New Challenges for Entrepreneurship

#### **Chapter 4**

## Entrepreneurship in a Different Era

*Li Xiong*

#### **Abstract**

With the development of technology, and the change in economy, population etc. the Industrial economy, internet economy and intelligent economy present different characteristics, and entrepreneurship under these different era varies greatly, and there are great differences in the characteristics and value creation logic of business models under the background of industrial economy era, network economy era and intelligent economy era, and the requirements for successful entrepreneurship are quite different, e.g. educational background, understanding of the economy, methods for market survey, and business model etc. So it is valuable to find the differences and generalize patterns in various era, and provide guidance for entrepreneurship in the digital and intelligent economy era, based on insights of cases, both failure and success.

**Keywords:** entrepreneurship, era, industrial, information, intelligent

#### **1. Introduction**

Entrepreneurship is the process of seeking and developing opportunities to create value, by integrating resources creatively under the current resource constraints [1]. The essence of entrepreneurship is to meet the undiscovered needs, or to meet the known needs more efficiently. Under the background of different era, the economy, technology and population etc. vary greatly, and the market opportunities and entrepreneurship are also very different. What can we learn from the evolution of technological development? What will be the challenges for future entrepreneurship? We focus these issues by looking back and assessing this research stream, noting key milestones and the contributions it has made to our knowledge.

In the discussion that follows, we first seek to develop a clear understanding of the characteristics of entrepreneurship under industrial economy, network economy and intelligent economy. We then assess the contribution of past research on entrepreneurship and crystalize our findings. We comment on current research streams and how these have advanced our knowledge of entrepreneurship. Finally, we suggest directions for future research on entrepreneurship under the digital economy.

#### **2. Entrepreneurship under industrial economy**

Under the background of industrial economy, entrepreneurship is usually based on its own key resources and capabilities, and the transaction structure (contractual relationship) formed by participants in the industrial value chain to realize value creation, transmission, acquisition and distribution. In this case, the business relationship between enterprises, customers and partners is a "linear" business relationship, and entrepreneurship is the relationship and state of value creating activities of the enterprise, and it is the way and logic of all participants' value activities.

In many researches on entrepreneurship, because of the different research perspectives and research purposes, the definition of entrepreneurship is different accordingly. Generally speaking, the essential characteristics and core logic of entrepreneurship in the context of industrial economy include the following:

First, the essence of entrepreneurship is to create or jointly create value for customers and partners as the ultimate goal. Therefore, entrepreneurship takes value creation as the core, based on the core resources and capabilities of the enterprise, by identifying and mining the value needs of customers, adjusting the transaction structure of stakeholders, improving the transaction efficiency, by delivering the products or services as the value carrier to customers, completing the value transmission and acquisition, and through the value distribution mechanism, enabling customers to obtain value, and all stakeholders (participants) make profits.

Second, entrepreneurship is a structural, holistic and logical generalization of all business activities. Magretta [2] believes that entrepreneurial innovation is the improvement or innovation of industrial value chain, including manufacturing and marketing. Therefore, entrepreneurship and enterprise management theories are closely related, such as value chain theory, operation management theory, marketing theory, and strategic management theory. Entrepreneurship as a general description, in this respect, it covers a wider scope and broader meaning than enterprise strategy.

Third, entrepreneurship is an organic combination of a whole set of business activities, which cannot be summarized by any local activities or contents. Entrepreneurship, as a whole set of methods and procedures, various activities are interrelated and organically combined, which is the sum of business relations and transaction modes of all stakeholders in the process of business activities. Although strategic decision-making and management, customer identification and positioning, market planning and promotion, technical support and improvement are all important and indispensable parts of entrepreneurship, they cannot represent the overall concept of entrepreneurship.

Fourth, entrepreneurship is the transaction structure, profit model or revenue and expenditure mode constructed and dominated by the focus enterprises. Any start-up needs to be supported by the core resources and capabilities of the focus enterprise, and other stakeholders participate in through a specific transaction structure around the focus enterprise. Any enterprise, regardless of its size and strength, must have its own core resources and capabilities. Otherwise it will not survive in the competition. Therefore, any enterprise has two identities in different value networks or industrial chains: one is the "leader" of some value networks or industrial chains, that is, the focus enterprise; Second, as a "participant" of some value networks or industrial chains, that is, a partner. But according to the current research results of entrepreneurship, people pay more attention to the role of the focus enterprise in the value network or industrial chain, and less attention to the participants.

Under the background of industrialized economy, the "linear" characteristics of entrepreneurship in the industrial chain have gradually evolved into the "network" and "integration" characteristics across the boundary of the industrial chain in the era of network economy and intelligent economy.

#### **3. Entrepreneurship under network economy**

With the development and wide application of Internet technology, the era of industrial economy has evolved into the era of network economy, and entrepreneurship has undergone great changes. The Internet accelerates the speed and frequency of information transmission between transaction subjects, reduces the intermediate links, and eliminates the constraints of time and space, thus greatly reducing the transaction cost. Internet technology has created a large number of well-known enterprises, such as Amazon, apple, Facebook and Google in the United States, Alibaba, Baidu, Tencent, Jingdong and Xiaomi technology in China, Tata and Infosys in India. It is with the help of the Internet "platform" that these enterprises have created a business miracle, and also spawned and boosted the explosive growth of DHL, FedEx, UPS in US, and SF and "four Tongs and one Da" in China and other express giants in the world.

Entrepreneurship is to enroll consumers in production and value creation, enhance the connection between manufacturers and consumers, and they create and share value together. It is a group of modes in which the supply and demand form a community platform, to realize the isolation mechanism to maintain organizational stability and realize connection dividend, in the uncertain and fuzzy internet environment.

With the development and application of internet technology, the traditional industrial economy has transformed into a network one, and entrepreneurship has the following distinctive characteristics:

First, the production and management boundaries of manufacturers tend to disappear, making the traditional labor division and entrepreneurship ineffective. For example, Xiaomi technology has developed from a *triathlon* entrepreneurship of "hardware + new retail + Internet service" to an ecological cluster consists of more than 90 enterprises, and built a three-tier product matrix of mobile phone accessories, intelligent hardware and consumer products around mobile phones. In China, Meituan car-hailing service and DiDi takes-out service infiltrate each other's core business in order to compete for the entrance of community local life … Where is the boundary of internet companies? What industry is your company in? etc. these questions may be difficult to answer. Industry boundaries are blurred.

Second, the uncertainty of the internet makes entrepreneurship random and instable, while traditional enterprises lose the competitive advantage built on their resources and capabilities. At the same time, the resources and capabilities of enterprises are becoming more and more unreliable. On the one hand, the flow of resources and capabilities between different enterprises is more and more frequent, and the traditional theory (e.g. Resource-based view, RBV) of obtaining competitive advantage by relying on the non-flow of resources and capabilities between enterprises or difficult to copy has been greatly challenged [3]. For example, the emergence of open source mode and sharing economy represents the change of resources and capabilities from the view of ownership to the view of use. For example, in 2014, Tesla opened all intellectual property rights free of charge to promote the development of clean energy vehicles. On the other hand, the former core competitiveness may become the core rigidity, which hinders the innovation and development of the enterprises. Path dependence often begins with a successful product or pattern. Once a method or process is found to be particularly effective, we hope to fix it, as eventually leads to low efficiency and degradation of core competence [4]. Today's advantage is replaced by tomorrow's trend.

Third, the Internet has realized the decentralization of media. Under the background of network economy, it is no longer a centralized media era controlled and updated by a few particular people or organizations, but a self-media era created,

participated, communicated and shared by the masses. This makes the content and voice of media more diversified, such as Facebook, microblog, Wechat, RenRen etc. The community entrepreneurship can better meet the needs and experiences of the public, and it has been developing rapidly.

Fourth, under the network economy, the core competitiveness of enterprises expands from internal resources and capabilities to external ones, including external resources integrating capability, partnership, customer relationship, etc., which makes the business model of enterprises more "non-replicable". Today, there are more and more contacts between enterprises and customers, e.g. user forums, social networks, web browsing records, intelligent hardware interaction, etc. These contacts leave traces of customers, helping enterprises better grasp the needs of customers and improve the customization of products or services. Cooperation between enterprises can further enlarge the availability of data. For example, the driving records obtained by Uber can not only be used to optimize the dispatch algorithm, but also can be provided to the insurance company for personalized car insurance customization based on personal driving habits. Finally, the enterprise's insight into customers will be more and more accurate.

The Internet has subverted the traditional sense of entrepreneurship, making the whole world more and more transparent, geographical distance and artificial distinction tend to be invalid. This kind of "gathering" across time and space makes people's information communication, knowledge production and diffusion effortless. This in turn accelerates the speed and frequency of entrepreneurial innovation and upgrading [5].

#### **4. Entrepreneurship under intelligent economy**

Germany officially launched industry 4.0 at the Hanover Industrial Exposition in 2013, which is the era of promoting industrial change by using information technology, that is, the era of intelligence. With the development and implementation of industry 4.0, intelligent technology has been promoted and applied, and the network economy has been upgraded to the intelligent economy accordingly. The core of intelligent (industry 4.0) is the deep integration of information system and physical system, including vertical integration within the enterprise, horizontal integration between industrial chain and end-to-end integration. With the deep integration of digital, network, intelligent and manufacturing, a large number of new-type entrepreneurship with intelligent as the core emerge, such as the application of intelligent "robot" application software such as Uber in US and DiDi in China. Business model innovation is crucial to manufacturing. So, in the era of industry 4.0, what is the business model of manufacturing in the future? It is to solve customer problems. Therefore, in the future, manufacturers will not only be limited to hardware sales, but also gain more added value by providing after-sales services and other follow-up services, which is soft manufacturing. The system with "information" function becomes the new core of hardware products, which means that personalized demand and small batch customization will become the trend. Manufacturing enterprises need to increase the added value of products as much as possible, expand higher quality and richer services, propose better and more perfect solutions to meet the personalized needs of consumers and lead the way of "soft manufacturing + personalized customization" (**Table 1**).

In the era of intelligence, manufacturing enterprises, based on CPS, use advanced intelligent technology to form self-learning, adaptive and selfimprovement capabilities through vertical integration, horizontal integration and intelligent platform integration, so as to enhance the efficiency of design and

#### *Entrepreneurship in a Different Era DOI: http://dx.doi.org/10.5772/intechopen.99797*


**Table 1.**

*Comparison between the industrial and digital era.*

development, production and manufacturing, channel sales, logistics distribution, after-sales service and other links in the enterprise value chain, Completely subvert the traditional manufacturing enterprise product or service life cycle operation mode, create a new intelligent business model. For example, a clothing brand, She In.com, with its powerful data acquisition and mining capabilities, has successfully established a digital nervous system and digital reflection arc. Hundreds of clothes are launched every day to face the customers in the form of products. Through these dynamic and real-time updated data, SheIn can more accurately grasp the real needs of consumers. Through MVP dialog with the market and customers to refresh its understanding of the market, SheIn will launch a lot of products every day, quickly realize the obtained cognition, and then update and optimize the products to have a dialog with the market. In this way, SheIn has a great competitive advantage because its cognitive turnover rate of the market is much higher than that of traditional ones. The cognitive turnover rate of traditional clothing enterprises is calculated by year or quarter, while SheIn's cognitive turnover rate is by day.

First, vertical integration. From the perspective of vertical integration, i.e. internal information integration of enterprises, the production mode, physical layout and operation status of equipment and the working mode of employees will be greatly changed, and entrepreneurship will also change to meet the personalized customization needs of end customers.

Based on the industrial Internet and intelligent CPS system, the enterprise integrates information in the original enterprise value chain, such as market research, design and development, manufacturing, after-sales service, respectively, forming four information platforms, such as remote customization platform, global design and development platform, intelligent manufacturing and decentralized production platform, and intelligent service platform.

Second, horizontal integration. From the perspective of horizontal integration, i.e. information integration of industrial chain, enterprises extend from internal information integration to information integration of external suppliers, distributors and customers, break the barriers between traditional enterprises and industries, realize "interconnection" and form an intelligent network system with the industrial chain of enterprises as the basic unit. New changes will take place in manufacturing, information integration, resource sharing, asset form and innovation platform based on industrial value chain. In the future, entrepreneurship with industrial chain as the main body will include three levels: value chain level, industrial level and ecological level.

**Figure 1.** *Big data application in various fields in China. Source: China Information and Communication Research Institute [6].*

Third, intelligent platform. From the perspective of intelligent platform, that is, information integration of multi industry chain, platform entrepreneurship in the intelligent era provides a new resource integration capability for enterprises, forming a three-dimensional model of "manufacturer – terminal – consumer" with terminal platform as the fulcrum and connecting manufacturers (Intelligent Manufacturing Platform) and consumers. Among them, the terminal platform is divided into three categories: (1) Internet factory, crowdsourcing and crowd R&D platform, through which customers can obtain personalized customized products or services, and also undertake the task of R&D and design, which is also a main work of the current popular "gig economy". (2) Mobile mall and smart store, customers can search, browse and purchase existing goods at any time and anywhere through the platform. For example, customers can use their mobile phones to purchase goods in "\*\* online mall", or help customers make purchase decisions through the platform's intelligent push technology. (3) Intelligent service platform, through which manufacturers can track the relevant data of products or services, and provide consumers with online and offline service support for the whole life cycle of products.

With the continuous enhancement of data capability, when manufacturers and terminal platforms form enough data capability advantages, there will be "capability spillover", participating in the high profit or low efficiency links in the value chain of other industries, realizing the digital transformation and upgrading of traditional industries, or directly conducting cross-border operations through mergers and acquisitions, new construction and other ways. For example, technology-based giant enterprises, based on their big data capabilities, crossborder into traditional industries, transform the backward links in the traditional industrial chain or add new links, subvert the profit distribution mode of the original industry, and realize the industrialization upgrading. See **Figure 1** for the big data application in various fields in China in 2019.

#### **5. Conclusion**

In this article, we have summarized the findings of academic papers and practical articles published in highly ranked international business, management, and

#### *Entrepreneurship in a Different Era DOI: http://dx.doi.org/10.5772/intechopen.99797*

finance journals and business journals. We have outlined an agenda for further research on entrepreneurship in the era of digital economy. In conclusion, for the same reason that re-visiting the knowledge problem of economics considering the recent technological developments shows that the "pretense of knowledge" problem exists as before [7], the competitive environment and characteristics of firms evolve over time, and thus the potential sequential adoption of varying international opportunity identification (IOI) processes can be investigated in future research [8].

### **Author details**

Li Xiong Southwestern University of Finance and Economics, Chengdu, China

\*Address all correspondence to: leexiong73@swufe.edu.cn

© 2021 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

### **References**

[1] Eckhardt J T, Shane S A. Opportunities and entrepreneurship. Journal of Management, 2003, 29(3): 333-349

[2] Magretta J. Why business models matter. Harvard Business Review, 2002, 80(5): 86-92

[3] Chen Chunhua, Liao Jianwen. The Way for Enterprises to Survive in the Digital Age. Harvard Business Review Chinese edition. November 2017

[4] Collis D., How valuable are organizational capabilities. Strategic Management Journal, 1994, 15(1): 143-152

[5] Christiansen J. K., et al., Living twice: How a product goes through multiple life cycles. Journal of Product Innovation Management. 2010, 27(6): 797-827

[6] China Information and Communication Research Institute, October 2020.

[7] Erkut, B. From digital government to digital governance: Are we there yet? Sustainability. 2020. 12, 860; DOI: 10.3390/su12030860

[8] Ren S, Fan D, Huang X, et al. The micro-foundation of ambidextrous opportunity identification in international expansion. International Business Review, 2021, 30(1): 1-13

#### **Chapter 5**

## What's "Next"? On the Future of Digital Entrepreneurship

*Burak Erkut and Vildan Esenyel*

#### **Abstract**

Digitalization is gaining speed, latest since the global pandemics, even for those industries which only observed it as a supplementary phenomenon to their physical business activities. Despite this ongoing phenomenon and the use of catchwords such as e-business or e-commerce in both academia and practice, there is still confusion when the discussion shifts to the sphere of digital entrepreneurship—especially when it comes to the "who" and "how" of the digital entrepreneurship. The aim of this chapter is to focus on digital entrepreneurship as an ongoing phenomenon in the digital economy. In this chapter, the authors first introduce background and rationale with respect to digitalization and digital entrepreneurship by using a thematic literature review of recent contributions coming from economics and management disciplines. Next, the authors present next-generation models of digital entrepreneurship, with which they specify three important components of digital entrepreneurship as a business model, customer base, and social networks. By doing so, the authors not only aim to answer the questions of who the digital entrepreneur is, and how he/she acts in an entrepreneurial way, but they also aim to provide a knowledge base of digital entrepreneurship for future endeavors, let them be practical or theoretical ones.

**Keywords:** digitalization, entrepreneurship, digital entrepreneurship, technology, business

#### **1. Introduction**

When Israel M. Kirzner aimed to contribute to our understanding of entrepreneurship, he described the entrepreneur as someone who makes an arbitrage—buying something at a certain price from someone and selling it to someone else with a higher price and making a living out of it [1]. In this sense, Kirzner's definition of an entrepreneur was something like the controversially perceived painting of Kazimir Malevich, the black square, as it was like the point zero of defining entrepreneurial action similar to Malevich's painting being the point zero of defining art [2]. Whereas the basic motivation, namely, to make a living out of the entrepreneurial talent (or "alertness", as Kirzner mentions), remains valid for people engaging in entrepreneurship, the domain of entrepreneurial action is becoming more and more digitalized. This requires entrepreneurs to think and act in ways that have not been used before and develop unique capabilities that fit the new, digital era—the next generation of entrepreneurship. This different way of thinking implies that creativity and imagination are more and more in the foreground of entrepreneurial activity, as later acknowledged by Kirzner himself [3]. In this sense, the aim of this

contribution is to explore the concept of digital entrepreneurship by focusing on the next generation business models, customer base, and social networks as three relevant fields of action. By doing so, the authors make use of recent contributions from the fields of economics and management. The rest of the chapter is organized as follows: In part 2, the authors present the background and the rationale of the contribution by explaining the concepts of digitalization and digital entrepreneurship. In part 3, the authors present next-generation models with respect to business models, customer base, and social networks in digital entrepreneurship. A conclusion follows.

#### **2. Background and rationale**

#### **2.1 Digitalization**

Pandemics changed how we perceive digitalization, defined as "the adaption of digital technologies in business, economy, and society" ([4], p. 60), as it dramatically changed our lifestyles and working conditions. Latest after the occurrence of the worldwide COVID-19 pandemics, many of the hitherto "physically occurring" business activities shifted to the digital sphere, and the trend is increasing [5]. Ref. [6] (p. 519) describe this process as "the deep and accelerating transformation of processes, activities, and competencies of companies", and highlight the importance of digitalization as one of the main topics posing a challenge to the economy and businesses alike. The challenge of digitalization for businesses is that they need a different kind of transition in the ways they manufacture and market their products, and the ways they organize their workforce [7]. In this sense, digitalization offers a transformation channel to overcome the future challenges of sustainable and inclusive growth [8]. Despite this mechanism's clear impact on how businesses are being made, there is confusion regarding how to transform a business into the digital sphere, and how to decide when there are trade-offs between efficiency and job creation. What is known and important regarding digitalization is that it offers more possibilities for current and potential entrepreneurs. Frank Petry, a well-known figure from German start-up scene, indicates that "What has changed radically, of course, are the possibilities. When I think of the first investments: no social media, no mobile phones, fortunately already email. It was all much slower, not as tightly networked, you had to spend a lot more time going to events, meeting people, a lot of things are digital now, and that makes it much easier. We have moved closer together via digitalization." ([9], p. 2). In an interview with Dennis M. Steininger of TU Kaiserslautern, Petry emphasizes that digitalization makes the implementation of new ideas faster and easier, but this is not a linear process, as he describes it rather as a U-shaped process. According to him, the 1980s came with a vast amount of people who wanted to be entrepreneurs despite only a handful of newly available technologies. This phenomenon diminished over time, and only recently, a revival phase started to emerge, with important developments in the fields of artificial intelligence, big data, blockchain, quantum and cloud computing, internet of things, robotics, smart and sustainable technologies. Petry mentions that not only did these technologies individually make big leaps in their respective fields, but also made new combinations available, which can be reflected as new business opportunities for digital entrepreneurship.

What Petry is describing in his interview in terms of new business opportunities does not merely indicate that entrepreneurs can set foot in new industries doing the same things they used to do. On the contrary, [10] highlights two channels of a fundamental shift in the way entrepreneurial action is conducted. The first shift occurs

#### *What's "Next"? On the Future of Digital Entrepreneurship DOI: http://dx.doi.org/10.5772/intechopen.104690*

in the entrepreneurial processes, which are made less bounded due to digitalization. With this, [10] highlights both structurally less bounded entrepreneurial processes in the sense of the properties, scope, or the relevant market for the focal product, and in the sense of the spatial and temporal boundaries of entrepreneurial action. The second fundamental shift in the way entrepreneurial action is conducted goes through the pre-definition of the locus of entrepreneurial action. With this second channel, [10] highlights the fact that the set of actors in entrepreneurial action is becoming more diverse and evolving continuously in comparison to a pre-defined entrepreneurial agency that collects and utilizes different pre-defined resources for its pre-defined goals.

Despite the enhancing impact of digitalization on businesses by means of offering efficiency and flexibility as well as saving for resources [4] and making the entrepreneurial agency less bounded and less predefined [10], there can be negative externalities associated with it. In an empirical analysis, [11] focus on how digitalization and artificial intelligence (AI) may impact working individuals in the US labor market. Their findings indicate that there is no direct evidence of digitalization causing higher unemployment, and even if this would be the case, entrepreneurship can still bring people a source of income—hence, the necessity for entrepreneurship may increase in numbers. A more detailed analysis by the authors indicates that one can already find a relationship between automation and unemployment. If there is a low risk of automation of their jobs, people may still switch to entrepreneurship, yet their motivation would be rather opportunity-driven instead of necessity-driven.

#### **2.2 Digital entrepreneurship**

In the context of this work, digital entrepreneurship is described by the widely used definition due to ([7], p. 293) as follows: "digital entrepreneurship is a subcategory of entrepreneurship in which some or all of what would be physical in a traditional organization has been digitized". In the framework of Hull et al., a useful notion of distinction for digital entrepreneurship is the degree of digitalization, which they refer to as mild, medium, and extreme. The case of mild digital entrepreneurship views digitalization only as a supplement to traditional, "physical" entrepreneurial activity. The case of moderate digital entrepreneurship, on the other hand, already involves digital products and digital delivery as well as other components coming from the digital sphere to be included in the business model. The extreme case of digital entrepreneurship has digitalization as the sole form of existence. This includes the production, the goods or services, advertising, distribution, and the consumer group, even the payment in digital currencies can be the case. Based on this typology, [7] suggests six contexts, within which traditional entrepreneurship may differ from digital entrepreneurship. These are "ease of entry, ease of manufacturing and storing, ease of distribution in the digital marketplace, digital workplace, digital goods, digital service, and digital commitment" ([7], p. 296). With the ease of entry, the authors indicate that entry conditions are easy for digital entrepreneurs, as one can even create a digital venture from his coffee table. With the ease of manufacturing and storing, digital entrepreneurs may benefit from concepts such as just in time production, or drop-shipping, the latter indicating that the digital entrepreneur acts in a similar vein to the Kirznerian arbitrage-making entrepreneur. Ease of distribution in the digital marketplace refers to the property of digital entrepreneurs regarding how well they can use the reach of internet and social media networks to make people aware of their products. This necessarily involves a rapid delivery of their products to their customers. In the case of the digital workplace, things may not be as favorable as they are for

traditional entrepreneurs since digital entrepreneurs need to invest time and effort to recruit the right people and manage remote teams of people. Whereas this may sound straightforward, established theories of human resources management may bring little use to the domain of managing remote teams. In addition to the management perspective, which proves itself to be different from the non-digital entrepreneurial case, also the interaction with innovation seems to be quite problematic as extant theories and concepts do not suffice to help digital entrepreneurs manage their interaction with innovations.

Digital entrepreneurs, especially during the early stage of their ventures, face two different channels of innovation shaping their venture [12]: The first one is innovation related to their value proposition, which boils down to the issue of new product development. The second one is innovation related to their business model, which nevertheless cannot be fully separated from the first channel of interaction. These two channels boil down to the issue of whether digital entrepreneurs can successfully adapt their business model to their external environment, or, alternatively, engage in business model innovation to offer a different alternative to the market. The contribution by [12] shows an interplay between three concepts, namely, business model innovation, lean start-up methods, and agile development. Lean start-up philosophy goes back to the contribution by Eric Ries [13] and "favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional "big design up front" development" ([14], p. 65). Agile development, on the other hand, has its roots in software development, and requires "setting a structure that allows discovering changes and opportunities as soon as possible and react on them appropriately." ([15], p. 5). What can be identified from the contribution of [12] is that lean start-up methods are agile tools for designing a business model innovation, and digital entrepreneurs may consider using these three conceptual tools together to develop their own business model under volatile environmental conditions. In other words, digital entrepreneurship is not a completely independent field of action but stems from the hitherto separate fields of lean start-up, agile development, and business model innovation. In fact, all three clearly try to capture the impact of new technologies on entrepreneurial action, and this is exactly where digital entrepreneurship is situated.

When asked what has changed and what has not in the case of digital entrepreneurship, [16] argues in a similar vein as above, indicating the discovery of opportunities, as well as the decision to exploit opportunities did not change when comparing non-digital entrepreneurship with digital entrepreneurship. In this setup, and combining the line of argumentation of [16] with that of [12], one can clearly notice that technological opportunities are the key to understand digital entrepreneurship. Technological opportunities may not necessarily indicate hightech products, they can even come from traditional products [17] to be interpreted in an innovative context, as known from the success of platforms such as Etsy known for being e-commerce platforms offering a place for vintage or handcrafted and traditionally manufactured goods. In addition, [16] mentions that new entrepreneurial actors (especially intermediaries between demand and supply sides, such as Etsy for the traditional industries), new technologies and business models, new product development processes, as well as policies and regulations, are the aspects which went through a change when comparing non-digital entrepreneurial efforts with digital entrepreneurial efforts.

Despite this perspective provided by [16], the most important issue that did not change in comparing digital and non-digital entrepreneurial efforts lies deeper, and to be more precise, in the economic system. The issue of the knowledge problem in economics as firstly formulated by Austrian economist Friedrich August von Hayek [18] highlights the fact that governments, or central planning bodies, are not able to

aggregate diffuse subjective knowledge to coordinate the economic activity. Despite digitalization, the nature of the knowledge problem did not change [19] and this justifies the existence and activities of digital entrepreneurs in a digitalized era. Despite this justification, it also opens a problematic space that goes beyond existing rules, regulations, and policies for governments to catch up. Also in this sense, digital entrepreneurs are moving more and more into the foreground both for job creation and a potential field of political intervention.

#### **3. Next generation models**

The entrepreneur's success in a competitive environment depends on creating a unique value proposition for the customer and making it sustainable and key activities undertaken by the entrepreneur are critical to the value proposition of the business. One of the most important activities that an entrepreneur should do before starting a business is to put forward the business model in which the business idea will be rationalized with the entrepreneur's thinking and planning ahead of time about the market, competition, costs, and resources that are needed [20]. The business model enables the entrepreneur to understand what can and cannot be done, and helps to anticipate the situations that may be encountered while implementing the business idea [21].

The main purpose of the business model is to reveal who the entrepreneur's customer is, what is important to these customers, how to find and create relations with these customers, and how to make money while meeting the customer's needs. The value that the entrepreneur will reveal must be demandable while meeting the needs of customers more effectively than other entrepreneurs [20].

For digital entrepreneurs to achieve successful results and create value in this rapidly changing business world, they need to establish innovative business models that include the understanding of new generations with changing mindsets and establish new social networks to create new relationships to strategically adopt these business models.

It is necessary for businesses to shape their digitalization processes according to the expectations and wishes of their customers and to get to know them closely to do this most accurately [22]. The children of this generation, who were born into a world with technology, are among the current and future customers of the enterprises. Businesses need to prepare their strategic plans with this generation in mind and be prepared for this audience that will form the customers of the future.

#### **3.1 Business model innovation for digital entrepreneurs**

Traditional and old ways of doing business and the business environment of the entrepreneur have changed with technology. Products that were not in demand or that were not in the market in the past have started to be produced, different production methods have become more common than before, the methods of transportation to the customer have changed, and customer demands have changed and become more specialized [23]. The transformation in innovation and information technologies has also changed the conditions of competition. This cycle of change is still going on very rapidly. Under these conditions, it has become impossible to differentiate and create value by using old business models [22].

Business model innovation is very important for the entrepreneur to catch up with the competition or to be a pioneer in the competition. Entrepreneurs have started to change their business processes with new business models [24]. In this process, entrepreneurs have transformed traditional business models into innovative and e-business models to understand risks, identify opportunities, and create new revenue streams [23].

Entrepreneurs should provide original values to the market by making radical changes in the existing core structure. Using white space opportunity [25] the entrepreneurs should restructure activities in the business model for new products and markets and reach new customers or present products with changed features to existing customers in different ways. For the entrepreneur to create white spaces, dynamism and innovation must be provided in the business model.

The white area marks the risky areas that businesses cannot fully identify and also, white spaces contain risks that entrepreneurs must solve and manage. Few entrepreneurs reach and succeed in these areas [25]. These entrepreneurs are the ones who update their traditional business models with an innovative perspective to take advantage of white space opportunities. The white space can be turned into an opportunity not with the current capabilities and business model of the business, but with new capabilities and models.

#### **3.2 Next-generation customer base for digital entrepreneurs**

For the success of the business model, marketing, advertisements, production, and product features should be determined according to the characteristics of each customer group [26]. The value propositions of these different customer groups may also differ from each other. Knowing the generations allows entrepreneurs to understand the relevant period and the behaviors, attitudes, and perspectives of the individuals of that generation, because each generation has different experiences by witnessing different values, norms, events, and processes of their period, and each experience differentiates them from other generations [27].

The youngest of today's consumers who were born digital after 2010 are members of the "Alpha Generation" [28]. The Alpha generation which comes after Generation Z is the first generation to be born in the twenty-first century. They are named after the first letter of the Greek alphabet to symbolize a brand-new beginning. It is stated that [27] from the alpha generation, all future generations will be named according to the Greek alphabet.

Taking 2010 as the first year of birth of Alphas, as of 2022, the oldest will be 12 years old and will start to take part in business life after 10 years at the latest. Countries with large populations such as India and China will experience a more significant generation gap with this generation. It is estimated that [29] the Alpha population will reach 35 million by 2050. This situation increases the importance of getting to know the Alpha generation closely.

The parents of the Alpha generation consist of individuals from the Y and Z generations. Although it is a different generation from the Z generation, it can be said that the Alpha generation has some hereditary features [28]. For example, the use of technology and the lives integrated into the digital world is a feature that the Z generation [30] transfers to the Alpha generation.

The Alpha generation, which is considered the "generation of the future years" and also defined as "Digital children" are familiar with all digital technologies. Unlike other generations, Alphas begin to recognize and use these products before they start talking. The Internet is an integral part of their lives. For Alphas who were born into an environment full of digital, technology is an important part of every moment of their daily lives. Technology shapes the lifestyle of the alpha generation, in all sectors from health to education, from household goods to our shopping methods, from smartphones to the use of robot technologies [27].

The Alpha generation, which is a generation capable of changing technology beyond seeing technology as a tool, begins to show interest in technology products

#### *What's "Next"? On the Future of Digital Entrepreneurship DOI: http://dx.doi.org/10.5772/intechopen.104690*

at a young age. Today, coding, which is taught from a young age, is used in toys, and children can reprogram robots, keys, and sensors of game consoles as they wish [28]. As their learning styles are more hands-on and experimental, they immediately start using technological toys, smart devices, and wearables.

Alpha generation members, who were born in an era with advanced technology, where digital transformation is experienced in every sense compared to their parents and grew up socially, do not hide their lives, feelings, and thoughts, share them with everyone, and are constantly in research because they cannot tolerate uncertainties [31]. Alphas, who have a more liberal spirit than other generations, make their decisions with the data they find and with their own experiences [28].

Alpha generation, who knows and uses the internet better than all generations, also affects the decision-making processes of their parents in their purchasing behaviors [27]. Today, Alpha Generation does not yet have spending power, but they do have a strong influence on their families' spending.

The new generations, surrounded by visual stimuli, have a more developed visual perception than the old generations [32]. The Alpha generation establishes a social life in a virtual world and prefers online communication instead of talking to people face to face. Alpha generation is a generation that has less face-to-face communication, spends more time with themselves, and has discovered its ways of learning at an earlier age [31].

Living in a very fast-paced world filled with excessive data, future customers who know everything about digital, Alphas will expect instant satisfaction from all businesses in the future [32]. Businesses should provide instant feedback to increase customer satisfaction through social media channels.

Each new generation after the Z generation, which is known for its entrepreneurial feature [30], will be more entrepreneurial than the next because they can access information more easily than previous generations [32]. Alphas, who do not know a world without social media, will turn to platforms that are easy to use in their purchasing preferences and expect everything to be customized according to them.

Contrary to the view that technological developments will negatively affect the job opportunities of the Alpha generation and robots will replace human power and leave the new generation unemployed it is also thought that new generation technological applications will create new professions and job opportunities in the future [23]. The Alpha generation, which is predicted to decrease the starting age of entrepreneurship [32], even more, will live in a world where the number of entrepreneurs is much higher than in the past.

#### **3.3 Social networks and digital entrepreneurship**

Entrepreneur's social networks are a potentially rich source of information. Reaching more individuals as a source of information is a significant condition for foreseeing new business areas, as not all the business owners have all the knowledge and skills themselves [33]. Social networks are beneficial for entrepreneurs in many ways. They can help to improve a firm's value, increase customer and supplier relationships, shed light on available resources and funding, encourage innovation, and may develop strategic partnerships [34].

Based on sociological studies [35] that examine social networks through the strength of interpersonal ties, it has been suggested that entrepreneurial networks consist of two main types or levels of linkage: strong and weak ties. Entrepreneurs forge strong and weak ties when building relationships. When planning and establishing a firm; entrepreneurs seek different kinds of help and support by inviting family members and outsiders to their social networks.

Access to information is very important to the entrepreneur. According to [36] information is most effective through weak ties. The acquisition of sources other than information is based on strong ties. Strong ties provide social support and motivation, which is important for entrepreneurs. Weak and strong ties have a positive effect on starting a business because they provide access to information, motivation, and finance.

Social media also can be seen as another discovery that brings people's communication to a very different dimension. Entrepreneurs now use social media platforms to create, expand and strengthen their networks facilitated by the opportunities it provides [37]. Entrepreneurial firms no longer have to wait for the next step to digitize their business processes, as social media platforms already offer easily accessible alternatives to collaborate with network actors. The networked nature of social media has enabled entrepreneurs to use these tools to support their own needs in different ways than other established companies [35].

Thus, for entrepreneurs sensing this opportunity, social media can be turned into a set of tools to reach existing customers and target audiences. Entrepreneurs use social media platforms for various reasons, expecting different benefits and results, including value creation, marketing, entrepreneurial business process improvement, information seeking, business networking, performance improvement, crowdfunding, communication, and driving business innovation [37]. In this respect, social media provide entrepreneurs the opportunity to reach customers and target groups, communicate and establish relationships in a way that provides trust to companies.

In conclusion, social media has helped entrepreneurs identify and realize opportunities that have fostered innovation and networking, leading to the creation of new businesses. In this sense, the greater the amount of weak and strong ties present in the entrepreneur's social network, the easier it will be to access appropriate resources and the greater the chance of success in the business establishment process with the use of social media.

#### **4. Conclusions**

This contribution aimed to highlight the importance of digital entrepreneurship and to discuss its future within the given framework of state-of-the-art research contributions. The authors highlight the following concluding remarks: Firstly, with respect to the theoretical reference in the introductory part of this article, it must be clear that theoretical research in digital entrepreneurship goes beyond the point zero of entrepreneurial action, that is to say, the alert entrepreneur who merely engages in arbitrage [1]. In this sense, digital entrepreneurship requires a new set of skills and capabilities unique to the digital age. This does not mean that the basic alertness behavior is not relevant anymore; its relevance is accompanied by several skills and capabilities that—in the best case—constitute the necessary, but not the sufficient point of departure for digital entrepreneurship. Secondly, the nature of the knowledge problem [19] remains valid in the digital era, and despite the potentially disruptive impact of digitalization on employment, new combinations of existing and/or emerging technologies still provide a fertile ground for digital entrepreneurship, contrasting the popular belief that digital businesses are selfcontained, and once a new technology is present, it can directly shape the market without any effort. Despite the role played by new technologies in digital entrepreneurship, this popular belief is an oversimplified version of the truth, as new technologies and their combinations can—in the best case—be fertile ground waiting to be discovered by the alert digital entrepreneurs. Thirdly, the Alpha generation,

*What's "Next"? On the Future of Digital Entrepreneurship DOI: http://dx.doi.org/10.5772/intechopen.104690*

which will constitute the majority of the customers of the future, will be more conscious, more researching, and questioning consumers as a generation with higher expectations. Businesses should be prepared now for the next generation of Alphas and should take their digitalization steps beyond the needs of the Alpha generation, taking into account the wishes, expectations, suggestions, complaints, and knowing the specific features of this generation. Although it may seem scary Alpha generation that does not hesitate to express their wishes, expectations and complaints will contribute to the improvement of processes, with their personalities that ask, research and wonder. Alpha generation subordinates will definitely bring different perspectives to Z generation managers in the business world.

### **Conflict of interest**

The authors declare no conflict of interest.

### **Author details**

Burak Erkut\* and Vildan Esenyel Faculty of Economics, Administrative, and Social Sciences, Bahçeşehir Cyprus University, Nicosia, North Cyprus

\*Address all correspondence to: burak.erkut@baucyprus.edu.tr

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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## Section 3

## Shaping the Next Generation of Entrepreneurship

#### **Chapter 6**

## Network Strategy for Entrepreneurs

*Camilo Peña Ramírez and Alberto Levy*

#### **Abstract**

Networks are an emerging area within the literature related to how entrepreneurs transfer knowledge, seek partnerships, and ultimately interact with others. Some terms with which this area has been defined are Business Networks, Knowledge Networks & Collaboration Networks. It is a cross-cutting phenomenon in various areas of knowledge, such as open innovation and entrepreneurship. However, the relevance of the use of networks for entrepreneurs and the development of global start-ups leads us to the need to propose a conceptual framework for the planning and administration of these business networks. It is an analytical investigation with a case study methodology. They are cases of the cities of Sao Paulo (Brazil) and Santiago (Chile) mainly of consulting and software services. From the models usually used in entrepreneurship, those with integrated tools and methodologies for the development of business networks by founders or administrators of start-ups.

**Keywords:** networks, strategy, entrepreneurship

#### **1. Introduction**

The network is an emerging area in the literature related to how organizations transfer knowledge, seek partnerships and, finally, interact with other organizations.

In business, some terms with which this area was defined are Business Networks, Innovation Networks, Knowledge Networks, and Collaboration Networks. It is a phenomenon that cuts across several areas of knowledge such as open innovation; entrepreneurship; social and public innovation; research network; collaborative economies; internationalization; strategy.

Ability to manage knowledge of these networks, referring to how to classify them, identify partners, what resources can be obtained, the type of alliances they should generate, among others. This implies a contingency analysis and the availability of resources available to companies.

Huggins and Johnston [1] related the theory of firm resources [2, 3] and the theory of networks (intra-firm) suggesting that firms should also create and manage external networks, to create knowledge and have capabilities needed to exploit this knowledge.

Valkokari and Helander [4] also analyzed networks at a strategic level, since it is considered that they can be managed and are a component of macro-networks at an industrial, regional, and global level. Furthermore, for these authors, a network

delivers common meanings and interpretations, continuity, and a stable context to network members to coordinate their actions.

The previous approach is similar to that of "ba", which is a virtual or physical place where knowledge transfer takes place [5, 6], which can be extended outside the company in an inter-organizational manner.

As for the level of development of strategic networks, they range from the traditional ones aimed at the efficiency of production or operation to those aimed at innovation, aimed at delivering (search) added value in the future [7]. These same authors indicate that, at the most developed level, focused on innovation, the ability to manage networks, create a vision, orchestrate and innovate is necessary. The question that can be asked is: what are these strategic network management activities?

So, if network management is important for the development of companies. We will discuss how to integrate business network planning and management models into organizations' formal strategic planning.

#### **2. Epistemological vision for a new strategy from knowledge**

Since 1990 the theory based on the resources and capabilities of the firm (resource-based theory) has received more attention than that based on competitive advantages [8]. The theory of resources and capabilities (resource-based view) is close to the idea of "core competencies" of Prahalad and Hamel [9], which needs to have similar attributes if they want to provide a competitive advantage, they need to provide access to a wide variety of markets, contributing significantly to the benefit of the customer and their products, and are difficult for competitors to imitate.

The resource-based view theory of the firm is a neo-evolutionary economic branch of Nelson and Winter [10], and the main idea is that the firm has resources that allow it a sustainable advantage over other firms. The problem with this perspective is that it is static, but Teece and Pisano [11] proposed that dynamic capabilities add two new characteristics, the renewal of competencies and that strategic management has a main role to improve and determine the organizational competencies.

In this context Venzin [12] proposed a distinction between 3 epistemologies that could guide practice and research, these are (1) Cognitivism [13]. Organizations such as open systems, generate knowledge by interpreting the world. (2) Connectionism [14]. Similar to cognitivism but the representation process is different. (3) The autopoiesis [15]. Provides a different understanding of information to a system.

The vision of autopoiesis [15], is an open system to data but closed to information and knowledge, both of which must be interpreted within the system. At an autopoietic system, the world is built with the system self-referenced, and the world is not seen as fixed and objective, so it is impossible to represent reality.

Furthermore, a group of individuals is seen as an organization, who creates a new and common frame of reference, common rules, and standards. Autopoiesis was defined too as a living system and auto-reproduction that keeps the organization constant [16]. Thus, an autopoietic epistemology of the organization considers that people are second-level entities and that knowledge comes through the life process. In addition, knowledge is in the individual who knows and cannot be "managed".

In the vision of Maturana and Varela [17] autopoietic knowledge implies that knowledge is a process related to life, thus knowledge allows effective action in the environment. This definition considers knowledge as a personal asset and

#### *Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*

that it exists only in the tacit form and explicit knowledge is only a representation of the above.

This epistemology is close to the works of Nonaka and Takeuchi [18] according to Sveiby [19]. This same author, based on Polanyi [20] and Wittgenstein [21] defines knowledge as the capacity to act (capacity-to-act), with the emphasis of this definition on the action element. An ability to act is only visible in action and each individual has to re-create this ability through experience, a vision that is close to constructivism [22].

Thus, we consider a socio-constructivist conception of knowledge, resident in practice groups or work teams [23]. Knowledge is dynamic, personal, and different from data and information, and this dynamic property of knowledge is the most important for executives [19].

On the other hand, inspired by evolutionary theory, knowledge, and capabilities are central elements in the so-called knowledge or competence-based theory. Regularly assuming constructivist conceptualizations, knowing has been seen as a process and evolving, inherently provisional and socially and technically referenced [23].

The knowledge-based approach considers knowledge as a key strategic resource in organizations, with creation, transfer, and transformation is a competitive advantage [24]. Thus, the differences in results between companies would be justified by their different stocks of knowledge and by their different capacities for the exploitation and development of new knowledge [18, 25, 26].

Knowledge management began to form as an area of knowledge when the authors Machlup [27], Bell [28], and Porat [29] around 1970 integrated a series of concepts of economics and administration, in addition to basic concepts of Knowledge and Knowledge Workers (knowledge workers). After this, Abernathy [30] differentiated the concepts of scientific knowledge from administrative knowledge, however, the orientation in those years was still dominated by research and development (R&D) and documentary knowledge.

Abandoning the idea of articulated knowledge, Nelson [10] developed the role of tacit knowledge in management, based on the work of Polanyi [31]. Tacit knowledge is the main basis of human abilities, especially when these are complex and not obvious to the observer. Tacit knowledge is certainly not causal and does not have a scientific knowledge base. Nelson took Polanyi's ideas to the level of complex organizations, determining that an "organizational routine" is a group of personal skills that are coordinated and integrated with coherent social action in the context of the organization. We emphasize for our purposes that of coherent social action.

According to Adcroft and Willis [32] there are few reflective works in strategy, because most of the works come from positivism, under this view the world is being socially constructed, where the researcher is part of the phenomenon.

For Quinton and Smallbone [33], positivist research is based on empirical social science methods with an emphasis on "validity, reliability, and generalizability", but phenomenological research seeks the truth and authenticity of each individual study with a qualitative orientation.

On the other hand, Jackson [34] indicates that socio-constructivism treats the organization as a single entity. That is capable of learning, despite the fact that the behavior is different from that of an individual. The socio-constructivist vision assumes that knowledge management transforms individual knowledge into organizational knowledge through organizational learning. Organizational learning is achieved through 3 steps that are externalization, internalization, and objectification [18].

Jakubik [35] identified that the knowledge management theory was ignoring the ontological, epistemological, and political characteristics of knowledge. Styhre [36] indicates that it is important to establish a new vocabulary and a new epistemology in knowledge management. Schultze and Stabell [37] identified four main "discourses" on knowledge management. These discourses were around dimensions of social order (consensus or not) and epistemological. Thus, four discourses on knowledge management research are presented: 1. critical speeches; 2. neo-functionalist discourse; 3. constructivist discourses; 4. dialogical discourse.

These same authors adopt the constructivist discourse in the epistemology of practice (how it is transferred) rather than an epistemology of possession (who knows?). In addition, the constructivist discourse assumes duality before dichotomy, which means that they are not finite stocks of knowledge, but rather knowledge continually emerging. This leads us to the fact that knowledge is not a separate object from human actions because it is continuously associated with the social practices of individuals and communities.

This led Schultze and Stabell [37] to suggest 4 metaphors of knowledge according to discourses: 1. knowledge as power; 2. knowledge as an asset; 3. knowledge as thought; 4. knowledge as a discipline.

The epistemology that comes is a synthesis of the processes of learning and knowing of the person that leads to new experiences of knowledge and learning. Some of the characteristics proposed by various authors of this new epistemology are:


De Alvarenga Neto and Choo [5] review the conditions in which knowledge is developed and propose a model that relates these conditions to the type of knowledge process and the level of interaction in knowledge management. As I am working with a vision from the strategy, I will base myself mainly on the strategic and structural vision proposed by these authors.

The business vision and the necessary support in the strategy and structure of the organization are related to the creation and operation of the "ba" (the virtual or physical place where knowledge transfer occurs) [6]. The assembly conditions are:


#### *Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*


For example, there is an implicit need for trust and personal relationships in the social vision (organizational behavior) and formal coordination and discipline to develop the vision strategy/structure.

French [38] explains that most of the research in the field of strategy has been developed in the epistemological paradigm of Modernism, but there are other paradigms such as Postmodernism and Critical Theory. According to this proposal, constructivism considers the following:


Battista [39] reviews the theoretical contributions on institutions made by various authors, concluding that this theoretical contribution mixed with constructivism, gives rise to establish the bases for a new conception of institutions that can help to solve two unresolved dichotomies in the economic analysis of organizations, we are talking then of process versus structure and individualism versus collectivism.

Valadao & Silva [40] study the overlap between strategy as practice and as a process. Strategy as the practice is seen as a social practice and seeks to understand strategists and their interaction.

On the other hand, strategy as a process is more than a simple plan, which considers the behavior, action, reflection, and patterns that emerge incrementally between the past and the future, think and act, model and develop. These relationships are developed both internally and externally.

Valadao & Silva [40] conclude that strategic practices and processes are continuously restructured, where the strategic alternatives taken by individuals are influenced by practices that are socially constructed and culturally accepted. Strategy is evident when executives and practices, structure, context, and operations complement social practices, where knowledge and language allow strategists to go beyond practice to more complex strategic processes in the current reality of the company.

McGee and Thomas [41] argue like Grant [25] about a pluralistic epistemology and the interaction between explicit (in documents) and tacit (in people) knowledge, and between different organizational units (from individuals to groups).

Spender [26] explains that the concepts of knowledge vary too much, inconsistently, and in different ways, without being related. Then a clear epistemology is necessary that provides meaning, as it is proposed:


developed through individual options and "eventually" (very little empirically identified) are embedded in organizational routines.

• The origin of knowledge as intuition [18, 42], where what is tacitly known by individuals is transformed and communicated to the group (collectively and socially).

Spender [26] also analyzes 4 types of ideal connections of these adaptation mechanisms. According to the different types of knowledge there are different types of theories of knowledge, however, a theory based on "inherent, immobile and collective knowledge (a strategic resource)" leads to the conclusion that it is the safest and most strategically significant type of knowledge organizational.

Finally, we can propose a summary table, a structure of the knowledge of these different areas, and their articulation (**Table 1**).

Then, the basic epistemology is socio-constructivist [38, 39], but a particular look at this vision is necessary (**Table 2**).

Finally, we can structure a common epistemological vision to propose a theory of a strategy for start-ups and small businesses. The main epistemological vision of articulation within socio-constructivism is the autopoiesis of Maturana and Varela [15], also considering the adaptive vision of knowledge [10], knowledge as a discipline [37], and the concept of "ba" [5, 6].

Thus, we have the following norms or base rules of epistemology for a strategy:



**Table 1.** *Theories.*


*Source: self-made.*

#### **Table 2.**

*Epistemological vision.*

#### **3. Methodology**

It was an analytical investigation with a case study methodology. There were 16 cases from the cities of Sao Paulo (Brazil) and Santiago (Chile), mainly in the areas of consulting and software services.

In the first instance, from the interviews, causal maps were developed for each company, to later integrate the companies that were in the same stage of development in a single diagram. On the other hand, the procedure was completed, listing all the identified "strategic actions" in order, to later assess the relationship of the different actions identified and how they affect the others.

Then, network management was analyzed based on the strategic activities identified for Startups. A selection was made of the activities present in the company's network management process.

Thus, network management activities were classified in each quadrant according to the model of Nonaka and Takeuchi [18]. This systematization considers a series of filters, considering the relevance, occurrence, and priority identified in the content analysis.

Finally, the network management activities already identified are integrated into a process to propose a relationship between the results and the presence of the activities (**Table 3**).

The interviews considered in the case study were in-depth, lasting approximately 1 hour, semi-structured, and conducted in Spanish, English, or Portuguese, which began with reference questions. A type of episodic interview was used [57] that corresponds to establishing situations of the phenomenon under study, and in a sequential manner. This sought to better capture the meaning of strategic practices by administrators.

The questions were asked based on the level of development and the events the company has gone through. For example, at the 1st level, the events of "incubation and creation of the company" occur, and questions such as who was your first customer and how did you do it? Also, at the last level, the event of "sending a commercial proposal to a client abroad" occurs, and questions such as do you maintain any alliance or agreement with other companies in the region or globally?

For this research, startups had between 5 and 50 employees, and professional executives from different specialties with more than 5 years of experience, are expected to have previous international experience. A representative number of executives was interviewed, 1 or 2 per company. The companies had to be 3 years old or more, with sales in all years of operation and at least 3 active clients. You must


**Table 3.** *Analysis categories.*

have effective exports made or at least have submitted proposals (technical and commercial) to clients in other markets in the last 2 years.

The cases are 16 companies (11 Chilean and 5 Brazilian), obtaining a good description and analysis of the specific event in question. The companies belong to the sectors: miscellaneous businesses; research and experimental development in natural sciences and engineering; business and management consulting activities; software consultancy and services (4); data processing (1).

#### **4. Developing a network strategy for entrepreneurs**

Those companies that can classify the networks in which they participate and maintain networks that handle knowledge, beyond the market or customers, are in a greater stage of development and in the process of internationalization.

It is possible to establish the types of networks most used and relevant for the companies interviewed, when the administrator recognizes the different types of networks in which they participate and can manage them separately with an ICT tool or support. The planning activities known at this stage are contact coordination.

The ability to migrate from the personal and company network certainly determines the scalability of a start-up, this can be appreciated by the need for coordination (of the network and contacts) and the use of support tools for the entire company (ICTs). Kaya and Erkut [58] recommend new research focus on the strategy process and implementation, especially in a social media environment and knowledge generation.

The explicit component of network knowledge management corresponds mainly to some technology management techniques and customer management accessible to administrators.

#### *Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*

The proposal that knowledge of networks (Network Knowledge) is prior to other types of knowledge such as technological and market knowledge remains valid. However, the main challenge is how to create governance structures to involve people in the strategic decision-making process, and do not be trapped in the knowledge problem [59].

The transfer of knowledge occurs in an expanded context of the company, as the stage of the outsourcing and combination process was reviewed in the results, which occurs in workgroups and companies respectively, in the expanded context it considers the members of the company and the partners or partners that are in the network. The latter is not there if the network is not established or deployed, and the resources that they have will not be available, such as technological, distant markets, reputation, and marketing knowledge, among others.

A common nomenclature is established between interactions with customers or business contacts, a virtual and face-to-face network, as well as a formal and informal relationship. Companies with a focus on the local context (city, region or state, and country) are intensive in face-to-face and informal relationships (social and close). They do not handle formal relationship procedures with clients or other related entities, another type of network in addition to the market or clients is not distinguished. The level of internationalization is null or unfeasible among administrators, furthermore, the orientation towards face-to-face and informal (personal) relationships does not prepare the organization for future stages of development.

Intensive personal networks in this type of company are also centralized, based on power, since they are managed by the owner(s). The perception of associate consultants, employees, or freelancers is the same, their contributions are only work hours, not new contacts, projects, or clients.

Working together with the other company, client or partner, has been established as one of the most relevant activities for the transfer of knowledge, and achieving affinity and long-term relationships, which is related to the achievement of social capital in the medium to long term.

Within the sequential questions asked, the stage that provided the most conclusive evidence and antecedents corresponds to the second stage or "network management". This provides background information to conclude that the company that differentiates networks other than the market (customers) and that has a formal mechanism for managing these contacts is in a phase change and allows it to access regional and global markets.

In the Nonaka and Takeuchi model [18], it is possible to establish levels of development in network knowledge management, considering the network between companies, where those companies that gain access to more complex activities such as internationalization, implies that the flow between the stages is balanced and there is also a sequence between network management activities. This is important because a virtuous circle can be established, a dynamic capacity that allows the company's networks to expand.

The company's network management development events are determined by the following milestones:


In the most relevant stage for this research, we have:


The companies that present at least some of these actions or functions within their operations are in transition to the last stage of development or in this, which is the management of networks at a regional or global level.

Now, not as stage transition actions or functions, but within the more complex actions, the following can be mentioned as findings other than those present in the literature:


#### **5. Results discussion**

According to the results obtained, there are the criteria for the planning of business networks, which are the first discriminators on the selection of the network:

1st. Types of resources available

This is likely to imply an additional effort on the part of administrators because they will have to identify who their participants are and their motivations, and other related aspects such as what is the rationality and nature of the network.

#### *Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*

Analysis was similar to that of Stakeholders with the MML, Corporate Social Responsibility, or Stakeholder management based on the theory of Freeman [60].

The administrators in these aspects behave from intuitively, rationally to strategically, according to the level of basic development, networks or export respectively. But the first thing to look for is to increase the number of interactions in order to gather the information you require about the network, the actors involved, their relative position, and their power. This knowledge is eminently market or commercial, that is, that contacts can provide information to trigger new business.

2nd. Viability of the network

This has to do with criteria of governance, proximity, dynamism, stability, and spatial scope of the network. In simple terms, if you participate and dedicate time to managing and maintaining the contacts of that network, it will not be a failure. Although the evidence recorded is that this action is intuitive, most of the managers interviewed identify that the network they participate in has no contribution and has been "a waste of time", with which they have felt frustrated.

Other criteria have been left as secondary, since, in a dynamic and open, nontraditional system, the owners of the networks, their cohesion, age, and density are determined by higher quality information, which is obtained already by participating in this group or net. Only the owner or age of the network could be viable information to obtain immediately, but it is not necessarily what is happening in reality, because there are informal owners or the network is inactive for many periods.

Within the viability of the network, criteria such as relative, central, or peripheral position are included, which every time the company progresses in its development, accesses new markets or sectors, returns to a peripheral position. This also occurs when accessing new networks, such as that of technological and reputational knowledge, which, as previously reviewed, are identified and managed by administrators in stages of greater development of the company.

3rd. Selection of partners

Here, the criteria for selecting actors within the networks in which they participate are considered, as well as the number with whom they can interact. Within these criteria, there is the type of relationship, the viability of delivering the knowledge, where its characteristics and the possibility of being able to interpret it are considered.

This occurs, for example, in the interaction of a technological network between a University or Research Center and entrepreneurs who need to further develop a technology or seek a technological option for the identified business opportunity. Here there are problems of interpretation, power, motivation, and feasibility of delivery.

At this stage, it is necessary to consider the implicit power in the relationship with partners or partners, of domination or dependence, but in these dynamic and collaborative work environments, it is necessary to have sufficient flexibility, since, according to the spatial level of the network (local, regional or global), the type of network (market, technological, reputational or other) and its viability, administrators will find themselves in a permanent challenge to manage both positions, domination or dependency, in collaborative work environments.

At this stage, it is necessary to consider the criteria associated with alliances, such as their frequency and sustainability, and the intensity and willingness of the members. As the selection of partners or partners is a skill available to companies that are already in a stage of managing their business networks, they are queries that administrators should make when they have already selected the networks where they are going to participate and the appropriate actors or partners with whom to form these alliances. Partners are entities that can range from individual professionals to companies or organizations.

In order to compile the antecedents exposed in this investigation, particular conclusions can be presented for administrators. For these professionals, the ability to network is crucial, the selection of partners or partners, and to be able to work under different conditions of dependence and power, depending on the network in which they are participating. You must understand the conditions of low social capital, so you have to be a generator of new trusts and spread this practice within the company and the network. You must be aware that personal egos, internal political conditions, prejudices, and other personal or organizational culture conditions make the team or company inflexible, where permeability and flexibility are required to transfer, deliver or receive knowledge.

A crucial skill for administrators is to be able to differentiate the various networks in which the company participates, and that it can be trained for this. It should be remembered that the ability to distinguish technological and reputational networks is present in administrators and companies with a higher level of development and internationalization.

The contextual conditions for both administrators and small service companies are that they must understand that they work with open systems, probably as a professional or company in intermediary positions, as well as the dynamic and innovative network in which they operate. In addition, the understanding of being established or positioned in the value-adding channel.

The learning capacity should also be mentioned, which has to do with identifying areas of interest or communities, as well as the search for interaction activities, intensive in knowledge with partners or partners.

A practical application of the use of the criteria or discriminators explained above is a guide to design a business network plan. Formal planning for small work teams, where the following example considers a start-up venture. The objective is the sustainability of the project and the scalability of sales.

From the Entrepreneurship Business Model [61], the analysis consists of 2 stages:

First stage: Review the commercial areas, channels, relationship with customers, and customer segment. Using the central circle in **Figure 1**. First, the information and/or knowledge necessary to access channels and clients is identified, then

**Figure 1.**

*Business network plan. Source: self-made.*

#### *Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*

the community or networks to participate in, and finally the necessary partners (parceiros). Those are the questions: What? (1), is it feasible? (2) and Who? (3) in clockwise order.

Second stage: Review the non-commercial areas, key partners, activities, and key resources. Using the outer circle of **Figure 1**. Then, the questions asked in the First Stage are repeated to identify information and/or knowledge necessary to access key partners, activities, and resources. In the same previous order of the clock hands.

The previous analysis allows us to identify this triad made up of Knowledge, Network, and Partner. Those circles that are complete can be prioritized and assigned to the professionals of the working group for their exploitation and followup. Those incomplete circles, usually in Network (2) and/or Partner (3), imply a search or investigation work of the pending data to complete the triad.

This entire process allows the business model to be validated under the vision of business networks. In addition, define and schedule formally and simply the activities of the business network plan.

#### **6. Conclusions**

Finally, in order to collect the background exposed in this research, particular conclusions can be presented for professionals, companies, public policy, and internationalization.

For administrators and professionals, the ability to network is crucial, the selection of partners or partners, and to be able to work under different conditions of dependence and power, depending on the network in which they are participating. You must understand the conditions of low social capital, so you have to be a generator of new trusts and spread this practice within the company and the network.

A crucial skill for administrators is to be able to differentiate the various networks in which the company participates, and that it can be trained for this. It should be remembered that the ability to distinguish technological and reputational networks is present in administrators and companies with a higher level of development and internationalization.

The context conditions for both administrators and small service companies are that they must understand that they work with open systems, probably as a professional or company in intermediary positions, as well as the dynamic and innovative network in which they operate. In addition, the understanding of being established or positioned in the value-adding channel.

The learning capacity should also be mentioned, which has to do with identifying areas of interest or communities, as well as the search for interaction activities, intensive in knowledge with partners or partners.

#### **7. Limitations**

This is a qualitative investigation, with a case methodology, where 16 companies in Chile and Brazil were analyzed. Access to these companies was complex because they are niche companies, intensive in expert knowledge. For one in three of the companies that were contacted, an effective interview was achieved. The companies interviewed in Brazil allowed us to validate the behavior of companies in the same categories in Chile.

The composition by type of the cases does not allow generalizing behaviors, since we worked with consulting, software, and software services (SAAS)

companies. The items corresponded to diverse businesses, research and development, consulting, software services, and data processing.

The specificity of the interviews carried out and their duration was aimed at responding adequately to the research questions and proposals, but not providing background information on management practices outside of the analyzed business networks. In addition, the interview is in virtual mode (via SKYPE©) allowed to validate the use of the tool by the administrators, but not the physical operating conditions of the companies, only through their internet sites (Web Site) and material delivered to the researcher.

#### **8. Future research**

One aspect to be developed corresponds to the validation of the instrument to measure the level of development of companies, specifically in the capacity to manage business networks.

A variant of this research, and where the same content analysis methodologies and application of knowledge management models can be used, is to carry out the necessary variations to apply this "Test" at the level of business networks to various areas or sectors.

The greatest variations of the instrument are expected for social and public innovation, personal marketing, as well as research networks or researchers (Research Network). As mentioned above, the areas of open innovation, entrepreneurship, and digital marketing are closely related to this research, which would imply very few adjustments to the instrument.

When making a relationship of terms between the area and the problem, only considering the primary and secondary information collected by this research, and where business network management can have inference, we have (area—problem):


In the area of strategy, there are various applications for formal strategic planning from a business model, business plan, strategic unit planning, corporate planning, or any formal planning model. How the management of business networks is integrated to complement or enhance the formal strategic planning that the company has?. This is determined by the strategic objectives, as well as the identified tactic and action plan.

Related to the proper planning of business networks, compilation and systematization must be carried out, in addition to the application and evaluation of the results in companies. This is to establish a broadly detailed model of business network planning, which allows representing the various techniques or practices dispersed in economic sectors, as well as the use and effectiveness of various

*Network Strategy for Entrepreneurs DOI: http://dx.doi.org/10.5772/intechopen.101641*

theoretical supports that tangentially describe the management of business networks. One of the areas where this network planning model could be used and validated in a better way is in areas, where there is diverse content on the internet, and data capture can be done historically, with public information and open, making it more viable.

### **Author details**

Camilo Peña Ramírez1 \* and Alberto Levy2

1 Universidad Central de Chile, Santiago, Chile

2 Universidad de Buenos Aires, Buenos Aires, Argentina

\*Address all correspondence to: camilo.pena@ucentral.cl

© 2022 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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#### **Chapter 7**

## Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis of an Educational Context

*Inés Ruiz-Rosa, Francisco J. García-Rodríguez and Naira Delgado-Rodríguez*

### **Abstract**

The promotion of entrepreneurial intention in educational contexts is a priority that is increasingly present in academic planning, especially at university level. Furthermore, social entrepreneurship has been gaining prominence not only as a formula for improving the welfare and equity of society as a whole, but also as a mechanism for professional development. Taking into account both aspects, this paper analyzes the effect of university students participating in volunteer activities on their intention to carry out social entrepreneurship projects. With this objective, this study is based on the Theory of Planned Action of Ajzen. A sample of 208 university students was analyzed, 96 of whom had some experience of volunteering. The results confirm that taking part in volunteering, during students' education, positively affects their intention to start social entrepreneurship projects. This result allows us to conclude that encouraging volunteering could be a good methodological tool to promote social entrepreneurship within the educational field. In addition, the implementation of this type of social project could benefit university students not only by making social improvements to their environment, but also as a labor insertion tool.

**Keywords:** Entrepreneurship Education, Social Entrepreneurship, University, Entrepreneurial Intention, Volunteering

#### **1. Introduction**

In recent decades, intervention programs aimed at promoting an entrepreneurial spirit in the classroom have proliferated in educational centers, especially in university contexts [1, 2]. The effectiveness of these intervention programs has been amply demonstrated as a way of improving the entrepreneurial intention among their participants [3–11].

Particularly, and, as far as the university sphere is concerned, it has been confirmed that higher education centers are a potential source of future entrepreneurs [8, 12, 13]. Indeed, entrepreneurship has become an increasingly important work option that is highly valued by students [14–17].

Within the programs related to promoting entrepreneurial intention, in the current socioeconomic context, the specific area of social entrepreneurship has been gaining importance [18–20]. In this sense, according to Kaya et al. [21], students who can be described as social lead users, whose social vision is beyond the existing market for providing solutions to social problems, are more likely to be entrepreneurs than those who cannot be described as social lead users. Thus, analyzing the cognitive schemes associated with social entrepreneurship is an important academic challenge [22–24].

Aware of this need and taking into account that altruism and volunteer activities can be a key explanatory element when characterizing social entrepreneurship [25–29], the present work aims to measure the effect participating in volunteer activities has on the intention to carry out social entrepreneurship projects. In this sense, the model of planned behavior [30, 31] is the relationship framework that is most popular for introducing personal and contextual variables, and has rigorous theoretical support [32, 33].

Therefore, and starting from the Theory of Planned Behavior, we compare the entrepreneurial intention towards social projects based on attitudes towards this behavior, subjective norms and perceived behavioral control of a group of students with experience in volunteering with another group that lacks this experience.

The paper begins with a brief review of the theoretical background of social entrepreneurship, and then reflects on the possible relationships between personal factors and social concerns. The proposed model is presented below, the methodology of the study is described and the main results are detailed. Finally, the main conclusions are highlighted.

#### **2. Social entrepreneurship: concept and scope**

Kao [34] already pointed out that entrepreneurship, in general terms, can be defined as the process linked to 'doing something new and something different' with the aim of adding value, both to the individual and to society. Social entrepreneurship is framed within this conceptual field, in fact, "social entrepreneurs share many of the same qualities that regular entrepreneurs share: their ventures are typically of high risk, they are characteristically skilled at stretching resources more efficiently, and typically they have a new idea that fills a niche in the market" ([35]; p. 9).

The concept of "social enterprise" started to gain popularity between the 1980s and 1990s, promoted by Bill Drayton, founder of Ashoka, a non-profit organization based in the United States, which develops activities focused on social entrepreneurship. However, there is still no clear academic consensus regarding its meaning [36]. Despite the diversity of nuances that shape this concept, there are three common ideas that are repeated in all their meanings [18, 20, 36–40]:


*Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*

c. Social projects become the driving force that stimulates **social change**. In this sense, it is a priority to have the capacity to identify the opportunities that can become authentic catalysts of social change [44].

Martin and Osberg [40] differentiate between traditional organizations that provide social services and firms of a social nature. In fact, the term *sustainable social value* differentiates social entrepreneurship from charitable works or charitable actions [41, 45, 46]. This concept of sustainability refers to the intention to maintain social activity over time and not just solve a social problem of a temporary nature.

In short, following Guzmán and Trujillo [47] and Sastre-Castillo et al. [45], we understand that social entrepreneurship is a specific type of entrepreneurship that seeks to solve social problems through the construction, evaluation and pursuit of opportunities that allow the generation of sustainable social value, reaching new and stable equilibriums in relation to social conditions.

This central objective of obtaining a social benefit does not mean that social entrepreneurship projects should be developed under the legal umbrella of nonprofit associations only. In this sense, there is a significant trend of nonprofit entities to be created with non-traditional legal forms. Eikenberry and Kluver [48] explain this change by the budget cuts suffered by some social programs and the decrease in donations received by the private sector.

Along these lines, some authors [39, 42] recommend the creation of hybrid business models or new forms of social entrepreneurship that bring together elements of both traditional social and commercial enterprises.

According to Guo and Bielefeld [35], the main differentiating element of social entrepreneurs compared to regular entrepreneurs is that the former "are not merely trying to make the best out of the current situation, but instead create a wholly new situation in which to operate. They have a business and social mission, and through that mission change the way the system functions". Along these lines, following Austin et al. [42] and Dorado [49], we could categorize the main differences that exist between a commercial or business enterprise and a social enterprise in four groups:


Indeed, the existence of organizations whose objectives are generating benefits for the community is not something new; rather it has been a concern from the very first civilizations. What is new is the growing interest that this type of activity has awakened in recent years, in both academic and government institutions [22]. Much of this interest is due to the fact that, in many cases, social entrepreneurs provide innovative social solutions that are more sustainable and effective than those provided by the public sector [37, 50, 51]. In fact, Bargsted [52] recognizes in social entrepreneurship an alternative path towards social and economic progress.

However, and despite this interest, empirical approaches are scarce [45] and there is still a considerable scientific vacuum in terms of the dynamics and processes that favor the generation of social entrepreneurship projects [27, 29, 53–56]. In this sense, Certo and Miller [22] highlight the importance of determining the personal characteristics and cognitive schemes of social entrepreneurs, in order to promote these types of initiatives.

#### **3. Personal factors: driving force of social entrepreneurship**

Entrepreneurial activity, like any process, requires some planning until it materializes in the creation of a business, with the intention of entrepreneurship being the step prior to its effective implementation and, therefore, its best predictor [31, 57–59].

However, there is still a significant gap in understanding how the antecedents of this intention and how its conditioning factors are formed [60]. With regard to social entrepreneurship, following North [61, 62] the start-up of this type of projects responds, fundamentally, to two kinds of motives: formal, such as reasons for public spending and access to financing and informal ones of governmental efficiency, such as social needs, social attitudes and education [63].

Urbano et al. [64] recognize that reasons of an informal nature, and linked to personal aspects, exert a greater influence on the generation of new social entrepreneurship projects. Similarly, Hemingway [65] considers that personal factors determine the propensity of an individual to create social ventures.

#### **3.1 Explanatory model of entrepreneurial intention**

Entrepreneurial intention, in the general field of entrepreneurship and by extension to the case of social entrepreneurship, depends fundamentally on a combination of personal and social factors [66–68]. According to this argument, among all the models that try to explain entrepreneurial intention, that of the Theory of Planned Action [31, 57] has become the one that best reflects the entrepreneurial process, insofar as it explains entrepreneurial intention based on the interaction between personal and social factors.

This theory proposes that entrepreneurial intention depends on the influence that three variables have on it: attitude towards behavior, the subjective norm and the perceived behavioral control. The attitude towards entrepreneurial behavior will depend on the beliefs that a certain person has about certain behaviors. Moreover, these beliefs will depend on the consequences that the subject perceives could be triggered by such behavior and its evaluation. The subjective norm can be defined as the perception of social pressure to carry out or not a particular behavior [31]. Scores of subjective norm are obtained from the analysis of two variables: the beliefs about how other significant persons think that the individual should behave (normative beliefs), and the motivation that refers to the general tendency that exists in complying with the norms of a group taken as a reference [68]. Finally, perceived behavioral control refers to the greater or lesser difficulty that the person perceives to perform the behavior [57]. Regarding this variable, Ajzen [57] breaks it *Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*

down into two dimensions: self-efficacy (belief in one's own abilities to organize and execute behavior) and controllability (belief about the control one has over one's own behavior).

Although in the field of entrepreneurship the Theory of Planned Action (TPA, hereafter) has been widely applied, in the specific case of social entrepreneurship the development of the model has been rather scarce [54, 69, 70]. This means that the field in general is still in the process of configuration and development, especially in terms of the explanatory background of social entrepreneurial intention [29, 45, 55, 66].

#### **3.2 Volunteering and social entrepreneurship**

For Osorio [71], the training of altruistic people, as a vehicle to enhance prosocial behavior, is one of the great challenges faced by current educators. In this sense, this same author, suggests that empathy is one of the main engines of altruism, in the sense that if 'one learns to suffer with the suffering of others, and to be happy and alleviated with the joy and relief of others, you will find a certain pleasure in altruistic actions, and you will be, therefore, more prone to carry out such actions'.

Likewise, the capacities of an entrepreneur are not fixed or immovable traits or characteristics, but can be modified over time and, therefore, developed and learned through experience [72]. Bird and Romanelli [73] identified a strong relationship between experience and the trajectory of founders of enterprises and the type of business entrepreneurship they generated. Moreover, Zahra et al. [74] affirm that the linking of potential social entrepreneurs with activities related to the social sector fosters the capacity to become more altruistic citizens and, therefore, a greater capacity to identify new social opportunities. In this sense, several researches coincide in demonstrating that prior social experience is a relevant aspect in the generation of social entrepreneurship projects [22, 42]. These findings can be explained on the basis that volunteer work [75] and service learning [25] enhance a sense of social responsibility among participants.

In this sense, in an exploratory study by Scheiber [29], conducted in Brazil, it is pointed out that participation in volunteer work can be one of the explanatory factors, even the essential motivation, for the subsequent implementation of social entrepreneurship projects. This can be explained because volunteers often obtain a more intimate awareness and understanding of those most affected by social problems through volunteer work. However, following Scheiber [29], it is necessary to develop quantitative studies in other territorial areas, aimed at other populations, especially younger people to explain this relationship. This is framed in the need to improve the explanatory factors of social entrepreneurship [67] and to consolidate a general theory for this field [76].

Under these premises, and aware of the role of universities as promoters of capabilities linked to entrepreneurship and more specifically to social entrepreneurship [69, 77] it is necessary to determine the antecedents of social entrepreneurship, comparing it to business entrepreneurship and the importance of having carried out previous volunteer activities.

#### **4. Methodology**

A total of 208 university students participated in this research, 96 of them volunteers and 112 non-volunteers. Of the total sample, 67.1% were women and the rest men. The mean age was 32.59 (SD = 15.05). **Table 1** shows a summary of the characteristics of the sample.

For this study, a questionnaire was developed that included 37 questions (see Appendix). The confidentiality of the data collected was guaranteed, as well as the anonymity of the participants. The questionnaire included the following sections:

1. *Adaptation of the Entrepreneurial Intention Questionnaire* (EIQ). Developed by Moriano et al. [68], this instrument measures the entrepreneurial intention using the TPA of Ajzen [31]. The general wording of the questionnaire items is adapted by the way in which reference is made to start-up projects with social content, instead of a business one. The answers range from 1 (not interested/not at all / not, never) and 7 (totally interested/totally in agreement/yes, many times).

The questionnaire contains a first block of questions aimed at measuring personal attitude towards entrepreneurship, through two scales of seven items each, which gather the beliefs and assess the consequences of entrepreneurship. In the adaptation carried out for this research, an item has been included in the attitude block related to the desire to achieve social improvement, and another item to measure its assessment.

A second block of the questionnaire measures subjective norms, by means of two scales of three items each, which measure the normative beliefs and participants' motivation to adjust to these norms perceived by the influence of direct family, close friends, co-workers or colleagues.

The third block of the questionnaire includes the controllability scale, with 5 items, since two new items were included in relation to the questionnaire proposed by Moriano et al. [68]: "*I am ready to start a social project" and "I know how to develop a social project".*

Finally, the fourth block of the questionnaire measures the entrepreneurial intention through 3 items "Have *you ever considered starting a social project?", "Do you think that in the future you will create a social project?",* and *"How likely do you think it is that you will create your own social project within five years?*

2. *Other measures*. In the questionnaire, 12 items were included whose objectives were to identify the age and sex of participants, as well as their studies, experience as volunteers/intention to participate in volunteer activities.


**Table 1.** *Sample characteristics (N = 208).*

*Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*

This questionnaire was delivered to and completed by participants at a Conference on Solidarity organized by a medium-size European university and the Volunteer Office of the *Cabildo de Tenerife* (Island Government in Canary Island, Spain). This conference was attended by people who volunteered as well as non-volunteers.

#### **5. Results**

#### **5.1 Descriptions, reliability and correlations between the variables of interest**

First, with the sample as a whole, the mean scores and standard deviations of the dimensions were calculated. In addition, the reliability of each dimension was calculated through Cronbach's Alpha, and an analysis of the existing correlations between Entrepreneurial Intention, Social Entrepreneurship and the dimensions of the TPA model was carried out. **Table 2** presents a summary of the results obtained.

A moderately high correlation was observed between Entrepreneurial Intention and Social Entrepreneurship (r = .418; p < .01), which indicates that these are two independent constructs, although they are related. Social entrepreneurship showed a very high correlation with controllability (r = .706, p < 0.01) and personal attitude (r = .401; p < 0.01).

#### **5.2 Comparison between volunteer and non-volunteer participants**

To check if there are differences in the dimensions studied between voluntary and non-voluntary participants, comparisons of means were carried out, the results of which are presented in **Table 3**.

These results indicate that there are statistically significant differences between the groups of volunteers and non-volunteers in the intention to carry out social


#### **Table 2.**

*Matrix of correlations between the variables studied.*


#### **Table 3.**

*T-tests for the variables of the TPA model and social entrepreneurship depending on experience or no experience of voluntary actions.*

entrepreneurship, as well as in the perception of controllability. In both measures, the group of volunteers presents scores higher than that of non-volunteers.

#### **5.3 Predictors of social entrepreneurship**

To determine if similar or different predictive models are produced for the criteria of entrepreneurial intention and social entrepreneurship, a multiple linear regression analysis was carried out for each of these dimensions, including the prediction variables Attitude, Subjective norm and Controllability. The results obtained are presented in **Table 4**.

The results obtained show that the predictive capacity of the model is greater for social entrepreneurship, with 51% of the variance of the criterion variable explained, compared to entrepreneurial intention (R<sup>2</sup> adj = .160). In the predictive model of entrepreneurial intention, Attitude and Controllability are statistically significant. Specifically, for each unit increase in Controllability, entrepreneurial intention increases 0.29, and for each unit increment in attitude, entrepreneurial intention increases by 0.20. When the regression model is applied to social entrepreneurship, the subjective norm and controllability are the two predictor variables that are statistically significant in the model. Specifically, for each unit increase in controllability, the intention of social entrepreneurship increases by 0.67, and for each unit increase in subjective norm, the intention of social entrepreneurship rises by 0.13.

Finally, in order to compare the groups of volunteers and non-volunteers, multiple linear regression analyzes were carried out separately for each group, for the social entrepreneurship criterion variable, including as predictor variables Attitude, Subjective norm and Controllability. The results obtained are presented in **Table 5**.

In the case of the volunteer sample, the predictive model explains 44% of the variance of the criterion variable. In this case, controllability and subjective norm are the variables with predictive power. Specifically, for each unit increase in controllability, Social Entrepreneurship increases by 0.49, and for each unit increase in subjective norm, there is a 0.28 increase in Social Entrepreneurship.


#### **Table 4.**

*Results of the regression analysis for the criterion variables entrepreneurial intention and social entrepreneurship.*


*Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*

#### **Table 5.**

*Results of the regression analysis for the criterion variable social entrepreneurship in volunteers and nonvolunteers.*

#### **6. Conclusions**

This paper analyzes the possible relationship between entrepreneurial intention in projects of a social nature and participation in volunteer activities. From the results obtained some preliminary conclusions can be drawn that confirm the value of expanding our knowledge of social entrepreneurship and its explanatory factors, especially the role that volunteering plays.

On the one hand, the results reveal that entrepreneurship and social entrepreneurship are different dimensions which, although they are related, maintain a clear independence of each other. In this sense, it is noteworthy that experience as a volunteer increases the intention to carry out social entrepreneurship projects, but does not produce differential effects on entrepreneurial intention in general. This positive relation between volunteer work and social entrepreneurship confirms previous exploratory work, such as that of Sheiber [29] or Kaya et al. [21], emphasizing the importance of social lead user to recognize the social problems and to launch startups for providing solutions in a more efficient way than public sector institutions. It encourages further progress to analyze this relationship in other geographical areas and with other population samples.

Moreover, the sample highlights the predictive capacity of the dimensions studied in relation to social entrepreneurship. This allows us to conclude that the model of planned behavior [30, 31] constitutes a valid approach to social entrepreneurship, as is the case of regular entrepreneurship. Among these variables, for the group of volunteers, controllability and subjective norm are the most relevant. In the case of non-volunteers, perceived control over social entrepreneurship is the only explanatory variable. These data indicate that for volunteers, the opinion of family and friends regarding the intention to carry out social projects in order to consider social entrepreneurship is more important than for non-volunteers.

With regard to the comparative analysis between the volunteers and nonvolunteers, it is observed that the experience as a volunteer seems to increase the desire to undertake projects of a social nature. In addition, the group of volunteers perceives a greater level of control over launching a social project, in comparison with people who have not taken part in voluntary actions. Possibly, this difference in controllability is due to the knowledge accumulated through experience, related to the having worked with institutions and groups, etc., which ultimately translates into an increase in confidence.

The results are very useful for organizations that must work with generation Z intrapreneurs in order to face challenges they have to cope with, in the sense indicated by Singh Ghura [78]. It seems that promoting volunteer activities could aid to create the organizational supportive environment needed to facilitate an intrapreneurial culture in the organization and therefore to increase corporate entrepreneurship and product innovation [79].

From the point of view of entrepreneurial university education, it seems, therefore, that the promotion of volunteer activities, the dissemination of inspiring examples of people with experience as volunteers, among other actions, could constitute good methodological tools to promote social entrepreneurship, although not business entrepreneurship. Therefore, the results confirm the potential of the university as a promoter of capabilities linked to social entrepreneurship, as pointed out in some previous works like those by García-Morales et al. [19], Co and Cooper [69] or by Richomme-Huet and Freyman [77]. It also seems to confirm the suitability of the methodologies linked to service learning [2, 25] to increase the social entrepreneurship intention in the university educational context. Finally, it should be noted these social projects can serve university students not only as vehicles to produce social improvements in their environment, but also as tools for their own future labor insertion.

#### **Appendix: Adaptation of the entrepreneurial intention questionnaire**


#### **1st block: personal attitude**

**To what extent do you agree that starting a social project (non-governmental organization, nonprofit association, volunteer ...) for you would mean:**


*Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*


#### **2nd block: subjective norms**

**Think now of your closest family and friends. To what extent would they agree with you if you decided to start a social project (non-governmental organization, non-profit association, volunteer ...)?**



#### **3rd block: controllability**


### **4th block: entrepreneurial intention**


#### **5th block: Demographic data**



*Volunteering as an Explanatory Factor of Social Entrepreneurship: An Analysis… DOI: http://dx.doi.org/10.5772/intechopen.99380*

#### **Author details**

Inés Ruiz-Rosa<sup>1</sup> , Francisco J. García-Rodríguez<sup>2</sup> \* and Naira Delgado-Rodríguez<sup>3</sup>

1 Dpto. Economía, Financiera y Contabilidad, Facultad de Economía, Empresa y Turismo, Universidad de La Laguna, La Laguna, Spain

2 Dpto. Dirección de Empresas e Historia Económica, Facultad de Economía, Empresa y Turismo, Universidad de La Laguna, La Laguna, Spain

3 Dpto. Psicología Cognitiva, Social y Organizacional, Facultad de Psicología, Universidad de La Laguna, La Laguna, Spain

\*Address all correspondence to: fgarciar@ull.es

© 2021 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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[74] Zahra, S., Rawhouser, H., Bhawe N., Neubaum D. and Hayton, J. (2008). Globalization of social entrepreneurship opportunities. *Strategic Entrepreneurship Journal*, vol. 2 (2), pp. 117-131.

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#### **Chapter 8**

## Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources

*Thomas Baaken, Liguang Liu and Lea Lapornik*

#### **Abstract**

The chapter presents two smart concepts of creating a new business without or with only low budget. Thus, it applies particularly e.g., for either students, refugees and/or people from developing countries. "Bricolage" stands for a behaviour in which the actor solves problems using only available resources. Contrary to the resource-creating mentality, only the resources of the repertoire at hand are used. "Growth Hacking" as a new method, using digital approaches in particular, can achieve high sales in a short time. The relevance of data-driven marketing within the framework of a growth strategy. Working primarily with data is a promising strategy for companies that can effectively, efficiently and cost effectively using online tools or online-offline combinations to achieve their growth objectives. Thus, the two concepts are complementing each other by dedication to two different stages of a start-up process. Bricolage for creating the start-up and Growth Hacking for getting it successfully to the market and make it grow sustainably. The Chapter is describing the two concepts and their interdependence by offering a conceptual framework.

**Keywords:** Bricolage, Growth Hacking, Entrepreneurship of Students/Refugees/ Developing Countries, Lacking Resources

#### **1. Introduction**

The creation of new companies poses various challenges for most people. However, some fractions face particularly difficult challenges in terms of resources: students, people in developing countries, and refugees.

Over the past years, the number of student entrepreneurs has been increasing [1]. In general, students are provided with a good framework as universities put much effort into supporting them. For example, they offer entrepreneurship programmes and courses or business incubators for entrepreneurs [1] and students can use university resources for little money [1]. However, the support students receive from their universities is not sufficient for founding a start-up and many barriers are faced all the same. Shambare [2] identifies four main barriers that student entrepreneurs are confronted with: lack of entrepreneurial support, lack of exposure to businesses, whereby lack of exposure and lack of entrepreneurial support and equivalent resources pose the most significant barriers. Bailetti [3] mentions two types of barriers: institutional and regional barriers. Student entrepreneurs often are not accepted by society and lack business experience and commercial skills. On the other hand, they face "regulatory, legal, administrative, employment, financial,

and partnership burdens" [3]. Sometimes the support of a business expert for receiving funding is required. The access to financial and network resources also presents a challenge as students do not have access to [3]. This is supported by a study conducted by Ruda, Martin, & Danko [4] who identified four clusters regarding the start-up barriers faced by students. In addition to the monetary constraints, they also mention student entrepreneurs have small networks.

Another group facing similar barriers is the group of entrepreneurs in developing countries. It is a common assumption that not much entrepreneurship exists in these countries, but this is not true. Entrepreneurship plays an important role as it helps developing countries to grow and leads to increased innovation and employment [5]. Nevertheless, entrepreneurship in developing countries is more difficult than in developed countries. Entrepreneurs in developing countries often are based in less wealthy locations. Besides, people in developing countries do not receive the same education as people in developing countries, which limits their capabilities to access financial resources and capital [5, 6]. Another barrier is the lack of knowledge about market conditions and requirements [5]. Often, the government even hinders entrepreneurial activities on purpose by setting up high entry barriers in the form of administrative fees as higher tax income can be generated off bigger enterprises [7]. As a consequence, entrepreneurs have to pay large sums for setting up their business or need to go through a very complex and time-consuming administrative process [7], which is very costly and, thus, hinders the establishment of new firms [6]. In comparison to developed countries, developing countries do not have a social security system as tax money is used to pay for essential public goods. Consequently, no public safety net is available, and families need to save and protect their money and even support other family members financially. This complicates investments in new businesses even more [7].

The third group that is examined is the group of refugee entrepreneurs. As the refugee population is continuously growing, the likelihood of refugee enterprises is very high [8]. Meister & Mauer [9] and Embiricos [8] provide a concise summary of the barriers refugee entrepreneurs are facing. Both authors attest refugees lack knowledge about the host country's culture, language, and ways of doing business, therefore complicating their entrepreneurial aspirations. Resulting from their flight from another country, they do not possess big networks in the host country and often face discrimination by society and economy [8, 9]. Moreover, the insecurity about their asylum status and a denial of their asylum claims ruin all of the investments made [10]. Until this claim is granted by the authorities, it is difficult to get access to financial resources due to low creditworthiness [8, 9]. Labour market regulations and legal frameworks directed at asylum seekers make the foundation of a business a time-consuming matter, too [10]. Similar to entrepreneurs in developing countries, refugees save money to support their families, resulting in the limitation of financial resources to be used for founding a business [10].

Even though the investigated groups seem to be very different from each other, it appears that they are similar with regards to the challenges faced when intending to found a business related to resources.

This leads to the research question, what can be done to detect tools and approaches for those groups to enable them to create a start-up without or low resources.

#### **2. Conceptual framework**

The conceptual model on which the chapter is based (**Figure 1**) shows that the process of successfully founding a start-up and creating a business without *Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*

**Figure 1.** *Conceptual Framework.*

resources consists of two concepts according to two phases. In this paper, both concepts are presented, the concept of Bricolage and the concept of Growth Hacking, according to their deployment in those phases; addressing and including selected neighbourhood strategies, such as Bootstrapping and Guerrilla Marketing.

This framework is anticipated and based on an approach that values the momentum and initiative of the individual with regard to economic success higher than economic algorithms and regularities. Thus a renewed confirmation of Schumpeter's law [11, 12] according to the Austrian School of Economy. The Austrian School is a scientific view of economics that represents a heterodox doctrine in economics. The central logic is the idea of the evolutionary creation of knowledge by the individual, the entrepreneur and the consideration of the dynamic uncertainty of economic processes. The school emphasises the importance of individuals and their personal initiatives for economic processes (subjectivism). In addition, there is a negation of purely mathematical forms of representation of economic relationships (Lausanne School with its mathematically formulated models of neoclassicism) [13].

#### **3. Bricolage**

Bricolage, associated with its actor (i.e., bricoleur), serve as analogies to delineate a particular way of practical reasoning: "making do with current resources, and creating new forms and order from tools and materials at hand" [14]. Since its original conception, Bricolage has been extended to a range of different fields, such as entrepreneurship, innovation, organisation, and management. Contrary to the resource-creating mentality, Bricolage stands for a behaviour in which the bricoleur solves problems using only available means or resources. Bricolage is an activity where, contrary to the resource-creating mentality, only the resources of the repertoire are worked with making do with the means or resources at hand [15, 16].

In the field of entrepreneurship, Baker et al. [14] label "dependence on pre-existing contact networks -" as "network Bricolage" to analyse the founding process of new knowledge-based firms. The research finds that network Bricolage is prevalent in discovering founding opportunities and recruiting early members into organisations. Trying to understand how some entrepreneurs can "create something out of nothing in resource-constrained environments", Baker and Nelson [17] integrate a range of related concepts and build a process model of Bricolage and firm growth to understand entrepreneurial behaviour. Together with resource

seeking (continued attempt to acquire standard resources) and avoiding new challenges (by downsizing, disbanding, or remaining inert), entrepreneurial Bricolage is an alternative approach that organizations may adopt when facing with penurious environment. Bricolage is thus defined as "making do by applying combinations of the resources at hand to new problems and opportunities". This means bricoleurs view resource limitations as both a problem and an opportunity. Such a notion of "the pursuit of opportunity through close regard to the resources at hand" is consistent with the claim that most entrepreneurial opportunities are more enacted than discovered [17].

In many cases, entrepreneurs draw on resources readily at hand, instead of searching broadly for, or planning for specific resources [14]. The entrepreneurship literature differentiates Bricolage and resource-seeking as two approaches and entrepreneurs make assessment by trading-off. They "engage in Bricolage at sometimes and in some domains and reject Bricolage at other times or for other activities". There are admixtures of Bricolage and resource-seeking in entrepreneurial practice. Entrepreneurs may engage in network resource-seeking for founding but rely heavily on network Bricolage afterwards, while there are other cases, in particular in start-up firms, that the founding begins with the Bricolage and successfully transmits to accelerated growth afterwards through resource seeking [18].

Bricolage is frequently used interchangeably with the term "improvisation" and some suggest taking Bricolage as an element or correlate of improvisation [19, 20] or treating improvisation as a precursor to Bricolage [21]. However, they are not the same construct. Improvisation "consists of assembling elements based on simple rules in order to yield an original composition [15], and it is "occurring when the design and execution of novel action converge" [17]. Improvisation highlights an organization's rapid degree of adaptation to a turbulent environment, whereas Bricolage is the "mixture of the precomposed and the spontaneous" and as sensemaking, Bricolage contributes to the capacity improvement for adaptation in destabilizing situations [15]. Improvisation framework complements the design precedes execution (DPE) approach, in which clear goals precede and are independent of action, while Bricolage may often occur during improvisation, but may occur in the implementation of pre-existing plans as well [14]. Baker et al. argue that improvisation implies Bricolage, but Bricolage does not imply improvisation [14], and they often "appear tightly linked empirically", however, further studies are needed to understand their relationship [17].

Three approaches, i.e., causation, effectuation, and Bricolage, are most used as theoretical perspectives to describe the logic and behaviour underlying the entrepreneurial action or corporate venturing process [14, 22, 23]. Causation is a traditional, rational model of entrepreneurship, which identifies opportunities and makes plans before developing products or services. The causation processes "take a particular effect as given and focus on selecting between means to create that effect" [21]. Effectuation and Bricolage offer an alternative view to the causation approach, which posits the market provides opportunities, and the entrepreneur discovers them. Effectuation is positively associated with uncertainty, which generates more actions of control than prediction [16]. Effectuation processes "take a set of means as given and focus on selecting between possible effects that can be created with that set of means" [24]. Effectuation and Bricolage involve starting with a set of means. However, entrepreneurial Bricolage combines existing resources in creating solutions. Behaviours following a DPE model may also make use of Bricolage. Bricoleurs may use materials at hand both to see the possible results with current resources (effectuation) and to find out the means to meet the pre-existing goal through what is at hand (causation).

#### *Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*

Bricolage deals with the question of how start-ups succeed in outperforming and even outgrowing their competitors despite limited resources and limited scope of networks. The mechanism of how Bricolage works is hardly comprehensible so far and worth addressing [22]. However, Bricolage is a process of continuous creation and utilization of practical knowledge and a process of exploitation of varied types of resources [15, 25]. A unique advantage for bricoleurs in resource-constrained start-ups is that they "enjoy great latitude in their processes of collecting and utilizing resources", therefore, they can "find responses to the environmental constraints and dependencies they face" [15]. Despite its ability to overcome resource constraints, Bricolage can also lock the firm into a self-reinforcing cycle of activities that limit growth [23].

Bricolage depends on the existence of organizational memory, which allows an organization to maintain an inductively generated knowledge base on experiences [15]. With the link to resilience, Bricolage enables individuals and organizations to overcome the crisis by keeping flexibility in mobilizing available resources and taking trial and error tests [26]. Bricolage is viable in small firms since large organizations are more fragmented along professional or occupational boundaries [15]. It represents a particular process of engaging multiple actors and "gradually transform emerging (technological) paths to higher degrees of functionality [20]. Inside the Bricolage competencies, the improvisational competencies can impede the development of DPE competencies [14]. All these can be seen as positive points for start-ups with resource constraints. It is fair to say that the Bricolage approach is proving to be viable and potentially successful, especially for companies in problem situations, developing countries and under financial bottlenecks.

Both the resource-based view and the resource dependence theory highlight the new business' need to acquire or have access to necessary resources to grow and survive [27]. However, many young and small firms confront the barriers of limited resources in finance, space, and skills. A similar approach of behavioural strategy to Bricolage is bootstrapping. Both approaches are resource management techniques that entrepreneurs use in resource-constrained environments [28] to find creative solutions to acquire necessary resources or exploit others underutilized resources [29]. Whereas Bricolage focuses on improvisation, bootstrapping focuses on a selfsustaining process that operates effectively without external/financial help [26]. Bootstrapping is often associated with financial resources since financial resources are often looked at as one of the most important resources [30]. Bootstrapping strategy is consistent with the pecking order theory which argues that due to the information asymmetry, firms prefer internal to external sources in managing resources [31].

Research deals with the categories of financial bootstrapping in small businesses. Four types of methods under bootstrapping are identified: (1) customerrelated, (2) delaying payments, (3) owner-related financing and resource, and (4) joint-utilization of resources with other firms [32]. Winborg [33] further examines motives for using financial bootstrapping in new businesses and identified three groups of founders: cost-reducing bootstrappers, capital-constrained bootstrappers, and risk-reducing bootstrappers. The relative experience of the founder is the most significant influence for using bootstrapping. With the experience gained, the bootstrapping changes from initially focusing on reducing costs towards a proactive focus on reducing the risk in the business. By delineating the nature of bootstrapping strategy profiles, logics, and effects in small ventures, Malmstrom [28] identifies 'quick-fix', 'proactive', 'efficient' as three financial bootstrapping strategies for resource mobilization. 'Quick-fix' bootstrapping emphasizes temporary access to resources and prefer internally oriented activities for such purposes; 'proactive

bootstrapping' focuses on operational resource issues; and 'efficient bootstrapping' prefers activities that are externally and vertically oriented, up, or down in the value creation chain.

Bootstrapping embraces the idea of "meeting the need for resources without relying on long-term external finance from debt holders or new owners" [32]. Bootstrapping has its pros and cons. On the one hand, it is often the speedier and more convenient way to gain access to large amounts of capital (e.g., through credit cards). It promotes lean organisations and maximizes internal efficiencies with limited resource sets [30] and helps keep ownership of the business, control over direction, and gain a sense of accomplishment [34]. On the other hand, bootstrapping firms take risks of cash flow shortages without outside capital, limitation on visibility and growth potential, drifting away from top-level help, and constraint on growth and financial performance [34]. Empirical study shows that if firms were only engaging in bootstrapping out of necessity instead of a strategic decision, bootstrapping often causes negative financial effects [27]. Nevertheless, financial bootstrapping provides useful insights by highlighting the innovative financing routes for small ventures by "acquiring the use of resources without borrowing money or raising equity financing from traditional sources" [35].

#### **4. Growth hacking**

#### **4.1 Guide to a new smart concept**

In 2010, Ellis [36] created the term Growth Hacking in a start-up surrounding. Especially interesting for start-ups, as those often have fewer financial and human resources compared to established companies [37]. Furthermore, Growth Hacking is delimited from other marketing strategies particularly for start-ups with low or non-budget [38].

Growth Hacking describes intelligent, mostly free (online) marketing strategies, which primarily achieve companies to generate growth and – if products or software solutions are already available– to increase sales. Also, Growth Hacking is collecting direct feedback to build customer relations and use the feedback for direct improvement of the product and service. All channels and media available (at no or low cost), such as search engine optimisation, content marketing, social media, or viral marketing [39]. Only a few empirical research papers have been published on Growth Hacking, so empirical evidence is missing [40].

Thus, growth hacking, which is primarily data-based, is a practical promising strategy for new companies to effectively, efficiently and cost saving online tools or online-offline combinations to achieve ambitious objectives. Growth Hacking is also based on the ability of companies to collect relevant data and to analyse and store it in real time [41]. This also allows start-up companies to experiment and experience new marketing methods, whether or not they are successfully working.

The primary goal of start-ups is growth. Growth secures surviving and increase of value. Indicators for growth are measured by selected key figures, such as newsletter registrations, purchases, visitor klick rates or customer referrals. Thus, Growth Hacking is a process of rapid experimentation across different channels and development at the same time, to find the most effective and efficient way that contributes directly to the growth of the company [42]. One reason for this is the fact that start-ups, the development of products and their features directly into the growth process, which has a significant impact on their competitive advantage [43].

The growing digital change impacts the company's digital and social media marketing [44, 45]. The need for marketing to act more flexibly got even more

#### *Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*

evident during the COVID-19 pandemic [46, 47]. To implement digital and social media marketing, start-ups, at first, need to provide the necessary knowledge and proactive agility. Shaltoni et al. [48] find that start-ups – and their stakeholders – are willing to engage if they perceive a greater benefit and compatibility with the corporate culture. Sun et al. [49] identifies further aspects that impact the willingness to integrate big data in a company "relative advantage, technological competence, technology resources, management support, competitive pressure, and regulatory environment."

The advantages are addressing a wide range of customers, customer engagement and the possibility of specific placement targeting [44]. Neslin et al. [50] identifies for start-ups five challenges in customer channel management: data integration, understanding customer behaviour, channel evaluation, allocating resources across channels, and coordinating channel strategies. Also, in a report by McKinsey, the authors predict that the success of the company marketing during the unpredictable COVID-19 crisis will highly depend on "how effectively they can test, learn, and adapt" [51]. The process which could support handling the opportunity is Growth Hacking.

Growth Hacking is a marketing strategy [52] that aims to increase growth by adapting digital marketing through testing and analysing, in repetitive cycles. Ellis and Brown [36] refer mainly to such as Dropbox, Uber, Instagram, and Facebook. Furthermore, those companies are offering software or artificial intelligence-related services.

But is Growth Hacking also applicable to companies offering physical products, as they cannot adopt their product as fast as software providers can?

In physical product selling markets the relationship between sellers and buyers is characterised as closer [53]. Furthermore, the focus is more on long-lasting relationships to reduce the risk [54]. Thus, relationship value leads to trust, satisfaction, and commitment, which result in loyalty [55]. Product companies need to provide more detailed information, as usually, buyers compare products in more detail [53]. Therefore, Habibi et al. [56] conclude that for products, a greater variety of communication channels and messages are needed. On the one hand, Gustafson et al. [57] relate the communication process of digital marketing, the diffusion, the transmission of information, conveyance as one relevant aspect. On the other hand, the researchers name the convergence process, which creates shared understanding and knowledge in the buying company [57].

Digital content marketing can enhance information flow and the customers' trust [58]. Furthermore, perceived information quality influences customer loyalty [59]. Social selling is here to name as one opportunity, promotion via social media platforms [60]. Järvinen et al. [61] list several social media tools for start-up companies: blogs, Facebook, Flickr, discussion forums, Twitter, YouTube, webinars. As research has shown, the use of professional networks such as LinkedIn is particularly suitable, as well as Facebook [62]. Furthermore, buyers increase the relevance of digital content marketing; providing information in a journalistic format for the customer [58]. Moore et al. [62] find that salespeople use "social bookmarking, and presentation sharing storage sites" and "relationship-oriented social media significantly more often for prospecting, handling objections, and follow-up and aftersales service." Firms also use e-mail marketing and newsletters [61]. Among other things, Growth Hacking can help to address and better coordinate these challenges by agility.

Agility marketing focuses on detecting and understanding changes repetitively and regularly, and responds fast to those changes thereafter [47]. Agility marketing consists of sensemaking, iteration, marketing decisions and speed. Leadership, employees, organisational and team factors influence the performance. Kalaignanam et al. [44] point out that reacting, however, deciding not to do so, is part of agile marketing. Homburg et al. [63] also talk about agile marketing in terms of "simplified structures and processes, fast decision making, and trial and error learning."

Lean start-up describes an iterative process to develop and improve a product or process through the loop build-measure-learn [37]. The objective is to run the loop fast and often [37]. The central aspects of this methodology are learning from failures and mitigate invested resources [37, 64].

In their paper, Herttua et al. [52] differentiate Growth Hacking from viral marketing, guerrilla marketing and traditional marketing. For them, the difference to traditional marketing is that IT knowledge is necessary, as well as that it is not about shocking people as guerrilla marketing could intent and different from viral marketing, it focuses on people who share knowledge and not just information [52].

#### **4.2 Neighborhood strategies**

Whereas Growth Hacking can be combined and complemented with other low budget strategies, guerrilla marketing is a strategy with which start-ups design unusual marketing measures to stand out from the mass of advertising messages. It often involves offensive, creative, and unique advertising campaigns that appeal even to those who do not actually identify with the product or service or do not react to advertising due to sensory overload. Guerrilla marketing aims to achieve a surprise effect on large groups of people with a small budget and effort. Originally, the word comes from military operations and describes a tactic in warfare in which small, independently operating combat units operate covertly in the enemy's hinterland and rely on the surprise effect on the opponent. The primary goal of such guerrilla tactics is to confuse the opponent with the help of the surprise effect and to strike in a targeted manner in order to then weaken him.

With guerrilla marketing, it is possible to address a very large part of one's own target group, but beyond that, to create a sensation. Guerrilla marketing is not mass advertising. The more precisely the target group has been defined in advance and the smaller it is, the more effectively guerrilla marketing can be used. Like every marketing measure, guerrilla marketing also tries to trigger a reaction in the target group and encourage them to take action.

Guerrilla marketing has a variety of instruments at its disposal with which to convey its advertising message. Guerrilla marketing is known for being controversial and occasionally crossing boundaries [65, 66].

These boundaries need to be weighed and exploited in a targeted way. Guerrilla marketing works best when the advertising campaign is so far unique and appears unexpected and surprising for the target groups and the competition.


*Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*


Guerrilla marketing offers some advantages that speak for itself: low costs, enormous attention, quick impact, and a large reach both in the masses and specifically in the target group. One problem that can arise with guerrilla marketing is that the impact and spread of the advertising can only be influenced to a limited extent once it has been circulated. Since guerrilla marketing often specifically uses controversial or even offensive content, there is a risk of negative reception of the marketing measures.

According to Conway and Hemphill [72], Growth Hacking and agile marketing are much aligned. Growth Hacking adopts "the continuous cycle of improvement and the rapid iterative approach" and focuses on customer and revenue growth [36]. Thus, Herzberger and Jenny [73] regard Growth Hacking as an evolution rather than an innovation. After this classification and delimitation, the process of Growth Hacking is described in more detail in the following.

#### **4.3 Growth hacking framework**

Growth Hacking is a marketing technique to aim customer growth costefficiently through creativity, marketing techniques, data analysis and coding [36, 74]. Even though Ellis and Brown [36] define Growth Hacking, it is noted in the literature that a uniform definition is difficult to grasp [52, 72, 75, 76]. Analysing the existing data of customers and conducting surveys or interviews help get more insights to potential segment customers to figure out growth potential [36]. Analysing supports and detecting key customer trends can protect from misleading posts [77]. Therefore, tools, software and AI assist in evaluating the test [74].

The first step is about collecting ideas for hacks in an open-minded surrounding [36] and those need to be prioritised. Ellis and Brown [36] propose using the Impact, Confidence, and Ease of implementation (ICE) score system they developed. The following step is testing the preferred ideas. A/B tests can serve as a means of testing [52]. Furthermore, they propose conducting several tests a week and increasing the number of tests by time to improve results [36, 78]. After the test phase, the cycle restarts by analysing the results of the test.

Herzberger and Jenny [73], Bohnsack and Liesner [75] and Lennarz [74] propose a modified cycle. The Growth Hacking framework consists of three components, with their interaction or, in other words, their simultaneous application leading to Growth Hacking. The three components are (digital) marketing techniques, data analysis and testing, and coding and automation [74–76]. Conway and Hemphill [72] adapt the Growth Hacking framework by adding the product-fit step before the cycle. For them, the first step is to check the product-market fit and then, in the second step, to start with Growth Hacking. Ellis and Brown [36] also mention the product/market fit as a prerequisite to start Growth Hacking but do not integrate it as an element in their cycle. The idea of having a minimum viable product originates from the lean start-up. An initial product version enables gaining more information about customer needs. Then, those support developing the product and its promotion further [79]. A second prerequisite placed by Conway and Hemphill [72] before the cycle is, as already mentioned by Ellis and Brown [36], a multidisciplinary team with various skills [72]. Wahlandt and Heidel [80] propose for application in start-ups to divide Growth Hacking into three steps: development, implementation, and penetration.

Growth Hacking aims to increase growth by hacking which relates to creative ideas testing and adapting [42, 74]. To grow a company and its value, three customer groups are key: retaining customers, developing existing customers and acquiring new customers [81]. Hence balancing new and existing customers is necessary to secure financial performance [82]. Supporting the customer journey with a mixed team of sales and marketing representatives increases sales and customer loyalty [83]. So, it is relevant to follow the customer on the whole customer journey with Growth Hacking [36]. Big data provides new opportunities for companies along the customer journey. Five steps form the customer experience funnel: acquisition, activation, retention, referral, revenue. Acquisition, activation (developing) and retention were already mentioned above. Referral means a (potential) customer recommends the product to others [84]. Monetising, buying the product or, for example, a free download represents the fifth step: revenue [84]. Bohnsack and Liesner [75] identify 34 patterns for the customer journey that could facilitate the execution of Growth Hacking in a company. For example, for the activation phase, they propose using single sign-on or dynamic pricing for the revenue phase [75]. The growth of the customer base is also relevant for B2B companies [80].

According to Bussgang and Benbarak [85], in line with Herzberger and Jenny [73] Growth Hacking concerns owned (i.e., company website), paid (i.e., SEA) and earned media (i.e., likes on social media) as well as the product itself [36]. Different digital channels can serve for Growth Hacking. Ellis and Brown [36] classify them as viral/word-of-mouth (i.e., social media), organic (i.e., company website) and paid (i.e., SEA). Each channel has different opportunities and risks; besides, various efforts and inputs are necessary for the respective channel [80]. Gustafson et al. [57] point out that the right message and the right platform influence the speed and the quality of information sharing. Furthermore, the authors state besides the sources of information, for the buyer, the technique to gather and transform information into knowledge is relevant [57].

#### **5. Conclusion, limitations, and further research**

New and innovative concepts like Bricolage and Growth Hacking are increasingly finding their way into society. To survive and sometimes prosper under

#### *Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*

resource-constrained environments, and benefit from digitalisation and its associated opportunities, Bricolage and Growth Hacking offer the possibility to generate company growth. Bricolage provides a behavioural strategy that businesses can practice creativity to find solutions even under penurious environments.

The creation of new companies poses various challenges especially for the fractions who are short of resources, such as students, people in developing countries, and refugees.

Correspondingly, businesses with strong Bricolage capabilities in making use of inputs at hand can help firms explore and exploit new opportunities and win advantages in competitive markets. As digitalisation is predicted to grow, Growth Hacking provides the opportunity to improve performance by testing, analysing, and adapting [45]. The performance of a variety of digital marketing instruments applied by start-ups can be improved to generate growth, which is of high relevance for start-up companies [80].

Certain limitations restricted the study. As the topic of Growth Hacking is very current, only a limited amount of appropriate literature is available. The term was appeared in 2010 [36]. The research published since then is limited to small in comparison to other topics. So far, just a few research papers are published on growth hacking [40]. Due to the lack, this work has often drawn on other sources than on empirical research papers. Concluding more research on the topic is necessary to be able to make reliable statements on the quality of the model.

This paper proposes a two-phase conceptual model that embraces the business creation processes and marketing strategies. It seems that the two phases are separated and the processes are continuous, however, due to today's dynamic, it is no longer entirely possible to separate the phases from each other, as they do not necessarily follow one another but shift, overlap and repeat during the creation of a new company. However, to depict this reality would have been too complex for this paper and needs further research. Notably, the application of bricolage and its linkage with growth hacking, as proposed in the framework, is not generalizable to all entrepreneurial endeavours under resource-constrained conditions. Also, for this purpose, pure literature research is not the most appropriate method. It would be advisable to conduct qualitative research or experiments (e.g., empirical case studies) to explore the topic in antecedents of acceptance or scepticism.

For future research, the concepts should be reviewed and aligned to current practices. There is an opportunity for future research to select sample cases and conduct longitudinal studies to examine processual features of entrepreneurial dynamics and capture the wide variability across start-ups. Furthermore, the subject is highly complex, and more applications should be considered than possible within the paper's scope. There is a need for a deeper understanding of low resource company creation and development to evaluate the success. For future research, it would also be interesting to investigate how growth hacking through the internet influences the decision making and the buying time, if the fast accessibility decreases the decision time or whether the amount of information and the time to evaluate those extend the decision time.

*Next Generation Entrepreneurship*

#### **Author details**

Thomas Baaken1,2\*, Liguang Liu3,4 and Lea Lapornik1

1 MSB Münster School of Business, FH Münster – University of Applied Sciences, Münster, Germany

2 Science-to-Business Marketing Research Centre, Münster, Germany

3 School of Government, Beijing, P.R. China

4 Center for Global Economy and Sustainable Development, Central University of Finance and Economics (CUFE), Beijing, P.R. China

\*Address all correspondence to: baaken@fh-muenster.de

© 2021 The Author(s). Licensee IntechOpen. This chapter is distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/ by/3.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

*Bricolage and Growth Hacking: Two Smart Concepts of Creating a Business Lacking Resources DOI: http://dx.doi.org/10.5772/intechopen.99391*

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## *Edited by Burak Erkut and Vildan Esenyel*

The book deals with next-generation entrepreneurship and aims to answer the questions of in which ways, how, through which focal directions, and by which means will next-generation entrepreneurship emerge and shape the market processes. Under this broad overview, the book is sub-divided into three sections: "Entrepreneurship Education and Young Perspectives", "New Challenges for Entrepreneurship", and "Shaping the Next Generation of Entrepreneurship". The book balances empirical evidence with conceptual contributions.

Published in London, UK © 2022 IntechOpen © happyphoton / iStock

Next Generation Entrepreneurship

Next Generation

Entrepreneurship

*Edited by Burak Erkut and Vildan Esenyel*