Business

How social movements catalyse entrepreneurship in emerging industries such as green energy

Research shows that social movements can play a key role in bringing new players into the solar industry, green building and recycling.

Research shows that social movements can play a key role in bringing new players into the solar industry, green building and recycling. Image: Unsplash/Li-An Lim

Desirée Pacheco
Professor of Entrepreneurship, IESE Business School, University of Navarra
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  • Social movements could help support finding innovative solutions to issues such as climate change by encouraging entrepreneurial activity.
  • Research shows that social movements can also play a key role in bringing new players into the solar industry, green building and recycling.
  • Such collective enterprises could help push forward the changes needed for entrepreneurship to flourish in emerging industries like green energy.

In the search for innovative solutions to the climate crisis and other challenges, new businesses may find an unexpected source of support: social movements.

Though often associated with opposition and protest, such collective enterprises can be crucial in encouraging entrepreneurial activity in emerging industries, serving as catalysts for innovation in some of the areas where it’s needed most.

To understand the relationship between social movements and entrepreneurship, Professor Theodore Khoury of Portland State University and I looked at the solar power industry in the US and the tech-focused advocacy organizations dedicated to promoting renewable energy.

Co-evolution of social organizations and entrepreneurs in the US solar energy industry.
Co-evolution of social organizations and entrepreneurs in the US solar energy industry. Image: IESE Business School, University of Navarra

Can social movements benefit entrepreneurship?

We wanted to know whether these social movement organizations can benefit entrepreneurship, as well as where and when they may be most effective in bringing new entrants into the fray.

Of course, not all social movement organizations – those dedicated to promoting shared social or cultural goals – are created equal. The US-based organizations we studied had an approach that was targeted and goal-oriented rather than confrontational; they were interested more in educating than in shouting.

Examples of the groups we looked at were Carolina Land and Lakes, Acadia Center and the Energy Trust of Oregon and all launched various initiatives to promote clean energy. They held training and educational programmes; fought misinformation and found common ground; pushed for regulatory reform; and managed programmes for technology swapping or upgrading.

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Unlike trade associations, these social organizations are open to competing clean technologies that help realize social change. Their funding and governance are also diverse, with little to no representation from the business sphere.

And not all industries lend themselves to inspiring social movements. But in the race to save the planet, many sectors are ripe for this dynamic.

Social movements played an important role in bringing new players into the solar industry, and similar findings can be seen across a range of newly-developing industries, such as green building and recycling.

Here are some of the ways social movements can impact entrepreneurship:

Increase a nascent industry's legitimacy

When an industry is in its infancy, social movements help it and new players come across as viable and legitimate. They clarify the unknowns in a company’s offering, push for legal frameworks that make room for them, and target potential customers. Clean energy groups can increase the incidence of state-based incentives like sales tax credits for renewable technologies.

The Acadia Center, for example, publishes data on the role of clean energy investments on job creation and economic growth, and designs market-based strategies for renewables and advocates for policies to implement them.

Encourage new companies to enter a sector

Highly-populated industries often experience a decline in new players, as entrepreneurs can find entry conditions too competitive. But our research shows that even as an industry starts to mature and competition builds, social movements can encourage new companies to keep entering by expanding public support and demand for the industry.

Expanding the market by targeting consumers that might otherwise be ignored, Carolina Land and Lakes helps small businesses and farmers to get government assistance for energy projects in renewables, including the installation of solar photovoltaic panels.

Stimulate the entrance of specialist companies

Social movement organizations can stimulate the entrance of smaller, specialist firms and limit the dominance of generalist firms. They do that by securing the support of consumers and government bodies.

Specialist solar providers may be able to compete with large energy firms, despite their greater scope and economies of scale, if social movements work to secure state incentives for solar roof panels or if they provide information on smaller market players.

The Energy Trust of Oregon created a portal for finding and selecting solar installation contractors and provided a system to inspect the installation. They also assisted customers in areas such as how to file for tax credits.

In the absence of an industry with a similar profile that has created an environment for innovation, social movements may step into that role. Here, think wind and solar producers. A strong wind energy sector provides legitimacy spillover to solar energy. But in places where the concept of green energy is entirely new, social movements can work towards creating that legitimacy, and inciting entrepreneurship.

Social movements must understand target industries

For social movements, all this can be useful for gauging where they should concentrate their efforts. Just as a start-up would survey competitive conditions before entering a new market, social movements should understand the ecology of their target industries before pitching their tent in a given area.

That understanding can also inform their actions. If it’s a place where an industry is completely novel, the social movement may have to lay the groundwork through education and regulation.

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How is the World Economic Forum facilitating the transition to clean energy?

If it’s a place that is a bit crowded with competing firms, groups should focus on ways to expand the market. And if it’s a place where another industry may have a spillover effect on the industry, it may be worth looking for other options where the impact may be greater.

The presence of social movement organizations is no guarantee that entrepreneurship and innovation will take off. But in many emerging industries, this type of group may play a key role in pushing forward the changes required in consumer habits, regulatory frameworks and industry make-up for entrepreneurship to flourish.

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