1.2. User Entrepreneurship

Empirical studies remain conspicuously focused on users as a source of innovation, thus users as entrepreneurs is still a poorly studied topic. According to the conventional wisdom, the change of the “functional role” of the user innovator has been considered a rare exception. The same is true about users’ benefits, which come from the use of the innovation and not from their commercialization (von Hippel 1988). On the other hand, entrepreneurship process occurs whenever opportunity recognition precedes any prototype development (Venkataraman 1997; Shane and Venkataraman 2000).

However, recent studies underline a different pattern: users eventually exploit entrepreneurial opportunities successfully. Anecdotal evidence to this effect can be found in several industries: 43% of extreme sports equipment (windsurfing, skateboarding and snowboarding) is developed by users (Shah 2003). The same holds for rodeo kayaking (Baldwin et al. 2006), mountain bikes (Luthje et al. 2005), videogames and the animation industry (Heafliger et al. 2010). Furthermore, a research of Shah and Tripsas (2007) analyzed this emerging phenomenon studying a seven billion dollar business: the juvenile industry. The study shows that 84% of the sample companies were founded by parents who became user entrepreneurs. Consequently, the authors made a strong contribution to User Innovation and Entrepreneurship literature, building the Model of End-User Entrepreneurial Process. In the following paragraphs some differences between the classical and the emergent model will be shown.

1.1.1.              Entrepreneurship: the classic view

Economics and management research widely focussed on studies about entrepreneurship, contrasting different theories, models and the profile of a potential entrepreneur. In particular, the topic was extensively discussed at the beginning of the 20th century by the Austrian economists Joseph Schumpeter. In his view the entrepreneur is a person who is willing and able to convert a new invention into a successful innovation by employing the process of “creative destruction”. According to Schumpeter, entrepreneurs replace in whole or in part inferior innovations across markets and industries, by creating new products and business models.

Overall, studies in this field confirm that entrepreneurship commences with the identification of new opportunities, which always happens given the market inefficiencies in the allocation of resources. These opportunities are recognized in different ways by individuals who in certain contexts are in a unique position to identify a market gap and able to attract resources (Aldrich and Zimmer 1986; Burton et al. 2002). This process is enhanced by entrepreneurs’ ability to attract resources (Aldrich and Zimmer 1986; Burton et al 2002), their opportunity costs (Amit, Eitan, and Iain 1995), and their entrepreneurial experience (Carroll and Mosakowski 1987). Besides this, the majority of firms are founded in response to an opportunity identified, without a special plan or long-term future considerations (Baker, Miner, and Eesley 2003). Subsequently, it is only at a later point that new start ups receive market feedback which help entrepreneurs to design the company and to adapt the products to the market needs employing the “opportunistic adaptation” (Bhidé 2000). Nevertheless, also external factors affect this process. New start ups are likely to be venture capital funded and university-technology based (e.g. Audretsch and Feldman 1996; Zucker, Darby, and Brewer 1998; Shane, 2001; Feldman, Francis, and Bercovitz 2005; Mowery 2005; Stuart and Ding 2006), thus the availability of these elements affect the whole process.

Figure 1 shows the classic model of the entrepreneurial process reported by Shah and Tripsas in their work. On the whole, the entrepreneurial process follows two main steps: (1) the opportunity recognition and (2) the evaluation of whether this opportunity can be exploited by starting a new venture (Venkataraman 1997; Shane and Venkataraman 2000).

Figure 1 Classic Model of the Entrepreneurial Process

Source: Adapted from Shah and Tripsas (2007)

1.1.2.              User Entrepreneurship model

The study on the juvenile industry leads Shah and Tripsas (2007) to develop an alternative model of the entrepreneurial process, called “Model of End-User Entrepreneurial Process” (figure 2). In order to understand the model correctly, it is important to notice that in the figure the actions taken by users are represented by rectangles, whereas inputs to those actions pictured by ovals.

Figure 2 Model of the End-User Entrepreneurial Process

Source: Adapted from Shah and Tripsas (2007)

First and foremost, the emergent model started from a problem solving situation, which occurs when users experience a certain problem or a need. Table 1 shows some selected cases of User Entrepreneurship which confirm the starting point of Shah and Tripsas’ model: users were looking for a solution not present in the market and they finally came up with their own ideas which they later commercialized.

Table 1 Examples of User Entrepreneurs

Innovation

User entrepreneur

Description

Juvenile products industry

Parents. Example of companies founded: ABC Fun Pads, Baby Einstein (Shah and Tripsas 2007)

84% of juvenile products firms in the US founded in the last 20 years were founded by users-innovators

Snowboard

Jake Burton

Skiing enthusiast who got bored by traditional skiing. He became a pioneer and the founder of BURTON Snowboards

Skateboard

Tony Alva

One of the most influential skateboarders in the world who founded ALVA Skateboard

Kite surfing

(new industry)

Bruno and Dominique Legaignoux

Sailors who became interested in kites when they tried to develop an efficient sailing boat under the brand “Wipika”

Rodeo kayak (new industry)

Extreme sports users

(Hienerth 2005)

Due to the characteristics of extreme sports (e.g. several unexpected inconveniences while playing these sports) the level of innovation is high

Mountain Bike

Gary Fisher

(Luthje et al. 2005)

Passion for biking off-road, need for a bike that suited his high requirements. Founded his own firm fisherbike.com

Personal Computer

Ed Roberts

Engineer, developer of ALTAIR 8800 (the first Personal Computer)

Yahoo!

David Filo and Jerry Yang

Stanford PhD candidates, transformed their hobby in a global search engine

Music editing

Propellerhead software, an online community

( Jeppesen an Frederiksen 2006)

Users originally created complements for other reasons, and then realized over time that there was a business opportunity

Secondly, the public exposition of innovative solutions through online communities raises the interest of cybernauts willing to adopt new innovations. The users’ participation in these groups leads benefits to user innovation in two directions. On the one hand, thanks to the social norms of forum discussion and the degree of openness of the exchanged information a user innovator can obtain first-hand information about the needs and preferences of potential customers. As a result, the community serves as a market testing environment providing direct feedback that is relevant to the product development (Franke and Shah 2003). On the other hand, the collective creativity processes that take place in these online platforms are open and can be shared, allowing for the brainstorming of the ideas that provide a higher level of novelty (Autio et al. 2008)

1.1.3.              Comparison

Recalling the classic view described in the previous section, experimentation and adaptation occur after the decision to start a firm is made. Instead, in the User Entrepreneurship model, all phases of development, testing and idea definition are carried out by users before they even contemplate founding a firm. As a result, the time of feedback collection differs between these two models. Another distinction is given by the personal driver in terms of a decision to start a new company. While the desire of financial gains is the main motivation for a classic entrepreneur, end-user entrepreneurs are more motivated by a social gain: they can proudly show that their innovation is widely adopted. In fact, their commercial goal is mainly driven by the willingness to get enough money to fully dedicate their lives to this activity which very often is also a hobby (Shah and Tripsas 2007). Thus hobbyists can spend a greater fraction of their time devoted to activities related to their interests. Moreover, end-user entrepreneurs are distinct from other types of entrepreneurs given that they have personal experience with a product or service and derive not only financial benefit from commercialization, but also through use.

To sum up, the end-user entrepreneurial process is typically emergent, meaning that the user entrepreneur takes a number of steps towards starting a firm, such as developing a product for personal use, without any formal acknowledgment or evaluation of a commercial opportunity. It occurs mainly when individuals experience a need and they create a solution being willing to share it with others. Conversely, a typical entrepreneur takes action (such as developing prototypes) only after a potential opportunity has been identified.

The so called “accidental” entrepreneur model will be recalled in the finding section, on light of the results of the analysis of users in OSH.

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