Upscaling in social entrepreneurship and development studies
Within the entrepreneurship field as a whole, ‘social entrepreneurship’ deserves special attention here. Social entrepreneurship encompasses the activities and processes undertaken to discover, define, and exploit opportunities in order to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner. Social wealth may be defined broadly to include economic, societal, health, and environmental aspects of human welfare. Essentially, then, one can conceive of social entrepreneurs as key players in sustainability transitions (Witkamp et al. 2011). According to Witkamp et al. (2011), social entrepreneurship is pitted against two extant ‘regimes’, i.e., the business regime where profit maximization and increasing shareholder value is the major goal, and the civil-society regime where societal objectives take a major role and profit maximization takes a back seat. Social entrepreneurship, therefore, continuously faces tensions between private profit-making and fulfilling societal objectives.
Most social entrepreneurs have an ability to create new connections among people and organizations for new paths, or business models, in which these tensions are managed and societal value is created. In so doing, (social) entrepreneurs also create and develop the institutions and infrastructures needed for development (Garud et al. 2007; Dees 2009; Mair and Marti 2009; Chowdhury and Santos 2010; Zahra et al. 2008, 2009). According to Mair and Marti (2006), Robben (1984), and Sud et al. (2008), entrepreneurs can leverage resources to create new institutions and norms or transform existing ones. Maguire et al. (2004) speak about entrepreneurs’ leading efforts to identify political opportunities, frame issues, and induce collective efforts to infuse new beliefs and norms into social structures. In other words, social entrepreneurs can foster development in many different ways: by getting new legislation or regulations passed; getting old legislation or regulations enforced; shifting social norms, behaviors, and attitudes among fellow citizens, corporations, and government personnel; changing the way markets operate; and finding ways to solve problems or meet previously unmet needs.
Several social entrepreneurship studies have discussed the phenomenon of upscaling (Alvord et al. 2004; Bloom and Chatterji 2009; Chowdhury and Santos 2010; Dees 2009; Smith and Stevens 2010). The latter define upscaling as increasing the impact produced by a social-purpose organization to better match the magnitude of the social need or problem it seeks to address. They distinguish upscaling and deep scaling. Upscaling refers to the growth in social value by expanding a current program to other geographic locations. This involves effort and costs in terms of building infrastructure, organizing and developing an ecosystem, obtaining licenses, and educating customers in a new region. Deep scaling refers to focusing energies and resources on achieving greater impact in the same location where the enterprise was started by engaging in activities like improving the quality of services, achieving greater penetration of the target population, finding new ways to serve people, extending services to new people, and developing innovative financial management approaches.
Karamchandani et al. (2009) and Klein (2008) have a somewhat different view. They refer to upscaling as the capacity of the enterprise to expand quickly, effectively, and efficiently. Upscaling can also mean expanding the capacity of the existing business, in the sense of developing resources, building a knowledge base, employing people, developing management systems, and even developing a culture. According to them, upscaling, thus, includes serving more people with the same product within the same region, as well as extending into new markets, i.e., different geographies. In a given situation, the meaning of upscaling, to a large extent, depends on the motivation of the entrepreneur. Some enterprises may focus on developing a specific region in terms of new products and services before scaling geographically, while others may choose to scale into new geographies before venturing into new products and services.
According to Dees et al. (2004), choosing the right path towards broader social impact is a complex matter, since it involves judgment, experimentation, and continuous learning. They develop an approach towards upscaling based on following five Rs, i.e., Readiness, Resources, Receptivity, Risk, and Return. Bloom and Chatterji (2009) suggest the SCALERS model, i.e., Staffing, Communicating, Alliance-building, Lobbying, Earnings-generation, Replicating, and Stimulating market forces. Chowdhury and Santos (2010) suggest that successful upscaling can be achieved by disseminating information through the use of best-practice blueprints or intermediaries such as multilateral organizations and consulting firms.
Since our study is set in an emerging economy with deep-rooted social inequality and poverty in addition to environmental problems, it is pertinent to also examine the literature about development projects, program, and non-governmental organizations (NGOs) for possibly useful insights about upscaling. Gillespie (2004), Myers (1984), Uvin and Miller (1994), and Uvin (1995) have developed taxonomies of different types of upscaling and paths to achieve it. Uvin (1995) defines ‘quantitative scaling’ as reaching increasing numbers of people; ‘functional scaling’ as adding unrelated new activities to existing programs; ‘political scaling’ as an organization’s members participating in or influencing political activities; and ‘organizational scaling’ as increasing the degree of self-financing through subcontracting. Myers (1984) discusses ‘institutional scaling’, i.e., involvement in processes and mechanisms for promoting wide stakeholder participation; ‘geographical scaling’, i.e., expanding project coverage to other communities/municipalities; ‘technological scaling’ i.e., broadening a project’s technological scope or implementing appropriate technologies to increase productivity; and ‘economic scaling’, i.e., bringing down unit costs. Other issues that have been discussed include the timing and duration of upscaling. Writers about development have obviously found it difficult to come to grips with the phenomenon. According to Uvin and Miller (1994), “All in all, the literature on upscaling is reminiscent of the Loch Ness monster. It has been sighted enough to make even the skeptical give it a measure of respectability; [but] … its description is as varied as the people who have written about it.”
Institutional upscaling as a collective process
One big complication is that an individual social entrepreneur usually does not have all the competences, resources, and legitimacy that are necessary to create a full infrastructure for a new business. Chowdhury and Santos (2010) point out that, while social entrepreneurs are often successful in establishing effective business models to address problems in their local areas of operation, they face enormous challenges in scaling their operations and achieving greater social returns for constituents such as funding agencies. According to Dees (2010), they need a supportive ecosystem and infrastructure such as targeted financial services, cultural encouragement, and accommodating legal and regulatory mechanisms. These conditions have to be created in concert by a large number of actors, since complex environmental problems are rooted in behaviors, norms, institutions, social structures, and policies. Individual entrepreneurs usually cannot bring about radical institutional change on their own without broad societal support. Rarely do individual actors possess sufficient power, resources, and charisma to bring about institutional change (Garud et al. 2002; Leca et al. 2008).
Therefore, governments, multilateral aid agencies, philanthropic organizations, social investors, financial service organizations, universities, consultants, corporations, bankers, and the media all play an important role in creating conditions that help social entrepreneurs to scale their impact in a timely, significant, and cost-effective way, while, at the same time, prevailing institutions limit the possibilities for institutional entrepreneurship (Dees 2010). Actors are not entirely free, but embedded (Garud and Karnøe 2003; Garud et al. 2007). Entrepreneurs may need to ‘run in packs’, which means coordinating their actions to simultaneously pursue their own and collective interests, and simultaneously cooperating and competing with others as they develop and commercialize their new ventures (Van de Ven 2005).
As the numbers of entrepreneurs grow, a complex network of cooperative and competitive relationships begins to generate critical mass and produce effective collective action. This infrastructure includes institutional arrangements to legitimate, regulate, and standardize a new technology; public resource endowments of basic scientific knowledge, financing mechanisms, and a pool of competent labor; the creation and development of markets, consumer education and demand, proprietary R&D, and the development of manufacturing, production, and distribution functions by private entrepreneurial firms to commercialize an innovation for profit. This infrastructure may be developed by superstructure organizations often specializing in coordinating flows of information or coordinating the activities of substructure organizations (Van de Ven 1993, 2005; Jacobsson and Johnson 2000).
Concerted action from different social enterprises and the mobilization of support from multiple other actors in the innovation system for the diffusion and legitimization of new institutional arrangements might, thus, be key requirements for social enterprises that aim to upscale their businesses for solar home systems in India. This is also recognized in a related stream of literature that aims to understand how advocates of radical, potentially more sustainable technologies gain increasing support for their technologies. This literature under the heading of strategic niche management (SNM) is part of evolutionary approaches to understanding systemic transformation in socio-technical systems towards sustainability (Kemp et al. 1998). In SNM, innovations with promising sustainability characteristics are conceptualized as emerging and developing in ‘niches’, i.e., emerging institutional environments that provide a (partially) protected space in which actors experiment and incubate promising concepts or prototypes.
The relation between the emerging institutional environment, the space it generates, and the activities performed by innovating actors within that space is conceptualized as cyclic and co-evolutionary. Experiments represent small initiatives in which the earliest stages of socio-technical learning and co-evolution take place. Experiments typically bring together new networks of actors with knowledge, capabilities, and resources, who cooperate in a process of social learning (Berkhout et al. 2010). If successful, experiments generate locally useful lessons, but the experiment’s advocates might also try and translate the results into more widely applicable lessons, e.g., through ‘internal’ networking with similar initiatives by participating in workshops, organizing site visits, and publishing handbooks. Advocates might also collaborate in shaping the institutional environment more directly through ‘external’ networking, for example, by setting up field-level organizations that lobby governments, user groups, science actors, or relevant business actors for beneficial institutional changes.
Socio-technical experiments can encompass a wide range of projects, pilot plants, and demonstration facilities initiated by firms, public research organizations and universities, community and grassroots organizations, and so on (Berkhout et al. 2010). In this literature, experiments are seen as playing a key role in the development of innovations that have the capacity to modify or even replace dominant ‘socio-technical regimes’. Regimes constitute the extant social, institutional, and technological fabric of economic activity. Experiments may involve novel technological, actor, and market configurations, and are, therefore, likely to face considerable initial uncertainties, problems, misalignments, and high costs compared with conventional, incumbent regimes to which they offer more sustainable alternatives.
Previous research on the niche development of sustainable energy systems (primarily set in high-income countries) has concentrated on technological experiments and their role in regime change. Few studies have focused on entrepreneurial firms and their importance as prime movers. Entrepreneurs do have an important role in transition processes, since they are agents of creative destruction, with the potential to commercialize sustainable innovations and, consequently, foster the necessary institutional change that favors such innovations (Markard and Truffer 2008).