism literatures by examining the poor as entrepreneurs, the role of local innovation, and how entrepreneurship policies generate different social impacts within poor communities.     

Playing with the Rules of the Game: Social Innovation for Urban Transformation

Innovation is perhaps the buzzword in local economic development policy. Associated narrowly with neoliberal ideas, conventional notions of innovation—like its capitalocentric counterparts, enterprise and entrepreneurialism—may promise higher productivity, global competitiveness and technological progress but do not fundamentally change the ‘rules of the game’. In contrast, an emerging field reimagines social innovation as disruptive change in social relations and institutional configurations. This article explores the conceptual and political differences within this pre‐paradigmatic field, and argues for a more transformative understanding of social innovation. Building on the work of David Graeber, I mobilize the novel constructs of ‘play’ and ‘games’ to advance our understanding of the contradictory process of institutionalizing social innovation for urban transformation. This is illustrated through a case study of Liverpool, where diverse approaches to innovation are employed in attempts to resolve longstanding socio‐economic problems. Dominant market‐ and state‐led economic development policies—likened to a ‘regeneration game’—are contrasted with more experimental, creative, democratic and potentially more effective forms of social innovation, seeking urban change through playing with the rules of the game. I conclude by considering how the play–game dialectic illuminates and reframes the way transformative social innovation might be cultivated by urban policy, the contradictions this entails, and possible ways forward.     

Environmental regulation and innovation driving ecological design in the UK automotive industry

The theory of ecological modernization asserts that economic and environmental goals can be integrated within a framework of industrial modernity. Its central tenet is that environmental regulation can stimulate the application of ‘clean’ technologies or techniques. Ecological modernization also contends that environmental regulation can offer business benefits from innovation through improved product design and economic performance. The EU End of Life Vehicles Directive (ELVD) reflects many of these principles, as it compels all car manufacturers to ‘take back’ and dismantle vehicles at the end of their useful lives and to remove the hazardous substances from the production process. Each component will then be either reused or recycled. The legislation forces designers to introduce ‘clean design’ and ‘design for disassembly’ practices. In light of this, we examine the impact of the directive on UK automotive component manufacturers. We find limited evidence that the EU ELVD Directive has driven product innovation beyond short‐term, incremental technological trajectories. We therefore conclude that a more radical approach, in line with the ‘dematerialization’ thesis by Dobers and Wolff (1999), is needed to generate more radical, ecological design solutions within the UK automotive industry. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Developing Alteratives: Energy,Offices and the Environment

This paper maps some of the social and commercial forces shaping the debate around ‘realistic’ or ‘appropriate’ levels of energy specification in the commercial office market. It discusses how the dynamics of the market, alternative lease arrangements, enhanced building management standards, technological innovation and shifts in cultural taste are all redefining contemporary office space and presenting new opportunities for environmental innovation. Drawing upon interviews with developers, investors, agents, occupiers and property researchers in Britain and France, the changing, often conflicting, priorities underpinning decisions about energy standards are explored. The paper explores possible ‘futures’ for office development processes in the United Kingdom. Highlighting the ebb and flow of the market, the paper points to the changing nature of tenant demand and current ‘opportunities’ for the development of alternative, more ‘realistic’ energy specification levels. Looking beyond the current property slump it examines the cultural and structural shifts likely to sustain any reformation of British real estate practices. In particular, the paper highlights contemporary debates around transformation of the institutional lease and legislative codification of energy and environmental standards. It is argued that this loose constellation of social forces promises a significant, new mutuality of interests between developers and occupiers which is cultivating ‘appropriate’ specification and procurement practices. Cet article retrace certaines des formes sociales et commerciales qui modèlent le débat sur les niveaux ‘réalistes’ ou ‘appropriés’ de spécification de l'énergie dans le marché des bureaux commerciaux. Il explique comment les dynamiques du marché, l'organisation alternative du bail, une meilleure gestion des immeubles, la nouveauté technologique et le changement des goûts culturels redéfinissent l'espace contemporain du bureau et présentent de nouvelles opportunités d'innovation de l'environnement. M'appuyant sur des entrevues avec des promoteurs, des agents, des occupants et des chercheurs sur les propriétés immobilières en Grande-Bretagne et en France, j'examine les priorités changeantes et souvent contradictoires qui supportent les décisions quant aux niveaux d'énergie. Cet article explore les ‘futurs’ possibles pour les processus de développement des bureaux au Royaume Uni. Soulignant le va et vient du marché, cet article démontre la nature changeante de la demande des locataires et les ‘opportunités’ actuelles quant au développement de niveaux alternatifs et plus ‘réalistes’ de spécification de l'énergie. En regardant par delà l'effrondement actuel du marché immobilier, il examine les mouvements culturels et structuraux qui pourraient supporter une réforme des pratiques des agents immobiliers britanniques. Cet article souligne en particulier les débats contemporains sur la transformation du bail institutionnel et la codification législative de la qualité de l'environnement et de l'énergie. Je soutiens que cette constellation décousue de forces sociales promet une nouvelle et significative mutualité d'intérêts entre les promoteurs et les occupants qui cultive les spécifications ‘appropriées’ et les pratiques d'acquisition.     

Changing consumer behaviour through eco-efficient services: an empirical study of car sharing in the Netherlands

In this paper ‘innovation’ is discussed as a strategy to change consumer behaviour to reduce the environmental impact of consumption. Innovation aims to improve the ‘production process’ of certain end results or ‘units of service’ for the consumer, which is defined as the ‘consumption technology’. This concept includes the entire organization of how these units of service are produced. ‘Eco-efficient services’ are introduced as an innovation strategy, based on theoretical considerations through which more eco-efficient consumption technologies and less environmentally damaging consumption behaviour could be realized. This strategy is explored through an empirical consumer behaviour study on commercial car sharing services in the Netherlands. Based on an inventory of the environmental effects of this approach, as exemplified by the car sharing schemes, it can tentatively be concluded that the eco-efficient services concept offers an interesting framework for reconsidering the current consumption practice and for generating innovative activities in industry. © 1998 John Wiley & Sons, Ltd and ERP Environment.     

Capability accumulation,innovation, and technology diffusion: Lessons from a Base of the Pyramid cluster

Although research on industry clusters has made many valuable contributions, a dearth of empirical evidence and theoretical reflection about the characteristics of Base of the Pyramid (BOP) clusters has persisted. Consequently, the literature still lacks a framework that incorporates the context, challenges, and dynamics encountered in such clusters. Drawing from clusters, capability accumulation, and innovation literatures, we develop a theoretical framework that provides a more fine-grained understanding of the dynamics encountered in BOP clusters, the role of support organizations, the importance of capabilities accumulation in firms, and the challenges associated with technology development and diffusion within such settings. We use case study research method conducted in a traditional granite-mining cluster in Brazil, based on 154 interviews with key informants between 1999 and 2011. Our findings suggest that BOP clusters present different dynamics when compared to clusters elsewhere, because of the existence of idiosyncrasies such as additional barriers to technology diffusion, especially when coupled with a lack of coordination and misaligned policy approaches. We contribute to the literature by arguing that the process of technology diffusion in BOP clusters is hindered by these barriers, and that technology development without wide diffusion within BOP clusters can become a source of social exclusion and wealth concentration. Moreover, in large emerging economies, global pipelines are not necessarily the only path for BOP clusters to achieve competitive advantage and sustainable growth, as suggested in the clusters literature.     

Can breakthrough innovations serve the poor (bop) and create reputational (CSR) value? Indian case studies

Though radical and complex reengineered product innovations are not discussed much in either the ‘Corporate Social Responsibility’ (CSR) or the ‘Base of the Income Pyramid’ (BoP) literature, both support the premise that if an innovation serves the poor, then it will generate CSR gains. To test this assumption with respect to breakthrough technological innovations, the present paper proposes a theoretical construct and uses it to examine two innovations launched in India, namely genetically modified cotton seeds and a HIV/AIDS drugs cocktail. Because firms decide on innovation outlays to maximize profit without including an explicit CSR component, it develops indicators to examine if any involuntary CSR effort was embedded in the innovation strategy. It confirms that though firms do not invest in innovation to earn CSR credit, some breakthrough technological innovations, not all, can trigger CSR returns. There are tradeoffs between CSR effort and BoP innovation market value. Higher the consumer surplus generated by the innovation, better the bargaining position of the innovator vis-à-vis contestations. The windows of opportunity for generating BoP market value and CSR value are context specific. A robust business strategy rather than philanthropy is needed for breakthrough technological innovations to be marketed to BoP communities.     

Towards commercial and environmental excellence: A green portfolio matrix

This article examines the strategic framework and options available for product strategy towards commercial and environmental excellence. It defines the environmental dimension as a ‘moving target’, explores a conceptual framework to integrate commercial and environmental dimensions and elaborates a ‘green portfolio matrix’. The proposed matrix is also empirically investigated as to its practical validity by using a set of secondary data including twelve product cases. Using the matrix, a company can diagnose its existing product mix from an environmental point of view, and furthermore can establish future ‘targets’ for an environmentally-friendly product portfolio. In addition, the matrix can be used as a framework for comparative analyses between strategic business units or for longitudinal assessment of a specific business entity.     

Really changing the course: the limitations of environmental management systems for innovation

The paper broadens the scope of environmental management system (EMS) research by describing how EMSs can contribute to inertia in present production systems. In conjunction with other factors this inertia can inhibit dramatic shifts toward more sustainable technologies and systems. Our approach builds upon technological lock‐in theory, which focuses on market coordination and technological interdependencies as generators of inertia in technological systems. Building on this framework, we call attention to previously under appreciated non‐market social forces and institutional structures that can further reinforce lock‐in. We argue that the co‐evolutionary mechanisms that generate increasing returns for physical technologies may also be applied to social technologies, such as management systems. The paper describes the emergence of ‘EMS lock‐in’ as a path dependent evolution occurring within the context of the larger quality management paradigm. While EMS may initially produce improvements in environmental performance, EMS may also constrain organizational focus to the exploitation of present production systems, rather than exploring for superior innovations that are discontinuous. The paper questions the enthusiastic private and public sector support for EMS implementation and instead recommends an ambidextrous management approach that integrates foresight and broader stakeholder collaboration. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Small business responsibility in developing countries: a threat or an opportunity?

Many developing country small and medium sized enterprises (SMEs) that are exporters see themselves facing a dilemma. They do not know how to respond to the rising social and environmental requirements of global buyers and supply chains and fear that were they to do so they would lose their competitive edge. However, they are aware that if they do not meet these requirements, they will not be able to access new foreign markets and may lose the contracts they already have. To investigate whether practical methods exist for resolving this dilemma, the United Nations Industrial Development Organization (UNIDO) carried out a one year project with 22 SMEs in four Asian countries. The results suggest that well targeted, enterprise‐specific efforts to meet corporate social responsibility (CSR) requirements can make a positive contribution to both short‐term profitability and longer‐term competitiveness. The ‘business case’ for CSR appears strongest in the environmental area, but measures in that area can act as a ‘starter motor’ for tackling more systemic ‘social’ problems. Furthermore, tackling social issues at the workplace can feed back positively to improve the sustainability of the environmental improvement measures. Copyright © 2005 John Wiley & Sons, Ltd and ERP Environment.     

Innovation Strategy and Entry Deterrence

We model an incumbent’s decision to pursue radical or incremental innovation when facing a rival entrant. The radical innovation may yield lucrative financial returns but entails significant technological and market‐related uncertainties. It is also particularly attractive to the rival entrant: if the market for it pans out, such an innovation obsoletes the existing technology and any incremental improvements to it. Each firm has its own assessment of the market potential for the radical innovation, and the reliability of these market forecasts can differ. We show that when the entrant’s market‐assessment capability is weak, the incumbent will pursue incremental innovation and postpone its plans to develop radical innovation even when it thinks highly of the market potential for the radical innovation. The incumbent does so to avoid validating the high market potential to the entrant, who may otherwise be encouraged to invest aggressively. The incumbent thus prefers to look “soft” with respect to its innovation strategy in order to discourage entry. Even if its innovation strategy is not observable, we show that an incumbent that assesses the commercial potential for a radical innovation favorably may pursue an incremental path and communicate its plans publicly; this strategy serves to reduce entry by affecting the entrant’s beliefs about the market potential of the innovation. Finally, we extend the model to investigate the entrant’s decision to communicate its innovation intentions. We find that the entrant communicates its plans to aggressively pursue radical innovation only if the incumbent’s market‐assessment capabilities are strong. In doing so, the entrant acts preemptively to discourage the incumbent from pursuing the radical innovation, and is less concerned with validating market potential.     

加强中小企业技术创新提高企业核心竞争力——以台湾中小企业技术创新的成功经验为借鉴

技术创新是企业的命脉,中小企业是技术创新主体中最富有活力的组成部分,在推动技术进步等方面起着不可替代的积极作用。受全球金融危机的影响,结合中小企业自身的特点,认真分析影响中小企业技术创新的主要因素,找到可行的对策,以提高中小企业的技术创新能力和核心竞争力。     

校企产学研战略联盟技术创新驱动力的形成模式

我国的技术创新不仅依赖于外部引进和自主创新,合作创新更是发挥着重要的作用。校企产学研战略联盟作为合作创新的一种全新的组织模式,能够有效的整合校企双方的资源,更好的实现技术创新的目的,校企双方合作进行技术创新的驱动力显然区别于一般形式的合作创新。本文在对校企产学研战略联盟面对的环境因素、校企进行技术创新的动力因素及两者之间的相互作用进行分析的基础上,对校企产学研战略联盟技术创新驱动力的形成模式进行探讨。     

Research design: the methodology for interdisciplinary research framework

Many of today’s global scientific challenges require the joint involvement of researchers from different disciplinary backgrounds (social sciences, environmental sciences, climatology, medicine, etc.). Such interdisciplinary research teams face many challenges resulting from differences in training and scientific culture. Interdisciplinary education programs are required to train truly interdisciplinary scientists with respect to the critical factor skills and competences. For that purpose this paper presents the Methodology for Interdisciplinary Research (MIR) framework. The MIR framework was developed to help cross disciplinary borders, especially those between the natural sciences and the social sciences. The framework has been specifically constructed to facilitate the design of interdisciplinary scientific research, and can be applied in an educational program, as a reference for monitoring the phases of interdisciplinary research, and as a tool to design such research in a process approach. It is suitable for research projects of different sizes and levels of complexity, and it allows for a range of methods’ combinations (case study, mixed methods, etc.). The different phases of designing interdisciplinary research in the MIR framework are described and illustrated by real-life applications in teaching and research. We further discuss the framework’s utility in research design in landscape architecture, mixed methods research, and provide an outlook to the framework’s potential in inclusive interdisciplinary research, and last but not least, research integrity.     

Impact at the ‘Bottom of the Pyramid’: The Role of Social Capital in Capability Development and Community Empowerment

Rooted in the notion of inclusive capitalism, the Bottom‐of‐the‐Pyramid (BoP) approach argues for the simultaneous pursuit of profit and social welfare by creating markets for the poor. This idea has been both celebrated and criticized in the literature. We do neither in this paper. Instead, by leveraging insights from Amartya Sen's work on capability development and the literature on social capital, we offer a more socially embedded and community‐centric BoP approach. By redefining poverty not just as a lack of income, but also as a lack of ‘capabilities’ in Sen's sense that can be developed through leveraging social capital, we offer a systemic framework for understanding the societal impact of business‐driven ventures in the BoP and empowering BoP communities through these ventures. Specifically, we argue that any business initiative in the BoP ought to be evaluated on the basis of whether it advances capability transfer and retention by (a) enhancing the social capital between a particular community and other more resource rich networks, and (b) preserving the existing social capital in the community.     

我国大中型工业企业技术创新能力差异研究

本文根据我国2009年31个省市区大中型工业企业的科技创新统计资料,运用多元统计分析中的因子分析对各地区的企业创新能力进行了探索分析,并用聚类的方法对各行业的科技创新能力按照创新能力强、中等、弱进行了分类。可以看出,我国各地区工业企业的科技创新能力强弱不一,省份和省份之间的差别较大,越是经济发达的地区,对科技创新越重视,投入的人力物力也多;越是经济不发达地区,受到经费等各方面的制约,企业的科技创新能力较弱。     

Incorporating sustainability criteria into credit risk management

Does a commercial debtor's economic, environmental and social performance in terms of sustainability affect its credit risk rating? Does adding criteria aimed at assessing a lender's environmental, social or sustainability practices provide added value to traditional financial rating criteria? Many analyses have reported that a correlation exists between companies' environmental and their financial performance. We checked out the assertion that it ‘pays to be sustainable’ by analyzing the role that criteria pertaining to sustainability and environmental orientation play in the commercial credit risk management process. Our results show that sustainability criteria can be used to predict the financial performance of a debtor and improve the predictive validity of the credit rating process. We conclude that the sustainability a firm demonstrates influences its creditworthiness as part of its financial performance. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.     

Outbound open innovation in bio-pharmaceutical out-licensing

Our study investigates the outbound open innovation of firms engaged in technological venturing. Leveraging insights from the sociology theory and innovation literatures, we clarify whether social status helps entrepreneurial ventures overcome market imperfection and information asymmetry in out-licensing and illustrate the importance of specific aspects of social status building in this context. We also examine the effect of failure experiences on out-licensing. We take a dynamic view of desorptive capacity by studying an entrepreneurial venture’s learning process, both internally, in terms of its own technology trajectory, and externally, through inter-organizational alliances. We apply a negative binomial model to our novel panel of 180 firms studied over an 18-year period with controls for stocks of clinical development activities, patenting and prior licensing activities. Empirical analysis enables us to observe the impact which the firms’ technological and development status, reputation and desorptive capacity exert upon out-licensing volume. Prior outbound open innovation studies do not account for the heterogeneity of technology and R&D success and failure experiences observed in our study. We also demonstrate the contingency effect of external learning from alliances during the building-up of a firm’s desorptive capacity, or the way in which the number of co-authoring partners in scientific publications negatively moderates the positive effect of the number of commercial alliances on the volume of its out-licensing deals. Our findings contribute to the understanding of external knowledge exploitation and complement important aspects of the literatures on outbound open innovation and desorptive capacity, offering empirically rich insights for bio-pharmaceutical firms into the drivers behind volumes of out-licensing deals.     

The Impact of Company Resources and Capabilities on Global New Product Program Performance

Product innovation and the trend to globalization are two important and interrelated dimensions driving business today. In this article, the results of five published research articles on the topic of global new product development (NPD) are summarized to provide an integrated overview of the factors that impact global NPD program performance. The overall conceptual framework is based on three types of literature—NPD, globalization, and organization. The main theoretical approach for establishing relationships between factors is the dynamic capability/resource‐based view. Accordingly, factors linked to outcome are seen as operating on different organizational levels, with more actionable initiatives or ‘capabilities’ largely mediating the softer and longer term background ‘resources’ of the firm. The analyses are based on a broad cross‐industry sample of 467 firms (North America, Europe, B2B, goods/services). Three global NPD‐related background resources (global innovation culture, resource commitment, and senior management involvement), labeled the ‘behavioral environment’ of the firm, are identified and shown to be linked to global NPD program performance via the mediated effect of four specific NPD capabilities (NPD process, strategy, team, and IT/communication). A qualitative synthesis of the findings is provided, along with recommended management initiatives with which firms can enhance their performance in the global NPD effort. Both sets of factors are found to be essential and highly interrelated, but it is the strength of the behavioral environment resources that distinguish the best performing firms, setting the stage for success in global NPD.     

Exploring the effect of environmental orientation on financial decisions of businesses at the bottom of the pyramid: Evidence from the microlending context

Existing research has accumulated substantial evidence on the effect that an environmental orientation has on businesses' economic performance. Yet this research does not cover small businesses from bottom‐of‐the‐pyramid (BOP) markets. In fact, despite increasing interest in research on BOP markets, the effect of environmental orientation on the financial decision‐making of small businesses from BOP markets has gone largely unexplored. Using a large multicountry data set from a microlending platform, we investigate how the environmental orientation of BOP businesses impacts their financial decisions related to microlending, which ultimately shapes their economic performance. The results indicate that an environmental orientation necessitates BOP businesses to request a higher level of financial capital and ask for longer time to pay it back. Surprisingly, environmental orientation increases the odds of BOP businesses paying back the borrowed capital. These results show that environmental orientation gives rise to both challenges and opportunities for sustainable development in BOP markets.