Chapter 3: Applying disruptive innovation theory to green-tech ventures
Innovation is a phenomenon widely studied in management and entrepreneurship. Nevertheless, the existing academic literature has not systematically assessed the role of innovation in the social venture context. Understanding innovation in this context is important to developing processes and products that facilitate wide-scale social change (Drayton, 2002). At the same time, many innovation theories have primarily been analyzed in more traditional industries. Thus there is a gap in the literature to apply existing innovation theories to other industries. Social ventures are a unique context in which to assess existing innovation theories, as innovation is extremely important to creating solutions that benefit society in a replicable manner. This study addresses this gap in the literature by applying innovation theory to green-tech ventures to better understand the nature of innovation taking place in this sector and to assess the theory in a different context. Disruptive innovation represents the introduction of new technologies or innovations that replace existing business models and in some cases produce social benefit (Christensen et al., 2006). Sustaining innovations create better valued products for existing markets (Christensen, 1997). Through a content analysis of the business plans of 20 green-tech ventures, this study assesses the types of innovations in the green-tech venture sector. At the same time the study evaluates whether and how green-tech ventures are developing new innovations to enact social change and thereby solve social problems. The findings suggest that many greentech ventures develop innovations that can be considered both sustaining and new-market disruptions. In addition the results suggest that environmental and economic value creation is more prevalent in green-tech ventures with new-market disruptive innovations, while social value creation is slightly more prevalent in green-tech ventures with sustaining innovations. Thus social venture practitioners should develop innovative practices and products that cater to both existing and new markets.
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