The Hybrid Middle Ground in Contemporary

Entrepreneurship: A Conceptual Discussion

with NYC-Based Clean Technology

Enterprises as Cases in Point

Bala Mulloth, PhD, Central European University Business School June 13, 2012

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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

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 21st 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).

Growing expansion of the meaning and practice of

entrepreneurship.

Personal Reason: I wanted to best utilize my experience

working at the Entrepreneurship Centers at NYU-Poly

and it provided me a first hand experience to look

deeper into the field.

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.

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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 Definition

Mair & Marti (2004) Social entrepreneurship is defined as the innovative use of

resources to explore and exploit opportunities that meet a social

need in a sustainable manner

Haugh, (2007) 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

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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

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

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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.

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Social Venture Models

Source: Academy for Entrepreneurial Leadership

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Overarching Representation of Contemporary

Entrepreneurship

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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)

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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

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Portfolio Companies at NYC ACRE

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.

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Observations + Discussion

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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.

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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.

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