Applied Business an Entrepreneurship Association ...
Proceedings
of the Thirteenth Annual Conference
of the
Applied Business and Entrepreneurship Association International
Program Chair
Lisa Anderaus
Program Co-Chairs
Bahram Adrangi
Arjun Chatrath
Pamplin School of Business Administration
The University of Portland
November 2016
Las Vegas, Nevada
Articles published in this Conference Proceedings are accepted based on the double-blind peer-review process.
Contents
An examination of ROI on Service Industry Groupon Promotions 4
Abstract 4
Background 4
Terms Defined 5
Review of Current Literature 5
The Negotiation 7
Proposed ROI Formula for Sellers 7
Assumptions & Limitations 8
Areas of Future Research 8
References 9
Market Size and Market Efficiency, Are They Related? 11
Abstract 11
Introduction 11
Review of Literature on Testing Market Efficiency 12
Data/ Methodology 13
Selected 7 Questions 13
Results and Findings 16
Summary and Conclusion 17
References 17
Learning for Entrepreneurship: An Integrative Competency-based Framework for Graduate Entrepreneurship Education 19
Abstract 19
THE ERIE FOOD HUB PROJECT 20
ABSTRACT 20
Business Modelling and Planning for Born Global Firms: Starting Them Small and Growing Them Big 21
Abstract 21
The Effect of Securitization Announcements on Vacation Ownership Firms’ Shareholder Wealth 22
Abstract 22
The Effect of Securitization Announcements on the Shareholder Wealth of Timeshare Companies 23
Summary 23
References 25
A Conceptual Framework of Understanding Social Enterprises 27
Abstract 27
Introduction 27
Towards a Conceptual Framework for Social Enterprises 28
Social Entrepreneur and Social Enterprise 29
REFERENCE 38
Business development frameworks for establishing innovative born-global firms in Nigeria and Sub-Sahara Africa 44
Abstract 44
Introduction 45
1. Pertinent developing country contexts using Nigeria and Sub-Sahara Africa as focal points 46
2. Conceptual framework for BGF new business development in developed and developing country contexts 53
3. Summary of hypothetical BGF characteristics and case applications 66
4. Conclusion and policy implications 68
References 75
Platform business model constructs: Fostering innovative born-global firms in Sub-Sahara Africa 81
Abstract 81
Introduction 82
Theoretical background 83
References 96
An examination of ROI on Service Industry Groupon Promotions
Jacob I. Fait, Ph.D., School of Business, Lincoln Memorial University, 6965 Cumberland Gap Parkway, Harrogate, TN 37752, Phone : (814) 282-5788
Jacob.Fait@lmunet.edu
Abstract
This study presents results of an exploratory study on the implications and return on investment of utilizing Groupon as a marketing tool for service industry businesses. The study seeks to establish a greater understanding of the Groupon mechanism and help practitioners navigate the implications on business practices. This form of marketing presents several challenges and benefits alike for service business owners to consider. If ignored or misunderstood, the effects could be devastating for small and large service industry businesses alike. Historical views, findings, implications and areas for further research are discussed.
Background
The Groupon concept grew from the idea of a Pittsburgh native Andrew Mason and launched in the city of Chicago in November of 2008. In less than seven years the startup grew to over 500 cities worldwide with over 48 million active users and 425,000 or more active deals at any one time(). While the organization has seen great growth and success in the ‘deal-brokerage’ business, businesses have had mixed feelings about their experience utilizing Groupon campaigns. Dr. Utpal M. Dholakia reported in a 2010 study that respondents(150) experienced a profitable Groupon campaign in 66% of cases and unprofitable campaigns in 32% of cases(Dholakia 2010). What is the differentiator between these two groups of businesses? Is there truly a discrepancy or are service business owners not accounting for all of the ancillary benefits afforded to them through the Groupon campaign?
The Groupon model in its simplest form is a brokerage model where Groupon connects and facilitates the exchange of goods or services between a seller and a buyer taking a monetary commission off the top of the transaction. In a perfect scenario all three parties involved benefit from the transaction. The Seller would hopefully receive some if not all of the following: a sale, a sale with consumer spend in excess of the featured deal(overspend), implicit economic profits through a long term customer relationship and market exposure. The Buyer would receive the opportunity to experience a service or product at a deeply discounted rate and find an organization that they develop a loyalty to and prefer to do business with. Groupon receives a percentage of every transaction they broker between the buyer and seller and must keep both Buyer and Seller satisfied to continue to use the Groupon platform.
Terms Defined
• Deal: Agreed upon brokerage of the sale of a good or service between seller and buyer by Groupon.
• Overspend: This is the amount the Groupon buyer spends in addition to the value of the redeemed Groupon deal.
• Buyer: The individual purchasing the deal from Groupon.
• Seller: The individual or organization offering the product or service for sale through Groupon.
• ROI: Return on Investment: (gain from investment – cost of investment) / Cost of investment
• Ancillary Benefit: Any benefit in addition to monetary compensation that a buyer receives by participating in the Groupon deal, ie., the amount a seller is willing to pay for the marketing, demographic information, new customers and allocation of unredeemed Groupon deals
Review of Current Literature
In a review of current literature it was found that the body of literature in this field seems to lose steam around the time that Groupon decided to make some changes to their business model. Up until May of 2012, Groupon required a certain number of transactions be committed to for the actual deal to transpire(Subramanian 2012). If this threshold was met, the deal would transpire. Buyers would exchange currency for the seller’s product. If this threshold was not met, no deal would transpire and monies would return to their rightful owner and the only cost involved in this economic transaction would be the time and energy spent in researching the respective deal by the three aforementioned parties. After May of 2012, this threshold was lifted and now Groupon’s Merchant Account Terms and Conditions obligate Sellers to accept whatever customer quantities Groupon provides(Edelmam et al 2014). This game changer left the seller vulnerable if they needed to obtain efficiency from volume and economies of scale while benefiting both Groupon and the buyer with certain and expedited sales. The seller is able to set a ceiling for the number of Groupon deals sold in any given month. This ceiling protects the seller from having sales in excess of their operational capacity which would compromise consumer experience and satisfaction alike.
The body of literature suggests that there is a misalignment between Groupon and some Seller expectations in terms of producing mutually beneficial agreements. These disconnects include arguments such as inopportune marketing cycles, overwhelming number of buyers redeeming in excess of operational capacity, buyers being deal seeking rather than experience seeking, low conversion from Groupon buyer to long term customer, low spend in excess of Groupon deal and buyers tipping service staff on the cost of the deal rather than the value of the product or service.
Dr. Utpal M. Dholakia from Rice University developed and empirically tested a conceptual framework studying the determinants of profitable Groupons. In his survey of over 150 businesses he received the following feedback from restaurant owners (Dholakia 2011):
• ‘The consumers were cheap’ – Restaurant, Western US.
• ‘Many of the groupon user [sic] used it for only the value of the coupon (in our case $50) and nothing more. The return business has been non-existent. It was very harmful to our bottom line during the months we ran it.’ – Restaurant, Midwestern US.
• ‘The only downsides to Groupon are you never see of the guests return because they are bargain shoppers, it can create a wait that negatively influences full-paying guests and it is difficult to track/redeem’ – Restaurant, Southern US.
• ‘waiters were frustrated by low sales & low tips since guests didn’t tip on the full amount.’ – Restaurant, Western US.
• ‘The people who bought our groupons were not out typical customer. They are only looking for a deal.’ – Restaurant, Southern US.
Dr. Dholakia’s survey had an impressive response rate of nearly 41.67% with 32.7% of respondents being in the restaurant industry(Dholakia 2011).
An example of inopportune marketing cycles would be if Groupon featured and pushed the sellers deal as the headline deal in a week that just happened to be the busiest week of the seller’s year with or without the deal. Jessie Burke, owner of Posies Café experienced just this when her deal launched the weekend that the neighborhood library opened. She explained: “Deals are scheduled based on factors that optimize the deal for Groupon, not the merchant”(Agrawal 2011). Due to this inopportune scheduling she had a line out the door the entire weekend which compromised all customers’ experience. A nail salon in Chicago had a similar experience when 4,000 manicures and pedicures were sold for their store which only had two stations to serve customers. Similarly, many customers left angered.
Interestingly there is this notion amongst sellers with Groupon scars that Groupon buyers are deal seeking rather than experience seeking. Essentially, the premise is that the pedigree of deal buyer through Groupon is not the same pedigree of person that would frequent the service normally and therefore there is little to no conversion rate into long-term or continued relationship with the customer. Dholakia operationalized this phenomenon as: “longer-term behavior of customers toward the firm” (Dholakia 2011). They tracked repeat purchases by Groupon customers for two weeks directly after the Groupon Deal ended at Gourmet Prep Meals in Houston, Texan and found that approximately 4% of Groupon users had returned(Dholakia 2011). Interestingly, it was found that these return customers spent significantly more than the average customer on their return visit.
One other noted anomaly in current literature is that the tipping habits of Groupon buyers is noticeably less than that of regular customers. Restaurant owners and servers alike comment that Groupon buyers tend to tip on the check total or overspend and not the entire total of good and service received. This anomaly creates a particularly problem for Sellers and practitioners as it has been found that employee satisfaction with the Groupon deal is the primary driver of the promotions profitability (Dholakia 2010).
While the previous section may have painted a dark and dismal experience for sellers utilizing the Groupon platform, this is definitely not the testament spoken by all sellers. The body of literature suggests a plethora of advantages: sales, advertising for start-up and entrepreneurial ventures, new customers, conversion of Groupon customers into long-term customers, overspend beyond the deal, key demographic information.
Dholakia & Tsabar described the exposure value received by a Houston-based startup:
For GPM, the Groupon promotions value is approximately 140% of its baseline sales over the six month period. We also found that although the promotion itself has no material impact on the firm’s profits, when the earnings from unredeemed Groupons are taken into account, GPM enjoyed a substantial 30% lift in profits compared to baseline levels. The firm lost a small amount of money on the average Groupon user, but more than made up for it from the increased rate of purchase – which was more than three times higher – by full price-paying customers from increased exposure(2011).
Two key deal components that need to be taken into consideration by service industry sellers in the decision making process is overspend and percentage of unredeemed Groupons. Each time a Groupon is redeemed in the service industry there is the opportunity to obtain overspend. Overspend is the amount spent in addition to the deal that the buyer makes when visiting the buyers establishment. For this reason it is essential for the seller to have staff trained and selling additional items to Groupon buyers. The servers interaction with the buyer can be the difference between zero and $30 of overspend if the experience is enjoyable. Secondly, as with any coupon or gift card there is a certain percentage of buyers that simply forget to redeem. This amount of revenue should also be taken into account in the decision making process and can essentially be divided across all of the redeemed Groupons in additional revenue.
The Negotiation
For a seller to become listed and utilize the Groupon platform they must reach out to Groupon and request to become a Groupon Merchant. Groupon researches the organization or client to ensure that there is a certain level of fit before moving into negotiating a deal between the two. For a deal to be effective and viewed favorably by buyers Groupon likes to offer the product or service to buyers at a greatly discounted rate. This rate is usually around 50% of the seller’s advertised selling price. Similar to selling a house is to a realtor, it is in Groupon’s best interest to sell in high volume, not necessarily at the largest profit margins for sellers. The deeply discounted offering price to buyers allows them to make a sales push and hopefully entice high sales. The 50% discounted revenue that Groupon receives from buyers is then split in some proportion between the seller and Groupon. Obviously it is in both the Buyers and Sellers best interest to negotiate the highest percentage possible. The seller wants a high percentage to cover cost of goods and hopefully make a profit. Groupon also wants a high percentage to cover costs and hopefully make a profit. This is where negotiations come into play. Groupon likes to begin this conversation suggesting a 50:50 split between themselves and the seller of the good or service. They utilize data on the split of similar goods or services in the region to keep their percentage of the take as high as possible. Obviously it is in the best interests of both parties to have their respective side of the split as high as possible.
From the seller stand point, if you have offered a product or service to buyers for a 50% discount and then split the proceeds 50:50 with Groupon you are looking at receiving 25% of your normal asking price on the good or service. For some sellers this 25% is above their cost of goods and for others this is well below their cost of goods. If it is too far below the cost of goods it may not make economic sense to pursue a relationship with Groupon. However, other ancillary benefits should be taken into consideration (overspend, customer conversion rate, advertising obtained, and key demographic information)
Proposed ROI Formula for Sellers
Basic financial acumen tells us that Return on Investment is equal to gain from investment minus cost of investment divided by cost of investment. Once all is said and done, we hope that this equation produces a positive number.
To better illustrate: (gain from investment – cost of investment) / (cost of investment).
In order to quantify gain from investment one must attempt to quantify all of the items gained and cost of investment into a monetary format. I suggest the following:
Gain from Investment = Seller take per item + estimated profit on overspend per item + Ancillary benefit per item
Cost of Investment = What the product or service actually costs the seller. (keep in mind, if the seller needs to add additional staff this should be extrapolated and added to the equation. However, if the seller would have the doors open anyways and not have to add additional staff then this should not be added to the cost of the investment)
Two Examples
Example #1: The seller offers a Groupon deal for $15 where the consumer can enjoy a $30 steak dinner. The seller negotiated a 50:50 split of the sales price, has a cost of goods of 33%, anticipates a $20 overspend and has determined that their ancillary benefit per sale is $2.
The Example #1 ROI equation would look like this:
ROI = ((.5($15) + .67($20) + 2) – (.33($30) + .33($20))) / (.33($30) + .33($20))
ROI = (($7.50 + $13.40 + $2) – ($9.90 + $6.60)) / ($9.90 + $6.60)
ROI = (($22.90) – ($16.50)) / ($16.50)
ROI = 38.79% *based upon this ROI equation the seller should go through with offering the deal
Example #2: The seller offers a Groupon for a Pitcher of craft beer($15) and a pizza ($12) for the price of $17. The seller negotiated a 70:30 split in sales price, has a cost of goods of 27%, anticipated a $10 overspend and has determined that their ancillary benefit per sale is $3.
The Example #2 ROI equation would look like this:
ROI = ((.7($17) + .73($10) + $3) – (.27($27) + .27($10))) / (.27($27) + .27($10))
ROI = (($11.90 + $7.30 + $3) – ($7.29 + $2.70)) / ($7.29 + $2.70)
ROI = (($22.20) - ($9.99)) / ($9.99)
ROI = 122% *based upon this ROI equation the seller should go through with offering the deal
Notice how some very small differences created an ROI for Example #2 that was over three times greater than that of the ROI for Example #1.
Assumptions & Limitations
This simplistic ROI formula holds some very apparent assumptions. These ROI model assumptions, which include: overhead variable costs remain constant for the seller, the seller is able to accurately predict their ancillary benefit and the seller is able to accurately predict average overspend. In addition to the three assumptions described above, there can be numerous other assumptions inherently implied which are fundamental in nature.
This study has a number of inherent limitations present that must be recognized in order to avoid misinterpretation and incorrect generalization of the ROI formula. The main limitation is the formula only being applicable to service industry sellers. Similarly, sellers will weigh the ancillary benefits provided based upon their past experiences which can produce a bias. Utilizing this formula outside of the service industry would produce results that are both inaccurate and non-generalizable. Furthermore, each service organization is inherently different and therefore may not be able to apply this proposed formula.
Areas of Future Research
With the growing technological savvy of the millennials it is without doubt that online couponing and daily deals will only grow in popularity. However, the form of offering and the mechanism will inevitably morph and transform overtime as we continue into the 22nd century. This research could be expanded into a plethora of scholarly areas including: an examination of ROI on goods sold via Groupon deals, a comparative study of the same organization utilizing two distinctly different Groupon deals and an ROI estimate for a specific service establishment.
There is a distinct difference between Groupon deals involving goods and Groupon deals involving service products. The most notable difference is that a Groupon deal for goods does not have the opportunity to collect ancillary benefits such as overspend, a returning customer or non-redeemed deals. For this reason an examination into the return on investment for goods sold through Groupon would expand the field of study.
Is it possible that one Groupon deal create better profitability and ancillary benefits for a service organization than another? An analysis of the same organization utilizing two distinctly different Groupon campaigns could shed a light on this question. If there is a distinct difference than there is evidence that sellers should put more emphasis and thought into the deal construction and buyer deliverable.
An in-depth examination of a service organizations campaign where actual historical data can be analyzed would provide a basis for the validity of the campaign. Until historic data is analyzed the field is stuck making assumptions based upon trend data. Obtaining a study of multiple organizations could suggest a mechanism or rubric for Groupon success from the standpoint of the seller.
In conclusion, the field of study surrounding Groupon deals and their structure and effectiveness as well as return on investment is still in its infancy stage. Future research holds significance to researchers and practitioners alike as it could lead the online daily deal/coupon industry into another delivery format as well as make the negotiation process and outcome beneficial for all parties involved.
References
Agrawal, R. (2011). Groupon was ‘the single worst decision I have ever made as a business owner,’ Available online at:
Amblee, N. & Bui, T. X. (2012). Value proposition and social proof in online deals: an exploratory study of .. In R. J. Kauffman, M. Bichler, H. C. Lau, Y. Yang & C. C. Yang (eds.), ICEC (p./pp. 294-300), : ACM.
Byers, J. W., Mitzenmacher, M., Potamias, M. & Zervas, G. (2011). A Month in the Life of Groupon. CoRR, abs/1105.0903.
Byers, J. W., Mitzenmacher, M. & Zervas, G. (2011). Daily Deals: Prediction, Social Diffusion, and Reputational Ramifications. CoRR, abs/1109.1530.
Byers, J. W., Mitzenmacher, M. & Zervas, G. (2012). The groupon effect on yelp ratings: a root cause analysis.. In B. Faltings, K. Leyton-Brown & P. Ipeirotis (eds.), EC (p./pp. 248-265), : ACM.
Dholakia, Utpal M. (2011), “A Startup’s Experience with Running a Groupon Promotion,” Available online at:
Dholakia, Utpal M. (2010), “How effective are Groupon promotions for businesses?” Available online at:
Dholakia, Utpal M. (2011), “What Makes Groupon Promotions Profitable for Businesses?” Available online at:
Edelman, B., Jaffe, S. & Koniners, S. D. (2014). To groupon or not to groupon: the profitability of deep discounts. Working Paper, Harvard Business School.
Kumar, V., Rajan, B. (2012). Social coupons as a marketing strategy: a multifaceted perspective. Journal of the Academy of Marketing Science. (40) 120-136.
Subramanian, U. (2012). A theory of social coupons. Working Paper, University of Texas at Dallas.
Market Size and Market Efficiency, Are They Related?
Tahmoures A. Afshar, School of Business, Woodbury University, 7500 N. Glenoaks Blvd., Burbank, CA 91504-1052, Phone: (818) 252-5170 Fax: (818) 394-3311, Tahmoures.afshar@woodbury.edu
Abstract
In this study we examined the investment behavior of 220 professional investors, both in large publicly held investment and small closely held investment units. Professional investors were Accounting faculty and CPA-PFSs. A survey was e-mailed to these individuals, requesting their views on types of stock evaluation techniques: a) fundamental analysis and b) technical analysis (following the herd). Empirical results indicated investors mostly use fundamental analysis, but large portions of investors follow the experience of other investors to make investment decisions. Further, investors in small closely held investments relied more heavily on the fundamental analysis and less inclined to follow the running with herd. This indicates that small closely held investment markets are inefficient. However, professional investors in the large publicly held investing markets had a tendency to follow more technical analysis than fundamental analysis. It indicates that these large markets are more efficient than small investing markets. As evidenced from this study, the size of the market and its efficiency are related.
Introduction
Investors in stock market generally are seeking an investment strategy that insures success in meeting their financial goals. There are three major investment strategies in the stock market to determine the price of stocks: a) fundamental analysis; b) technical analysis; and c) buy-and-hold approach. Eugene Fama in his 1965 seminal paper, "The Behavior of Stock Market Prices,” presented three perspectives of stock prices: those of chartists , those of fundamentalists, and those of the random walk advocates.
The fundamental analysis is concerned with the intrinsic value of stock by examining the factors that help to determine these values. A stock will be chosen if its intrinsic value is higher than its market price, thereby will provide a higher return.
The technical analysis attempts to find a stock price trend based on past price performance of a stock. This approach believes that past prices will determine the future ones. Although the validity of this approach in predicting future prices of stock is questionable, yet it provides useful information to investors when to buy/sell the stock.
The buy-and-hold stock is a passive approach and basically used as benchmark against other approaches.
The type of strategy that an investor may choose depends on his/her view regarding whether the stock market is efficient or inefficient. If investors believe that stock market is efficient, that is, the market price of stock will approach its true value, then investors will decide not to pursue the fundamental approach. If investors believe that market is inefficient there will be opportunity for some stocks to deviate from their justified prices. That is, the market has potential to create excess return. Thus investors will choose the fundamental and technical analysis in their investment process.
In finance, the EMH (Efficient Market Hypothesis) asserts that financial markets are “informational efficient.” As a result, one cannot consistently achieve returns in excess of average market return on risk-adjusted basis, given that the information available at the time the investment is made. The EMH claims that under its semi-strong form, prices reflect all publically available information and that, prices instantly change to reflect new public information. However, this belief that no one can beat the market and all excess returns will be leveled out in future has been challenged. There are some market anomalies that allow investors to gain extra returns and these anomalies cannot be explained by any standard financial theory.
Review of Literature on Testing Market Efficiency
Many financial scholars and financial professionals considered the Efficient Market Hypothesis (EMH) as an important pillar of the modern financial theory. Fama first defined the term “efficient market” as: a market where there are large number of rational profit maximizers actively competing, with each other trying to predict the future market value of individual securities, and where important current information is almost freely available to all participants (Gertmenian and Chvakhin, 2002, p.2). Accordingly, the market is efficient if the information quickly reflect in the price of stock such that old information cannot be used to predict the future price movement s (Han, 2011, p.1) in efficient market available information includes:
1) Past information,
2) Current information ,
3) Forthcoming events, information can be reasonably inferred
The EMH states that the stock markets are stable and it is impossible for an investor to “beat the market”. This is because the price of stocks reflects their true value. A market to be efficient should have following features:
a) Market participants are price takers, that is one investor alone cannot affect the price of an investment security
b) Information is costless and widely available to all market investors at the same time
c) Information is generated in a random fashion such that announcements are independent from each other
d) investors react fully and quickly to the new information, causing stock prices to adjust accordingly
The EMH takes three forms of hypothesis, depending on the availability of information.
1) The weak form which states that past prices of stock determines its current prices. The validity of this form of the EMH has been rejected. That is, using this form is useless in predicting future price changes.
2) The semi strong form of EMH states that all publically available information is already incorporated in the current price of stock, so nobody can make more than average return using this information that is available to all market participants.
3) The strong form EMH states that even using private (insider) information will not allow any market participants to secure an abnormal returns. However, this form of the EMH has not been confirmed in the literature (Han, 2011, p.3).
According to the random walk concept that was suggested by Fama as an extension of the EMH, "the market cannot be consistently beaten, arbitrage is impossible, and free lunch is generally unavailable."(Han, 2011, p.1)
In this study, we have examined the investment behavior of 225 professionals with accounting and financial background. These individuals are intellectual and well educated echelon of society. Hence, their choice of chosen strategies, such as fundamental, technical, and buy and hold analysis will shed useful information regarding their belief of the US stock market being efficient or otherwise. More specifically, our goal in this paper is to:
e) Explore whether and to what extent educated/professional investors ( they are identified as accounting faculty and CPAs with a personal financial specialist) are using fundamental analysis in their investment process
f) Explore whether and to what extent , these investors are following other market participants ,that is, following the herd, and
g) Explore whether or not stock market is efficient based on their investment experiences
Data/ Methodology
To conduct our study, we have selected 7 questions out of 14-survey questionnaire that has been collected in Jinkens (2014) study. The 14-survey questionnaire was e-mailed to 4,791 Accounting Faculty and 4,192 CPA-FFSs (CPA-FFS are those certified Public Accountant s with a Personal Financial Specialist) for a total of 8,983 individuals. Of these 813 were not delivered and the remaining 8,170 surveys sent out. Of these, there were 220 respondents completed the survey (Jinkens, 2014). “The responses were analyzed with SPSS 18 and the Levene’s SPSS test to differentiate between variances.” (Jinkens, 2014, p. 127)
In this paper two types of investment vehicles were utilized: publically held and privately held, where the ownership of the publically held investment is widely distributed, and the ownership of the privately held investments is an individual or small closely aligned group of individuals. Examples of the publically held investments whose stocks are distributed to a large number of investors and typically they are listed in a major exchange (New York, American, etc.) Examples of privately held investments might be a business that is initiated in partnership, sole proprietorship, or S corporations. For privately owned businesses there is no formal market. It is assumed that investors in these two types of investments use the same investing criteria (Jinkens, 2014, p. 124)
Selected 7 Questions
1. Based upon your current experiences for publicly held investments, such as those that might be listed on a major stock exchange, please indicate on a scale of 1 to 5 whether you would use "Present Value" techniques (PV) or "Running with the Herd" techniques (RH).
i. 1 = PV only
ii. 2 = PV mostly
iii. 3 = PV and RH equally
iv. 4 = RH mostly
v. 5 = RH only
Where, PV denotes present value, which indicates the use of ‘Fundamental Analysis’. Under this approach, investors try to obtain the true (intrinsic) value of invested security by taking the PV of all cash flow generated by this security over its life time. Then, they compare this value with its market value to find underpriced stock/securities to secure a decent return on their investments.
RH denotes ‘running with the herd’ which represents the use of ‘Technical Analysis’. Under this approach investors try to invest on those securities which were chosen or recommended by security analysts or a leader in the market. .
When investing in small, closely held private investments (e.g. rental real estate or a business) there is no formal market (such as the New York Stock Exchange, or the like) to establish market/selling prices. Accordingly, these investors cannot “Run with the Heard” because there is no herd (i.e. an exchange). Each investment is essentially unique. Past similar experiences are used to estimate future cash flow. Present values can be calculated based upon acceptable discount rates chosen from various alternatives, and these are compared to the selling prices to determine whether to buy or sell a particular investment or other assets. The alternative discount rates would be various rates of return available to investors.
For these types of purchases (sales) this paper tests if financial fundamentals are still valid. This brings us to our second question. For closely held private investments and other assets, do investors use financial fundamentals for deciding upon whether to buy or sell, or do they “Run with the Herd”? Respondents were asked the following question (Jinkens, 2014, p. 125).
When investing in small, closely held private investments (e.g. rental real estate or a business) there is no formal market (such as the New York Stock Exchange, or the like) to establish market/selling prices. Accordingly, these investors cannot “Run with the Heard” because there is no herd (i.e. an exchange). Each investment is essentially unique. Past similar experiences are used to estimate future cash flow. Present values can be calculated based upon acceptable discount rates chosen from various alternatives, and these are compared to the selling prices to determine whether to buy or sell a particular investment or other assets. The alternative discount rates would be various rates of return available to investors.
For these types of purchases (sales) this paper tests if financial fundamentals are still valid. This brings us to our second question. For closely held private investments and other assets, do investors use financial fundamentals for deciding upon whether to buy or sell, or do they “Run with the Herd”? Respondents were asked the following question (Jinkens, 2014, p. 125).
2. Based upon your current experiences for closely held investments, such as rental real estate or a business, please indicate on a scale of 1 to 5 whether you would use "Present Value" techniques (PV) or "Running with the Herd" techniques (RH).
i. 1 = PV only
ii. 2 = PV mostly
iii. 3 = PV and RH equally
iv. 4 = RH mostly
v. 5 = RH only
To find the PV of cash flow, investors need an appropriate discount rate. One way to calculate the discount rate is to add the associated risk premium of the security and/or investors with risk free interest rate. Jinkens claims that the risk premium is subjectively determined rather than estimated from models, such as CAPM (Capital Asset Pricing Model) (Jinkens 2014, p.125). This leads us to the third and the fourth question. Do investors, or their advisors, subjectively estimate risk premiums rather than using those calculated by models?
3. How do you measure risk? (Jinkens, 2014, p. 126)
i. 1 = only subjectively
ii. 2 = mostly subjectively
iii. 3 = an equal balance of subjectivity and economic models
iv. 4=mostly based upon economic models
5 = only based upon economic models
4. Based on your current experiences, are US government bond rates a reasonable substitute for the risk-free inflation adjusted rate of return? That is, do you consider such bonds to be risk-free and compensate for (include) inflation? (Jinkens, 2014, pp.125-126)
i. 1= poor substitute
ii. 2= mostly a poor substitute
iii. 3= fair substitute
iv. 4= mostly a good substitute
v. 5= good substitute
5. During the last 8 years, have you significantly changed how you evaluate investments over time?
i. Yes
ii. No
iii. Year
6. If you have answered “yes” that you have changed how you evaluate investments, please indicate whether your methods have become more PV or more RH.
i. 1 = a lot more PV
ii. 2 = a little more PV
iii. 3 = no change
iv. 4 = a little more RH
v. 5 = a lot more RH
“Finally, since investments exist in order for investors to earn returns, and since investors’ opinions may be greatly influenced by whether the values of their portfolios have changed significantly, this brings us to a seventh question. Over the last 8 years, have investors experienced a significant change in their portfolio values?”(Jinkens, 2014, p.127)
7. Over the last 8 years, have you experienced a significant change in your portfolio value?
i. 1 = significant loss
ii. 2 = some loss
iii. 3 = no gain or loss
iv. 4 = some gain
v. 5 = significant gain
Results and Findings
For the first and second questions, which compared publicly held and closely held investments, on a scale of 1 to 5, where 1 equaled “Financial Fundamentals” and 5 equaled “Running with the Herd,” the results were as follows:
• for publicly held investments:
• the mean was 2.63 (53% from PV to RH)
• the standard deviation was 0.89; and
• for closely held investments
• the mean was 1.99(40% from PV to RH)
• The standard deviation was 1.04.
• Levene’s test for equality of variances indicated that the variances were not significantly different (F=0.027, sig. = 0.869).
• The t-test for equality of means indicated that the means were significantly different (df = 178, t = -4.48, sig. = 0.00).
“This indicates that on a scale of only using “Financial Fundamentals” to only using “Running with the Herd,” investors rely more on “Financial Fundamentals” for closely held investments than do those who invest in publicly held investments, but both rely, to some extent on “Running with the Herd.”(Jinkens, 2014, p.128)
On the third question of whether investors estimated risk subjectively or used economic models, the SPSS mean was 2.83 (57% from only subjective to only models) with a standard deviation of 1.00. This indicates that most investors rely slightly more on economic models than on subjectivity (Jinkens, 2014, p.128).
On the fourth question, substitute was significantly different from being a good substitute (df = 219, t = -23.31, sig. = 0.00).
On the fifth question of whether investors have changed how they evaluate investment in the last 8 years, 29.68% of the respondents said “yes.”
On the sixth question, the investors who stated they had changed how they evaluated investments were asked if they had changed more towards “Financial Fundamentals” or more towards “Running with the Herd” during the last 8 years. The results were as follows:
• Mean: 2.52 (50%)
• Standard Deviation: 1.05.
• 72% from less risky to more risky)
• Standard Deviation: 1.13.
This indicates that investors have begun to use “Financial Fundamentals” more, and that they consider investments to be a more risky. (Jinkens, 2014, p. 128)
On the seventh question of whether investors had a significant gain or loss in their portfolio values, the results were:
• Mean: 3.27 (65% from loss to gain)
• Standard Deviation: 1.20.
This indicates a gain in portfolio values. (Jinkens, 2014, PP.127-128)
Summary and Conclusion
The result of analysis investigated in this paper supports the Efficient Market Hypothesis (EMH). As indicated, the publicly held investment market which represents the large US Stock Market has shown to be more efficient than a smaller privately held market. As was expected, investors in the publicly held market have a tendency to follow more the ‘herd’ rather than heavily rely on fundamental analysis, based on their belief that the market is efficient. Although, the investors in this type of investment sector still follow the ‘fundamental analyses as a backup for their sound investment decision making process. However, the investors in the privately held type of investment preferred performing ‘fundamental analyses as a way to come up with justified stock choices. This indicates that, small and privately held market in this study is inefficient.
References
Art of Saving. (2012).
Fama, E. F. (Jan., 1965). The Behavior of Stock-Market Prices. The Journal of Business. 38 (1) pp. 34-105.
Fama, E. F. (1976). Foundations of Finance. Basic Books, Inc., Publishers. pp. 169-175.
Han, Alvin, Efficient Market Hypothesis (2011). -market/
Gertmenian and Chuvakhin, (2002). Does Market Efficiency Trump Behavior Bias in Finance Decisions?http:gbr.pepperdine.edu/2010/08/does-market-efficiency-trump-behavioral-bias-in-finance….
Investopedia. (2012). CFA Exam Guide, Level 1.
Jinkens, Robert (2014). Are Financial Fundamentals Used to Value Investments or Do Investors Follow the Market? Pre and Post 2008Findings Are Compared. Journal of Applied Business and Economics vol.16 (2)
Portfolio Management. (2012).
Simple and Compound Interest Rates. (2012).
Learning for Entrepreneurship: An Integrative Competency-based Framework for Graduate Entrepreneurship Education
Ana Azevedo, Deborah Hurst, Faculty of Business, Athabasca University,
201, 13220 St. Albert Trail, Edmonton, Alberta, T5L 4W1
Phone: (780) 257-2911, E-Mail: ana.azevedo@fb.athabascau.ca
Abstract
This paper has two primary aims. The first is to introduce an integrative conceptual framework for promoting the development of entrepreneurial competencies from the beginning to the end of a graduate study program. The second aim is to discuss critical findings from a longitudinal pilot study implemented within an online MBA program in Western Canada. The three and a half year pilot study was designed to examine key competencies that are being developed during the first phase of this graduate business program and to identify which specific curriculum activities best support the development of these competencies. Competencies investigated in this study were selected from a detailed review of the academic literature, with special emphasis on conceptual frameworks that have been applied in graduate business programs. Considering the overlap between entrepreneurial and generic competencies, the authors proposed an integrative conceptual framework for meaningfully linking them in first and second phase MBA courses, thus supporting entrepreneurial thinking and development throughout the program’s duration. The pilot study methodology included an initial phase of 13 interviews with key stakeholders, followed by longitudinal surveys with twenty-two MBA students. After an initial pretest phase, student surveys were collected with three different MBA cohorts, both at the beginning and the middle of the study program. Survey findings revealed significant differences in graduate students’ capability ratings of key generic competencies at these two specific times. In addition, content analysis of the 13 interviews with students, alumni, employers and faculty indicated that specific curriculum activities such as participation in online discussion forums, case studies and applied projects were considered critical in promoting students’ competency development during their first phase of core courses. Implications for future research and curriculum development are discussed.
THE ERIE FOOD HUB PROJECT
Bruce A. Kibler, PhD, Kibler006@gannon.edu,
Amber Costello, Student Project Leader, Student Sub-Group Leaders: Lisa Gropler, Marisa Guyton, Sydney Spaeder, Gannon University, 109 University Square, Erie, PA 16541
ABSTRACT
The following case study is the product of a student service learning project in the management capstone course. The students were tasked with working with various stakeholders, deploying wholesale and retail surveys and performing an overall feasibility of establishing a Food Hub in downtown Erie, PA. Downtown Erie, PA currently has seven food deserts and downtown residents have no access to fresh food, i.e., only access to highly processed packaged and canned foods.
A new Erie Metropolitan Transit Authority (EMTA) headquarters is being built. The building will have three floors, two of them being dedicated to EMTA operations and one will be designed to partially alleviate a Food Desert in downtown Erie by providing a fresh food market. The total area being dedicated to the possible food hub is about 19,000 square feet and there will be customer parking.
The project sponsor is the CEO of the Erie Downtown Partnership and the project owner is Bruce A. Kibler, PhD, professor of our business capstone course. There have been a total of twenty students assigned to work on the Food Hub. The graduate project team has six members and they have completed all of the benchmarking for the project. The undergraduates are split up into three groups, a commercial group, a marketing group, and a finance group. The project teams have fourteen students total and they have been responsible for completing the core of the project. Nothing has been determined yet for the food hub other than its location. The team has provided a confidential business management consulting service throughout the semester to determine the feasibility of the establishment of a fresh food market in downtown Erie, PA.
Business Modelling and Planning for Born Global Firms: Starting Them Small and Growing Them Big
Nonso OCHINANWATA & Patrick Oseloka EZEPUE
Statistics and Information Modelling Research Group, Sheffield Hallam University, UK
Tel: +447446823469; Email: hyginus.H.ochinanwata@student.shu.ac.uk
Tel: +447772632150; Email: p.ezepue@shu.ac.uk
Abstract
Objectives: Despite the examples of global firms such as Google, Apple, Amazon and Starbucks in UK and other parts of the world, there have not been enough integrative studies on the kind of business modelling and planning which underpin the development and profitable growth of such born global firms (BGFs). This is even more important for developing countries such as Nigeria and Sub-Saharan Africa, given that there are very few visible home-grown BGFs in these places. This paper conceptually outlines how to use an Integrated Born Global Business Model (IBGBM) to establish and profitably grow BGFs. The paper therefore explores what it takes to start such firms small and grow them big.
Prior Work: Theoretically, the paper utilises seminal research on such themes as strategy, entrepreneurship, e-commerce and digital strategies, business modelling and planning, and profitable growth.
Approach: The anticipated research data and methodology will include information on growth prospects of BGFs in selected industry sectors, linked to social media and the above research themes, case studies of such GBFs which serve as experimental hotbeds for building the model, and newly structured BGFs which will be grown over the period of the research using the IBGBM, and an evidence base by way of Google website traffic and analytics.
Results: The key findings from the paper consist in the development of the IBGBM and its validation of the growth prospects for spin-out BGFs.
Implications: This is the first time that such a research is being conducted with a view to spinning out sustainable BGFs with detailed guidelines on how different stakeholders can use the IBGBM to develop such businesses. These stakeholders include individual entrepreneurs, staff of organisations who work intrapreneurially in creating exceptional value-added, higher educational institutions, private sector and government organisations.
Value: The primary value of the research is in capacitating these entities to create additional entrepreneurial value in their various locations, a goal that is sorely needed in developing countries.
The Effect of Securitization Announcements on Vacation Ownership Firms’ Shareholder Wealth
James Drake, Department of Hospitality, Tourism, and Events, Metropolitan State University of Denver, Campus Box 60, PO Box 173362, Denver, CO 80217 Office Ph: 303.556.4840 jdrake23@msudenver.edu
Abstract
The emphasis of this study deals with the vacation ownership industry, or otherwise known as the timeshare industry. The study examines the effect on shareholder wealth of the announcement of the sale of asset-backed securities in the timeshare industry. The cumulative abnormal returns of publicly traded lodging corporations that operate in the timeshare industry are calculated and analyzed for the study. The impact of mortgage-backed securitization announcements of lodging firms that have timeshare operations had significant, positive effects on the shareholder wealth of these firms. While similar event studies have been performed in the lodging sector, there is a lack of event study research in the timeshare industry.
The Effect of Securitization Announcements on the Shareholder Wealth of Timeshare Companies
James Drake, Department of Hospitality, Tourism, and Events, Metropolitan State University of Denver, Campus Box 60, PO Box 173362, Denver, CO 80217 Office Ph: 303.556.4840 jdrake23@msudenver.edu
University Address: Metropolitan State University of Denver, 1201 5th Street, Denver, CO 80204
Summary
This study examines the impact of mortgage-backed securitizations on the shareholder wealth of both lodging firms that operate a timeshare business and outright timeshare companies. Wyndham Worldwide is an example of a lodging firm that operates a significant timeshare operation and Marriot Vacation Club would be an example of a timeshare-only business.
Securitizations are widely used in the capital-intensive timeshare business to generate cash flow (Fang & Long, 2009). Timeshare mortgages are bundled together, assigned a credit rating, and issued to the market as a tradable security.
The methodology used in the study is the event study, which examines the effect that new information may have on the market prices of securities (Torchio, 2009). The sample for this study is comprised of the corporations that operate timeshare businesses and their corresponding securitization issues. The pertinent information about these companies includes the firm, date of announcement of completion of a securitization deal, and the amount of the securitization.
This event study examines the change in the mean abnormal return in securities for seven lodging/timeshare firms:
1. Bluegreen Vacations (timeshare only)
2. Diamond Resorts International (timeshare only)
3. Hilton Grand Vacations (Elara timeshare)
4. Marriott Vacation Club (timeshare ‘spin-off’ of Marriott)
5. Silverleaf Resorts (timeshare only)
6. Starwood Vacation Ownership (timeshare operation from Starwood)
7. Wyndham Vacation Ownership (timeshare operation from Wyndham Worldwide)
The securities data were obtained from the Center for Research in Security Prices (CRSP) at the University of Chicago, from July 15, 2004 to March 27, 2015. The calculation of the mean abnormal returns for the securities was carried out by the Eventus software package from Wharton Research Data Services of the Wharton School at the University of Pennsylvania. In total, there were 26 securitization announcements carried out by the seven firms in the time period indicated. Securities data is the daily common stock price of the firms listed. Successful completion of securitization deals announced in the Wall Street Journal was the source of the dates of the securitization announcements, as well as each lodging/timeshare firm’s annual reports or press releases.
Two theories relating to the securities market are examined in this study: the information leakage theory (also known as the “dribs and drabs” theory) (Grace, Rose & Karafiath, 1995) and the new information theory (Fama, 1965). Because securitization packages involve lengthy, complex processes involving many different parties, it is not difficult to imagine sensitive financial information may be leaked to the investing public well before the securitization is actually announced officially.
The primary research question this study asks is if the announcements of securitizations by timeshare businesses, or that of lodging firms that operate a timeshare business, affect shareholder wealth of those firms? This study examines this question using two types of event studies: one with extended blocks of time in the event window (to address the “information leakage” theory) and one with a contracted event window (to address the “new information” theory).
The ten-day incremental event windows, which are listed as (-50, -41), (-40, -31), (-30, -21), (-20, -11), and (-10, -1) demonstrated no significant mean cumulative abnormal returns. The 10-day event window (-30, -21) showed the highest cumulative abnormal return of 1.37%, but was not significant at any level. This would indicate that information leakage leading up to the securitization announcements did not have a significant impact on the stock price.
The results of the (0, +1) event window, where 0 = the day of the announcement and +1 = one trading day post announcement, showed a mean cumulative abnormal return of 1.32%, with a rank test z statistic of 1.781 which was significant at the 10% level. The corresponding sign test was 17.9 and was significant at the 10% level. This result bolsters the new information theory. In this event study, the date of the announcement (day 0) plus one day post-announcement indicate that the announcement of a successful securitization issuance represented new information to the market and a significance cumulative abnormal return was demonstrated.
References
Fama, E.F. (1965). The behavior of stock market prices. Journal of Business, 38(1), 34-105.
Fang, M., & Long, F. (2009). A preliminary look at effects of asset-backed securitization on shareholders. Journal of Financial Management of Property and Construction, 14(3), 248-256.
Grace, E.V., Rose, L.C., & Karafiath, I. (1995). Using stock return data to measure the wealth effects of regulation: Additional evidence from California’s proposition 103. Journal of Risk and Insurance (1986-1998), 62(2), 271-285.
Torchio, F. (2009). Proper event study analysis in securities litigation. The Journal of Corporation Law, 35(1), 159-168.
A Conceptual Framework of Understanding Social Enterprises
Chaewon Lee, Associate Professor, Department of Business Administration, School of Business and Technology, , Seoul National University of Science and Technology, Seoul, South Korea, Phone: +82-2-970-6421, Fax: +82-2-973-1349, hlee@seoultech.ac.kr
Minjung Baek, Research Professor, KAIST GIFTED, KAIST, Daejeon, South Korea, Phone: +82-42-350-6211, Fax: +82-42-350-8660, mjbaek@kaist.ac.kr
Abstract
This paper explores and clarifies the significance of analytical framework of social enterprise. We present a conceptual framework for understanding of social enterprise, presenting theoretical and practical insights into social enterprises and social entrepreneurship. A conceptual framework for understanding the complexity of social enterprises integrates five major perspectives in entrepreneurship; characteristics of the individuals who start the social enterprise focusing on social value creation, organization’s trait which is their identity, performance which creates the social impact beyond the financial performance, sustainability which has a high level of innovation, business model which can be replicable and scalable, and partnership with local organizations. The authors explore the implications of social enterprises’ identity and identification in explanations with comprehensive 5 factors.
Introduction
As social entrepreneurship scholars, we could often feel that what we are talking about when we talk about social enterprises. Or we wonder if audiences have same definition of social enterprises when we talk about social enterprises. Even if we are using a same word, social enterprise, we all in discussions have a different view of social enterprises.
Social enterprises have developed from and within the social economy sector for a long time. The distinctive organizational forms that social enterprises adopt depend on the existing legal frameworks, on the political economy of welfare provision and on the cultural and historical traditions of non-profit development. As a result, the social enterprises sector today includes both new typologies of organizations and traditional third sector organization re-fashioned by a new entrepreneurial dynamic (OECD). In this respect, the social enterprise concept doesn’t see to replace concepts of the non-profit sector or social economy. Rather, it is intended to bridge these two concepts, by focusing on new entrepreneurial dynamics of civic initiatives that pursue social aims.
Based on the OECD, social enterprises are organizations that take different legal forms across OECD countries to pursue both social and economic goals with an entrepreneurial spirt. With this explanation, at least we have consensus that social enterprises have goals and metrics to achieve social and economic value creation with different legal forms. Yet, an abundance of scholarly effort, the majority of definitions proposed have not been clear with respect to what constitutes the major elements of a definition.
Our research is trying to propose an acceptable general definition of social enterprises among entrepreneurs, policymakers and entrepreneurship scholars. We are trying to examine of extant definitions in social entrepreneurship literature to define the major elements of social enterprises. Especially we use the analytical perspectives of social enterprises: antecedents (motivations), processes and outcomes. Therefore, this paper provides a conceptual framework that allows understanding the growing phenomena of social entrepreneurship through showing the conceptual framework of describing social enterprises.
Towards a Conceptual Framework for Social Enterprises
The definitional aspects of social enterprises has highlighted the immense efforts of scholars in defining the conceptual determinants and borders of social enterprises. However, most extant definitions has been conducted from two analytical perspectives of social enterprises which are antecedents and outcomes (Aygoren, 2014). Only a few researchers define social enterprises by reference to process perspective.
We suggest in this paper that we need to consider three perspectives, antecedents, processes, and outcomes to define social enterprises to understand their distinctive characteristics.
Social Entrepreneur and Social Enterprise
Social enterprise
Nobel Prize Muhammad Yunus defined the social businesses as an organization with the aim of creating social impact. Also he emphasized that social businesses are created and designed to address a social problem. In the early 1980s, Bill Drayton publicly asked why enterprise couldn’t be to solve social problems. He began to build a global organization, Ashoka, to put such an approach in place.
In many scholarly literature, social enterprises pursue the multi-faceted goal of creating value for and capturing value from customers, while also creating social value (Battilana & Dorado, 2010; Dohrmann, Raith, & Seibold, 2015; Meyskens & Carsrud, 2011; Pache & Santos, 2013) . Social value is defined as specific improvements to societal dimensions including health, nutrition, community development, education or improvements to the natural environment (Florin & Schmidt, 2011). This value is considered to be a positive externality that extends beyond the enterprise and its customers (Mendoza-Abarca, Anokhin & Zamudio, 2015).
Social entrepreneur
Thake and Zadek (1997) that social entrepreneurs are driven by a desire for social justice. They said that social entrepreneurs seek a direct link between their actions and an improvement in the quality of life for the people with whom they work and those that they seek to serve. They also said that social entrepreneurs aim to produce solutions which are sustainable financially, organizationally, socially and environmentally. Social entrepreneurs play the important role of change agents in the social sectors, by 1) adopting a mission to create and sustain social value (not just private value), 2) recognizing and relentlessly pursuing new opportunities to serve that mission, 3) engaging in a process of continuous innovation, adaptation, and learning, 4) acting boldly without being limited by resources currently in hand, and 5) exhibiting heightened accountability to the constituencies served and for the outcomes created(Dees,1998). Reis (1999) emphasizes what social entrepreneurs can create social value through innovation and leveraging financial resources.
Analytical Perspectives of Social Enterprises
For understanding of distinctive characteristics of social enterprises, we suggest three analytical perspectives, antecedents, process and outcomes to define social enterprises. Compared to the antecedents and outcomes, the studies on the processes of social entrepreneurship are limited. In our research, we try to use the balanced perspective to see the distinctive characteristics of social enterprises.
Even though extant research try to find what motivates social entrepreneurs, there is a heterogeneity in individual’s motivations. At the individual level of analyses as antecedents for social entrepreneurship, diverse factors such as motivations, skills, and competencies are investigated. However, it doesn’t have consistent conclusions so it is not well theorized (Miller et al., 2012). Miller et al. (2012) proposed that the other-oriented emotional construct, compassion is an important motivational antecedent. Even if we still need to see the antecedent with a perspective of institutional condition and processes mitigating individual motivations and skills, we try to consider compassion as an antecedent of individual level in this research.
The studies of process are very limited in social entrepreneurship research. Most literature in process are about social entrepreneurial opportunity recognition and exploitation process, process concerning the hybrid nature of social ventures, forms of organizing, and innovation. Venkataraman (1997) , studying traditional entrepreneurship, sees the creation of social wealth as a by-product of economic value created by entrepreneurs. In social entrepreneurship, by contrast, social value creation appears to be the primary objective, while economic value creation is often a by-product that allows the organization to achieve sustainability and self-sufficiency. In our paper, we will see the organizational identity, and innovation aspect as a process perspective.
Compared to the processes of social entrepreneurship, the outcomes of social enterprises research have been well conducted. The outcomes of social enterprises can be classified with individual and social group empowerment, organizational sustainability, local, regional and community development, societal and institutional transformation and change, and environmental sustainability (Aygoren, 2014). However, many research consider and focus on social impact and sustainability even if there are more important factors which are very important to describe social enterprises as outcome perspective.
As we use the three analytical perspective to explain social enterprises, we can have better understanding and deeper perspective to clarify social enterprises.
A Framework for Describing Social Enterprises
We contend that there are five major elements that collectively should describe social enterprises. Further, we argue that no one element can be considered in isolation of any one of the other elements if we are to understand the contribution of each element. So it is through consideration of what elements interact that we have developed our conceptual framework of social enterprises. Figure 1 presents a framework for describing social enterprise across five dimension: (1) compassion as a motive of social entrepreneur, (2) organizational identity, (3) innovation, (4) network with local partners, and (5) replicability and scalability as a social impact measurement.
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Compassion as motive of social entrepreneur
There have been lots of discussions about the antecedents of social enterprises. Especially the social entrepreneurship literature has shown that motivations and behaviors are influential factors to create the socio-economic impact (Zahra et al., 2009). Also, extant literature reports that the relationship between the characteristics of social entrepreneurs and the socio-economic impact they create (Alvord et. al., 2004; Zahra et al., 2009) . Townsend and Hart (2008) conclude that the entrepreneur’s motivations not only affect the opportunity search process but also influence the organizational strategies and the tactics employed to deal with environmental and institutional ambiguities. Their research expand the importance of social entrepreneur’s motivation to the overall strategies of the company. In addition, the literature on social entrepreneurs’ skills provides a plethora of competences, which are influential at various stages of the entrepreneurial process and in different contexts. Miller at al. (2012) goes deeper to identify a common pool of competencies. They show as important competencies of social entrepreneurs that (1) the ability to problem solve, management of financial capital, (3) innovation and creativity, (4) formulating strategy, and (5) developing collaborative relationship.
However, those researches are focused on the characteristics related to social enterprises’ success. As you see the literature in social entrepreneurs’ characteristics and skills, it is not a clear factor for only social entrepreneurs. In our research, we are trying to identify the factor which is related to social enterprise as antecedents. We want to see what kind of motivation factors make social entrepreneurs to start to social enterprises. We try to find which factor can be a differentiated factor compared to other entrepreneurial start-ups.
In early research of entrepreneurship, founder’s motivation was not enough to explain why an individual would engage in the process of starting up a social enterprise (Carsrud & Brannback, 2011; Miller at al., 2012). Some results reveal that financial returns as compensation for their personal risk taking, and independence from organizational bureaucratic situation are important motivation factors (Casson, 1982, Kirzner, 1985, GEM Global Report, 2015).
Recently, Miller and his colleagues (2012) developed a conceptual model to define social entrepreneurship. Their research focuses on compassion among many motivational factors. Also, they show that compassion can transform into social entrepreneurship with three mechanisms such as integrative thinking, prosocial cost-benefit analysis, and commitment to alleviating others’ suffering. And several scholars have suggested that compassion may act as a prosocial and emotional motivator of social entrepreneurship (Dees, 1998, 2007; Fowler, 2000). Traditionally, individual will choose to engage in activities when the personal benefits outweigh the personal costs. However, there are so many evidences and theories to talk about individual’s irrational decision making. Many research shows that the other-oriented and emotional nature of compassion challenges such a traditional atomistic analysis of the costs and benefits of possible actions (Miller et al., 2012; Dees, 1998, 2007; Fowler, 2000)
Proposition 1. Social entrepreneur(s) are more likely to be motivated by compassion than traditional rational and self-oriented motivations.
Organization Identity
There are so many legal forms of social enterprises, cooperatives, public bodies, private ventures including social orientation, and philanthropies agencies. Most organizations identify themselves as social enterprises with different mission and orientation. Most organizations, ranging from cooperatives to philanthropies agencies, have hybrid characteristics of having social and economic value-oriented identity. Sometimes this kind of mixed identity can be a beneficial to pursuit two sides of value creations. However, it can create ambiguity and organizational confusion associated to dual orientations (Glynn and Dacin, 2000; Dacin et al., 2011).
Organizational identity is defined as the enduring attributes of an organization that contribute to its uniqueness and distinctiveness (Albert & Whetten, 1985) . On Albert & Whetten (1985)’ research, they said that organizational identity is defined as the shared and collective sense of an organization and is typically singular in focus. Even if many researchers have suggested that organizations may hold multiple identities, empirical research examining these assertions has been scant (Foreman & Whetten, 2002) . In Moss et al. (2010) ’s research, they empirically show that there are two different types of organization identities. One is utilitarian organization identity (i.e., entrepreneurial, product oriented) and another is normative identity (i.e., social, people oriented). They compared with the mission statements of other high-performing entrepreneurial enterprises culled from the Inc. 500 with social enterprises. They said that social enterprises have a tendency to dual identities which are a utilitarian organizational identity and a normative organizational identity. Also, another research shows that the organizational identity of a social enterprise is intrinsically dualistic because it borrows distinctive elements from both the social and commercial sector (Pharoah, Scott, & Fisher, 2004; Pratt & Foreman, 2000).
Proposition 2. Social enterprises are more likely to have a dual identities which borrows distinctive elements from both the social and commercial sector.
Innovation
There are three kinds of sustainability: operational, financial and environmental in social entrepreneurship. Sustainability is the term for enterprises that will last, and be around for the long-term. Operational sustainability refers to managerial and human capacity, while financial sustainability refers to having the financial resources to meet strategic impact goals. Non-for-profit enterprises often struggle with financial sustainability because they are dependent on donor generosity. Often social enterprises are better positioned for sustainability, because they are generating revenue as they pursue social impact objectives. Environmental sustainability for social enterprise is often heightened by the reliance of many people, like developing world farmers, who are dependent on predictable climate conditions for their very survival. Those three kinds of sustainability are related to innovation.
Many social entrepreneurs start with their compassion to contribute to society and passion to pursue their goals without their solid business model based on innovation. They confront the situation that they don’t have enough revenue sources to continue businesses because of the lack of innovation of their products and services. Also, their orientation leans to the social value creation identity. Without innovation, they can’t achieve their social and economic goals. Innovation is essential for social enterprises to perform well and to achieve their social and economic goals (Bradley et al., 2013; Chell et al., 2010).
Social enterprises refer to organizations that pursue innovation with a social objective, which can include for-profit, nonprofit, or hybrid forms of organizing (Austin, Stevenson, & Wei-Skillern, 2006).Like for-profit organizations, innovation is also a fundamental capability of social enterprises (Roberts & Woods, 2005; Short et al., 2009). Dees (1998) emphasizes that social entrepreneurs create the value through continuous innovation, adaptation, and learning. Social entrepreneurs should have radical innovation capability to produce products or services and generate social value by creating ways to solve problem that throughout time have been unsolvable. Therefore, high innovation capabilities is one of desired traits for social enterprises to have sustainability.
Proposition 3. Social enterprises are more likely to develop their own innovation processes to have sustainability.
Network with Local Partners
All too often intentioned people create projects and enterprises to solve problems that they connect to emotionally, but haven’t experienced directly. Good intentions to help others are important, but the best social enterprises are those that are built by or in close collaboration with local people or organization as partners, to address their problems in a way that they can truly own at a grassroots level. Thompson (2002) shows that a social entrepreneur’s community network is especially important because the resources needed to create value and support the community are embedded within the community network. It is the sum of social resources embedded in a social relationship, yielding benefits of referral, timing, and information (Burt,1997; Coleman,1988). Extending these research, Peredo and Chrisman (2006) explain that social capital is a vital ingredient in the emergence of community based enterprises. Larger networks present greater opportunities to gain resources and survival (Baum & Oliver, 1991; Nahapiet & Ghoshal; 1998).
Network and partnership as resources of firms is not only for social enterprises. However, the core value of network and partnership in social enterprises can be different. Social entrepreneurs may exploit their network to enlist volunteers and devote time and money to the organization, to maintain or fund operations, and to undergird initiatives (Haugh, 2007; Thompson, 2002). Community-led, making community-based networks are critical resources for social enterprises and distinctive charateristics (Haugh, 2007).
Proposition 4. Social enterprises are more likely to have a large size of network with local partner to continue their businesses.
Replicability and Scalability as Social Impact
Social enterprises’ ultimate goal is to maximize their social impact (Austin et al, 2006). Performance in social enterprises is conceptualized around mission-related ‘social value creation’ or ‘social value proposition’ (Austin et al., 2006; Martin and Osberg, 2007). Even if there have been lots of research, it is also very ambiguous (Peredo and McLean, 2006). Also, there are lots of challenges of measuring performance of social enterprises. On the actual measurement of social value, the literature offers little guidance. Even if there are lots of challenges and argument of social impact measurement, the distinctive characteristics of social enterprises are related to replicability and scalability.
Replicability means the capacity to reproduce or adopting the social enterprise’s structure, processes, products or services, and habit (Dees et al., 2004; Winter and Szulanski, 2001 ). Bradach (2003) emphasizes replication as an important dimension of scalability to move an organization’s theory to change to a new location.
Scalability is built for growth and greater impact. The best social enterprises are both replicable and scalable (Seelos and Mair, 2005). There are inconsistent definitions of replicability and scalability. So there are various efforts and several theoretically and empirically grounded approaches and model that suggest key components for determining the scalability and replicability of social enterprises.
There are three critical success factors for scaling social impact by Bradach (2003). In that research, author shows that the definition of growth strategy, design of network and role of national could be the three critical success factors for scaling social impact. Aspen Institute (2008) shows that there are six key drivers of scaling of social enterprises: adaptation of traditional business model, confrontation with tensions implicit in scaling-up opportunities for earning revenue, engagement in strategic partnerships, use of subsides effectively, practice of solid business fundamentals. These two characteristics are distinctive traits compared to profit organizations.
Proposition 5. Social enterprises are more likely to seek sustainable solutions which are replicability and scalability than to seek sustainable advantage.
The Implication of the Proposed Conceptual Framework
The present paper has tried to identify the distinctive domain of social enterprise. It has been argued that social enterprises differ from other forms of organizations in that it gives high priority to social value creation by change makers. The current definitional aspects of social enterprises are not enough to clarify the social enterprises’ constructs. This paper has tried to have a holistic approach to use three perspectives, antecedents, processes, and outcomes of social enterprises. We conclude our paper with showing a comprehensive conceptual model to describe social enterprises. It fills the gap by providing a conceptual framework for understanding how compassion, organization identity, innovation, networks with local partners, and replicability and scalability a social impact explain social enterprises. This paper attempts to organize the many variables that have been used in past research to describe social enterprises into a comprehensive framework. Far from being reductive, the new view of the social entrepreneurship literature should provide valuable insights into the social enterprises by showing it to be a complex and multidimensional phenomenon. A primary value of the framework for describing social enterprises presented here is that it provides a systematic means of comparing and contrasting complex social enterprises; it provides a way to conceptualize variation and complexity.
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Business development frameworks for establishing innovative born-global firms in Nigeria and Sub-Sahara Africa
Patrick Oseloka EZEPUE and Nonso OCHINANWATA
Statistics Information Modelling and Financial Mathematics Research Group, Department of Engineering and Mathematics, Sheffield Hallam University, UK
Tel: +447772632150; Email: p.ezepue@shu.ac.uk
Tel: +447446823469; Email: hyginus.H.ochinanwata@student.shu.ac.uk
Abstract
This paper explores different approaches for establishing born-global firms (BGFs) in developed and developing countries, with a special focus on Nigeria and Sub-Sahara Africa. It reviews the key constructs and frameworks that underpin new business development in born-global firms. Examples of these constructs are business development, dynamic capabilities, innovation, collaboration, entrepreneurship and organisational learning. Given the relative lack of BGFs in developing countries, as opposed to developed countries, the paper explores how frameworks for BGF new business development which are subtly different in developed and developing country contexts. For example, BGFs in developed countries focus on niche products and services with breakthrough innovation, whilst those in developing countries, because of limited resources and capabilities, focus on undeserved and mass markets which do not require high level resources and capabilities. Realistic hypothetical examples of BGFs which directly underpin Nigerian and Sub-Sahara African higher education and economic development are used to illustrate the BGF business development constructs.
Keywords: Born global-firms, Worldhero , , Business development, Innovation, Dynamic capabilities, Entrepreneurship, Higher education, Economic development
Related conference topics: Entrepreneurship and Small Business; International Business
Introduction
Born-global firms (BGFs) are defined as companies that seek superior global performance from early stages in their development, for example Facebook, Apple, WhatsApp, Snapchat, Google and Uber (Cavusgil and Knight, 2009; Knight and Cavusgil, 2004, 1996; Madsen and Servais, 1997; Rennie 1993). Knight and Cavusgil (1996) describe BGFs as companies that export twenty-five per cent or more of their products within the first three to six years of their foundation. Modern BGFs such as mentioned above use internet-based integrated business models to achieve high global reach from inception. Traditional BGFs are identified as companies that export their products within two years of establishment to international markets (Gleason and Wiggenhorn, 2007; Rialp et al., 2005; Rasmussen, Madsen and Evangelista, 2001).
However, modern BGFs which primarily use the internet to distribute their offerings can be said to deliver these offerings globally from inception, since the offerings are immediately accessible to consumers and clients in different parts of the world. Also, start-ups that develop unique products or services from a global customer perspective are more likely to have a high degree of uptake of their products or services in global markets from their founding, through cyber-mediated internationalisation.
The core research problem addressed in this paper is the fact that despite the overwhelming success of such BGFs as mentioned above in creating thousands of jobs and growing the economies of countries in which they are based, there are relatively few, if any, of these companies in Nigeria and Sub-Sahara Africa. Ironically, these countries have teeming populations of unemployed youths and graduates, a situation which is exacerbated by continuing economic challenges related to decrease in revenues earned from commodities, oil and gas, for example (Ezepue and Ochinanwata, 2016a). Moreover, lack of innovations in higher education in these countries produce graduates who are almost unemployable in terms of requisite modern graduate skills (Ezepue and Ochinwata, 2015; Ezepue, 2016). The paper therefore explores how existing frameworks that support innovation and new business development in BGFs can be adapted to Nigeria, Sub-Sahara African, and similar developing countries which lack the presence of BGFs. It turns out that since BGFs are from start typically SMES with a DNA for accelerated internationalisation; the same BGF frameworks also support innovative start-ups and small-scale enterprises (SMEs) in these countries, which is strategically important to the government of developing (and developed) countries, Ezepue and Ochinawata (2016a).
Madsen and Servais (1997) identify several factors that promote BGFs’ growth. These factors are associated with entrepreneurial orientation, international market mind-set, and high innovative and creative skills. Knight and Cavusgil (1996) argue that time and speed differentiate BGFs from other traditional small new ventures. Hence, this paper addresses these factors in the context of developing countries seeking successful start-ups, SMEs and BGFs which are managed by highly skilled and entrepreneurial academics, students, and graduates.
As noted above, whereas there is a wide range of studies on these enablers of BGF development and growth (Madsen, 2013; Cavusgil and Knight, 2009; Karra, Philips and Tracey, 2008; Gleason and Wiggenhorn, 2007; Madsen and Servais, 1997), there are no known research on BGFs in developed countries. More importantly, there is no study that integrates developed and developing country perspectives in order to provide a more holistic understanding of how proven BGF business strategies in developed countries can be contextualised in developing countries, in a way that will help indigenous entrepreneurs in these countries to establish successful BGFs. Therefore, this paper fills these gaps in knowledge, by using ‘realistic hypothetical examples of BGFs which directly underpin Nigerian and Sub-Sahara African higher education and economic development’ to illustrate how the above mentioned BGF business development constructs can be adapted to these contexts.
The specific research questions explored in the paper are: 1) What are the BGF characteristics compared to traditional firms (TFs)? 2) How can these characteristics be enshrined in developing countries like Nigeria, in a way that facilitates a pervasive and innovative entrepreneurial culture among academics and graduates? By answering these questions, the paper will provide new insights on the process of creating BGFs and international new ventures (INVs) in developing countries, especially Nigeria and Sub-Sahara Africa where there is no home-grown BGFs.
The rest of the paper is as follows. Section 2 discusses pertinent developing country contexts using Nigeria and Sub-Sahara Africa as focal points. Section 3 presents the theoretical background on conceptual frameworks for BGF business development in developed and developing country contexts. These include BGF characteristics, new business development, innovation, dynamic capabilities, and open collaboration. Section 4 applies these constructs to case study BGFs in higher education research and traditional enterprise development that will be based in Nigeria and Sub-Sahara Africa, but have a global reach. Section 5 concludes the paper with notes on related policy implications and support frameworks for creating a research-based entrepreneurial ecosystem in Nigeria, Africa and developing countries.
Pertinent developing country contexts using Nigeria and Sub-Sahara Africa as focal points
This section discusses current economic challenges in Nigeria. It also summarises some critical questions and problems of higher education (HE) in Nigeria and Africa which motivate the need to create innovative BGFs that will help to reskill their academics, students and graduates and make them more entrepreneurial and employable, as appropriate.
By way of brief notes on Nigerian Government’s ‘SME policy for entrepreneurship development’, Ezepue and Ochinanwata (2016a) state as follows:
‘the Central Bank of Nigeria (CBN) earmarks over 1trn Nigerian Naira (N) to promote lending to the real sector of the Nigerian economy, in order to ‘stimulate economic activities in the country’. The term ‘real sector’ loosely refers to non-oil and non-financial sectors of the economy, which includes start-ups and MSMEs and the informal sector of the economy generally. At the current exchange rate of £1 GBP to 450 Nigerian Naira (N) this sum is about £2.2bn. The money was to be allocated to the following social interventions: N300bn (£0.67bn) Real Sector Support Facility (RSSF); N220bn (£0.49bn) Micro, Small and Medium Enterprises Development Fund; N213bn (£0.47bn) Nigeria Electricity Market Stabilisation Fund; N500bn (£1.11bn) Non-Oil Export Stimulation Facility; and N75bn (£0.17bn) Nigeria Incentive Based Risk Sharing for Agricultural Lending. These interventions aim to ‘provide operators in the real sector long-term (e.g. 10-15 year) single-interest loans of between 6-9 percent with alternative collaterals. This is because Nigerian banks charge between 15 and 20 percent interests which are excessive for start-ups. Expected outcomes from these interventions include economic growth, related GDP growth, increased exports, and significant job creation, affordances that are even more urgent given that Nigeria’s foreign reserve had fallen to $28bn compared to $3.3trn for China, for example, for example’.
Also, ‘Nigeria’s Presidency budgets N500bn (£1.11bn) social welfare programmes’ aimed at creating: 500,000 direct jobs, ‘which will see unemployed graduates being trained and deployed as volunteer teachers in their communities while prospecting for jobs in their chosen professions’. Other interventions include: training 370,000 non-graduate youths in different skills and vocational programmes; giving MSMEs soft loans of N60,000 (£133) each to 1m Nigerians (small-scale traders, artisans and market women) through the Nigerian Bank of Industry; and a free education to 100,000 Science, Technology, Engineering and Mathematics (STEM) students.
‘The key rationale for these MSME interventions is to create jobs and enhance the capacity of the informal sector of the economy (that is individuals, civil society, and the private sector apart from government and financial services sectors) to grow the economy and enhance the overall economic development of Nigeria’. ‘In addition to poor access to finance, a key ‘financing start-ups and workforce development’ problem in Nigeria is lack of industry-facing business management and apprenticeship skills which will enable MSMEs to successfully benefit from the above mentioned funding schemes’.
Ezepue and Ochinanwata (2016a) suggest that the following research and enterprise development (RED) initiatives will address these needs: ‘an online Skills for Students, Graduates and Start-Ups (SSGS), which can provide opportunities for Nigerian graduates to acquire generic, entrepreneurship, enterprise, and employability skills; an innovative Nigerian Renewable Energy Research and Consulting firm, which can roll out solar houses and model solar villages as solutions to current energy-mix problems in the country; a challenger Nigerian Research and Enterprise Development Bank (Ochinawata and Ezepue, 2015), which will fill the current gaps in MSME financing in Nigeria; a Capital Management firm, which will use advanced research in statistics, big data analytics, applied economics, stock market analysis, and financial mathematics, to provide world-class investment management services to start-ups, MSMEs and mature firms; and a Centre for Advanced Research and Enterprise Development (CEfARED), which will deepen theoretical and practical expertise on these initiatives, in collaboration with researchers and professionals in academia, industry and government’. This centre will support the translation of research results from higher educational institutions into practice, through business incubator schemes, technology and services spin-offs.
In order to enable these initiatives to benefit key stakeholders in Nigeria, given its immense population of about 180 million people and more than 170 nationally approved universities and polytechnics, for instance, the initiatives should be structured as innovative BGFs which use internet and social media to disseminate their offerings. This way, the initiatives are realistic hypothetical case studies that could be used to illustrate the workings of BGF business development constructs explored in this paper. Before we do this, it is important to further examine the challenges of higher education in Nigeria and Africa which the BGFs should address.
Critical questions and problems in Higher Education (HE)
As noted in Ezepue (2016), ‘There are continuing discussions among Afrihero experts, Nigerian and African academics, and professionals, on why graduates trained within traditional curricula in Nigerian and African higher education institutions (HEIs) appear to lack critical skills compared to, say, UK graduates’. Consider, for instance, the fact that a typical UK/US first degree graduate is so skilled in reflective thinking and creative problem solving that most CEOs of giant corporations run these organizations using basically their first degree qualifications, if at all. Some don’t even seem to need it, for example Bill Gates of Microsoft (who dropped out of university) and Richard Branson of Virgin Group (who did not attend university at all).
‘What is wrong then with Nigerian/African HE systems which produce hordes of seemingly unemployable graduates amidst stark lack of job opportunities? What should we do to remedy this malaise of unconscious miss-education of the African graduate? What models of learning, teaching, assessment (LTA) and research are called for, and how do we get lecturers to imbibe them? What implications do these ideas have for higher education policy, in terms of curriculum planning and delivery, research management and funding, national job creation, entrepreneurship, enterprise and employability education? How can we innovate the HE-Research Institutes-Industry-Government Ecosystem in order to achieve skills-focused, critical and reflexive education?’
Ezepue (2016) suggests that these questions call for higher education innovations in research, teaching, learning, assessments, consulting and community services (RETLACSS). The paper argues that for these RETLACCS innovations to be achieved, traditional HE practices have to be transformed to more effective and innovative ones. Also, the higher education institutions (HEIs) should be transformed into agile born-global HEIs which are powered by the internet, and work more swiftly across academia, industry and government boundaries, than is possible with very large universities, where stifling bureaucracy and power races hold sway. See related notes in the African Higher Education and Research Observatory UK (.uk) which was founded by one of the authors since 2005, in order to facilitate radically innovative collaborations in RETLACCS works in Nigeria and Africa. Ezepue (2016) summarises the key HE problems in Nigeria as:
• a lack of skills-focused critical education;
• less emphasis in the HE curricula on higher order skills typically achieved through blended, reflexive and entrepreneurial curriculum design and delivery;
• insufficient exposure of lecturers to the scholarship of learning and teaching and correspondingly effective classroom strategies and dynamics;
• a seemingly false emphasis on single-discipline career self-management, whilst most global corporate academics (CAs) ply multidisciplinary knowledge, without sacrificing their intellectual identities;
• insufficient emphasis on the links between disciplinary knowledge, national development and societal value (Ezepue and Ojo, 2012);
• similarly, a less travelled walkway among academia and industry, and a corresponding lack of national policies that energise the HEI-Industry Ecosystem; and
• a lack of ICT-enabled 21st Century learning studios which catalyse Web 2|3|4.0 adaptive thinking and creative problem solving, using relevant software tools and processes.
The term Corporate Academic (CA) is an important construct that underpins the development of a new kind of academic who powers the born-global HEIs and RETLACCS innovations envisaged in this paper. We explicate this term further. A CA is an academic who executes three main domains of work, namely: a primary research domain (PRD) which consists of their specialist field(s) of specialisation; a primary application domain (PAD) in which the research ideas developed in the PRD are fervently applied; and a general cultural literacy (GCL) programme of continual development, and intense street-wise readings of how ideas work in concert and across related disciplines, especially in the resolution of cogent societal problems.
For example, a CA may have statistical science as a core PRD area (within which they may be primarily interested in, say, stochastic processes and their applications), and choose applied economics and finance as their PADs. The GCL could involve very wide readings in all these fields, including perspectives from philosophy, psychology, economic history, politics, mathematics, computer science, and theoretical physics. The CA regularly contemplates how multidisciplinary ideas from these fields are used in addressing critical problems in society, gleaned from expert reports and feature articles in related journals, mainstream news media and professional magazines, for example, Financial Times, The Economist, New Scientist, and blogs. These interests vary from CA to CA; what is important is the holistic focus on how knowledge is applied and the nature of wealth creation which this engenders. In a sense, a CA is enmeshed daily in the school of hard knocks and have an innate sense of what works that surpasses the ken of single-PRD purveyors of the academic game. The GCL programme is broader and deeper than the traditionally narrower continuing professional development (CPD) work which traditional academics (TAs) engage in, mainly around their PRDs.
CA thinking is a different mindset from the traditional HE career self-management model which emphasises a single minded PRD focus, by which academics label themselves somewhat limitingly as historians, and economists, mathematicians, say. It advocates a PRD plus approach to career self-management in academia, which supports an ethos of academic entrepreneurship and university-industry-government (Triple Helix) collaboration. This ethos is uncommon in Nigerian and African HEIs, but rather underpins business development and innovations in such BGFs as Google, Amazon, Microsoft and Facebook. We are strongly persuaded that the CA mindset and CA Model of academic work explored in more detail in Ezepue (2016), is fundamental to the development of the kind of pervasive entrepreneurialism exemplified by the case study BGFs discussed in this paper. That said, the rest of the paper is devoted to understanding enabling BGF constructs and how they can be applied in developing country contexts, since we do not have enough space to expand on CA thinking here.
Following Yizenga (2008), Ezepue (2016) identifies the following indicative responses to similar challenges of higher education in Africa which the former explores.
Table 1: A summary matrix of identified challenges in African HE and indicative BGF solutions
|No. |Challenges |Description |Indicative responses |
|1 |Faculty shortage and |Acute shortage of teaching faculty and |National and Continental Doctoral Training Centres |
| |development |world class research scholars, especially |aimed at using pooled expertise to train word-leading|
| | |senior faculty at PhD level; inability to |PhDs; creative ways to train lecturers as corporate |
| | |retain qualified research scholars; |academics (CAs) who live in the class and street, and|
| | |amplified by brain drain, retirements, and |thereby generate funding that enhances their RETLACCS|
| | |unattractive working conditions |engagements and earnings; similar opportunities to |
| | | |benchmark CAs’ working conditions on best practices |
| | | |in world-leading universities e.g. MIT, Harvard, and |
| | | |Oxford. |
|2 |Governance, leadership and |Weak leadership, management and governance |Setting up a global WORLDHERO 3E born-global firm, |
| |management |due to inefficiencies, underutilized |with mainly virtual presence and physical presence in|
| | |facilities, duplicative programmes, low |partner HEIs, special focus on strong institutional |
| | |staff-student ratios, allocation of large |leadership, management and governance, and a radical |
| | |share of budget to non-academic activities,|3E (entrepreneurship, enterprise, and employability |
| | |poor HE leadership development in strategic|education) ethos, which forces resource efficiencies,|
| | |planning, market research and advocacy, |mission-critical strategic planning, marketing, |
| | |research management, financial planning and|research management, financial planning and |
| | |management, HRM, performance management, |performance management; supported by research-based |
| | |and partnership building and networking |spin-offs and teaching companies which execute Triple|
| | |skills |Helix collaborations in relevant HE and commercial |
| | | |marketplaces. The WORLDHERO 3E simply expands current|
| | | |Afrihero offerings globally to other regions of the |
| | | |world. Hence, we will have Afrihero, Amerihero, |
| | | |Indiahero, Chinahero, Asiahero generally, and Mehero |
| | | |for Middle East. |
|3 |Problems of quality and |Mismatch between curricula and labour |With CAs that live in the class and streets where |
| |relevance |market requirements, education obsolete and|knowledge is directly applied to cogent societal |
| | |disconnected from the economy, |problems, disciplinary curricula are regularly |
| | |over-emphasis on theory and less on |renewed in line with changing labour market |
| | |practice and technical competencies, poor |requirements; case studies and mixed pedagogies are |
| | |generic, entrepreneurial, enterprise and |used to link theory to practice in all disciplines, |
| | |employability skills, and lack of effective|in a way that recognizes that every discipline is |
| | |national and continental research and |sufficiently ‘professional’ if taught the right way; |
| | |teaching excellence frameworks |fervent focus on 3E education imbued with radical |
| | | |RETLACCS innovations based on original research, best|
| | | |practices, and Triple Helix collaborations; |
| | | |condensing all these experiences into a Global |
| | | |Research and Teaching Excellence Framework (GLORETEF)|
| | | |adapted specially to an African Research and Teaching|
| | | |Excellence Framework (ARETEF), based on a |
| | | |meta-analysis of similar frameworks in UK, say, |
| | | |relevant HE and business performance league tables, |
| | | |Six-Sigma methodology, and excellence frameworks, |
| | | |such as the European Foundation for Quality |
| | | |Management (EFQM) |
|4 |Weak research and |Inadequate research facilities; poor |Training workshops on Translation Academics, which is|
| |innovation capacities |translation of knowledge to practice |a common trait of CAs and academic entrepreneurs; |
| | |through adaptation, innovation and problem |training on 3E skills (about 58 core skills) which |
| | |solving; slow expansion and development of |nurture adaptation, innovation and problem solving |
| | |innovative postgraduate programmes; low |mindsets among knowledge workers, see for e.g. the |
| | |impact of HE research on national |Skills for Students Graduates and Start-ups (SSGS) |
| | |innovation systems, productivity, and |programme of Afrihero (.uk); |
| | |‘dynamic university-industry linkages’ |addressing national economic and global sustainable |
| | | |development goals (SDGs) through innovative teaching |
| | | |of HE curricula, and Triple Helix collaborations (3E |
| | | |RETLACCS innovations) (Ezepue and Ojo, 2012) |
|5 |Financial austerity and |Lack of adequate finance, competing public |Operating entrepreneurially through 3E and |
| |lack of capacity for |service priorities; weak support from |value-adding RETLACCS innovations means that |
| |diversification |international community; need to diversify |academics, PG students and external |
| | |revenues, but very limited experience; poor|industry-government collaborators, can generate |
| | |competitiveness in knowledge generation and|enough funds and diversify their programmes, products|
| | |adaptation; poor integration in global |and services competitively and glocally; Capacitating|
| | |knowledge systems |academics with smart CA model-based PhD research |
| | | |supervision skills which turn PhD theses into |
| | | |born-global firms similar to Google, Amazon, Alibaba,|
| | | |SoftBank and Microsoft, for example – this amounts to|
| | | |a radical innovation in cutting-edge theoretical and |
| | | |applicable research, which mimics the Silicon Valley |
| | | |in the streets of Nigeria, Africa and developing |
| | | |countries. |
|6 |Poor physical facilities |Little or no infrastructure improvements in|Again, a CA model-based 3E education approach uses |
| |and infrastructure |the last few decades; widely deficient |the above strategies to generate sufficient funds to |
| | |learning infrastructure e.g. internet |improve the learning environment along all these |
| | |access, library, textbooks, equipment, |lines. For textbooks and research monographs, |
| | |laboratories |training Nigerian and African author syndicates by |
| | | |disciplinary clusters on the Afrihero STELLARTEXT © |
| | | |system for writing bestsellers and related ARETEF and|
| | | |GLORETEF motifs, will enable them to produce |
| | | |world-leading learning resources, with a good mixture|
| | | |of local and international examples and case studies.|
| | | |But this requires academics that operate the CA model|
| | | |and therefore have enough street wisdom to develop |
| | | |such texts, including laboratory manuals and library |
| | | |resources for specific disciplines. |
|7 |Inability to meet |Too many students seeking admissions |Researching and implementing signature RETLACCS |
| |increasing demand for |compared to available HE capacities; small |learning systems and strategies which work with large|
| |access and equity |graduate level (MSc and PhD) enrolments, |classes; creating a WORLDHERO 3E Research and |
| | |especially in core STEM and health fields |Enterprise University System which uses online |
| | |vital for science-based innovation and |programmes and modified Massively Open Online Courses|
| | |national competitiveness, with less than |(MOOCs) to roll out deep theory-deep praxis courses, |
| | |30% of Sub-Sahara African students in |certificates, UG and PG degrees, jointly awarded with|
| | |agriculture, health sciences and STEM |leading universities in Nigeria, Africa, and other |
| | |subjects |parts of the world; special focus on STEM subjects |
| | | |and quantitative business disciplines; with advanced |
| | | |studies institutes that catalyse cutting edge |
| | | |RETLACCS excellence in all HE offerings |
|8 |[Lack of entrepreneurial |Lack of innovative RETLACCS-focused BGFs |Driving WORLDHERO 3E-based collaborations and |
| |HE-Industry-Government |which directly link stakeholders in |national innovation systems through initiatives |
| |ecosystem] |academia, industry and government in |mentioned in Section 1 of this paper, for example the|
| |This row is added by the |creative problem solving and national |Centre for Advanced Research and Enterprise |
| |authors |socio-economic development |Development (CEfARED) in Nigeria; see also more |
| | | |details on research-based higher education ecosystem |
| | | |in the concluding parts of this paper |
As the notes in row 8 of Table 1 show, WORLDHERO 3E is a portmanteau case study BGF that is suitable for this paper, since it encompasses other research-based BGFs vital to Nigerian and African economic development. These BGFs include those mentioned in the introduction to this paper and some other ones indicated in column 3 of Table 1, namely a system of Doctoral Training Centres, cyber-mediated workshops on Translation Academics, 3E Research and Enterprise Universities, new kinds of CA-inspired MOOCs, integrated research and teaching excellence frameworks (GLORETEF and AREFTEF, for example), and Skills for Students Graduates and Start-Ups (SSGS).
Moreover, Ochinanwata and Ezepue (2015, 2016) stress that two key gaps in knowledge of BGF business model development in developing countries are: a) a need to use socio-culturally contextualised integrated business modelling principles in these contexts, and b) a lack of research-informed African e-market places that will replicate successes achieved by the likes of Google, Microsoft, Amazon and Alibaba in Nigeria, Africa and developing countries generally. These perspectives have not been researched in light of BGF dynamics, except in internationalisation-focused research. To cover the b) focus of these identified gaps in this paper, we use an additional case study BGF, , currently under development to explicate the selected BGF constructs alongside WORLDHERO 3E. The twin case study approach also straddles the academic and industry domains which CAs live in.
Conceptual framework for BGF new business development in developed and developing country contexts
Ezepue and Ochinanwata (2015) discuss in some detail a number of constructs and key conceptual frameworks commonly encountered in business development literature. These include strategic planning; business modelling and planning; BGFs, internationalisation, international new ventures (INVs) and integrated business modelling; e-commerce; web innovation, social media and business networks; new business development; dynamic capabilities; customer understanding; entrepreneurial orientation and PESTEL (political, economic, social, technological, environmental and legal) drivers of business success; flexibility and autonomy in new business development; innovation and adaptation characteristics of BGFs; theories of growth and profitability. These considerations are common to all types of businesses but have subtle differences in the way they are enacted in BGFs, because of the profound roles of the internet, e-commerce and use of social media in such firms, and consequent early and accelerated internationalisation of BGFs, compared to traditional firms (TFs).
In a conceptual paper such as this paper, it is infeasible to cover all these constructs in any meaningful detail. We therefore select some of them that more strongly underpin BGF business development practices, and discuss how they address the specific research questions posed in the introduction to the paper. In doing this we explicate related gaps in knowledge of a) differing characteristics of BGFs and TFs (RQ 1) and b) the non-existence of home-grown BGFs in Nigeria, Sub-Sahara Africa and similar developing countries and how to overcome it (RQ 2).
The selected constructs include BGF new business development; need for flexibility and autonomy in BGF new business development, BGF business model innovation; dynamic capabilities and BGF open collaboration. This choice of constructs is supported by Ezepue and Ochinanwata (2015)’s elucidation of a hierarchy of primary and auxiliary conceptual frameworks that embody their more detailed coverage of these ideas, namely: integrated business modelling, BGFs and cyber-mediated internationalisation, and e-commerce (for the primary conceptual frameworks); and entrepreneurial orientation, social and business network, innovation theory, and dynamic capabilities (for the auxiliary conceptual frameworks). Of course, as we explore these constructs in light of the two research questions (RQ 1 and 2), we use the other constructs as descriptive devices as appropriate. Future work on BGF business development in Nigeria and Sub-Sahara Africa will apply the fuller range of constructs enunciated in Ezepue and Ochinanwata (2015) to WORLDHERO 3E BGFs.
Explicating the selected constructs
Figure 1 depicts a conceptual framework for creating and capturing BGF opportunities in developed and developing countries perspectives. The constructs in the first two boxes on the left hand side are the most fundamental mechanisms for establishing BGFs in developed and developing country business environments.
[pic]
Figure 1: Characteristics of BGF in developed and developing countries (Source: the authors)
Dynamic capabilities (DCs) in BGFs new business development
Teece, Pisano, and Shuen (1997:516) define dynamic capabilities as ‘the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments”. Establishing BGFs requires resource-based and dynamic capabilities (Cavusgil and Knight, 2009; Chesbrough, 2007). BGFs acquire these types of resources through their founders' core competence that enable them to use internal and external resources from multiple partners. The core competence and knowledge of BGFs are not only from founders but also come from employees who are working with founders, especially where these employees behave entrepreneurially. This trait is better developed when students and graduates are trained on CA Model-based 3E pedagogies with a focus on deep problem-based learning, creative problem solving, and acquisition of entrepreneurship, enterprise and employability skills, Ezepue (2016). However, many new businesses in Sub-Sahara Africa lack this kind of education, for which reason 3E BGFs are fundamental in Nigeria, Africa, and developing countries.
Dynamic capabilities offer a rationale for expanding the current understanding of BGF new business development in developed and developing countries context. They allow firms to acquire tangible and intangible resources when establishing new firms and new business development; some of these resources are linked to competitive advantages which exist locally, nationally and regionally (Teece et al., 1997; Teece, 2007, 2014). Tangible resources include ICT facilities, stable high-speed internet, affordable energy, trained manpower, R & D resources, and existence of business platforms, for example knowledge exchange networks of conferences and workshops. Intangible resources include brand image, specialist experiences and skills for work available in an area, such as the talent pool in Silicon Valley which underpin US’s dominance in technology-based firms.
For example, to develop a WORLDHERO 3E Publishing BGF, we will need such capabilities as the expertise of academics, graduate students, and professionals in different countries and regions from which we convene Triple Helix author syndicates in respective disciplinary clusters. This will enable deep theoretical coverage of technical subject matter knowledge, which is continually enhanced with local and international case studies of innovative companies and real-life projects. These capabilities will be dynamically maintained with an army of graduate students who are trained CA-like in the art-science of blending theory and practice, through street stories researched from different sources, including cutting-edge journals, conference proceedings, surveys, news media and blogs, webinars, and professional magazines. This way, existing case studies are replaced with more up-to-date ones in different editions of texts and research monographs produced by CAs. For the Nigeria-African home-grown internet marketplace, , dynamic capabilities of similarly trained workforce will be used, including a ready pool of unemployed graduates who can handle website development, customer research, investment analysis, and marketing campaigns. Management will explore unique capabilities that locally accessible labour can provide and specific ways to motivate them to deliver superior performance in the different business functions.
As we mentioned elsewhere in this paper, it is important for individuals and entrepreneurs in developing countries, especially in Nigeria and Sub-Sahara Africa, to acquire dynamic capabilities by collaborating with international and local firms (Freeman, Edwards, and Schroder, 2006), rapid internationalisation (Ciravegna, Majano and Zhan, 2014; Zarei, Nasseri and Tajeddin, 2011), information and resource sharing (Palloti and Lomi, 2011; Gulati, 1999). Again, such collaborations are easier to structure through 3E knowledge platforms which link knowledge workers in different parts of the world through online forums, business and social networks, and multiple marketing platforms.
Networks enable firms to collaborate in other to achieve new business development (NBD), and it is important for firm growth (Gulati, 1999). However, collaboration may have advantage or disadvantage to collaborating firms, when the collaborating firms are not strategically similar or have conflicting interests and processes. BGFs collaborations are mainly enacted through the internet which enables strategic and operational interests to be digitally piloted at minimal costs to both firms. The extra functionality offered by such a BGF platform is the speed at which ideas are exchanged across the different collaborating entities using the platform as a ‘digital nervous system’ (Gates, 1999).
However, the above insights vary over time depending on the nature of a given business environment (Aldrich and Ruef, 2006). Location can also have a marked impact on the observed occurrence of important organisational behaviours (Johns, 2006); the Silicon Valley technology giants come to mind here. Environmental context influences how firms acquire resources and capabilities and choose innovative or adaptive strategies. Mowday and Sutton (1993) "describe context as consisting of constraints versus opportunities for behaviour, proximal versus distal stimuli, and similarity versus dissimilarity among organisational members" (cited in Johns, 2006:386). A WORLDHERO 3E Nigerian Centre for Advanced Research and Enterprise Development (CEfARED) will require community of disciplinary experts in great universities such as the University of Nigeria Nuskka, University of Ibadan, University of Lagos, and Obafemi Awolowo University Ile Ife, to be connected through strategic projects and joint research supervision, for example. Over time, the dynamic capabilities which the collaborators bring to the Centre will change as some retire and others come into prominence. Hence, a database of these experts should be maintained and grown and the members’ skills continually updated with cutting edge training, conferences, symposia and workshops. Similar considerations apply to the communities of senior management, staff, customers, and stakeholders who interact through the BGF.
Also, business environment determines whether entrepreneurs will choose to develop a novel offering or to enhance existing offerings. Kafouros et al. (2008) state that firms that operate in highly developed countries have more opportunity to innovate and internationalise their offerings, for example tech giants in Silicon Valley. Such enabling business environments help individuals and firms to learn from different business activities, and develop novel products and services (Filippetti, Frenz and Ietto-Gillies, 2011). This is not the case with developing countries, for example Nigeria and Sub-Saharan Africa generally, where most individuals are not exposed to international business activities. Therefore, there is need for policy-makers in developing countries to encourage and attract international enterprises to enable domestic companies to innovative and internationalise activities. This need is more directly served by the creation of home-grown BGFs like WORLDHERO 3E and , given their capacity to catalyse growth and create thousands of jobs.
Establishing BGFs in these types of environments needs to combine emergent and existing business strategies from developed countries (Ezepue and Ochinanwata, 2016). BGFs need to adopt emergent business strategies in highly dynamic environment, and align them to social cultural business environment, because it facilitates new products and markets development (Stalk and Hout, 1990). Copying or adopting innovative strategies could be harmful, if it is applied wrongly (Hansen and Birkinshaw, 2007). Therefore, there is a need for creativity when building BGFs in developing countries using innovative strategies from developed countries. For example, in adopting international best practices from the likes of Oxbridge, Warwick, Sheffield Hallam UK, Harvard, MIT, Yale, Princeton, Berkeley and Phoenix universities, WORLDHERO 3E must creatively adapt their offerings to the specific contexts of developing countries. This is the purpose of conducting detailed SWOT and PESTEL-based analyses, within a business model canvas that consists of nine standard elements which are explored in Osterwalder and Pigneur (2010). These elements are Key Partners, Key Activities, Value Propositions, Customer Relationships, Customer Segments, Key Resources, Channels, Cost Structure, and Revenue Streams (Ezepue and Ochinanwata, 2015, p. 83). We now explore the components of dynamic capabilities in the first left-hand box in Figure 1.
It is clear, for instance, that there are immense concentrations of entrepreneurial talent in Silicon Valley which are nurtured by such Ivy League US universities as Stanford, MIT, Harvard and Berkeley. The technology skills and innovation pools in the area are deep, same as financial resources provided by the technology giants (Google, Apple, Cisco, Facebook) who inhabit the Valley. This depth of innovations, novel and latent needs, as well as the Galapagos island of differentiated stakeholder needs is nurtured by an army of computer programmers, tech entrepreneurs, and customers in the Valley. This is the kind of entrepreneurial ecosystem envisaged in Nigeria and Sub-Sahara Africa, through the phalanx of WORLDHERO 3E BGFs indicated in this paper, a metaphorical e-Silicon Valley of boundary-crossing research, teaching, learning, assessment, consulting and community service (RETLACCS) innovators, who interact through the internet and in partner higher educational institutional, industry and government sites, in order to create world-class offerings that resolve challenging societal needs.
The constructs in the second box to the left are important for establishing such BGFs as WORKLDHERO 3E and in developing countries. This is because alternative offerings that satisfy the benefitting stakeholders in the countries are needed. Examples of these offerings are leading textbooks that use a balance of local and international examples and case studies, are affordable especially in easy to access electronic and hard copies, learning strategies and resources that are suitable for larger classes compared to developed countries. As this example shows, cost effectiveness is key to getting consumers of such BGFs to switch their loyalties from competing firms to the BGFs. When WORLDHERO 3E Research and Enterprise Universities use top-of-the range learning resources produced by glocal pools of expert academics and industry professionals who collaborate through the internet, at fractions of costs involved in attending traditional universities in departments that may be severely understaffed, they know they are benefiting from cost and quality advantages. The flexibility and convenience of online learning means that the students can combine work-based learning with continual skills training on the web and through intensive summer schools and webinars, in ways that are currently not implemented in traditional higher education in Nigeria, for example. This goal is more readily achieved if the WORLDHERO 3E academics and guest lecturers are first reskilled as CAs through intense training on core CA Model systems, including the enactment of disciplinary knowledge as entrepreneurship, enterprise, and employability (3E) education enablers.
The central box of elements in the figure is particularly crucial for establishing BGFs in developing countries. To successfully establish BGFs in Sub-Sahara Africa requires academics, professionals and entrepreneurs to engage in all forms of networks (Ochinanwata and Ezepue, 2016). This is because strategic networks are "stable interorganisational ties’ which are strategically important to participating firms (Gulati, Nohria, amd Zaheer, 2000:203). Take for example the proposed WORLDHERO 3E system of Research and Enterprise Universities – it requires networks of partner universities; academics and students; advanced research institutes; industry-relevant research groups; research consortia, which enable experts in cognate disciplines to collaborate across the HEI-industry-government divides; private sector organisations; government ministries, departments and agencies (MDAs); centres of entrepreneurial studies in higher educational institutions (HEIs), which are mandatory in Nigerian universities and polytechnics; benefitting customers, clients, stakeholders and funders; and alumni networks (see more details on this web of networks in Ezepue (2016, pp. 472-500).
Interactions amongst the eight faces of a business model which these stakeholders belong to (senior executives of companies and HEIs, intrapreneurs, entrepreneurs, investors, consultants, designers, conscientious social entrepreneurs, academics and students) are facilitated by a system of knowledge exchange platforms organised by WORLDHERO 3E, Ezepue and Ochinanwata (2015, p. 114). These platforms include advanced institutes, annual and biennial conferences, symposia and workshops, summer schools and skills retreats, roundtables, webinars, industry awareness studies and tours, leading journals and textbooks, Ezepue (2016). These networks of partners and platforms hinge on proactive team work among funders and founders of the BGFs, and generate economies of scale which are uncommon in traditional firms (TFs).
New business development in BGFs
Business development refers to the tasks and processes concerning analytical preparation of potential growth opportunities, the support and monitoring of the implementation of growth opportunities (Sorensen, 2012:26). Identifying business opportunity and entering new market is a core strategy for create long term-term advantage and profitable growth.
New business development and (NBD) and profitable growth depend on a firm's resource-base, and a SWOT (strengths, weaknesses, opportunities, and threats) analysis of those businesses (Kim and Mauborgne, 2015; Bogers, 2011; Chesbrough, 2007). Traditionally, forming strategic alliances with other companies is a way firms may achieve dynamic capabilities and profitable growth in new business development. This is more important for firms in developing countries that are eager to develop products and services that seek early international markets from inception. Beyond such traditional firms, BGFs are structured from inception to draw dynamic capabilities more flexibly from e-commerce platforms, social media, and web-based innovations than TFs. For example, to be successful in university-industry-government collaborations, African-based WORLDHERO 3E BGFs should form strong research, teaching and learning partnerships with all HEIs in Nigeria and Africa, professionals in different industry sectors which provide real-life projects, and government ministries, departments and agencies which fund and benefit from the skilled labour trained on such projects. A WORLDHERO 3E Publishing BGF could partner with established publishing firms in niche areas of innovative publishing that deliver superior customer benefits to academics, students and professionals in different parts of the world, in ways that established firms may not easily do.
Business development has received little attention in strategic management studies unlike other aspects of business strategies. However, its components include market expansion, product development, business diversification, and customer acquisition (Majocchi and Strange, 2012; Baldwin and Yan, 2012; Burgers et al 2008). Most business development activities fall under the four business growth strategies of Ansoff's product/market matrix, used by executives, senior managers and marketers: market penetration, product development, market development, and diversification (Ansoff', 1958; 1965). Clearly, the above mentioned nine elements of the business model canvas inform these growth strategies in a way that is sensitive to different customer segments.
Individuals and firms can create new businesses by continuously being open to new ideas, new people, and changes. Having multi-disciplinary team members are essential to BGFs' new business development. For example, Google is an internet giant search engine and its business model focuses on e-business, but the company has begun to develop a prototype of self-driving cars. To support the above point, flexibility literature argues the need to reposition businesses in a market with new strategies to meet new customer preferences (Sanchez and Mahoney 1996). Flexibility enables companies to satisfy existing customers' needs and develop new markets and products from customer preferences (Gibson and Birkinshaw, 2004; He and Wong, 2004). This is indeed how BGF achieve subsequent profitable growth and maintain competitive advantage overtime.
Consider for example WORLDHERO 3E PhD students supervised by carefully selected academics from different universities in Doctoral Training Centres. This access to pooled disciplinary expertise facilitates more deeply conceived, innovative, and big, hilarious and ambitious goal-directed (BHAG) topics, which single supervisors or relatively inexperienced ones in a particular institution cannot support the same way. For this, openness to new ideas happens naturally through coordinated meetings and research conferences amongst the collaborating supervisors and their PhD students, which are linked to enabling research consortia. For instance, Afrihero, the African arm of WORLDHERO 3E convenes a Nigerian Mathematics Finance Statistics and Economics Research Consortium (NIMFSERC), which supports a series of research methods conferences and the 1st International Symposium in Mathematical and Statistical Finance, held at the University of Ibadan, 1-3 September 2015, Ezepue (2016)
The NIMFSERC also groups academics in these fields into local Mathematical Sciences Research Groups (MSRGs) in different universities to enshrine a culture of multidisciplinary research collaborations (Ezepue, 2016, pp. 481-497). It is apposite that subsequent runs of the above mentioned symposium are themed to be one-week annual events entitled 1-Week International Symposium and Schools on Mathematics, Statistics, Computer Science, Finance, Finance, Economics and Business: Diversifying Nigerian and African Economies through Innovative Research and HEI-Industry-Government Collaborations. Alongside this annual knowledge exchange event is a two-week biennial training programme for reskilling academics and postgraduate students in translation academics, which is entitled 2-Week International Foundation Postgraduate Courses and Doctoral Colloquia in Mathematics, Statistics, Computer Science, Finance, Economics and Business: Exploring the Nexus Among Subject-Specific Research, Learning, Teaching, Challenging Societal problems, Innovative PhD Research Topics, and High-Impact Socio-Economic Development. These initiatives can easily be replicated across different disciplinary clusters, namely Arts and Humanities; Health and Social Care; Science, Technology, Engineering and Mathematics (STEM); and Social Sciences, Ezepue (2016, p. 436).
Flexibility is particularly required in managing agile BGFs given the dynamic nature of web-enabled business models which are subject to shifts in customer needs and sentiments. In other words, innovative frameworks for establishing BGFs such as explored in this paper must have in-built flexibility, present and disseminate ideas timely, react quickly to challenging problems which need research-based solutions, and provide training, staff development and consulting services to different clients and stakeholders in appropriate formats.
As mentioned elsewhere in this paper, to establish BGFs in developing countries requires an adaptation of tested strategies in developed countries to specific countries’ social cultural influences and business environments. Figure 2 below depicts BGFs’ new business development in developed and developing country contexts.
[pic]
Figure 2: A framework for BGF new business development in developed and developing countries context (Source: the authors)
The first two parts of the framework cover the business model elements that are applicable in new business development for traditional firms and BGFs, with a main focus on BGFs. Traditional firms mainly have their new business development within original industries they operate in, and they use their existing business model to manage the new companies. Because of this, the spin-off company will have less autonomy. This approach may restrict spin-off companies from achieving their growth potential because they lack sufficient control of their organisational culture and learning. BGFs typically take a different approach; they develop new businesses within new industry and original industry sectors they operate. Hence, they manage the new businesses with a new business model. Therefore, the spin-off companies have high autonomy which allows them to develop their own culture and leaning and succeed in diverse business environments. A simple example of this autonomy is the fact that new BGFs spun off from CA Model-inspired PhD research, conducted in WORLDHERO 3E affiliate universities and the proposed multidisciplinary Doctoral Training Centres (DTCs), are independently managed by a pool of supervisors, the PhD students and collaborating 3E industry professionals from different sectors of the economy in which the topics are enmeshed. These sectors include banking and financial services, energy (electricity, renewable energy, oil and gas), higher education (disciplinary research linked to the 3E foci and RETLACCS innovations), data science and e-commerce, business and finance generally, and STEM-based research and enterprise development.
Of particular importance for developing new businesses in developed and developing countries are the two sets of constructs in the lower half of Figure 2. Because firms in developed countries have high level resources and capabilities, they will be able to develop more novel products and services, in contrast to firms in developing countries that have low level resources and capabilities. These types of firms equally develop new offerings, but mainly focus on underserved and mass market.
More rationale for flexibility and autonomy in BGFs’ New Business Development (NBD)
A high degree of autonomy in new business development enhances the exploitation of existing and new knowledge by companies (Burgers, Bosch and Volberda, 2008; Söderquist, 2006; Schindehutte, Morris and Kuratko, 2000; Burgelman, 1985). This is even more important for BGFs that create diverse products and services in distinct industry such as high-tech industry, and specialised e-markets. Such BGFs can be spun-off from parent companies following which they use e-capabilities to more quickly develop their own culture based on the unique customer preferences they serve. This degree of autonomy is comparably lower in traditional firms (TFs) and higher in BGFs, therefore a parent company can also learn better strategies from the spin-off if the spin-off succeeds more than it expected and vice versa (Chesbrough, 2000; Sorrentino and Williams, 1995). Hence, traditional universities will learn to innovate their base offerings through partnerships with more innovative WORLD 3E BGFs engaged with cyber-mediated RETLACCS innovations to scales that are not known in traditional Nigerian and Sub-Sahara African universities. Similarly, through continual customer and client education, organisations that collaborate with will become increasingly innovative in their supply chains, product quality, cost and performance management.
Recent studies indicate that firms are likely to invest in market opportunities that are within the firms' knowledge and skills (Haynie et al., 2009; Hitt et al., 2011). BGFs may not follow this approach because they develop novel products and services for underserved markets and markets, for which it is simply easier to adapt existing offerings from developing countries. Diversifying into a new market is quite challenging but likely to yield superior performance and profitable growth due to reduced competition. In high technology industries, BGFs may need to adopt a differentiation strategy, because BGFs’ success depends on unique characteristics, recourse-base and dynamic capabilities (Tecce, 2007; Rialp et al., 2005; Knight and Cavusgil, 2004). In all, the extent to which BGFs apply different core competences depends on insights gleaned from detailed business modelling using the nine elements of the business model canvas (not pursued further in this paper), and the underpinning SWOT and PESTEL environmental scanning analyses.
BGF business innovation
Again, as depicted in the second left-hand box in Figure 1, and the second column of Figure 2, BGFs and TFs use inventing and reinventing strategies to create innovative products and services. These types of offerings include differentiation, low-costs, market expansion, underserved markets, latent needs, and switching costs. Inventing or reinventing of BGFs can be revolutionary or incremental. The incremental process is a way BGFs differentiate existing offerings in an industry by providing alternative products and services in a unique way. For example, Google is an internet giant search engine, but Facebook provides alternative search that enables individuals to search and identify friends and family around the globe, and it also enables people to search business information. These types of firms focus more on learning what customers want and adapting to changing business environments warranted by these needs and preferences. They perfect existing products and services that provide novel value propositions (Kumar et al 2000). For example, individuals and entrepreneurs in developing countries need to rethink how to create alternative and substitute products and services that already exist in developing countries, and contextualise the offerings to social cultural factors in their business environments, in order to effectively and efficiently satisfy unmet customer needs in those business environments. Recall the 3E examples provided above to this effect.
As part of their innovation strategies, BGFs create high-and-low switching costs in order to have edge over existing offerings (see column 1 of Figure 1). BGF switching costs rely on identifying what is missing in existing offerings in order to make them more affordable. This notion opposed traditional approach that usually discourages customers from switching to rival's product or service. For example, "many cellular phone carriers charge very high fees for cancelling a contract" in order to discourage customers from switching to more desirable products. However, high and low switching costs can occur in both TFs and BGFs.
Apple was not the first company that developed MP3 player, smart phone, and tablets, but Apple gained large market shares on smart phones and tablets by defining switching costs. Although BGF products and services are usually novel in meeting customer needs more conveniently through mobile and internet access, this insight shows that being first to market may not necessarily mean that a company will achieve long-term sustainability and profitable growth. From an evolutionary economics perspective, innovation strategies underpin organisational capabilities that give firms ability to create new knowledge (Teece, 2007; Nelson and Winter, 1982). The fascinating thing about BGFs is that they integrate their products with other companies’ products and services to offer customers a wide range of complementary offerings.
BGFs focus mainly on reinventing, switching costs, and innovation rather than adaptation. For example, WhatsApp messaging is somehow gradually replacing traditional SMS at much lower costs with better good customer experience. However, WhatsApp and SMS seem to be similar but are different on how customers use them. “Innovation is particularly the domain of entrepreneurs, whose function is to transform the patterns of production by exploiting an innovation or more generally an untried technological possibility for producing a new commodity or producing an old one in a new way, or by opening up a new outlet for products and so forth’’ (Schumpeter, 1942 cited in Knight and Cavusgil, 2004:126).
Further perspectives on BGF open collaboration
Strategic alliance encompasses a diversity of collaborative forms: supplier-buyer partnership, outsourcing agreements, technical collaboration, joint research projects, shared new product development, shared manufacturing agreements, cross-selling arrangements, and franchising (Grant and Baden-Fuller, 2004). These forms of partnership enable BGFs and new ventures to acquire all types of resources from existing firms and achieve their goals within a short time. BGF collaborations can take shape in different dimensions as illustrate in Figure 3 below. External resource and collaboration can increase firm’s internal capabilities (Capron and Mitchel, 2009; Chesbrough, 2000). However, it can create negative impact if collaborating partners do not contribute adequate resources as agreed (Teece, 2014).
Based on the above insights, technological capabilities may no longer be a barrier for establishing BGFs and international new ventures (INVs) in developing countries, like Nigeria and Sub-Sahara African countries, because they can benefit from other companies’ resources to achieve their goals. Collaboration is needed in all types of companies because firms possess different capabilities; it therefore offers firms competitive advantage which they do not have initially (Freeman, Edwards, and Schroder, 2006). Think, for instance, about how different academics and students acquire new skills sets from their 3E collaborators.
Figure 3 below depicts how BGFs and other innovative firms can take advantage of each other’s resources. A, B, C and D in the figure represent different companies. This is more important for firms in developing countries that have unique value propositions, but do not have either financial or technology capabilities to develop such products and services. For example, company A might have advanced technologies and strong research and development (R&D) team, but needs novel value propositions (latent ideas) from company B to provide customers unmet needs. These insights are more important in developing countries, where most of new businesses suffer a “liability of newness during the first year of establishment (Bruderl and Schussler 1990; Freeman et al 1983; Stinchombe, 1965).
The above A, B, C and D companies will struggle to achieve their goals without having all the above capabilities in each company. BGFs and many great companies succeed by using external and internal of other companies’ capabilities. Collaboration creates locus of innovation both on high-and-low-technology industries (Bogers, 2011), facilitates organisational learning (Freeman, Edwards, and Schroder, 2006; Grant and Baden-Fuller, 2004), enhances economic performance and cost sharing (Ozcan and Eisenhardt, 2009). It reduces the cost of conducting research and development (R&D), and maximises the potential for improvement in productivity, and synergy between internal and external innovations (Bogers, 2011). These types of collaborations enable BGFs to use external and internal ideas to create and improve their offerings. BGFs collaborate with many companies that have different capabilities such as manufactures, service providers, and technological advancement companies. For example, Google is using different auto companies to develop its self-driving car; these include the Toyota Prius and Lexus, the Audi TT, and equipment from Bosch and ZF Lenksysteme, which are assembled by Roush Enterprise.
[pic]
Figure 3. Characteristics of BGF open collaboration (Source: Authors)
These types of collaboration are more important in Africa and similar developing countries to enable individuals and entrepreneurs acquire tangible and intangible resources to establish BGFs and INVs. Studies have shown that foreign co-ownership in African based-firm develop products and services that internationalise more successfully, compared to those firms without foreign co-ownership and investment (Abor et al., 2008; Grenier et al., 1999). Moreover, technologies transferred from foreign companies enable African firms to develop and internationalise their offerings (Rankin, 2004; Roberts and Thoburn, 2003). It has been suggested that entrepreneurs in in many developing countries lack the capability to establish business networks, which limits them from taking advantage of globalisation and international business opportunities (Ochinanwata and Ezepue, 2016).
Summary of hypothetical BGF characteristics and case applications
In this section, we summarise those characteristics of BGFs that recommend them highly for development in Nigeria and similar developing countries, especially those in Sub-Sahara Africa. The summary of comparative BGF and TF characteristics is drawn from Ezepue and Ochinanwata (2015), Table 2.3, pp. 44-46, and is presented in Table 2 below. Column 3 of the table recalls the BGF characteristics we discussed in our case study BGFs (WORLDHERO 3E and ) in this paper. These insights answer to the RQ 1 on defining BGF characteristics and support future research on related BGFs following this paper.
|Functions of business |Traditional Firms (TFs) |Born-Global Firms (BGFs) |
| | | |
|Business planning |Formal business planning |Emergent business planning which track dynamic changes in |
| |More holistic planning |customer preferences through real-time feedback loops |
|Business model |Waterfall business model |Multiple-sided business models |
| |One size fit all (one business model for |Long tail business model |
| |different unrelated products and services) |Integrated business model covering 9 elements of the |
| |Incremental business model |business model canvas |
| |Reinventing business model |Provisional (trial and error) business model |
| | |Testing and validating |
| | |Innovation business models |
| | |Highly flexible business models |
| |Domestic and regional customer focus |Global customer focus |
|Customer focus |Enhancing existing value proposition |Differentiation (leading edge technological products) |
| |Differentiation |Separate CRM for every segments |
| |One CRM for every segments | |
|Products and Services |Develop products and services merely on |Develop products and services from customers’ expectation |
|Development |assumption |Niche products |
| |Mass markets |Mass markets |
| |products and markets perfection |Novel products and market |
| |Single market at a time |Products and services customised |
| |Less sophisticated market | |
|Entrepreneurship orientation |Entrepreneurial orientation |International entrepreneurial orientation |
| |Domestic markets mind-set |International markets mind-set |
| |Non-risk taking (focus in domestic markets) |Risk taking (focus in domestic and international markets) |
| |Experience management team |Experience in different markets environments |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|Networking Capability |Limited network |High level of information and communication |
| |use of social and business networks |More active use of social and business network |
|Channel |Less distribution channels |Leveraging many distribution channels in different countries|
|Innovation |Incremental innovation |Breakthrough innovation |
| |Adapting existing practice |Radical innovation |
| |Replication products and services |Investment in advance technology |
| |Investment in various technology | |
| | | |
|Capabilities | High tangible and low intangible resources |High tangible and intangible resources |
| |Team members’ collaboration |Strong innovative culture |
| | |Team member collaboration |
| | |Unique knowledge and background |
|Marketing and branding |Single marketing activities |Integrating of key marketing activities |
| |Late web presence |Early web presence |
| |Brand relevance |Brand relevance |
| |Marketing only products and services |Brand preferences |
| |Corporate social responsibility (CSR) |Marketing category and subcategory |
| |Focus on few P of marketing mix |Marketing education |
| | |Focus on entire 7p of marketing mix |
|e-commerce |Use for exchange goods and services |Use for exchange goods and services |
| |To engage and acquire customer |Use for innovative activities to develop and modify products|
| |To meet customers' needs |and services |
| |Competitive advantage |To engage and acquire customer |
| |Taking advantage of domestic market |To meet customers' needs |
| | |Competitive advantage |
| | |Global markets advantage |
|Profitable growth |Stages of growth process |Pursue growth and profits simultaneously |
| |Linear growth patterns |pursue profitable growth in different industry |
| |Pursuing either growth first then profits |Pursue large market share in different countries |
| |Pursue large market share in home countries, or | |
| |nearby countries | |
| | | |
|New business development |Novel products and services |Novel products and services |
| |Systematically approach |Latent needs |
| |Enhance or improve existing products and services|Flexibility |
| |Less or non-autonomy on new products and services|Enhance existing products and services |
| |Steak on conventional business line and industry |Complement existing products and services |
| | |Early market leadership |
| | |High degree autonomy on non-related new products and |
| | |services |
| | |Diversifying into new industries |
|Internationalisation |Gradual process by targeting one market at a time|Rapid internalisation by targeting numerous countries |
| | |simultaneously |
| |Engage with nearby geographical markets |Engaging with different distribution channels globally |
| |Direct selling (through internet) |Direct selling (through internet) |
Table 2: Differences and similarities between BGFs and TFs (Source: the author)
Conclusion and policy implications
This paper explored the process of creating BGF business opportunities in developed and developing country contexts with a special focus on Nigeria, Sub-Sahara Africa and developing countries, which lack home-grown BGFs like google, Apple, Facebook, Alibaba, and Microsoft. The two main questions (RQs) explored in the paper are: 1) what are the characteristics of born-global firms in developed countries? 2) How can these characteristics be replicated in developing countries?
The paper reviewed the key BGF business development constructs and proposed three important conceptual frameworks that bring these constructs together. Examples of these constructs are business development, innovation, dynamic capabilities, and collaboration. Given the relative lack of BGFs in developing countries as opposed to developed countries, the study offers new insights on how individuals and entrepreneurs can approach BGF business development in their various location, most in developing countries. Pertinent developing country perspectives which motivate the paper were examined in Section 2 using Nigeria and Sub-Sahara Africa as focal points. These perspectives justified our choice of WORLFHEERO 3E and as illustrative case studies for explicating selected BGF constructs.
Using Figure 1, the paper discussed useful strategies for developing market opportunities in the early and subsequent stages of BGFs. These strategies include: dynamic capabilities (entrepreneurial orientation, technology, financial resources, novel and latent needs, differentiation); creating BGFs through innovation (alternative and substitute offerings, switching costs, products and services integration); collaboration (network, team work, partnership, funder and founder collaboration and economies of scale).
The combined strategies from Figures 1 and 2 and Table 2 above which summarises the differentiating characteristics of traditional firms versus BGFs, show how BGF business development strategies could be adopt in developed versus developing countries contexts. For example, BGFs in developed countries could focus attention on niche products and services with breakthrough innovation, whilst those in developing countries, because of limited resources and capabilities, focus on undeserved and mass markets, which will not require high level resources and capabilities. Additionally, Figure 3 illustrates how firms can collaborate with others to use external resources from those companies to achieve their goals and missions. Also, the paper applied these BGF insights to chosen case study BGFs in higher education and business – WORLDHERO 3E and . Finally, in a more direct answer to RQ1 on BGF characteristics, the paper summarised these key characteristics in column 3 of Table 2.
This is the first time these four conceptual frameworks have been explored in this way in order to elucidate the strategies and entrepreneurial capabilities for successfully establishing and growing BGFs in developed and developing countries context, with a main focus on Nigeria and Sub-Sahara Africa. The paper particularly discussed how individuals and entrepreneurs can develop these capabilities, since a company’s innovative potential depends on employees’ imagination, intelligence and creativity (Ucbasaran and Newy, 2009; Mumford 2000; Zahra; Kanter, 1989). Again, developing these capabilities will enable entrepreneurs and firms to achieve both radical and incremental innovation in developing countries. Follow-on studies will use these ideas in key industry sectors in an economy, for example higher education, banking and finance, healthcare system, and for public sector services innovations in developing countries (Ezepue and Ochnanwata, 2015; Ezepue, 2016).
Policy implications for realising innovative research-based higher education ecosystems in Nigeria, Sub-Sahara Africa and the global South
Firstly, we recall in Table 3 below the suite of WORLDHERO 3E BGFs which will work in concert to rejuvenate higher education through RETLACCS innovations which are based on the corporate academic model of work.
|No. |WORLDHERO 3E BGF |Remits |
|1 |Worldhero 3E Corporation (parent BGF) |Houses all the BGFs mentioned in this paper and devoted to research, teaching, |
| | |learning, assessments, consulting, and community service (RETLACCS) innovations; |
| | |consists of Afrihero (.uk), , Amerihero, |
| | |Mehero, Indiahero, Chinahero, Asiahero, , all of which are |
| | |glocal 3E platforms that manage 3E activities in different regions of the world; |
| | |powered by a different model of academic work (the Corporate Academic Model) |
| | |which actively translates HE research to BGFs |
|2 | |The Alibaba | Aamzon of Africa |
|3 |Skills for Students, Graduates and |Devoted to disseminating 3E and a range of global graduate skills to indicated |
| |Start-ups (SSGS) |beneficiaries |
|4 |3E Energy Research and Consulting |Uses research results to address globally challenging energy mix problems in |
| | |Nigeria, Sub-Sahara Africa mainly |
|5 |Global Strategic Services and Training |The McKinsey equivalent of 3E strategy consulting which uses an Integrated |
| |(Glosstra) glosstra.co.uk |Strategic Problem Solving Model © explored in Ezepue and Ojo (2012); see further |
| | |notes below |
|6 |3E Research and Enterprise Development |Uses 3E SIMFIM PhD research works on digital banking, bank financial and risk |
| |Banks |management, e-commerce, data science and customer data modelling and predictive |
| | |analytics, and fintechs to innovate current banking mandates with a focus on SMEs|
| | |and sustainable business development |
|7 |3E Capital Management |Uses 3E SIMFIM research in mathematical finance, systematic stock market |
| | |characterization and development (SSMCD), business analysis, data science, and |
| | |their applications in finance, insurance, economics, banking and business (FIEBB)|
| | |to run deep value-based investment analysis and financial advising |
|8 |3E Centre for Advanced Research and |A global centre which intensely applies 3E SIMFIM research and syndicated Triple |
| |Enterprise Development (CEfARED) |Helix multidisciplinary research collaborations to create BGFs, in line with the |
| | |research philosophy that converts almost all PhD research structured and |
| | |implemented with CA Model tools into winning BGFs |
|9 |3E Glocal Publishing |A uniquely innovative publishing BGF which is cyber-mediated, focused therefore |
| | |on online publishing, and fervently devoted to the creation of world-leading 3E |
| | |learning resources, textbooks, super-books, enabling consulting, frameworks, and |
| | |world systems reports, with an optimal mixture of global and local case studies, |
| | |and illuminating street stories, and immersed in emerging RELTACCS realities and |
| | |innovations in the world |
|10 |3E Global Tuition and Research Support |An innovative (PhD) research supervision process driven by CA Model structures, |
| |Services (GLOTRESS), .uk |including a Corporate Academic Research Structuring System (CARESS ©) which |
| | |produces deep-value topics that are actionable as BGFs post-completion, and a |
| | |suite of fast-publishing tools for generating a rolling miasma of A* academic and|
| | |practitioner focused publications from the research results; the online GLOTRESS |
| | |disseminates best practices in the face-to-face supervision and support to |
| | |globally to prospective students in key 3E SIMFIM and cognate disciplines; the |
| | |system is cascaded to other disciplinary clusters through a train-the-trainer |
| | |initiative which reskills academics in the GLOTRESS tools |
|11 |3E Nigerian Mathematics Finance Statistics |The first multidisciplinary research consortium of this kind in Africa, |
| |and Economics Research Consortium |instantiated as a model that will catalyze related Triple Helix collaborations |
| |(NIMFSERC), part of a global 3E Centre for |among contributing academics; the NIMFERC’s focus on challenging problems in |
| |Mathematical Modelling as Applied to |banking and financial services industry sector will be replicated across other |
| |Finance, Insurance, Economics, Banking and |disciplinary clusters and focused on similar subject matter and global |
| |Business (CEMMASFIEBB), |sustainable development goals (SDGs), including national socio-economic |
| |.uk; glosstra.co.uk |development problems; see the mission statements of .uk and |
| | |glosstra.co.uk. |
|12 |3E Research and Enterprise Development |An open university system which disseminates all RETLACCS works summarized in |
| |University System |this paper across the world, with a coordinating online presence, and myriad 3E |
| | |partner universities in different parts of the world. The online core of the |
| | |system is called , a BGF |
|13 |3E Doctoral Training Centres (DTCs) |A system of BG DTCs which uses pooled Triple Helix research and professional |
| | |expertise to train new kinds of CA Model-based PhDs described above; these |
| | |centres are coordinated by our International 3E RED University and |
| | |, and supported by a phalanx of 3E RETLACCS events described |
| | |below |
|14 |3E RETLACCS Knowledge Exchange Events |A suite of annual and biennial Triple Helix events – conferences, symposia, |
| | |workshops, roundtables, roadshows, industry-focused studies and trend analyses, |
| | |with continual stakeholder surveys, aimed at intense capacity building in |
| | |RETLACCS capabilities which are directly moored to global SDGs, and national |
| | |economic development agenda |
|15 |3E Global Research and Teaching Excellence |An innovative research excellence framework which integrates best practices in |
| |Framework (GLORETEF) and Related Training |national REF frameworks (e.g. UK REF), teaching excellence frameworks (TEF), |
| |Programmes |business school league tables, national student surveys, and 3E CARESS © |
| | |structures for writing A* publications, and develops accompanying training |
| | |programmes for preparing academics in different climes to use it proficiently. An|
| | |example is the African Research and Teaching Excellence Framework (ARETEF ©). |
|16 |3E World Journals |A range of 15 plus 3E World Journals in all areas of 3E SIMFIM research, |
| | |augmented by leading multidisciplinary boundary-crossing ones, which are run with|
| | |the most value-adding reviews and contribution to knowledge criteria ever used in|
| | |any journal in the world, thereby enabling the journals to manifest inimitable CA|
| | |Mode-based ethos |
|17 |3E Secondary Further Higher Education Links|A kaleidoscope of bottom-up educational development initiatives which capacitates|
| |(3E SFHE Links) |secondary schools and further education training with international quality, |
| | |based mainly on innovative teacher development, curriculum improvements and |
| | |tuition support; an example is a 3E Gold Standard Mathematics Tuition which |
| | |prepares UK and international students for GSCE (O and A level) exams, and |
| | |related qualifications globally. |
|18 |3E Statistics Information Modelling and |The central international research programme led 3E experts in the UK, which |
| |Financial Mathematics Research Programmes |underpins the above initiatives |
| |(3E SIMFIM Research) | |
|19 |3E Economic and Social Development |The socio-political and economic advocacy programme which mobilizes global 3E |
| |Movements |citizenship for active civic engagement with their governments aimed at |
| | |fast-tracking socio-economic development agenda of the different countries; |
| | |specific examples are Nigerian Economic and Social Development Movement (NESDEM),|
| | |with plans to franchise similar movements in Ghana (GESDEM), and other Sub-Sahara|
| | |African countries |
Table 3: Indicative WORLDHERO 3E BGFs which underpin a research-based ecosystem for Nigeria and Sub-Sahara Africa (and globally)
The above notes convey our deep commitment to using 3E structures and knowledge platforms to enunciate a pervasively innovative and research-led entrepreneurial ecosystem in Nigeria, Sub-Sahara Africa and the global South, mainly. As noted in Ezepue (2016), the following guiding principles support this ecosystem build.
A vignette on entrepreneurial ecosystem and social innovation (adapted from Ezepue, 2016, pp. 471-473
In this section, we suggest the following entrepreneurship activities which require further work currently in Nigeria and Sub-Sahara Africa.
• Mounting internationally-leading graduate programmes (MSc up to PhD) in Academic and Practical Entrepreneurship, which enable the graduates to deeply understand the theories (core masteries) of entrepreneurship, and their practical use in creating entrepreneurial firms that address the core socio-economic goals of Nigeria, Sub-Sahara African and developing countries generally;
• Extending to other disciplines an innovative PhD topic on Entrepreneurship co-supervised by one of the authors and Professor Udo of the University of Uyo, Nigeria – The Pedagogy and Practice of Real Estate Management in Nigeria: Entrepreneurial Perspectives. Similarly extending to other disciplines a related topic, Pathways for Embedding Entrepreneurship, Enterprise and Employability Education in Hospitality and Tourism Discipline in Ghana, which is currently in play at the time of writing this paper;
• Designing flagship 3E Graduate Research Programmes in Entrepreneurship, Enterprise and Employability Education, with marching undergraduate spines which will be benchmarked against renowned programmes in the UK and US (Fetters et al., 2010), but deepened with perspectives from the Integrated Business Modelling and Operating Plans, which is the PhD topic of the second author supervised by the first author (2013-2017); this research provides enabling Integrated Business Model Templates and Operating Plans (IBMTOPs) which convert graduate research topics to value-adding BGFs;
• Running an annual series of workshops and public lectures on the topic Secrets of the Masters: Model-Based Development of Academics, Graduates and Professionals as Entrepreneurs in 3E partner higher educational institutions and Triple Helix organisations, aimed at diffusing emerging insights from these 3E initiatives glocally around the world;
We present the following guiding principles for establishing the type of University-Industry-Government Entrepreneurial Ecosystems discussed in this paper.
Guiding principles for developing University-Industry-Government Entrepreneurial Ecosystems
1. Involve senior leadership such as Deans and Directors of Centres as Programme Sponsors
2. Link the initiatives to strong teaching, research and outreach foci
3. Enable academics with different professional persuasions to contribute to the success of the programmes. For example, allow those with mainly disciplinary research interests to work together with those with wider entrepreneurial innovation interests to work on projects so that the projects have a balanced research, pedagogical and entrepreneurial look
4. Ensure that there is a sustained commitment of the programmes over a long period of time. This is particularly achieved via innovative graduate programmes that face down challenging stakeholder projects across the Triple Helix of Academia, Industry and Government
5. Commit substantial financial resources to the programmes through a combination of funding across the Triple Helix
6. Again, there must be a profound commitment of the programmes to related curriculum innovations. An example I emphasised in the lecture is the establishment of GLAF-IBMT University-Industry Institutes for Curriculum and Research Innovations in Different Disciplines
7. Use appropriate organisational structure and infrastructure to connect the programmes to key disciplines, centres, and institutes
8. Start with programmes with clearly defined innovation and practical outcomes relevant to institutional and stakeholder priorities for departments, faculties, centres, institutes, and wider Triple Helix stakeholders.
Facilitating research-teaching excellence, engaged scholarship and high-impact socio-economic development in Nigeria, Sub-Sahara Africa and the Global South
We list below other areas of work which the sense of integral RETLACCS excellence envisaged in this paper provokes:
• Using modern tools and techniques (cyber-mediated mobile technologies, social networks, for example) to enhance Social Innovation in HEIs and other national ecosystems, including the links with cybernetics, socio-cultural knowledge production systems, public choice theory, and smart heuristics;
• Using ICT tools to enhance the value chains that dominate key sectors of an economy, in order to enhance the productive capacities and competitiveness of the economy;
• Using IBMT-type integrated modelling to spin out highly innovative BGFs that catalyse wide increases in graduate and youth employment;
• As mentioned above, working collaboratively to deepen the entrepreneurial offerings of HEIs, thereby making the Centres for Entrepreneurial Studies in Nigerian universities and polytechnics more effective and value-adding in Entrepreneurship, Enterprise and Employability Education (3Es);
• Quality Assurance and Professional Standards in higher education which are moored to 3E tenets;
• Linking these developments effectively to requisite curriculum and research capacity innovations, in order to enhance the ‘carrying capacity’ of these programmes for supporting the developments.
Social innovation includes the use of the internet and emerging scientific and ICT tools to enhance societal wellbeing and economic development. Examples include the use of drones to drop vitally needed medicines to remote and inaccessible areas in war-torn regions, the use of drones to facilitate the shepherding of sheep by farmers across parts of a farm that are too rugged for the farmer to lead sheep dogs through, for instance. The general idea is for us as academics to think creatively about how our research results should facilitate myriad social innovations in different sectors of an economy, and government ministries, departments and agencies (MDAs). These innovations in 3E RETLACCS works will connect such works to the pulse of individual, organisational and societal needs. These instincts can be honed much better in an integrated corporate academic, as opposed to a traditional, approach to academic work.
We summarise below additional perspectives on entrepreneurial ecosystems which we gather from the 29th Annual Small Enterprise Association of Australia & New Zealand (SEAANZ) Conference, held in Melbourne Australia, 10-12 August 2016.
|No. |Topic and constructs |Links to 3E ecosystems |
|1 |Sujana Adapa and John Rice: Elements of Entrepreneurial Ecosystems: Accounting |Apply these perspectives to 3E BGFs and |
| |Firms in India: |ecosystem engagements, including firms key |
| | |sectors of national economies of Nigeria and|
| |Individual, societal, institutional and cultural factors linked to |Sub-Sahara African countries |
| |Education and training, organizational culture, funding availability, support | |
| |networks, social networks, and gender perspectives | |
|2 |Stuart Carr: Entrepreneurial Ecosystems and Effective Business Models: How |Apply related insights to case studies of 3E|
| |successful SMEs gain leverage: |ventures and other firms as in 1 above |
| | | |
| |Business model innovation and innovation-led growth | |
| |Case studies linked to fostering local manufacturing in Australia | |
|3 |Chamindka Weerakoon and Sarath S. Kodithwakku: Intellectual communities in |Adapt the ideas to 3E intellectual |
| |entrepreneurial ecosystems: a citation analysis: |communities and their impact on |
| | |research-based entrepreneurial ecosystems, |
| |Covered eight key intellectual specialties which underpin entrepreneurial |for example NIMFSERC, 3E Global Research |
| |ecosystems, namely: dynamic capabilities, value co-creation, co-evolution and |Institutes, 3E Research and Enterprise |
| |appropriation, entrepreneurial ecosystem and regional competitiveness, strategic |University, and 3E Model Training Institutes|
| |thinking and foresight in business ecosystem and environmental sustainability, | |
| |regional innovation policy and innovation ecosystem of firms | |
|4 |Sukanlaya Swang and Rebecca Langdon: What does happen when entrepreneurs do not |Relevant for further work on our 3E Graduate|
| |have entrepreneurial traits? |Skills Inventory, especially in developing |
| | |3E skills among individuals and firms |
| |Business outcomes and their links with autonomy and entrepreneurial wellbeing | |
| |Also links with entrepreneurial mindset, entrepreneurial orientation (EO) which is| |
| |a firm-level construct and individual entrepreneurial orientation (IEO) which is | |
| |an individual-level construct | |
|5 |Lara Jelenc and John Pisapia: Strategic thinking capability and entrepreneurial |Provokes radical thinking about how to |
| |attitude orientation: Links and relations |reverse the seemingly low impact of higher |
| | |education on national socio-economic |
| |Innovation mindset, personal, self-esteem and achievement (EO) |development and 3E orientations of |
| |Reframing, reflecting, and systems thinking (Strategic thinking capability) – |individuals and firms |
| |systems thinking seems to explain the largest part of the EO-outcome variance | |
| |[reflecting the importance of wisdom of crowds and the general cultural literacy |Warrants, therefore, advocacy programmes |
| |(GCL) aspects of the CA model in driving EO and IEO, perhaps?] |which engender more meaningful and |
| |Need for enabling education and training policies which enhance EO and IEO |high-impact HE, that blends following range |
| | |of ideas in optimizing the taste of the soup|
| | |(a CA’s life chances: |
| | | |
| | |The CA model itself |
| | |Deep structuring of street-actionable |
| | |graduate research topics |
| | |Capacity for meta-attendance of conferences |
| | |via systematic deconstructions of the |
| | |entailments of the key ideas in the |
| | |abstracts and papers for a CA’s research and|
| | |enterprise development agenda, without |
| | |having to sit into all the presentations |
| | |More effective translation of research |
| | |knowledge to real-life projects and BGFs |
| | |Reversing the increasingly negative |
| | |perception of non-productive academic work |
| | |which focuses attention more on mere |
| | |publication of papers, as puerile game |
| | |playing, a game in which academics are |
| | |‘victims’ of a system that fails to balance |
| | |the priorities of the professoriate across |
| | |all key RETLACCS domains |
|6 |Rajendra Adhikari et al.: Creating regional Australia’s future: development of a |Adapt the insights to 3E CEDs relevant to |
| |community entrepreneurship development (CED) framework |different industry sectors, as classified by|
| | |the Nigerian Stock Exchange, and across |
| |For specific sector, agricultural (wine-producing) communities of the Barossa |states and zones in Nigeria, for example |
| |Valley in South Australia | |
| |Links with regional development and economic competitiveness | |
Table 4: Research directions in 3E ecosystem builds for Nigeria, Sub-Sahara Africa and the Global South
Finally, Columns 3 of Tables 2, 3 and 4 above furnish an agenda of future research on born-global business and ecosystem development in Nigeria, Sub-Sahara Africa and the Global South. The envisaged research will explore the theory, research, practice and pedagogical merits of 3E BGF development in the form of case studies and learning resources for training academics, students and professionals as CAs.
Acknowledgments
The authors are grateful to anonymous reviewers whose comments improve the readability of this paper.
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Platform business model constructs: Fostering innovative born-global firms in Sub-Sahara Africa
Nonso OCHINANWATA & Patrick Oseloka EZEPUE
Statistics Information Modelling and Financial Mathematics Research Group, Sheffield Hallam University, UK
Tel : +447446823469 ; Email : hyginus.H.ochinanwata@student.shu.ac.uk
Tel : +447772632150 ; Email : p.ezepue@shu.ac.uk
Abstract
This paper explores the characteristics of platform business models, with a main focus on buyer and seller platforms. A buyer and seller platform is technology that creates value primarily by enabling direct interactions between two or more customers to transact business in a virtual marketplace. The paper discusses the creation of platform business enterprises in Sub-Saharan Africa, and how it will help entrepreneurs, start-ups, and existing SMEs to take advantage of e-commerce in order to connect sellers, consumers and stakeholders in international markets. The paper explicates relationships among e-commerce, platform, business and social network ides which support the development of innovative born-global firms (BGFs). It therefore proposes a platform design canvas that will enable individuals and entrepreneurs to develop platform enterprises in different sectors of an economy. For example, platform that creates new enterprises, and platform that foster existing products and services. The proposed platform design canvas is explained with selected examples of BGFs in higher education and e-commerce in Nigeria and Africa.
Keywords: Platform enterprise, business model, born-global firms, e-commerce, network effects, Nigeria, Sub-Sahara Africa
Related conference topics: International and Global Business | Economics; Entrepreneurship and Small Business Management
Introduction
According to Merriam-Webster online dictionary, a platform is “a flat surface that is raised higher than the floor or ground and that people stand on when performing or speaking” “A platform is a good or system providing a technological architecture that allows different types of users and complementary business partners (often called “complementors) to connect and benefit from the platform’s base functionality” (Suarez and Jacqueline Kirtley, 2012: 36). Platforms are multisided networks that bring together two or more distinct types of users and facilitate transaction among them.
Born-global firms (BGFS) are designed from inception to become global, using the internet as key distribution channel for their offerings, unlike traditional firms (TFs) which may internationalize later as they evolve future strategies. Some examples of BGF platform enterprise include eBay, Priceline Alibaba, Taoboa, Amazon, Microsoft, Facebook, Alibaba, Google, Apple, Uber, LinkedIn, Facebook, Airbnb, PayPal and eBay. Several authors have used different labels to describe the above mentioned platform enterprises, which include transaction, innovation, integrated and investment platforms (Evans and Gawer, 2016), transaction, infrastructure, and network and content platforms (Ochinanwata and Ezepue, 2016), buyers and sellers, advertisers, application developers and users, merchants and consumers, and shopping mall platforms (Hagiu, 2014). According to Evans and Gawer (2016:4), “Enterprises that leverage the power of platform business models have grown dramatically in size and scale over the past decade. Platform companies contribute importantly to the economy. They have driven up productivity in multiple ways”. Platform ecosystems are gaining ground through the digitalization of products, services and business processes and in the process are reshaping the global landscape”.
In spite of the benefits of platform enterprise to economic development in developed countries and emerging economies (for example job creation, convenience, and lower costs), less attention has been paid to the establishment of platform enterprise in sub-Saharan African countries. The lack of platform development in Africa has limited internationalization and globalization of African firms. In other words, African firms are struggling to have their products and services in international markets, because there are no channels to connect sellers, buyers and consumers with international markets. Hence, this paper fills the gaps in knowledge based on inadequate of channels that connect Africa firms to international markets. The paper is focused on integrated buyer-seller and stakeholder transaction platform enterprises (Hagiu, 2014; Ochinawata and Ezepue, 2016; Evans and Gawer, 2016). It emphasizes how these platforms facilitate early internationalization and rapid entrepreneurship development in Africa through platform BGFs.
The research methodology adopted in the paper is a conceptual review of enabling platform enterprise constructs and use of two boundary-crossing examples to illustrate how the constructs can be applied in Africa. These two case studies are a higher education platform, , and an e-commerce platform, . is designed to pool existing expertise in the core higher education business areas in universities and polytechnics together, in a way that enables all the institutions to partner with each other in providing world-leading research, teaching, learning, assessments, consulting and community services (RETLACCS). In doing this, the platform especially aims to support a higher education ecosystem focused on developing deep skills among academics, students and professionals in entrepreneurship, enterprise and employability (3E) education. Capabilities in HEConnection are therefore cascaded globally to different regions of the world through a World Higher Education and Research Observatory 3E (Worldhero 3E) platform enterprise, Worldhero . In this paper, we use HEconnection as a focal point since it is Afrocentric. The platform case study is designed to mimic the capabilities in Alibaba and Amazon, for example, but with a primary focus on products and services produced in Africa, alongside mainstream offerings which Africans also buy and deal on.
The specific research questions explored in the study are: 1) what are the characteristics of platform business models? 2) What factors facilitate the effectiveness and efficiency of buyers and sellers’ platform business models? 3) How can the above types of platform enterprises be established in Sub-Saharan Africa? 4) How can they enable products and services in these environments to achieve early and accelerated internationalization of their offerings?
The rest of the paper is as follows. Section 2 presents a theoretical background on platform enterprise constructs, frameworks and design canvas. These constructs include web-enabled business models, characteristics of platform enterprise models, network effects, and multi-sided platforms, blended approach to running platform enterprisers (e-commerce and mortar-and-brick), and infrastructure support. Section 3 discusses the policy implications of the ideas, and concludes the paper.
Theoretical background
Platform enterprise constructs, frameworks and design canvas
[pic]
Figure 1: Characteristics of platform enterprise in sub-Saharan Africa (Source: the authors)
There are four key constructs that will facilitate early and accelerated internationalisation of African products and services from inception, that is, to establish successful African BGFs. These include platforms and network, e-commerce, born-globalism and cyber-mediated internationalisation, and enabling infrastructure. Figure 1 depicts these platform enterprise elements.
Networks
Networks offer an organisation alternative markets (Ciravegna, Lopez and Kundu, 2014); create locus of innovation both in high- and low-technology industries (Bogers, 2011); multiple marketing platform (Freeman, Edwards, and Schroder, 2006), economies of scale and cost sharing (Ozcan and Eisenhardt, 2009); rapid internationalisation (Criavegna, Majano and Zhan, 2014; Chetty, Johanson and Martin, 2014; Zarei, Nasseri and Tajeddin, 2011), information and resource sharing (Palloti and Lomi, 2011; Gulati, 1998); and enables businesses to build trust and transparency in both physical and virtual worlds.
Direct and indirect network effects
In a network business, there is typically no value in the network without users, and users do not show up on an empty platform. “Key to the success of platforms are network externalities, the depth of the “installed base” or number of consumers using it” (Suarez and Kirtley, 2012: 36). A market has network effects when customers (consumers and stakeholders) value a product more the more other customers use that product (Evans, 2012). Direct network effects are the immediately perceived or actual benefits conferred on the network by its users, for example revenue flows from customers. Indirect network effects are the unforeseen externalities or indirect benefits which flow from the network. Examples are flow of more PhD students to a Doctoral Training Centre in when experienced academic supervisors join the centres.
For example, recall that HEconnection is a platform enterprise that enables Nigerian and African universities to openly innovate their research, learning, teaching and assessment (LTA) processes across the entire African higher education system, and globally, as other higher education institutions join the platform. The platform will also enable the researchers, lecturers and students to interact and share some knowledge-based resources. Lecturers and students need to come on-board on this platform concurrently. In order to do needs to provide incentives to both students and lecturers simultaneously. The indirect networks of HEconnection are that more customers of each group (students or lecturers) are more valuable to the other group and generate differentiated externalities on the platform (Gawer and Cusumano, 2014). Another example is the fact that more users make software platforms more valuable to developers and more developers make software platforms more valuable to users (Evans, 2011) since the base software and its user support are improved.
Also, the Afrimarket platform is design to enable start-ups, new ventures, existing SMEs and generally African products and services to seek early international markets. In other words, it will help people who intend to buy African products to search and purchase them from all over the world. In this way, Afrimarket needs to provide incentives to attract African entrepreneurs, start-ups, new ventures, and existing SMEs to come on-board on the platform in order to have millions of products to motivate different buyers and consumers around the global to search for products on the platform. Hence, the direct network effects assumed that increases in usage lead to direct increase in value. For a further example, telecommunication users gain directly from widespread adoption, and telecommunications networks with more users are also more attractive to non-users contemplating adoption (Klemperer, 2005).
According to Suarez and Kirtley (2012) platform companies can use subsidies to incentivize users to join in order to attract different groups of platform users. For example, the main focus of this paper is to enable Africa firms and products to seek early international markets from inception. In this regards, Afrimarket will provide free advertisement and registration in order to attract millions of sellers in Africa. In this way, more buyers and consumers around the global will show up on the platform.
Born-global firms
Entrepreneurial orientation (EO) is fundamental to all businesses both for individual entrepreneurs who must have the initial entrepreneurial dispositions to start the businesses and the established firms, which must deepen their entrepreneurial orientations. For example, as founders of HEconnection and , the authors have the initial Individual Entrepreneurial Orientations (IEOs) because they are trained and operate as corporate academics (CAs) who live in the class and streets practically applying research results to enterprises, Ezepue and Ochinanwata (2016 a,b) Following their founding, the BGFs must continue to remain innovative and entrepreneurial by funding new ways to enhance and internationalise their offerings, in addition to the primary internet operations which make them BGF platform enterprises in the first place.
In order to deepen the IEOs and EOs of these firms, key collaborators who work with HEConnection, especially lecturers, will be reskilled in the corporate academic ways of working, including academic entrepreneurship, ability to develop stimulating case studies garnered through intense engagement with stakeholders, clients, students, and government policy makers through consulting, contract research and training projects. Similar training and business support services (business analysis and marketing research services) can be extended to participating firms in , as appropriate.
Having an international markets mindset is crucial to accelerated internationalisation of HEconnection and Afrimarket as born-global platform enterprises. That is why they are primarily located in the internet as e-commerce platforms. Hence, they will benefit from low-cost market expansion through social media advertising campaigns, knowledge exchange through automated databases of experts, and myriad online education programmes – webinars, podcasts, real-time user-generated feedback, and algorithmic use of such insights in powering related sales.
Born-global platform enterprises also use the above techniques and fast user generated customer preferences to develop novel offerings and satisfy a range of customers’ latent needs which are not initially considered in the design of underpinning customer propositions. For example, a student’s latent need may surface as a preference to understand the key concepts of a topic using a combination of approaches which cater to different intelligences – visual, verbal, mathematical, kinaesthetic (practical work). With this insight, the authors will introduce features that do precisely this, even though some of these considerations did not feature strongly initially in the writing of the text. In a web-enabled environment, it is possible to modify the base copy of the texts in real-time so that electronic copies of the texts are continually updated with such user-generated insights, instead of waiting for new editions.
E-commerce and web-enabled business models
Electronic commerce (e-commerce) is a type of business model that enables individuals and firms to conduct transactions electronically on internet (Doherty and Chadwick, 2008; Levenburg 2005; Mirchandani and Motwani, 2001). Traditionally, e-commerce models are classified into four major types of market segments: business to business (B2B), business to consumers (B2C), consumer to consumer (C2C), consumer to business (C2B). Hence, their mechanisms are more useful for developing platform enterprises such as eBay, Alibaba, Taobao, and Amazon. These are classified as buyer and seller platform (Hagiu, 2014), transaction platform (Ochinanwata and Ezepue, 2016) and integrated and innovation platforms (Evans and Gawer, 2016).
Clearly, HEConnection is an integrated innovation platform which entails all kinds of platforms, since supplier and buyers of knowledge transact knowledge-related business on it (academics teaching students, facilitators presenting webinars, super-textbooks and research monographs sold, for example), and businesses are connected on the platform (inter-higher educational institutional exchanges). Different degree programmes will be supported on the platform. Niche activities such as online 3E skills training programmes will be facilitated by the platform. Short courses, scholarships and apprenticeships, as well as career advisory services will be undertaken in the centre. A database of academic and professional experts and outstanding graduates in key disciplines will be maintained and used to support human resource recruitment programmes through a network of partner organisations across academia, industry and government organisations. A network of world-leading advanced research institutes will be maintained for the benefit of all users and stakeholders.
The platform will devote attention to innovating all RETLACCS aspects of African HE innovations which are lagging behind global standards and benchmarks. Collaborative research programmes will be encouraged among consortia of cognate disciplines aimed at enunciating a Global Research and Teaching Excellence Framework. This excellence framework will accommodate innovation elements in existing frameworks, namely the UK Research and Teaching Excellence Frameworks, the UK Professional Standards, league tables of business schools in the world, and hallmarks of excellence in leading institutions in the world. African and developing country academics will be reskilled on pathways for effectively evidencing these standards in their careers. Examples of C2C interactions on the HEconnection platform include student communities by disciplinary clusters, peer-to-peer learning through discussion forums, and academic support groups.
For the Afrimarket platform, typical B2B, C2C, C2B, and C2C interactions currently offered in Alibaba and Amazon will be provided, with particular attention to the idiosyncrasies of emerging African countries. These operations will be run along principles of cooperativism in order to democratise the gains and cost advantages which online provision facilitates. Opportunities for innovating all key offering will be searched for and developed through continual competitor analysis, customer preference modelling and industry trend analysis.
In a nutshell, HEconnection is a content and network platform enterprise that connects different higher education institutions with the curricula of other institutions, as well as serves individual interests of lecturers, students and professionals. Afrimarket and HEconnection combine B2B, B2C and C2C business models. Interestingly, the case companies are similar to Alibaba, Amazon, and Open online courses (MOOCs), B2B, B2C, and C2C e-commerce business models, but are contextualised in African business environment.
The above mentioned e-commerce models facilitate BGFs’ early internationalisation. Knight and Cavusgil (2004:124) define "born-globals as business organisations that, from or near their founding, seek superior international business performance from the application of knowledge-based resources to the sale of outputs in multiple countries". Knight and Cavusgil (1996) operationalized BGFs as companies that export twenty-five per cent or more of their products within the first three to six years of their foundation.
The above four e-commerce models (B2B, B2C, C2B and C2C) have been widely employed by the researchers within a cross-border and cross-industry perspectives (Rasmussen and Madsen 2001; Rialp et al., 2005; Gleason and Wiggeenhorn, 2007). However, globalisation and changing business environment are likely to enable start-ups and new firms to be internationalised from the inception rather than few years after the establishment. For example, start-ups and international new ventures (INVs) in Nigeria and Ghana that develop unique products or services from global customer perspective are more likely to have their offerings in global markets right from their inception. This is the case with cyber-mediated internationalisation in HEconnection and and related BGFs which they engender.
However, as will be expatiated upon in the notes on African environmental context below, several studies have identified challenges that impede these types of business development in Africa. The major barriers include inadequate infrastructure (Belwal and Chala, 2008); microeconomic and political instability (Amank-wah-Amooah and Debrah, 2011; Okpara and Koumbiadis, 2011; Greneier et al., 1999); trade restrictions and transportation (Soontiens, 2003). Therefore, there is an urgent need for African governments and their policy-makers to prioritise the development of key infrastructures in order to foster the establishment of platform enterprise that will catalyst BGFs in Africa. These infrastructures include stable internet and high speed broadband and 24/7 supply of electricity. The financial resources required for running platform enterprises will be generated through sustainable, innovative and cost-effective business models which consider the special circumstances of Nigerian and African customers, academics, students and professionals. These BGF business models and complementary business plans are currently the subjects of the first author’s PhD thesis.
Web-enabled business model
Despite the ubiquity of web-enabled platform enterprises globally, many firms are struggling with the best approach to establish and adopt digital strategies in African markets. This is mainly because of the lack of ownership of content by some of the platforms when they merely aggregate the offerings of other companies. Our approach will be to co-own and co-create offerings through systematic research by an army of academics, students, and professionals who work together to develop novel offerings. This way, we offer own products and services alongside platform roles of the phalanx of e-platforms which other users engage with. In addition, core emphasis will be placed on innovative profit modelling within an integrated business model and plan for any born-global platform we develop.
In effect, new businesses in Nigeria and Sub-Sahara Africa can be designed from inception with similar e-commerce capabilities and innovation handles (ICT, supply chain, business model, RETLACCS and community ecosystem innovations as appropriate) to take advantage of digital economy and global business opportunities. The enterprise platform constructs and design platform explored in this paper summarises the nature of thinking that underpins such designs. We are primed through the above business model research to use such insights to foster a national enterprise platform innovation ecosystem which supports small and medium enterprises (SMEs) in Nigeria and Sub-Sahara Africa with e-capabilities and innovation handles. Short courses, online degrees and state-of-the art MOOCS in HEConnection will be used to train SME owners on key accounting and financial management skills.
In relation to the above points, African businesses need to develop effective strategic directions in e-commerce (Webster et al., 2006). However, this direction should be rooted from the inception in strategic planning and business modelling that allows firms to adapt flexibly and quickly to emerging business conditions. This will enable firms to, where necessary, radically alter traditional approaches to doing business (Webster, 2006; Lee, 2001). We envisage a situation where an increasing majority of graduates from Nigerian and Sub-Sahara African higher education institutions (HEIs) will be trained up as skilled 3E operators who habitually create businesses and understand the paths to profit and excellent business performance in their chosen business lines, under the auspices of HEConnection and its partnership with innovative HEIs, private sector and government agencies.
Miller and Cardinal (1994) argue that planned formation strategies (PFS) are more likely to enable a firm to succeed in given business environments. These are more strictly planned approaches to doing a business. However, firms that adopt emergent formation strategies (EFS) are also more likely to grow bigger than firms utilising planned formation strategies, as they use real-time customer feedback to align their offerings with changing business environments (Titus et al., 2011). "A purely emergent strategy is defined as one where there is “order - consistency in action over time - in the absence of intention about it”; whereas purely planned strategy must meet three requirements: explicit articulation of intention, the commonality of intentions amongst actors, and intentions carried out exactly as planned" (Mintzberg and Waters, 1985, cited in Titus et al., 2011: 446).
However, an enterprise should only adopt e-business if it complements its strategic needs, and firms will fail if they assume that mere innovations in technology will overcome the weaknesses in their business models (Clegg and Tan, 2007). However, platform business is imperative for doing business in a globalised and changing world. This is because many new organisations suffer a “liability of newness during the first year of establishment (Bruderl and Schussler 1990; Freeman et al 1983; Stinchombe, 1965), and mostly in sub-Saharan Africa business environments where there are lack of tangible and intangible resources. Tangible resources include visible infrastructure such as ICT, internet, and good transportation facilities. Intangible resources include human capital, social capital, and socio-economic capital which flow from effective support mechanisms, political and economic stability and development. In these regards, Afrimarket and HEconnection and related platform enterprises will provide solutions for challenges facing African firms and higher education institutions. An example of such a related e-platform which is still being improved up on is the African Higher Education and Research Observatory UK (.uk), the precursor of Worldhero .
African environmental context and infrastructural challenges
Location can also have a marked impact on the observed occurrence of important organisational behaviours (Johns, 2006). It is important to explore the sub-Saharan African environmental factors that could be limiting, and/or facilitating firms that seek early international market. Several researchers have shown that external contextual influences are major barriers for developing business that can from inception seek early international markets (Esterhuizen and van Rooyen, 2006; Soontients, 2003; Benda et al., 2001) For example, the benefits of e-commerce have been undermined in Nigeria and similar sub-Saharan African countries, due to theft among postal workers, expensive and inefficient courier services, poor internet infrastructure (Okoli and Mbarika, 2002), and outdated information and communication technology (ICT). In , therefore, plans must be put in place to have a robust and fraud-resilient supply chain and distribution network for purchased goods and services.
As we mentioned elsewhere in this paper, e-commerce benefits may vary from country to country because of the way firms, sellers and buyers perceive the values. Therefore, innovative digital economy programmes need to be initiated to enable individuals and entrepreneurs understand e-business processes and its potentials. It will help individuals and firms to understand how they can benefit directly or indirectly from e-commerce and e-platforms despite current infrastructure challenges facing African firms (Ochinanwata and Ezepue, 2015; Belwal and Chala, 2008; Esterhuizen and van Rooyen, 2006). It is believed that e-commerce underpins a BGF’s profitable growth and overall business strategies. Prior and more recent studies explore different types of e-commerce value creation such as shareholder value and financial performance (Albers and Clement, 2007; Geyskens et al., 2002), internal efficiency, commerce and coordination (Zhu et al., 2003), sales, competition and procurement (Cosgun and Dogerlioglu, 2012), crucial communication and innovation webs (Ezepue and Ochiananwata, 2015).
The Platform Design Canvas
Figure 2 depicts key elements of platform enterprises that will be borne in mind when designing such enterprises as HEconnection and . The circled items are platform enterprises while the ellipses are their characteristics and features. In a nutshell, platform enterprise can be designed as shown in the five blocks of the canvas to: a) Create new enterprises, b) Create new products and services, c) Foster existing products and services, d) Integrate products and services, and e) Change an industry’s direction.
[pic]Figure 2: Platform design canvas (Source: the authors)
For designing platforms that create new enterprises, the key characteristics include latent needs, market gaps, and new sources of supply. Airbnb and YouTube create new sources of supply. The former enables people to list and rent their apartment for vacation homes. The latter enables people to create different contents like music, film, and advertisement. The platform can also enable people to create new businesses. For example, Afrimarket will motivate people to develop new products that seek early international market from inception because it connects buyers and consumers in different countries. HEconnection will develop subsidiary links with different higher educational institutions (HEIs) which use it as a collaborator platform for instituting innovations in research, teaching, learning and consulting services. These services should be designed to meet the currently unmet latent needs on the parts of students, academics, and higher education stakeholders. Examples of these needs are generic, entrepreneurship and employability skills which are not adequately developed within traditional curricula.
For platforms that create new products and services, key characteristics include multiple marketing channels and speedy advertising. HEconnection as an example of such platforms will seek to disseminate innovations in higher education through exemplary textbooks, research monographs and academic development events in different formats and marketing channels. These include e-books, e-journals, online skills academies and advanced research institutes, social media and TV programmes. Again, emphasis should be on new offerings which complement and innovate what currently exists in HEIs.
For platforms that foster existing products and services, is a good example which provides such offerings online as explained above. This is by connecting buyers and sellers, lowering costs, creating brand awareness, and accelerating the internationalisation of available offerings from suppliers.
For platforms that integrate products and services, typical examples include Google, PayPal and Microsoft. The characteristics include complementary offerings, for example Microsoft Office software (Excel, Word, Project, Database), economies of scale through online access, use of licenses to capture value from patented offerings, and flexibility in business achieved through continual customer learning and feedback. These capabilities apply also to HEConnection in form of complementary research, teaching and learning innovations and offerings, and online collaborations among academics, students and stakeholders.
Apple (iPod and App store), Facebook and Uber are platforms that change industry directions and integrate products and services. For example, iPod is designed to enable people to have thousands of digital music players in one device. Facebook as a social network enables friends and family to connect with each other. Effectiveness and efficiency in business operations are crucial characteristics. For example, Uber mobile app allows consumers with smartphones to submit a trip request quickly and conveniently to Uber drivers who use their own cars. The defining characteristics of such platforms – new approach to doing business, novelty in systems and offerings, and differentiation of offerings by customer and stakeholder needs – apply to other platforms, including HEConnection and .
Single-sided and multi-sided platform enterprise
A platform enterprise can be designed from inception to create single-sided market or multi-sided markets. Afrimarket and HEconnection platform enterprise models are designed to coordinate demands of different groups of customers who need each other in some way. Hence, they are double-sided and multi-sided platforms. Multi-sided platform enterprises connect distinct groups of customers who need to transact business with each other. For example, dating site such as Match-making is double-sided and multi-sided platform enterprise that enables men and women to meet each other (Evans, 2011). Alibaba is another example of double-sided platform enterprise; Alibaba started from inception by providing a platform for small business merchants to showcase and sell their offerings to customers. This helps small and medium business in China to reach out to many customers and those who may do not know about the products they offer. Also, Amazon started with single-sided platform where the enterprise offers its own products to customers, which can be classified as a traditional e-commerce business model. Amazon later redesigned its business model and created a multi-sided platform to coordinate the demands of different groups of customers.
Buyer and seller or transaction platform enterprises like Afrimarket can be classified as double sided and multi-sided platforms, which are similar to Alibaba, Amazon and eBay, for example. The platforms evolve around traditional e-commerce business models, ranging from business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B), and consumer-to-consumer (C2C). Almost all buyer and seller platform enterprises, for example, Amazon, Alibaba, and eBay, have more or less the same elements of platform business models. For example, Alibaba platform model involves business-to-business (B2B), business to-consumers (B2C), and consumer-to-consumer (C2C) interactions, whereas Amazon involves business-to-business (B2B), business to-consumers (B2C) and consumer-consumer(C2C) buyer and seller or transaction platform business models (Hagiu, 2014; Ochinanwata and Ezepue, 2016).
However, Afrimarket and HEconnection platform enterprises are similar but have distinct characteristics in regards to the services they offer. Afrimarket involves transaction of physical products and cyber-mediated services in e-commerce, while HEconnection is purely cyber-mediated higher education services, which operates content and network platform business models (Ochinanwata and Ezepue, 2016). The content part includes YouTube and Massively-Open Online Courses (MOOCs). Approximately 500 virtual universities are reputed to be in existence today, with over 60,000 accredited courses offered online (Collis, 2002). The latter creates a marketplace that enables buyers and sellers to transact physical products through a virtual marketplace (Ochinanwata and Ezepue, 2016). HEConnection will use insights from these universities to develop further university-industry-government collaborations in research, teaching and learning, with a focus on entrepreneurship, enterprise and employability skills.
In a nutshell, buyer and seller and content and network platform enterprise models enable BGFs, start-ups and other small firms to quickly scale up their businesses, and to gain large market shares (Ochinanwata and Ezepue, 2016; Hagiu, 2014). From resource-based view perspective, platform and models enable both platform enterprise and platform users to acquire customers and gain large market share with minimal costs (Teece, 2014). However, not all products, service or technologies can become industry platforms, according to Gawer and Cusumano (2008). This insight is important in Africa where e-commerce potentials are sparsely realised. In this sense, African sellers and buyers can use a blended approach which combines e-commerce and brick-and-mortar (Cosgun and Dogerlioglu, 2012; Fernie et al., 2010).
Blended approach
Platform business models not only foster BGFs in sub-Saharan Africa, but also enable individuals and businesses in these countries to benefit from digital economy and take advantage of e-commerce opportunities. By way of a gap in knowledge, empirical evidence has shown that e-commerce potentials are sparsely realised in developing countries, especially in African countries, and are still infancy in some Asian countries (Molla and Heeks, 2007). E-commerce benefits may vary from country to country because of the way businesses and consumers in these countries perceive the values and social cultural effects. Hence, establishing HEconnection and requires a careful consideration of these contextual influences. HEconnection will explore the best way to blend traditional HEI offerings with innovative online offerings suitable for different disciplines and groups of students, lecturers and stakeholders.
Start-ups and SMEs in sub-Saharan Africa can benefit from integrating e-commerce and brick-and-mortar in their business models. For example, customers can benefit by ordering online and collecting their goods from a pick-up point or distribution point in nearby locations (known as click and collect model in the developed countries). This type of business model will offer mutual benefits to firms, sellers, buyers, and consumers in Africa. Hence, platform enterprises in Africa will create tremendous opportunities for businesses and individuals to benefit from different types of traditional e-commerce business models such as business to business (B2B), business to consumers (B2C), consumer to consumer (C2C), consumer to business (C2B) models.
The above four types of e-commerce models play different roles in the conceptualisation and development of cyber-mediated businesses. For example, conceptualising a B2C business requires understanding how an entire firm serves individual end-users, which requires different value propositions, say, compared to when a customer directly serves another customer (C2C). B2C and C2C types scale up much faster than B2B; hence they are key drivers of BGFs such as Amazon, Afrimarket, Alibaba, eBay and Google, which mainly serve individual customers.
On the other hand, C2C e-commerce business model will play a crucial role in sub-Saharan Africa through a platform marketplace. It will inspire individual entrepreneurs to avoid third party costs. This type of model enables start-ups and SMEs in Africa to take full advantage of their domestic markets. For example, selling goods and services online while physically exchanging goods and services in a shop will eliminate risks associated with poor quality postal services and other infrastructure challenges in Africa (Okoli and Mbarika, 2002). This approach is very crucial because it will enable sellers, buyers and consumers to engage in e-marketplace business activities and benefit from digital economy. For example, French grocery retailers combine traditional and e-commerce business models in order to deliver their goods to customer by means of click and collect. Customers order products online and collect it in a pick-up point, click and drive or drive-in (Fernie et al., 2010).
Policy implications and conclusion
We recall the following research questions: 1) what are the characteristics of platform business models? 2) What factors facilitate the effectiveness and efficiency of buyers and sellers’ platform business models? 3) How can the above types of platform enterprises be established in Sub-Saharan Africa? 4) How can they enable products and services in these environments to achieve early and accelerated internationalization of their offerings? The characteristics referred to in question 1 are depicted in Figures 1 and 2 in the paper. These combined characteristics also underpin questions 2-4. They were discussed in light of both existing born-global platform businesses in developed countries such as Google, Microsoft and Alibaba, and two indicative case studies of how such platform enterprises could be developed in Africa – and .
There are related works on establishing BGFs and start-ups in developing country perspectives, which provide frameworks for financing and establishing start-ups in Nigeria (Ezepue and Ochinanwata, 2016), and developing BGFs in sub-Saharan Africa (Ochinanwata and Ezepue (2016). This paper develops the platform enterprise ideas which complement BGF characteristics in establishing and scaling up born-global platform enterprises in Sub-Sahara Africa.
Okoli and Mbarika, (2002) developed a framework for assessing e-commerce diffusion in sub-Saharan Africa. It is believed that this framework will help African firms to benefit from e-commerce opportunities, especially in business-to-business export which is the fastest growing market in Africa as of that time (UNECA, 1999). Despite this, businesses and most especially SMEs and start-ups in Africa are not taking advantage of e-commerce because there are not no connecting buyers and sellers platforms that will enable them to internationalise their offerings. Hence, by bringing the key platform enterprise ideas together this paper shows how such businesses could be developed in Africa. The paper represents a first theoretical understanding of platform enterprise development in Africa, which is particularly focused on platform BGFs, with illustrative case studies in higher education and general e-commerce (HEConnection and , respectively).
Figure 1 explored the four key characteristics of platform enterprises, namely network effects, born-global firms, e-commerce perspectives and African environmental contexts, which need to be considered in successfully developing BG platform enterprises. Figure 2 explored four different types of platforms, typical examples and further business characteristics. These are platforms that a) create new enterprises, b) create new offerings within existing enterprises, c) integrate offerings, and d) change industry directions. The characteristics depicted in the figure can all be considered whilst developing platform enterprises like HEconnection and , as noted in the paper. These characteristics include provision of subsidiary businesses, fulfilling customers’ latent needs, market gaps, creation of new sources of supply, multiple marketing channels, speedy and viral advertising (using social media), brand recognition, accelerated internationalisation, lower costs, economies of scale, use of licenses linked to patents and intellectual property, novel business models and offerings, effectiveness and efficiency of enterprise operations. The paper exemplified these constructs with a range of examples in developed countries (Google, Microsoft, Alibaba, for example). It particularly discussed how such constructs underpin the two case studies of platform enterprises that are relevant to Africa – HEconnection and .
To reiterate earlier remarks, there are few studies that discuss key elements involved in building platform enterprises in the literature. The key elements to consider are discussed mainly in key features of born-global firms’ platform (Ochinanwata and Ezepue, 2016), platform typology (Evans and Gawker, 2016), strategic decisions for multisided platforms (Haggis, 2014), and the architecture of platforms (Baldwin and Woodard, 2008). However, these ideas have not been applied in developing countries contexts, especially in African business environments. This paper described two sets of elements in form of platform enterprise characteristics (Figure 1) and platform design canvas (Figure 2) provide initial answers to questions 1-3 above. Follow-on studies will develop detailed business models for the two illustrative case studies and adapt similar models to different industry sectors in Africa, for example management platform, challenger banks, application developers and users, higher education, healthcare system and shopping malls.
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