Social Enterprise Emergence from Social Movement Activism: The Fairphone Case

• Author: Ona Akemu,Steve Kennedy,Gail Whiteman
• Published date: 01 July 2016
• Date: 01 July 2016
• DOI: http://doi.org/10.1111/joms.12208

Social Enterprise Emergence from Social Movement

Activism: The Fairphone Case

Ona Akemu, Gail Whiteman and Steve Kennedy

Rotterdam School of Management; University of Lancaster School of Management; Rotterdam School of

Management

ABSTRACT Effectuation theory invests agency – intention and purposeful enactment – for new

venture creation in the entrepreneurial actor(s). Based on the results of a 15-month

in-depth longitudinal case study of Amsterdam-based social enterprise Fairphone, we argue

that effectual entrepreneurial agency is co-constituted by distributed agency, the proactive

conferral of material resources and legitimacy to an eventual entrepreneur by heterogeneous

actors external to the new venture. We show how in the context of social movement activism,

an effectual network pre-committed resources to an inchoate social enterprise to produce a

material artefact because it embodied the moral values of network members. We develop a

model of social enterprise emergence based on these findings. We theorize the role of material

artefacts in effectuation theory and suggest that, in the case, the artefact served as a boundary

object, present in multiple social words and triggering commitment from actors not governed

by hierarchical arrangements.

Keywords: : distributed agency, effectuation, longitudinal case study, material artefacts,

social entrepreneurship, social movement

INTRODUCTION

The Democratic Republic of Congo (DRC), a vast mineral-rich country in Central

Africa, has witnessed devastating civil conflict related to mineral exploitation. Mineral

ores mined in the context of the conflict – called ‘conflict minerals’ (OECD, 2013) – are

the raw materials used to manufacture the vital components of electronic devices such

as smartphones. In September 2009, Peter van der Mark, a public relations (PR) expert,

and Bas van Abel,

[1]

an industrial designer, devised a campaign to raise awareness in

the Netherlands about the connection between smartphones and the conflict in the

DRC. They called their campaign Fairphone. They invited the Dutch public to develop

Address for reprints: Ona Akemu, Doctoral Candidate, Rotterdam School of Management, Burgemeester

Oudlaan 50, 3062 PA, Rotterdam (oakemu@rsm.nl).

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Journal of Management Studies 53:5 July 2016

doi: 10.1111/joms.12208

collaboratively a ‘fair’ smartphone: a phone that would be ‘conflict-mineral free’. They

had neither the intention nor the expertise to make a commercial product. They hoped

that any resulting prototype would be a non-functional concept device destined for exhi-

bition at a local museum. They were wrong.

By January 2013, Fairphone the campaign had morphed into a social enterprise with

Van Abel as founder/CEO and with a new objective: ‘to produce a cool phone that

puts human values first’. In mid-2013, with no prototype, no customer base, no

employee with industry experience and limited working capital, Van Abel and his staff

of six launched a crowdfunding campaign via the company’s website. They expected to

pre-sell a maximum of 5,000 fair smartphones. They were wrong again. By November

2013, Fairphone had pre-sold 25,000 non-existent smartphones at e325 apiece. How do

we theorize the unlikely emergence of Fairphone?

We present the findings of a 15-month longitudinal case study of Fairphone. Drawing

on the social movement, commercial entrepreneurship, social entrepreneurship, tech-

nology entrepreneurship literatures and on effectuation theory, we develop a model that

offers three key insights into social enterprise emergence. First, agency – intention and

purposeful enactment – for social enterprise emergence does not inhere solely in the ven-

ture founders, as is assumed in effectuation theory (Sarasvathy, 2001, 2008, pp. 15–6).

The entrepreneurial intention and capabilities that are presupposed by a purposive

enactment of the venture in effectuation theory may also originate from multiple actors,

such as the media, influential corporate actors, and government officials, external to the

venture’s founding team. Distributed agency co-constitutes or enables effectual entre-

preneurial agency in the creation of a new social venture in two ways: (1) by the proac-

tive commitment of entrepreneurially-valuable material resources, legitimacy,

capabilities and contingencies – ingredients necessary for a new venture to thrive (Zim-

merman and Zeitz, 2002) – to the (eventual) effectual entrepreneurial agent, and (2) by

eliciting a change in the intentions of a previously-reluctant entrepreneur to pursue

domain-specific entrepreneurial goals – a necessary condition for new venture emer-

gence (Katz and Gartner, 1988).

Second, material artefacts, which were central to the development of effectuation

theory (Sarasvathy, 2008; Sarasvathy and Dew, 2005), but ignored in subsequent work

on the theory, are vital to the convention of an effectual network. The symbolic dimen-

sions of a material artefact – a smartphone – triggers resource pre-commitments from

members of the effectual network. These members commit resources to the venture not

based on assessments of utilitarian benefits, but because they interpret the artefact as

symbolizing their beliefs and values.

Third, the material artefact, served as a boundary object (Star and Griesemer, 1989)

because it is comprehensible, possesses emotional power and enables contributions from

members of different social domains – consumer electronics firms, government actors,

consumers, hackers – who attributed various meanings to the artefact (Bijker, 1987). We

propose that the concept be extended to include interactions that are not bounded

within a single organization as is the case in current organizational research on bound-

ary objects (e.g., Nicolini et al., 2012; Yakura, 2002).

We begin our paper with a review of effectuation theory and distributed agency, the

principal conceptual dimensions of the study. Next, we describe the method used in this

847The Fairphone Case

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paper – a longitudinal case study. We report our findings by presenting a summary of

the case, the themes and the model of social enterprise emergence. Thereafter, we dis-

cuss the implications of our findings and, finally, we conclude with directions for future

research.

THEORETICAL CONTEXT

In this section, we present the main concepts that emerged as we analysed Fairphone’s

history by pattern matching and referencing appropriate literatures. As we will discuss

in the ‘Methods’ section of the paper, we employed an abductive inferential approach

(Van Maanen et al., 2007) to adduce the best analytical explanation for the data, rather

than deriving these deductively from prior theory. If we presented the paper how the

study unfolded, we would have to report our methods and data before the reader learns

what the main conceptual components and contributions of the study are likely to be. In

order to furnish the reader with advance conceptual clarity (Suddaby, 2006), we aban-

don an abductive reporting approach. Instead, following traditional paper presentation

approaches, we present the theoretical context first to preview the findings and the

contributions.

Effectuation and the Creation of Social Enterprises

Like their commercial counterparts, social entrepreneurs act under conditions of uncer-

tainty (McMullen and Shepherd, 2006) as they combine resources to form new prod-

ucts, services or organizations intended to stimulate social change or meet social needs

(Mair and Martı, 2006). A valuable starting point for understanding entrepreneurial

action under uncertainty is Sarasvathy’s (2001) theory of effectual decision-making or

effectuation.

Sarasvathy (2001) argued that entrepreneurial action under an effectuation logic dif-

fers from action under causal or traditional theories (e.g., Gartner, 1985) in the follow-

ing ways: (1) effectual entrepreneurs are more likely to start developing entrepreneurial

opportunities not with a specific goal, such as making profit, but by deploying three sets

of means – their identity, knowledge, and networks, (2) they are more likely to assess risk

using the principle of affordable loss (advance commitments to how much resources

they are willing to lose in a new venture) rather than the principle of expected returns

(advance calculations about expected financial returns from the venture), (3) they focus

on building alliances with a network of stakeholders, such as potential suppliers and cus-

tomers, instead of on analysing and outwitting the competition, (4) they exploit unex-

pected contingencies to mould the emerging enterprise, instead of minimizing

contingencies, and (5) they act in order to control an unpredictable future instead of pre-

dicting an uncertain future.

Effectuation theory has been applied to explain the formation of new technology

firms (Sarasvathy and Kotha, 2001) and new industries (Sarasvathy and Dew, 2005). In

the so-called dynamic model of effectuation (Sarasvathy and Dew, 2005), the entrepre-

neur imagines some generalised desired end (e.g., a new venture) achievable using avail-

able means. The entrepreneur then interacts with people that she knows or meets. Due

848 O. Akemu et al.

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