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CSR Innovation and Entrepreneurship

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Jeroen Loog

on 28 June 2010

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Transcript of CSR Innovation and Entrepreneurship

Double click anywhere & add an idea CSR and innovation or entrepreneurship

1. What is innovation

2. CSR and innovation

4. Are CSR and innovation compatible or contradictory?

5. CSR and entrepreneurship

6. Conclusion and discussion
Corporate Social innovation, what is it?

First introduced by Rosabeth Kanter in 1999.

Innovations aiming at social improvements (i.e. health, education, community development). This can be, but is not limited to, product innovations with a social purpose.

Entrepreneurship defined

Entrepreneurship is the discovery and profitable exploitation of (so-far unrealised) opportunities to create new competitive space by generating market disequilibria (Stevenson & Gumpert, 1985; Drucker, 1986; Shane & Venkataraman, 2000).

It is the entrepreneurial opportunity (its identification, selection, and implementation) that is at the heart of entrepreneurship research

The concept of social entrepreneurship has emerged in the late 1990s in the U.S.

According to Hockerts it describes “the discovery and sustainable exploitation of opportunities to create public goods” (Hockerts, 2007).

Social responsibility, philanthropy and entrepreneurship offer direction to business leaders who want to increase their companies' social and economic performance (Wolcott & Lippitz, 2007) The Skoll foundation

Founded by Jeff Skoll, 1st president of eBay.

Why do people become social entrepreneurs Microcredit

a financial innovation that is generally considered to have originated with the Grameen bank

Radical innovation vs Incremental innovation

Radical innovation – a new product, process or system resulting from a technological breakthrough, or an application of a technology having a far-reaching impact.

Incremental innovation – technical modifications to an existing product, process or system and sometimes known as evolutionary innovation. Sustaining innovation vs disruptive innovation

Sustaining innovation is a new or improved product that meets the needs of most current customers and serves to sustain leading firms in their market position.

Disruptive innovation is a new or improved product or technology that challenges existing companies to ignore or embrace technical change. The innovation radar displays the 12 dimensions of business innovation, anchored by the offerings a company creates, the customers it serves, the processes it employs and the points of presence it uses to take its offerings to market The evolution of the innovation now is taking stakeholder and environmental issues into business consideration.

Situation: a small number of the innovative and entrepreneurial firms are repositioning business as the driver for social change and their ambition is to transform society for the better through their products while also achieving economic success. Corporate Social innovation To empower trainers or/and trainees with free resources, offer them a structured collaborative space to share their training but also to promote and value the “open” training materials
CSR innovation is a form of strategic CSR.

This is the fulfillment of a firm’s “social welfare responsibilities”, which creates a win-win situation in which the corporation as well as the stakeholder benefits (Lantos, 2001).
We as a group believe that a lot of the CSR innovations of today are user-driven innovations 3 kinds of social innovations.

1. Innovations aimed at social improvements.

II. “Base of the Pyramid” Innovations”.

III. Environmental (or sustainable) innovations.

(Hockerts & Morsing, 2008). Bottom or Base of the pyramid (BOP)

Focus on low-income markets.

Firms can create profittable markets while also helping the poor address some of their most urgent needs
For example: Microcredit But does it work? Environmental innovations.

An eco-innovation is a product, technology, process, input or activity that incorporates environmental sustainability principles, and that was also new to the company when first introduced

(Nidumolu and Rangaswami, 2008).
Environmental innovations

"Our research shows that sustainability is a mother lode of organizational and technological innovations that yield both bottom-line and top-line returns (...) we find that
smart companies now treat sustainability as innovation’s
new frontier

From: Why sustainability is now the key driver of innovation, by Ram Nidumolu Firms have relationships with many constituent groups. These stakeholders both affect and are affected by the actions of the firm. Freeman (1984)
Jones (1995) concluded that firms conducting business with stakeholders on the basis of trust and corporation have an incentive to demonstrate a sincere commitment to ethical behavior. The ethical behavior of firms will enable them to achieve a competitive advantage, because they will develop lasting, productive relationships with these stakeholders.
Stakeholder theory Down the rabbit hole Introduction

CSR and innovation or entrepreneurship

Matthieu Clervoy
Yili Wang Jeroen Loog conclusion And even deeper down the rabbit hole Time for a critical note: how compatible are CSR and innovation? Many traditional perspectives on entrepreneurship and innovation challenge the types of social concerns that are traditionally associated with CSR:

•“Creative destruction” (Schumpeter, 1943)
•“Disruptive technology” (Christensen, 1997)
•“Natural selection” (Campbell, 1986)
•“Comparative political economy” (Hall and Soskice, 2001)
What are the economic motives behind CSR? Only a minority of firms is actually using CSR as a means to drive innovation (Hockerts, 2008). Most firms see it as a tool to reduce risks and operation costs.
What prevents CSR innovation from being universally adopted? CSR provides flexibility and sensitivity to industrial needs and thereby represents a regulatory approach that supports innovation better than stiffer traditional government regulation

(in theory).
In practice, stakeholders fear that CSR may limit the firm’s capability to undertake major industrial restructuration/adopt disruptive strategies.

Time for CSR and entrepreneurship What are the differences between SMEs and large companies? 2. Independence
1. Profits 3. Control 4. Pursuit of social goals Time for some examples A think tank and strategy consultant for business that has worked with companies such as Shell, Starbucks and Microsoft (Hockerts & Morsing, 2008). Grameen bank

Founded by Muhammad Yunus
Nobelprice winner 2006 The foundation makes capacity building grants to social entrepreneurial organizations that already have reached a certain level of impact.
Connects them through the annual Skoll World Forum and Social Edge, the Foundation's online community, and highlights their work through partnerships Got a dream? Conclusions Lets listen to the experts Hanna Jones, Nike.

90's: Risk management.
Open source, shared, done within the environment
New business models Moss Kanter, Harvard

New collaborations needed
NGO's invited in the boardroom John Kao, Kao and Company

Sense of clarity
Create a narrative
Sense of urgency
Sense of stewardship User-driven innovation

Regards users as a resource in the innovation process Social and green entrepreneurs have many opportunities to join forces The gort cloud: a vast, largely invisible and growing ´community´on environmental products and services.
the cloud´s goal is the increased production of sustainable and socially responsible goods and services
Its a social network, like Facebook
but no one controls it
1. CSR is not a technological innovation, it´s a managerial and social innovation
2. Get your stakeholders involved
3. Leadership is a key-factor, for innovation as well as for entrepreneurial activity
4. CSR innovation is opening new doors for entrepreneurs
Microcredits are very small loans (microloans) to very people designed to spur entrepreneurship.

No collateral is asked for There is limited evidence that CSR efforts translate into economic benefits (Singer, 2000).


Who is driving innovation?
Who is driving CSR?
If companies respond reactively or inactive to social responsibility and sustainability, their CSR efforts will fail.

Evidence suggests that social innovation requires a PROACTIVE attitude, which makes CSR far from being widespread and generally only practiced by highly mature organizations.

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