sustainability as a driver for innovation –towards a model of corporate socialentrepreneurship at...

8/13/2019 Sustainability as a driver for innovation towards a model of corporate socialentrepreneurship at Odebrecht in Brazil

1/13

Sustainability as a driver for innovation towards a model of corporate socialentrepreneurship at Odebrecht in BrazilHeiko Spitzeck, Claudio Boechat and Se rgio Franca Lea o

Abstract

Purpose The purpose of this paper is to present a model of corporate social entrepreneurship. The case of Odebrecht demonstrates how companies are using societys sustainability challenges to innovate, in particular by adopting a corporate social entrepreneurship approach that allows the company to differentiate from competitors and create shared value.Design/methodology/approach This research applies a comparative case study design in combination with a review of the literature in order to present a model of corporate social entrepreneurship.Findings The case study of two major projects within the Odebrecht group allows us to design a model of corporate social entrepreneurship explaining how the company transforms external triggers such as socio-environmental risks into sustainability innovations, creating competitive advantages.Research limitations/implications The two case studies provide some evidence of how companies blendsustainability and innovation within corporate social entrepreneurship strategies. More research is needed in order to rene the patterns and components of the corporate social entrepreneurship model.Practical implications Integrating sustainability into the innovation process allows Odebrecht to differentiate itself from competitors and have meaningful engagement with stakeholders. This helps the company to grow, especially in developing economy markets, which face similar sustainability challenges as Latin America.Originality/value The combination of corporate entrepreneurship models and these case studies of sustainability innovation helps to create a model of corporate social entrepreneurship explaining how companies can transform external sustainability challenges into shared value creation.Keywords Sustainable innovation, Corporate social entrepreneurship, Shared value,Social intrapreneurship Paper type Case study

Introduction

In 2010 The World Business Council for Sustainable Development published the Vision2050 report (World Business Council for Sustainable Development, 2010) which lays out apathway leading to a global population of some 9 billion people living well, within theresource limits of the planet by 2050[1]. Like the Rio 20 conference and the EuropeanUnions 2020 Horizon, the report calls for inclusive forms of growth creating employment

and education, internalising externalities, valuing ecosystem services, as well as avoidingcarbon emissions. These initiatives as well as many others demonstrate global societysstruggle to achieve sustainable development to ensure that future generations have thesame access to essential resources and services as we have today (World Commission onEnvironment and Development, 1987).

This societal demand has met with a new consciousness in the corporate world that realisesthat satisfying societys sustainability needs not only helps to avoid risks, but may also createopportunities, for as Porter and Kramer (2011) termed it shared value creation.Companies at the higher end of corporate sustainability maturity have started to adopt their

DOI 10 .110 8/CG -06 -2 01 3-0 08 0 VOL . 1 3 NO. 5 2 013 , pp. 61 3-6 25 ,Q Emerald Group Publishing Limited, ISSN 1472-0701j CORPORATE GOVERNANCEj PAGE 613

Heiko Spitzeck andClaudio Boechat areProfessors at Nu cleo deSustentabilidade,Fundaca o Dom Cabral, Sa oPaulo, Brazil.Se rgio Franca Lea o isbased at Odebrecht, Sa oPaulo, Brazil.


2/13

strategies, proactively including societys concerns (Zadek, 2004; Maon et al. , 2010). Due totheir large-scale impacts, multinational enterprises possess the potential to increaseinnovation, spur wealth creation, transfer technology, raise productivity, meet basic needs,enhance living standards, and improve the quality of life for millions of people around theworld (Nelson, 2006, p. 2). However, this ambition to innovate based on societyssustainability challenges is currently not reected in existing models of corporateentrepreneurship (Kuratko et al. , 1990; Hornsby et al. , 1993; Stopford and Baden-Fuller,1994; Antoncic and Hisrich, 2003; Anderson et al. , 2004; Kuratko and Goldsby, 2004).Researchon corporateentrepreneurship basically focusses on entrepreneurial responses to

market forces, such as increased competition (Kuratko et al. , 2004), and currently fails tointegrate non-market aspects such as sustainability challenges.

This paper addresses this gap by proposing a model of corporate social entrepreneurshipbased on a literature review and the insights of two case studies within one organization.

The argument of this paper is presented as follows: rst, we present a short literature reviewdemonstrating that neither research on sustainability nor research on corporateentrepreneurship is currently able to explain how companies can use corporateentrepreneurship to support sustainable innovations. Second, the research methodologyis presented, which explains two case studies of projects executed by Odebrecht, aBrazilian business conglomerate. The projects contain diverse sustainability innovations,which simultaneously create value for the company and for society (Porter and Kramer,2011). Contrasting insights from the literature and the cases then allow us to present a modelof corporate social entrepreneurship. In conclusion, implications for theory and practice arepresented.

Literature review

In trying to integrate sustainability challenges into business strategies, companies seem tomove through stages of maturity, usually starting from a more reactive approach, evolving toa risk management approach, and nally to exploiting business opportunities and causingpositive transformations in society (Zadek, 2004; Mirvis and Googins, 2006; Maon et al. ,2009; Spitzeck, 2009). Due to their generic categorisations, sustainability maturity modelshave been unable to describe exactly what companies do in terms of innovation andsustainability once they reach higher stages of maturity. Additionally, many models havebeen designed by departing from a corporate reputation crisis in order to explain howcompanies learn to integrate sustainability into their operations (Zadek, 2004; Spitzeck,2009). This stream of research has yet to offer explanations to questions such as:

B How do companies without a reputation crisis learn to integrate sustainability?B What kind of internal environment do companies create once they treat sustainability

within their business strategy?B How do mature companies use sustainability to innovate and create competitive

advantages?

Some initial ideas are given in Porter and Kramers (2011) seminal paper about creatingshared value. However, many questions remain: what does a favourable internalenvironment for creating shared value strategies look like and who implementssustainability innovations?

Research on corporate entrepreneurship has explored how companies adapt to changingmarket conditions through new business venturing, innovation processes and self-renewal(Kuratko et al. , 1990; Hornsby et al. , 1993; Stopford and Baden-Fuller, 1994; Antoncic andHisrich, 2003; Anderson et al. , 2004; Kuratko and Goldsby, 2004; Christensen, 2005;Mantere, 2005; Antoncic, 2007). This line of research has particularly explored thecharacteristics of a favourable internal environment for innovation and entrepreneurshipsuch as proactive organizational culture, encouraging HR practices, top managementsupport, resource availability, exible organizational structures as well as an innovationstrategy. There are also models that connect the favourable internal environment to externalinnovation triggers such as, for example, increased competition (Kuratko et al. , 2004). The

PAGE 614 jCORPORATE GOVERNANCEj VOL. 13 NO. 5 2013


3/13

triggers explored in this line of literature have not yet integrated with wider social andenvironmental concerns and are currently limited to a market perspective by analysingtechnological change, industry growth, competitive rivalry, and market dynamism (Hornsbyet al. , 1993; Antoncic and Hisrich, 2003; Ireland et al. , 2009).

This paper aims to create synergies between both lines of research by presenting a model ofcorporate social entrepreneurship. This model explains how external non-market triggersgive an impulse for innovations that create value for the rm as well as for society.

Research methodIn order to explore the connection between external non-market triggers, innovations and asystem of corporate social entrepreneurship we present in-depth case studies (Eisenhardt,1989; Yin, 2003) of two major projects of the Odebrecht group. The objective is to explainhow the company transforms sustainability issues into innovations that create value forsociety while at the same time creating a competitive advantage for Odebrechts business.The case is analysed by combining various research methods such as semi-structuredinterviews with intrapreneurs and managers (Miles and Huberman, 2005), participantobservation (Glaser and Strauss, 1967) as well as document analysis (both internal andexternal) to triangulate data and verify the results presented (Jick, 1979). The analysis of twodifferent cases helps to demonstrate that results are in fact based on a corporate socialentrepreneurship strategy and not just incidental.

Case background

This case background describes important organizational antecedents (Kuratko et al. ,1990, 2001; Christensen, 2005; Ireland et al. , 2009) which are essential for a favourableorganizational environment regarding corporate entrepreneurship. Odebrecht is adiversied Brazilian business holding company headquartered in Salvador de Bahia(Brazil) that is active in construction, engineering, infrastructure, real estate development,biofuels, oil and gas, environmental engineering and petrochemicals, employing 87,000people, and reporting revenues of $US23.34bn in 2009. Fifty-four per cent of its revenuewas generated in Brazil, 24 per cent in other Latin-American countries, 10 per cent inAfrica and the remainder in North America, the Middle East and Europe (Odebrecht,2010, p. 15).

The companys mission is to generate increased wealth for Clients, Shareholders, Membersand Communities, aiming to Survive, Grow and Perpetuate[2]. A core part of Odebrechtssustainability approach is institutionalised in the so-called Tecnologia EmpresarialOdebrecht (TEO). This policy, originally formulated by the companys founder(Odebrecht, 1983), describes the companys values and principles, which govern theachievement of results, client satisfaction and sustainability in all operations[3]. It valueshuman beings strengths, particularly willingness to serve others, the ability and desire toprogress, and the drive to surpass previous results. As Odebrecht is a very entrepreneurialorganization, a rules and compliance approach would limit the creativity and engagement ofthe rms leaders, which have contributed to the creation of the highly diversied businessportfolio. Therefore Odebrecht opted for a principle-based approach, based on trust inpeople and their development through work.

Due to its values and vision, Odebrecht does not see itself as a construction rm, but as a

service provider to government and society wherever the rm is present, as well as aninductor of local development. This desire is present within the companys long-termstrategy for 2020 as well as in the discourse of senior leaders such as Marcelo BahiaOdebrecht, President and CEO (Odebrecht, 2010, p. 11):

. . . Linked to the Growth projected for 2020 are two basic commitments: to social development[. . .] and to environmental protection [. . .] By 2020 we will be bigger, but we will still be ourselves:knowledgeable people who can make things happen and create businesses that inducesustainable development wherever we are present.

The projects described below demonstrate how Odebrecht intends to bring life to this vision.

VOL. 13 NO. 5 2013jCORPORATE GOVERNANCEj PAGE 615


4/13

Case 1: The hydroelectric power plant Santo Antonio in Porto Velho

Brazils energy demand was expected to rise by 7.4 per cent in 2010, putting increasingpressure on the existing energy infrastructure (Blount, 2010). Brazil has one of the cleanestelectric energy grids worldwide, which is 44.1 per cent powered by renewables (EmpresaDe Pesquisa Energe tica, 2012). Until the early 1990s, most electricity generated in Brazilwas supported by state-owned companies. The majority of the large hydropower plantswere built by private construction companies under contracts with public energy utilities.Delays in construction schedules due to budgetary constraints frequently led to costoverruns in such public energy projects. Since environmental regulations were initiated inthe 1980s[4], but only consolidated in Brazil in the early 1990s, most large power plants werebuilt under conditions where the present strict regulations were not in place. Environmentaland social costs were high under these practices, especially where large reservoirs wereinvolved. Deterioration in water quality and the spread of disease (malaria and others)occurred in several projects in the Amazon region (Lyons, 2010). The environmental andsocial impacts of energy plant construction led the Brazilian government to halt construction,especially in environmentally sensitive regions such as the Amazon biome. However,infrastructure today is a major challenge to Brazils growth trajectory, and the country has settargets to build 24 dams in the Amazon in this decade business worth about $US100bn(Lyons, 2010). Critics argue that Brazil should do more to protect the Amazon biome, whichis home to an unparalleled biodiversity and key in the ght against climate change. An actualcase of critique is the 11,200MW Belo Monte dam (Barrionuevo, 2010a). The project is worth$US11bn and requires the hiring of approximately 20,000 workers, mostly men. The impactsof migration to this region will have great impact on social investments and programs in theregion. Risks of increasing prostitution and crime rates are among the major concerns of thelocal population (Schexnayder, 2010). The construction affects the Amazons Xingu River inthe Northern state of Para and will ood 440 square kilometres (Barrionuevo, 2010b). Theproject has been delayed by over a year due to environmental concerns, and its approvalhas been argued to be among the causes for Environment Minister Marina Silva resigningfrom ofce in 2009 (Blount, 2010).

Against this background Odebrecht Energy manages the project of the 3,150MW SantoAntonio hydropower plant on the Madeira River in Rondo nia, Brazil right in the heart of theAmazon biome. Odebrecht is involved in all stages of the project from feasibility studies allthe way through planning, construction, and via the company Santo Antonio Energia SA itwill also participate in the plants operations and energy sales (Odebrecht, 2010, p. 32). Theconstruction itself has a budget of $US8bn (Lyons, 2010).

The construction consortium led by Odebrecht has spent $US600m on a sustainabledevelopment strategy for the region (Lyons, 2010) and had commissioned environmentalimpact assessments[5] three years before the opening of the public bidding process.Odebrecht Energia has projected the total amount of greenhouse gas emissions that will begenerated during the construction of the Santo Antonio plant. This survey identied the mainsources of emissions, making it possible to develop reduction strategies (Odebrecht, 2010,p. 32). Odebrecht not only mitigated impacts but took local sustainability challenges to driveinnovation. One of the main innovations in terms of environmental protection was theadoption of special low head turbines. Traditional hydroelectric plants require the formationof reservoirs to provide the necessary water heads in order to power large-scale generators.Odebrecht commissioned the study of a run-of-the-river project involving a higher number oflow head turbines, which in turn implied a smaller reservoir and consequently less ooding

of areas. This strategy also allowed the company to bring forward energy production fromone part of the dam by one year.

On the social side, in 2005 Porto Velho had 350,000 inhabitants, 40,000 of whom wereunemployed (Barrionuevo, 2010c). In 2008 Odebrecht set up a programme calledACREDITAR (Portuguese for belief or certify) to train local residents to provide thelabour pool necessary for the construction of the plant. The programme has trained morethan 36,000 people for jobs such as bricklayers, welders, carpenters and electricians toname just a few. With total investments (2008-2011) of approximately $US18m Odebrechtdeveloped all didactic material for two modules the basic and the specic technical



5/13

modules[6]. The basic module consists of 32 hours of training on health, safety at work,environment, quality, planning, group work and occupational psychology, mainly based onTEO. The technical module consists of anything from 32 to 200 hours of training for a specicjob on site. After the course, graduates have priority for recruitment and 24,708 graduateshad been recruited by May 2011. Most of these workers have increased their income. Onecase is Arlincen Batista Gomes, a 30-year-old mother who earned $US110 per month as acleaner and now works as a carpenter with a monthly salary of $US750 (Lyons, 2010).Critical for the success of the programme was partnering with the Ministry of SocialDevelopment, local state government, the city administration, local schools and universities.

ACREDITAR has been expanded to other 20 projects in six different states in Brazil and alsoto projects in Angola, Colombia, Panama, Venezuela and Peru. Due to its impact PresidentLula has visited the project several times, thus highlighting the importance of localdevelopment at the Santo Antonio site[7]. Benets of the programme included a reduction inthe number of qualied people being brought to the region from outside, thus putting lessstress on the existing infrastructure (hospitals, schools, roads, etc.) (Lins de Alencar et al. ,2009).

Case 2: Interocea nica Sur

In Peru, Odebrecht has a 70 per cent share in the CONIRSA consortium for the constructionof a 700 km road connecting In apari with San Juan de Mancona, Matarani and other cities(Machado Filho et al. , 2008). CONIRSA will hold a 25-year licence for operation andmaintenance of the road. The project began in 2005 and the value of the contract adds up to$US1bn.

Right from the beginning the project was conceived as an opportunity for social inclusionand environmental protection. Before construction began Odebrecht ran a diagnostic ofsocial and environmental indicators, and discovered that 70 per cent of the population livedin rural areas, and 91.4 per cent of those lived in poverty; nearly 50 per cent of childrensuffered from malnutrition and 25 per cent were illiterate; and 35 per cent of the populationwere without access to energy, clean drinking water and sanitation. The mapping ofcommunities and their interests in being connected to the highway as well as avoidingenvironmentally sensitive areas facilitated the planning of the road. In 2007 the consortiumstarted to invest in local development for the communities affected by this work anddeveloped initiatives that aimed to improve health and education as well as to develop

sustainable forms of tourism that would enable the communities to benet from the newhighway. Total investment was expected to be $US12.5m over a ve-year period, with$US3m coming from Odebrecht and the rest from other partners. These funds nancedprojects in responsible tourism and handicrafts, eco-businesses such as sales of local fruits,conservation of biodiversity and strengthening of local governance structures. Responsibletourism centres have been created in Tinque and Ausangate; these include trekking routes,camp sites and accommodation facilities[8]. In the eco-business section one projectfocussed on training 120 families of guinea pig farmers, increasing their production ten-foldand increasing prices by 300 per cent[9]. More than 230 handicraft producers have beentrained in order to improve management and protability (Machado Filho et al. , 2008). As aresult of initial progress, Odebrecht was able to attract co-funding from various banks anddevelopment institutions.

The implementation and funding depended on the support of local citizens groups,handicraft associations, NGOs such as Conservation International, Instituto Machu Picchuand Accion Sin Fronteras, banks such as Corporacio n Andina del Fomento, Fondo de lasAme ricas and the Inter-American Development Bank, government institutions such as theMinistry of Tourism and the Regional Government of Cusco, as well as industry associationssuch as the Asociacio n Peruana de Turismo de Aventura y Ecoturismo as well as otherpartners. Estimates from the Peruvian government overseeing the construction calculatedthat the highway had generated approximately $US3bn in benets for the country by 2011due to the creation of 10,000 direct and 30,000 indirect jobs as well as the economicdevelopment of the region now connected to the road network of Peru and Brazil[10].



6/13

Results and cross-case comparison

The literature on corporate entrepreneurship and intrapreneurship (Hornsby et al. , 1993;Antoncic and Hisrich, 2003) has described two main antecedents of innovations:

1. the external environment in which the rm operates; and

2. the internal organizational environment, which either hinders or fosters innovation.

These models frequently refer to external triggers for innovation, innovations responding tothese triggers, as well as organizational outcomes (Hornsby et al. , 2002; Antoncicand Hisrich,

2003; Kuratko et al. , 2004; Ireland et al. , 2009). In the following cross-case comparison (seeTable I) we make reference to these important factors of corporate entrepreneurship, but alsoadd elements of the case studies such as external collaboration as well as societal outcomes.

The comparison of the two cases demonstrates that while individual characteristics such assustainability challenges and societal impacts may differ, there are clearly identiablecommon elements, such as:

B an innovation response to a non-market external trigger;B the use of external collaboration in the design and implementation of the innovation;B nancial as well as intangible organizational outcomes; andB reduced negative impacts as well as positive outcomes for the local communities involved.

Table I Cross-case comparison

Santo Anto nio Interocea nica Sur

External (non-market) triggers Migration of construction workers leading to: increasing crime rates stress on existing infrastructure prostitutionThe ooding of vast areas of land, leading to: deforestation loss of biodiversity relocation of local population breeding ground for mosquitoes with impacts

on health (e.g. malaria)

The planned highway runs through areascharacterised by: sensitive ecological areas poverty malnutrition inefcient business administration

Innovation ACREDITAR programme training localpopulation and reducing the need for workermigrationLow head turbines reducing the area to beooded

Planning of the route as well as training of thepeople along the highway for agricultural andhandicraft production and sustainable tourism

External collaborations Ministry of Social DevelopmentLocal and state governmentsSchoolsUniversities

Ministry of TourismLocal and state governmentsCitizen groupsIndustry and handicraft associationsNGOs such as Conservation InternationalInter-American Development Bank

Organisational outcomes Avoiding delays and in this case achievingproduction one year ahead of scheduleBuilding relationships with the government whichis the main client (visit by President Lula)Avoiding reputational risks and negative mediafrom protests

Increased income from highway concessionCo-funding of local development initiatives bypartners

Societal outcomes Training of 36,000 peopleRecruitment of 24,708 peopleIncreasing incomeLower environmental impactLower need for worker migration and thusreduced social impacts

Employment generated for 10,000-30,000peopleEducation and training of local population(management of handicrafts, agriculturalbusiness)Local economy increased by ca. $US3bn



7/13

Towards a framework for corporate social entrepreneurship

The existing models of corporate entrepreneurship in combination with the insights of thecase studies described above now allow us to design a model of corporate socialentrepreneurship. Corporate social entrepreneurship has been dened as a process ofextending a rms domain of competence [. . .] through innovative leveraging of resources,both within and outside its direct control, aimed at the simultaneous creation of economicand social value(Austin, 2006, p. 170) and the model shown in Figure 1 illustrates howcorporations can transform external non-market triggers into innovations, thus creatingeconomic and social value.

We detail each of the components of this model of corporate social entrepreneurship belowusing existing theory as well as references to the ndings of the case studies.

External triggers

Existing research summarises external triggers for innovation, such as dynamism,technological change, industry growth, competitive rivalry, product-market fragmentationand demand for new products (Hornsby et al. , 1993; Zahra, 1993; Antoncic and Hisrich,2003; Ireland et al. , 2009). These triggers are all clearly present in the case study, but at thesame time are focussed on existing market conditions, ignoring non-market aspects such as

Figure 1 A model of corporate social entrepreneurship

Note: Additions to traditional models of corporate entrepreneurship are markedin bold and italic

ExternalTriggers

Market Factors Competition

Technological

Change Industry

Growth Product-Market

Fragmentation Demand for

new products

Non-market Factors Social &

Environmental Risks

Opportunities for Creating Shared Value

OrganizationalOutcomes

Financial Profitability Growth Competitive

capabilities Strategic

repositioning

Intangible Value Reputation

Risk reduction

Access toGovernment

Long-termlegacy

Societal Outcomes

Reduced

Negative Impacts Positive Impacts

S h a r e

d V a

l u e

C r e a

t i o n

OrganizationalAntecedents

SustainabilityVision

Top ManagementSupport

CommunicationOpenness

Time & ResourceAvailability

Rewards & Controls Organizational

Values

Work Discretionand Autonomy

Collaborations Authority Competencies Credibility Co-funding

SocialIntrapreneurs



8/13

social and environmental issues. The cases above demonstrate rst, the importance ofconsidering social and environmental risks as potential triggers for innovation. Inconstructing hydropower plants and highways there are social risks such as resettlingand economic dislocation of the affected population, among other potential social negativeimpacts. Additionally, there are environmental risks such as loss of habitat, reducedbiodiversity and impacts on sh populations. Some issues are inter-linked, such as extensiveooding, which creates more breeding grounds for mosquitoes, transmitting malaria andother diseases. These externalities have traditionally not been considered in corporatedecision-making and innovation processes as their impacts were felt mainly by the general

public. Secondly, there is the potential of using social as well as environmentalcharacteristics in order to create shared value (Porter and Kramer, 2011). Thesocio-environmental diagnostic in Peru allowed Odebrecht to better plan constructionactivities along the route of the highway, promoting increased support activities for the localpopulation. Envisaging future uses of the highway, Odebrecht proposed fosteringresponsible economic activities such as improvements in tourism facilities, which in turncould bring further usage of the road. Local unemployment at the Santo Antonio site createda fertile ground for the educational initiatives of the company, which allowed a reduction inthe number of workers hired elsewhere and thus the costs of relocating, travel expenses andthe extent to which the local infrastructure was put under strain.

Organisational antecedents

Among the organizational characteristics that inuence corporate entrepreneurship arecommunication openness, reward and control mechanisms (Kuratko et al. , 1990, 2001;Christensen, 2005; Ireland et al. , 2009), environmental scanning intensity, time availability(Hornsby et al. , 1993), top management support (Kuratko et al. , 1990; Hornsby et al. , 2002)and organizational values (Antoncic and Hisrich, 2003).

The Odebrecht case nds traces of all these aspects, but adds one essential component:the inclusion of sustainability in the companys vision and action plans of senior executives.

This vision has been formulated based on humanistic values already established inTecnologia Empresarial Odebrecht. Such values have been found to be important forinspiring organizational members to innovate (Antoncic and Hisrich, 2003), as well as toincrease the motivation to partner for external stakeholders (Juniper and Moore, 2002;Lozano, 2005; von Kimakowitz et al. , 2010).

External collaborations

Organisational boundaries have been discussed extensively in the context of corporateentrepreneurship (Hornsby et al. , 1993, 2002; Kuratko et al. , 2005). However, the empiricalanalysis has been limited to questions of cross-departmental or cross-functionalcollaboration within the organization to overcome a silo culture (Hornsby et al. , 2002). TheOdebrecht case demonstrates the importance of collaborating with external stakeholders inorder to create shared value. This is in line with research on collective impact (Isaacs, 1993;Kania and Kramer, 2011) as well as social entrepreneurship (Austin et al. , 2006).Contributions from social entrepreneurship state that the organization may actually havegreater social impact by working in collaboration with complementary organizations or evenformer or potential competitors (Austin et al. , 2006, p. 18). Collaborations in the Odebrechtcases have been used in order to gain authority, add competences, increase credibility, andto leverage funds. Partnering with the local government and citizen groups gave theinitiatives the necessary authority and governance structure in order to implement projects.Partnering with training institutions was essential for educating the local population in orderto benet from the projects either as employees, suppliers or as entrepreneurs.Collaborating with diverse groups also increased credibility as it demonstrated a joint andorganized effort, which did not depend on a single actor. Finally, partnering with internationaland local development organizations and banks helped to leverage funds dedicated tothese projects as some institutions co-nanced the local development activities.



9/13

Social intrapreneurs

The emergence of sustainability innovations depends on individuals working within theorganization being capable of recognizing and responding to external triggers, buildingalliances with external stakeholders and aligning these activities with corporate strategy.These individuals have recently been named social intrapreneurs (Sustainability, 2008;Brenneke and Spitzeck, 2010; Grayson et al. , 2011; Halme et al. , 2012), who are describedas people within a large corporation who take direct initiative for innovations which addresssocial and environmental challenges protably (Grayson et al. , 2011, p. 3). In both cases ofthe Santo Antonio dam and the Peru highway the Odebrecht team included severalmembers acting as social intrapreneurs. Of course, these social intrapreneurs do not workalone, but they are the articulators of the shared value strategy on the local as well asorganizational level. Social intrapreneurs form a cross-functional project team; they engagewith local stakeholders, they convince development organizations to partner and align theiractivities with corporate strategy, and they report on nancial, social and environmentalresults of their projects in short, they bring the creation of a shared value strategy to lifewithin the operations of the company by implementing sustainability innovations. Thefollowing quote from one of the intrapreneurs demonstrates the importance of articulating anetwork of internal and external stakeholders in order to create shared value in the long run:

A leader is more than a good administrator of resources for all stakeholders, including investors.A leader aims for more than making money and includes concerns about values and ethics, andlong-term impacts of the business on society. A leader must ensure a continuous platform ofdialogue as a basisto seek mutualbenets forhis business andsocietythat go beyond thescopeof his contract.

Outcomes

Previous papers on corporate entrepreneurship have described outcomes in terms oforganizational and individual outcomes (Morris et al. , 2011). Research on shared value(Porter and Kramer, 2011), however, suggests that the results should be described in termsof organizational and societal outcomes.

On the organizational side, primary outcomes have been performance criteria such asgrowth and protability (Antoncic and Hisrich, 2003) or competitive capabilities andstrategic repositioning (Ireland et al. , 2009). In line with the literature, the above case reportssome clear, tangible, nancial outcomes such as increased protability by concessions,such as more economic activity in the local communities meaning more trafc on thehighway. By addressing social and environmental issues the company was also able toattract co-funding for local development projects and had access to cheaper forms ofnancing provided by banks operating under the Equator Principles agreement or the socialand environmental policies of the World Bank. By reducing risks regarding opposition to theSanto Antonio dam, Odebrecht was able to bring forward operations on part of the dam byone year, thus anticipating the generation of revenue. By training the local population, thecompany was able to reduce costs in comparison to the more expensive approach ofbringing more than 10,000 workers into a remote location. In addition to the nancialbenets, Odebrecht was able to create intangible value such as a better reputation,reduction of risks and government support for the training programme, while leaving apositive legacy in the community.

On the societal side there are two major differences between the Odebrecht approach andother similar projects. First, the projects aim to reduce negative impacts, which stem fromthe nature of projects such as constructing a dam, for example ooding, strain on existinginfrastructure, increased crime rates, etc. The reduction of negative impacts always refers toinnovations compared to the business-as-usual scenario in which social and/orenvironmental impacts are more severe. Second, the approach aims to create positiveimpacts, such as educating and training local stakeholders and animating local economicactivities. The cases demonstrate how the voluntary inclusion of social and environmentalexternalities brings benets to the community and company alike. This is how the companyaims to create shared value in line with the denition proposed by Porter and Kramer (2011,p. 66):



10/13

Theconceptof shared value canbe denedas policiesand operating practices that enhance thecompetitiveness of a company while simultaneously advancing the economic and socialconditions in the communities in which it operates.

Conclusion

The aim of this paper was to demonstrate how companies respond to external sustainabilitychallenges by following a corporate social entrepreneurship approach that allows thecompany to create shared value. The Odebrecht cases demonstrate that external triggersinclude non-market socio-environmental risks and opportunities. Social intrapreneursrecognize these external triggers and come up with sustainability innovations. Theseinnovations are made possible by an enabling internal environment as well as by addingcompetencies, resources and the reputation of external partners. Innovations from socialintrapreneurs are successful on two grounds: commercial success for the company andsuccess in resolving sustainability issues in the communities in which the companyoperates. Only if the business and society benet from the sustainability innovations can wespeak of the creation of shared value.

Contribution to theory

This paper contributes to the intersection of sustainability and corporate entrepreneurshiptheory. It enriches existing models of corporate entrepreneurship and presents a model ofcorporate social entrepreneurship. This model of corporate social entrepreneurship differsfrom previous models in so far as it recognizes non-market triggers for innovation such associo-environmental risks and opportunities. It also stresses the importance of asustainability vision, which inspires social intrapreneurs to innovate and motivates externalstakeholders to collaborate. Finally, the model does not only consider organizationaloutcomes, but also includes outcomes generated for society.

The ndings are limited by the adopted research approach of a comparative case studywithin a single organization. This research design is not sufcient for creating a new theoryand therefore, the model of corporate social entrepreneurship needs to be considered as arst suggestion, which requires further testing and renement. However, the case doesserve to demonstrate the limitation of current models of corporate entrepreneurship (Popper,1959), which are at present unable to integrate sustainability considerations. The casessuggest investigating the values, competencies and behaviours of social intrapreneurs asan avenue for further research. This would help educational institutions as well as humanresource professionals to design development activities which in the end help individuals aswell as organizations to harness the benets of a shared value approach.

Practical implications

This paper demonstrates the usefulness of a corporate social entrepreneurship approach forcompanies, which are seeking ways to transform external sustainability challenges intoinnovation. One of the essential components is a sustainability vision, which formulates adesirable image of the future for the company as well as for external stakeholders. Thissustainability vision has two effects. On the one hand it motivates external stakeholders topartner in projects, which aim to achieve this goal in which they are intrinsically interested.On the other hand it inspires employees and intrapreneurs to come up with innovations thatconnect the sustainability challenges, the companys vision and the interests of externalstakeholders in order to createvalue for thecommunity, and simultaneously for the company.Of central importance in this model is the social intrapreneur. These individuals understandbusiness as well as the external context and are able to identify the sweet spot in whichinterests overlap and collaborative projects can be born. As Felipe Cruz, Director ofSustainability and CSR, states: The best CSR project is the one focused on theconvergence of interests of the regional actors and the business itself.

Notes

1. Taken from WBCSDs website, available at: www.wbcsd.org/pages/edocument/edocumentdetails.aspx?id 219&nosearchcontextkey true (accessed 18 March 2012).



11/13

2. See www.odebrecht.com.br/en/odebrecht-organizations/2020-vision (accessed 4 November 2010).

3. See www.odebrecht.com.br/en/odebrecht-organizations/teo-business-culture and www.odebrechtonline.com.br/materias/01701-01800/1760/ (both accessed 4 November 2010).

4. See, for example, Brazils National Environmental Policy enacted in 1981, availableat: www.planalto.gov.br/ccivil_03/leis/l6938.htm (in Portuguese; accessed 22 May 2013).

5. See www.odebrechtonline.com.br/materias/01701-01800/1753/ (accessed 4 November 2010).

6. See Lins de Alencar et al. (2009).

7. See, for example, www.mds.gov.br/noticias/em-rondonia-presidente-lula-e-ministro-patrus-ananias-visitam-o-projeto-acreditar (accessed 27 October 2010).

8. For these and more examples see www.isur.org.pe/proyectos (accessed 5 March 2013).

9. See www.isur.org.pe/proyectos/formacion-y-fortalecimiento-de-redes-de-productores-de-cuyes-en-el-distrito-de-ccatcca-provincia-de-quispicanchi (accessed 5 March 2013).

10. See http://bic.caudilweb.com/es/Article.12432.aspx (accessed 5 March 2013).

References

Anderson, N., De Drew, C.K.W. and Nijstad, B.A. (2004), The routinization of innovation research:a constructively critical review of the state-of-the-science, Journal of Organizational Behavior , Vol. 25No. 2, pp. 147-173.

Antoncic, B. (2007), Intrapreneurship: a comparative structural equation modeling study, Industrial Management & Data , Vol. 107 No. 3, pp. 309-325.

Antoncic, B. and Hisrich, R. (2003), Clarifying the intrapreneurship concept, Journal of Small Business and Enterprise Development , Vol. 10 No. 1, pp. 7-24.

Austin, J., Stevenson, H. and Wei-Skillern, J. (2006), Social and commercial entrepreneurship: same,different, or both?, Entrepreneurship Theory & Practice , Vol. 30 No. 1, pp. 1-22.

Austin, J.E. (2006), Social entrepreneurship: its for corporations, too, in Nicholls, A, (Ed.), Social Entrepreneurship: New Models of Sustainable Social Change , Oxford University Press, Oxford,pp. 169-180.

Barrionuevo, A. (2010a), Bypassing resistance, Brazil prepares to build a dam, New York Times ,16 August.

Barrionuevo, A. (2010b), Diaspora-in-waiting in Amazon; indigenous groups refuse to go quietly as newdam forces them to relocate, International Herald Tribune , 17 August.

Barrionuevo, A. (2010c), Educational gaps limit Brazils reach, New York Times , 5 September.

Blount, J. (2010), Brazil expects power demand to rise 7,4% and is ramping up hydro and thermalprojects, Global Power Report , LexisNexis, Dayton, OH.

Brenneke, M. and Spitzeck, H. (2010), Social intrapreneurs bottom-up social innovation,International Review of Entrepreneurship , Vol. 8 No. 2.

Christensen, K.S. (2005), Enabling intrapreneurship: the case of a knowledge-intensive industrialcompany, European Journal of Innovation Management , Vol. 8 No. 3, pp. 305-322.

Eisenhardt, K.M. (1989), Building theories from case study research, Academy of Management Review , Vol. 14 No. 4, pp. 532-550.

Empresa De Pesquisa Energe tica (2012), Balanco Energe tico Nacional 2012 Ano base 2011:Resultados Preliminares , Empresa de Pesquisa Energe tica, Rio de Janeiro.

Glaser, B.G. and Strauss, A.L. (1967), The Discovery of Grounded Theory: Strategies for Qualitative Research , Aldine Publishing, Chicago, IL.

Grayson, D., McLaren,M. andSpitzeck, H. (2011), Social intrapreneurs:an extra force for sustainabilityinnovation, Doughty Centre for Corporate Responsibility, Craneld University, Craneld, available at:www.som.craneld.ac.uk/som/dinamic-content/media/knowledgeinterchange/criticalguides/ 20110223b/Guide.pdf



12/13

Halme, M., Lindeman, S. and Linna, P. (2012), Innovation for inclusive business: intrapreneurialbricolage in multinational corporations, Journal of Management Studies , Vol. 49 No. 4, pp. 743-784.

Hornsby, J.S., Kuratko, D.F. and Zahra, S.A. (2002), Middle managers perception of the internalenviroment for corporate entrepreneurship: assessing a management scale, Journal of Business Venturing , Vol. 17 No. 3, pp. 253-273.

Hornsby, J.S., Naffziger, D.W., Kuratko, D.F. and Montagno, R.V. (1993), An interactive model of thecorporate entrepreneurship process, Entrepreneurship Theory & Practice , Vol. 17, pp. 29-37.

Ireland, R.D., Covin, J.G. and Kuratko, D.F. (2009), Conceptualizing corporate entrepreneurship

strategy, Entrepreneurship Theory and Practice , Vol. 33 No. 1, pp. 19-46.Isaacs, W. (1993), Dialogue, collective thinking, and organizational learning, Oranizational Dynamics ,Vol. 22 No. 2, pp. 24-39.

Jick, T.D. (1979), Mixing qualitative and quantitative methods: triangulation in action, Administrative Science Quarterly , Vol. 24 No. 4, pp. 602-611.

Juniper, C. and Moore, M. (2002), Synergies and best practices of corporate partnerships forsustainability, Corporate Environmental Strategy , Vol. 9 No. 3, pp. 267-276.

Kania, J. and Kramer, M.R. (2011), Collective impact, Stanford Social Innovation Review , Vol. 60,Winter, pp. 36-41.

Kuratko, D.F. and Goldsby, M.G. (2004), Corporate entrepreneurs or rogue middle managers?A framework for ethical corporate entrepreneurship, Journal of Business Ethics , Vol. 55 No. 1, pp. 13-30.

Kuratko, D.F., Hornsby, J.S. and Goldsby, M.G. (2004), Sustaining corporate entrepreneurship:modellingperceived implementation and outcome comparisons at organizational and individual levels,International Journal of Entrepreneurship and Innovation , Vol. 5 No. 2, pp. 77-89.

Kuratko, D.F., Ireland, R.D. and Hornsby, J.S. (2001), Improving rm performance throughentrepreneurial actions: Arcordias corporate entrepreneurship strategy, Academy of Management Executive , Vol. 15 No. 4, pp. 60-71.

Kuratko, D.F., Montagno, R.B. and Hornsby, J.S. (1990), Developing an intrapreneurial assessmentinstrument for an effective corporate entrepreneurial environment, Strategic Management Journal ,Vol. 11 No. 5, pp. 28-49.

Kuratko, D.F., Ireland, R.D., Covin, J.G. and Hornsby, J.S. (2005), A model of middle-level managersentrepreneurial behavior, Entrepreneurship Theory & Practice , Vol. 29 No. 6, pp. 699-716.

Lins de Alencar, C., Vinhas Teles, F.E., Costenaro, F. and Ojima Costa, S. (2009), ACREDITAR Programa de Qualicaca o Prossional Continuada, Odebrecht Premio Destaque, Salvador.

Lozano, J. (2005), Towards the relational corporation: from managing stakeholder relationships to buildingstakeholder relationships (waiting for Copernicus), Corporate Governance , Vol. 5 No. 2, pp. 60-77.

Lyons, J. (2010), Brazil engineers a critic-proof dam, Wall Street Journal , 6 October.

Machado Filho, D., Carneiro Da Cruz, L.F., Barrio De Mendoza, E., Silva Rocha, G. and Canseco, M.T.(2008), Iniciativa Interocea nica Sur: Integrando Conservacio n y Desarollo, Odebrecht PremioDestaque, Salvador.

Mantere, S. (2005), Strategic practices as enablers and disablers of championing activity, Strategic Organization , Vol. 3 No. 2, pp. 157-184.

Maon, F., Lindgreen, A. and Swaen, V. (2009), Designing and implementing corporate socialresponsibility: an integrative framework grounded in theory and practice, Journal of Business Ethics ,Vol. 87 No. 1, pp. 71-89.

Maon, F., Lindgreen, A. and Swaen, V. (2010), Organizational stages and cultural phases: a criticalreview and a consolidative model of corporate social responsibility development, International Journal of Management Reviews , Vol. 12 No. 1, pp. 20-38.

Miles, M.B. and Huberman, A.M. (2005), Qualitative Data Analysis: An Expanded Sourcebook , SagePublications, Thousand Oaks, CA.

Mirvis, P.H. and Googins, B. (2006), Stages of corporate citizenship, California Management Review ,Vol. 48 No. 2, pp. 104-126.



13/13

Morris, M.H., Kuratko, D.F. and Covin, J.G. (2011), Corporate Entrepreneurship and Innovation:Entrepreneurial Development within Organizations , South-Western Cengage Learning, Mason, OH.

Nelson, J. (2006), Leveraging the development impact of business in the ght against global poverty,Working Paper No. 22, Corporate Social Responsibility Initiative, John F. Kennedy School ofGovernment, Harvard University, Cambridge, MA.

Odebrecht (2010), Annual Report 2010-2020, Odebrecht, Salvador.

Odebrecht, N. (1983), Survival, Growth and Perpetuity , Odebrecht, Salvador.

Popper, K.R. (1959), The Logic of Scientic Discovery , Harper & Row, New York, NY.

Porter, M. and Kramer, M.R. (2011), The big idea: creating shared value, Harvard Business Review ,Vol. 89 Nos 1/2, pp. 62-77.

Schexnayder, C.J. (2010), Brazil approves11,200-MW Monte dam, Engineering News-Record , 3 May.

Spitzeck, H. (2009), Organizational moral learning: what, if anything, do corporations learn from NGOcritique?, Journal of Business Ethics , Vol. 88 No. 1, pp. 157-173.

Stopford, J.M. and Baden-Fuller, C.W.F. (1994), Creating corporate entrepreneurship, Strategic Management Journal , Vol. 15 No. 10, pp. 521-536.

Sustainability (2008), The Social Intrapreneur A Field Guide for Corporate Changemakers ,Sustainability, London.

von Kimakowitz, E., Pirson, M., Spitzeck, H., Dierksmeier, C. and Amann, W. (Eds) (2010), Humanistic Management in Practice , Palgrave Macmillan, New York, NY.

World Business Council for Sustainable Development (2010), Vision 2050, World Business Council forSustainable Development, Geneva.

World Commission on Environment and Development (1987), Our Common Future , Oxford UniversityPress, Oxford.

Yin, R.K. (2003), Case Study Research: Design and Methods , Sage Publications, Thousand Oaks, CA.

Zadek, S. (2004), The path to corporate responsibility, Harvard Business Review , Vol. 82 No. 12,pp. 125-132.

Zahra, S.A. (1993), Environment, corporate entrepreneurship and nancial performance: a taxonomicapproach, Journal of Business Venturing , Vol. 8 No. 4, pp. 319-340.

About the authorsHeiko Spitzeck is Professor and Head of the Sustainability Research Centre at Fundaca oDom Cabral in Brazil. From 2008-2010 he was a Lecturer at Craneld Universitys DoughtyCentre for Corporate Responsibility in the UK. Between 2004 and 2006 he served as Directorfor oikos International, a student-driven NGO for sustainable management and economics.He was educated in Germany, Spain and Switzerland and received his PhD from theUniversity of St Gallen (Switzerland). Heiko Spitzeck is the corresponding author and can becontacted at [email protected]

Claudio Boechat has been a Teacher, Researcher and Project Manager at the SustainabilityResearch Centre, Fundaca o Dom Cabral (FDC), Brazil, since 2002. His current professionalactivities include knowledge development in the eld of responsible and sustainablebusiness management. He is the Brazilian representative of the Globally ResponsibleLeaders Initiative, sponsored by the UN Global Compact and the European Foundation forManagement Development, and is a member of the UN Global Compact Task Force for

Principles for Responsible Management Education. He holds a degree in ElectricalEngineering from the Federal University of Minas Gerais, Brazil, and is Specialist inEconomic Engineering at the Fundaca o Dom Cabral.

Sergio Lea o is Director for Sustainability at Odebrecht. Previously he was Sergio Director forEnvironmental Affairs at OdebrechtEngineering and Construction. He holds a degree in Civiland Sanitary Engineering from the Universidade Federal de Minas Gerais (Brazil) and a PhDin Civil Environmental Engineering from the University of California at Berkeley.


To purchase reprints of this article please e-mail: [email protected] visit our web site for further details: www.emeraldinsight.com/reprints

sustainability as a driver for innovation –towards a model of corporate socialentrepreneurship at...

Documents