Subsistence entrepreneurship the interplay of collaborative innovation, sustainability and social goals

Contributions to Management Science

Vanessa Ratten
Paul Jones
Vitor Braga
Carla Susana Marques Editors

Subsistence
Entrepreneurship
The Interplay of Collaborative
Innovation, Sustainability and Social
Goals


Contributions to Management Science


More information about this series at />

Vanessa Ratten • Paul Jones • Vitor Braga •
Carla Susana Marques
Editors

Subsistence Entrepreneurship
The Interplay of Collaborative Innovation,
Sustainability and Social Goals


Editors
Vanessa Ratten
Department of Entrepreneurship, Innovation

and Marketing
La Trobe University
Melbourne, VIC, Australia
Vitor Braga
Polytechnic Institute of Porto
Porto, Portugal

Paul Jones
ICTE
Coventry University
Coventry, UK
Carla Susana Marques
University of Trás-os-Montes
and Alto Douro
Vila Real, Portugal

ISSN 1431-1941
ISSN 2197-716X (electronic)
Contributions to Management Science
ISBN 978-3-030-11541-8
ISBN 978-3-030-11542-5 (eBook)
/>Library of Congress Control Number: 2019936558
© Springer Nature Switzerland AG 2019
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Contents

Subsistence Entrepreneurship: The Role of Collaborative Innovation,
Sustainability and Social Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vanessa Ratten, Paul Jones, Vitor Braga, and Carla Susana Marques

1

Firm Founders’ Passivity as a Source of Serendipitous Opportunity
Discovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Antti Kauppinen

7

Commonomics: Rhetoric and Reality of the African Growth Tragedy . . .
Jerry Kolo, Nnamdi O. Madichie, and Chris H. Mbah
Entrepreneurship in the Solidarity Economy: A Valuation of Models
Based on the Quadruple Helix and Civil Society . . . . . . . . . . . . . . . . . . .
José Manuel Saiz-Álvarez and Jesús Manuel Palma-Ruiz
Evaluating the Business Model of a Work Integration Social

Enterprise in Cantabria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elisa Baraibar-Diez, María D. Odriozola, Ignacio Llorente,
and José Luis Fernández Sánchez

17

33

51

Encouraging Indigenous Self-Employment in Franchising . . . . . . . . . . .
Scott Weaven, Lorelle Frazer, Mark Brimble, Kerry Bodle,
Maurice Roussety, and Park Thaichon

69

Shadow Economy Index for Moldova and Romania . . . . . . . . . . . . . . . .
Talis J. Putnins, Arnis Sauka, and Adriana Ana Maria Davidescu

89

Survivability and Sustainability of Traditional Industry
in the Twenty-First Century: A Case of Indonesian Traditional
Furniture SME in Jepara . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Danu Patria, Petrus A. Usmanij, and Vanessa Ratten
The Minimum Wage Fuels Romania’s Shadow Economy? . . . . . . . . . . . 155
Adriana Ana Maria Davidescu and Friedrich Schneider
v

vi

Contents

Gamifying Innovation and Innovating Through Gamification . . . . . . . . 183
Agnessa Shpakova, Viktor Dörfler, and Jill MacBryde
Work Hard, Play Hard: Work-Life Balance in Small Business . . . . . . . . 195
Robyn Young, Lorelle Frazer, Scott Weaven, Maurice Roussety,
and Park Thaichon
Stay Ahead of a Game or Stay Still: The Impact of Learning
and Development on Business Performance . . . . . . . . . . . . . . . . . . . . . . 215
Janette Timms, Lorelle Frazer, Scott Weaven, and Park Thaichon


List of Contributors

Elisa Baraibar-Diez University of Cantabria, Santander, Cantabria, Spain
Kerry Bodle Department of Accounting, Finance and Economics, Griffith
University, Southport, QLD, Australia
Vitor Braga Porto Polytechnic, Porto, Portugal
Mark Brimble Department of Accounting Finance and Economics, Griffith
University, Nathan, QLD, Australia
Adriana Ana Maria Davidescu Department of Statistics and Econometrics,
Bucharest University of Economic Studies, Bucharest, Romania
Department of Labour Market Policies, National Scientific Research Institute for
Labour and Social Protection, Bucharest, Romania
Viktor Dörfler University of Strathclyde, Glasgow, Scotland, UK
Lorelle Frazer School of Business, University of the Sunshine Coast, Sippy
Downs, QLD, Australia
Paul Jones Swansea University, Swansea, UK

Antti Kauppinen College of Business, School of Management, RMIT University,
Melbourne, VIC, Australia
Jerry Kolo College of Architecture, Arts and Design, American University of
Sharjah, Sharjah, United Arab Emirates
Ignacio Llorente University of Cantabria, Santander, Cantabria, Spain
Nnamdi O. Madichie Centre for Research and Enterprise, Bloomsbury Institute
London, London, UK
Jill MacBryde University of Strathclyde, Glasgow, Scotland, UK

vii


viii

List of Contributors

Carla Susana Marques Universidade de Trás-os-Montes e Alto Douro, Vila Real,
Portugal
Chris H. Mbah School of Business and Entrepreneurship, American University of
Nigeria, Yola, Adamawa State, Nigeria
María D. Odriozola University of Cantabria, Santander, Cantabria, Spain
Jesús Manuel Palma-Ruiz Universidad Autónoma de Chihuahua, Chihuahua,
Mexico
Danu Patria Universitas Teknologi Surabaya, Surabaya, Indonesia
Talis J. Putnins Stockholm School of Economics in Riga (Latvia), Riga, Latvia
Vanessa Ratten Department of Entrepreneurship, Innovation and Marketing,
La Trobe University, Melbourne, VIC, Australia
Maurice Roussety Department of Marketing, Griffith University, Nathan, QLD,
Australia
José Luis Fernández Sánchez University of Cantabria, Santander, Cantabria,

Spain
José Manuel Saiz-Álvarez EGADE Business School-Tecnologico de Monterrey,
Zapopan, Jalisco, Mexico
Arnis Sauka Centre for Sustainable Business, Stockholm School of Economics in
Riga, Riga, Latvia
Friedrich Schneider Johannes Kepler University of Linz, Linz, Austria
Agnessa Shpakova Heriot-Watt University, Edinburgh, Scotland, UK
Park Thaichon Department of Marketing, Griffith University, Southport, QLD,
Australia
Janette Timms School of Business, University of the Sunshine Coast, Sippy
Downs, QLD, Australia
Petrus A. Usmanij Department of Entrepreneurship, Innovation and Marketing,
La Trobe University, Melbourne, VIC, Australia
Scott Weaven Department of Marketing, Griffith University, Southport, QLD,
Australia
Robyn Young Department of Marketing, Griffith University, Nathan, QLD,
Australia


Subsistence Entrepreneurship: The Role
of Collaborative Innovation, Sustainability
and Social Goals
Vanessa Ratten, Paul Jones, Vitor Braga, and Carla Susana Marques

Abstract The goal of this chapter is to discuss the role of subsistence entrepreneurship in the society. Increasingly both business and government are focusing at
low-income consumers and the role they play in the innovation process. This has
meant greater emphasis has been given to understand the role of these consumers
who are called ‘subsistence consumers’ because they live at the bottom of the
pyramid and exist on low income and wages. This chapter discusses subsistence
consumers in terms of how they can be innovative and also the importance that

collaboration plays in achieving social goals. Managerial and social implications are
discussed in terms of how business can harness the collective power of subsistence
entrepreneurs in order to create a better global community.

1 Introduction
The world population is growing and there are a number of people who live in
poverty. This has led to a need to produce products and services at an affordable rate.
The goal of this book is to understand the way low-priced products and services are
being produced by subsistence entrepreneurs through a variety of different contexts.
This book offers an analysis of the practices of subsistence entrepreneurs through
V. Ratten (*)
Department of Entrepreneurship, Innovation and Marketing, La Trobe University, Melbourne,
VIC, Australia
e-mail:
P. Jones
Swansea University, Swansea, UK
e-mail:
V. Braga
Porto Polytechnic, Porto, Portugal
e-mail:
C. S. Marques
Universidade de Trás-os-Montes e Alto Douro, Vila Real, Portugal
e-mail:
© Springer Nature Switzerland AG 2019
V. Ratten et al. (eds.), Subsistence Entrepreneurship, Contributions to Management
Science, />
1


2

V. Ratten et al.

their cultural and social endeavours. This chapter begins by discussing the literature
on subsistence entrepreneurship, which is followed by some implications for
research and public policy.
Subsistence entrepreneurs are individuals at the base of the pyramid who are
considered poor and barely make a living (Viswanathan et al. 2010). The base of the
pyramid market ‘is characterized as illiterate, in poor health, of meager resources,
inaccessible by media, geographically isolated and inexperienced with consumption’
(Nakato and Weidner 2012: 21). Individuals living a subsistence existence tend to
have few resources and focus on short-term objectives. Subsistence entrepreneurs help
to alleviate poverty by operating small businesses. Viswanathan et al. (2014: 1) define
subsistence entrepreneurship as ‘entrepreneurial actions, undertaken in the informal
sector of the economy, by individuals living in poverty in bottom of the pyramid
(BOP) or subsistence marketplaces to create value for their consumers’. The bottom of
the pyramid has also been referred to as ‘the base of the pyramid’, ‘low-income
consumers’ and ‘subsistence consumers’ (Nakato and Weidner 2012).
Many subsistence entrepreneurs have social vulnerabilities due to where they work
and their living conditions (Ratten 2014). This has led to subsistence entrepreneurs
needing to think and act differently to other forms of entrepreneurs (Dana and Ratten
2017). The unique setting for subsistence entrepreneurship requires a consideration of
the context in terms of sustainability and social goals. The large population in emerging
economies like China and India have required a reexamination of low-income consumers in these countries as their sheer number makes them an important consumer
segment (Ratten 2017).
Subsistence markets are defined as ‘markets in which consumers barely have
sufficient resources for day-to-day living’ (Rivera-Santos et al. 2012: 1722). These
markets comprise subsistence entrepreneurs who are also referred to as subsistence
consumer-merchants because they both consume and operate small businesses
(Venugopal et al. 2015). Subsistence consumers are different to other types of

consumers as they face uncertainty in their daily activities. This results in a lack of
control over whether they are able to buy and consume certain products. Weidner
et al. (2010: 559) state that ‘subsistence consumers, both individuals and families,
live in substandard housing and have limited or no education; they also have limited
or no access to sanitation, portable water, and health care, and earn minimal income’.
This makes it challenging for businesses focusing on these consumers as they
struggle to understand their buying patterns (Ratten and Ferreira 2017). In addition,
many subsistence consumers have limited transportation, which makes them reliant
on certain geographical areas for their product needs. This is reflective in the low
levels of education amongst subsistence consumers and the lack of infrastructure in
these geographic locations (Ratten and Welpe 2011).
Work on subsistence entrepreneurship has been limited in the mainstream entrepreneurship literature due to the emphasis on corporate entrepreneurship. This
omission has resulted in an increase in social entrepreneurship, but still the research
on subsistence entrepreneurship is lacking (Ratten et al. 2016). However, this is
changing as there is both kudos and money to be gained from researching subsistence entrepreneurship. This derives from governments and international aid organizations wanting to help people at the bottom of the pyramid. Moreover, there is an


Subsistence Entrepreneurship: The Role of Collaborative Innovation. . .

3

awareness from business people about market potential in subsistence markets. Due
to innovation being a necessity for those in subsistence markets, it can breed
business creation. In addition, the entrepreneurial spirit of consumers at the bottom
of the pyramid is interesting.
The aim of this book is to fill a gap in the literature by providing a number of
studies on subsistence entrepreneurship and collaborative innovation. The motivation for this book is to expand the knowledge on subsistence entrepreneurship in
order to guide future research. By doing so, a better understanding of the way to
manage innovation can be presented. The chapters in this book are both exploratory
and explanatory in nature, thereby presenting a broad overview about the role

subsistence entrepreneurship plays in society. We hope that the chapters in this
book will spur more work into what makes subsistence entrepreneurship unique and
deserving of more attention.

2 Goal of Book
The chapters in this book constitute a preliminary effort to examine the role of
subsistence entrepreneurship in the global economy. The chapters vary in scope and
detail with a range of geographic settings included. This enables a comprehensive
understanding about the role of subsistence entrepreneurs in society. Accordingly,
whilst the results of each chapter are somewhat exploratory in nature, the findings
contribute to our knowledge about subsistence entrepreneurship. There needs to be
more emphasis on the uniqueness and vitality of subsistence entrepreneurs, who are
very useful in linking social and cultural conditions with business activity. Interesting questions still remain about the specifics of subsistence entrepreneurship such as:
How do entrepreneurs in subsistence marketplaces use their networks to find information? Do they rely on social networks to facilitate word-of-mouth marketing, or
do they use technological devices?

3 Overview of Chapters
The chapters in this book all relate to the interplay of collaborative innovation,
sustainability and social goals. The second chapter of this book titled ‘Subsistence
Entrepreneurship in Ethnic Religion and Sociocultural Spaces: A Case Study’
focuses on the social aspects of subsistence entrepreneurship. As religion and culture
have an impact on subsistence consumers, it is important to understand the role
ethnicity can play. The third chapter titled ‘Firm Founders’ Passivity as a Source of
Serendipitous Opportunity Discovery’ focuses on a new context for subsistence
entrepreneurship in terms of chance encounters leading to business ventures. This
is an interesting chapter as it analyses the discovery process leading to subsistence
entrepreneurship. The fourth chapter titled ‘Commonomics: Rhetoric and Reality of


4

V. Ratten et al.

the African Growth Tragedy’ analyses the context of emerging economies and
subsistence entrepreneurship. This is an important context given most subsistence
entrepreneurship occurs in developing countries. The fifth chapter titled ‘Entrepreneurship in the Solidarity Economy: A Valuation of Models Based on the Quadruple
Helix and Civil Society’ focuses on a new form of economic evaluation leading to
social change. This is an important part of understanding how government, business
and education interlink to enable entrepreneurship. The sixth chapter titled ‘Evaluating the Business Model of a Work Integration Social Enterprise in Cantabria’
focuses on social issues surrounding entrepreneurship. The seventh chapter is titled
‘Encouraging Indigenous Self-Employment in Franchising’ and focuses on disadvantaged communities. The eighth chapter is titled ‘Transformational Entrepreneurship Through Social Innovation and Public Sector Management’ and examines the
public sector. The ninth chapter is titled ‘Shadow Economy Index for Moldova and
Romania’ and analyses the informal economy in Europe. The tenth chapter is titled
‘Survivability and Sustainability of Traditional Industry in the Twenty-First Century: A Case of Indonesian Traditional Furniture SME in Jepara’ and highlights how
emerging economies in Asia are utilizing sustainable forms of entrepreneurship. The
eleventh chapter is titled ‘The Minimum Wage Fuels Romania’s Shadow Economy?’ and analyses the informal sector. The twelfth chapter is titled ‘Gamifying
Innovation and Innovating Through Gamification’ and discusses the technology
aspects surrounding social innovation. The thirteenth chapter is titled ‘Work Hard,
Play Hard: Work-Life Balance in Small Business’ and focuses on the small enterprises in communities. The fourteenth chapter is titled ‘Stay Ahead of a Game or
Stay Still: The Impact of Learning and Development on Business Performance’ and
provides a good overview of future innovation scenarios.

4 Managerial Implications
The chapters in this book present promising research avenues for subsistence
entrepreneurship. It is worthwhile noting that whilst subsistence entrepreneurship
can occur in any economic setting, most of it tends to be in developing economies.
Subsistence entrepreneurship can be used as a social action tool in broadening
consumer engagement and achieving better societal interaction with low-income
consumers. The availability of low-priced goods and services is needed by the poor
and marginalized communities. Large multinationals are realizing the potential of

this market and deliberately devising products to suit these consumers.
For entrepreneurship practitioners, the chapters in this book highlight the need for
a holistic approach to subsistence business practices. The chapters in the book point
out that there are various forms of subsistence entrepreneurship. Entrepreneurship
practitioners need to use marketing in terms of integrating social needs with business
practices. In order to improve rates of subsistence entrepreneurship, entrepreneurs
need to make their products in a way that appeals to consumers. This includes
designing products that fit into subsistence consumer’s lifestyles. The practice of


Subsistence Entrepreneurship: The Role of Collaborative Innovation. . .

5

subsistence entrepreneurship is complex and requires dedication. As the chapters in
this book demonstrate, there are some hindrances to successful subsistence entrepreneurship that can be alleviated by proper planning. An implication of this is the
need for entrepreneurs to rethink the development process. Traditionally, subsistence products have been less costly forms of existing products in the market. But
this approach should change with a realization that some products are naturally for
subsistence consumers. Due to unforeseen events and occurrences in the international market, different approaches to the innovation process for subsistence entrepreneurs need to be taken into account.

5 Research Implications
The chapters in this book have important research implications for the general field of
subsistence entrepreneurship but also related fields such as marketing, innovation and
management. As shown in the chapters of this book, not all subsistence entrepreneurship is the same. In developing countries, subsistence entrepreneurship is likely to be
related to product market differentiation rather than technological innovation. This is
due to the need for low-cost products that can be used for a number of reasons. In
addition, an appreciation of the requirements of bottom-of-the-pyramid consumers is
needed to understand adoption behaviour. At the moment, we still do not know
whether the innovation adoption process differs amongst developed and developing
countries in terms of subsistence products. Thus, another research implication is to

study the determinants and outcomes of adoption behaviour for subsistence entrepreneurship. Amongst the questions to address are what cycle of adoption behaviour is
used by subsistence consumers and whether context affects the consumer experience.
Additionally, more information about how to predict and explain subsistence entrepreneurship is needed. This includes focusing on consumers as co-creators of product
innovations.
The foregoing chapters leave some interesting areas for future research. First, there
needs to be more work on the different levels of analysis in subsistence entrepreneurship such as the entrepreneur, government and surrounding environment. This will
enrich the literature by providing different perspectives about stakeholder engagement
in subsistence entrepreneurship. Second, a deeper understanding is required about the
different forms of subsistence entrepreneurship. Past research has tended to use
developing countries as the context, but there are other contexts also prone to
subsistence entrepreneurship. This includes rural and peripheral communities that
have fewer resources than urban localities. There is little research on subsistence
entrepreneurship in developed countries. This leads to intriguing research possibilities
that can delve deeper into how context affects entrepreneurship.
The pioneering nature of this book lends itself to some unique research findings.
Subsistence entrepreneurs have a different experience in new product development
as they learn by experience. This provides an opportunity to compare different
practices for managing in subsistence marketplaces. This is of great benefit for


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V. Ratten et al.

entrepreneurs who intend to be in subsistence markets that can be in turn applied to
other market places. This book provides an opportunity to broaden our understanding about the resource barriers to subsistence entrepreneurship. We bring into focus
the need for subsistence entrepreneurship by emphasizing its importance.

References
Dana L, Ratten V (2017) International entrepreneurship in resource-rich landlocked African countries.

J Int Entrep 15(4):416–435
Nakato C, Weidner K (2012) Enhancing new product adoption at the base of the pyramid: a contextualized model. J Prod Innov Manage 29(1):21–32
Ratten V (2014) Future research directions for collective entrepreneurship in developing countries: a
small and medium-sized enterprise perspective. Int J Entrep Small Bus 22(2):266–274
Ratten V (2017) Gender entrepreneurship and global marketing. J Glob Mark 30(3):114–121
Ratten V, Ferreira J (2017) Future research directions for cultural entrepreneurship and regional
development. Int J Entrep Innov Manage 21(3):163–169
Ratten V, Welpe I (2011) Community-based, social and societal entrepreneurship. Entrep Reg Dev
23(5–6):283–286
Ratten V, Ferreira J, Fernandes C (2016) Entrepreneurial network knowledge in emerging economies: a study of the Global Entrepreneurship Monitor. Rev Int Bus Strateg 26(3):392–409
Rivera-Santos M, Rufin C, Kolk A (2012) Bridging the institutional divide: partnerships in
subsistence markets. J Bus Res 65:1721–1727
Venugopal S, Viswanathan M, Jung K (2015) Consumption constraints and entrepreneurial intentions
in subsistence marketplaces. J Public Policy Mark 34(2):235–251
Viswanathan M, Sridharan S, Ritchie R (2010) Understanding consumption and entrepreneurship
in subsistence marketplaces. J Bus Res 63:570–581
Viswanathan M, Echambadi R, Venugopal S, Sridharan S (2014) Subsistence entrepreneurship, value
creation, and community exchange systems: a social capital explanation. J Macromark 34:1–14
Weidner K, Rosa J, Viswanathan M (2010) Marketing to subsistence consumers: lessons from practice.
J Bus Res 63:559–569


Firm Founders’ Passivity as a Source
of Serendipitous Opportunity Discovery
Antti Kauppinen

Abstract This chapter focuses on understanding how subsistence entrepreneurs
utilise chance discoveries in their marketplace. A case study method is utilised to
understand the process of serendipitous opportunity discovery in terms of obtaining
market advantages. Case studies from Finland and Denmark are utilised to analyse

the subsistence entrepreneurship process from a transformational perspective. The
results indicate that some passivity can generate a serendipitous opportunity discovery. Suggestions for future research are stated that highlight the link between the
transformational and subsistence entrepreneurship literature.

1 Introduction
An entrepreneurial opportunity is a key element of subsistence and transformational
entrepreneurship (see Ratten and Jones 2019), because an opportunity is a situation,
in which products, services, raw materials, or organising methods could be introduced with a higher price than their cost of production (Shane and Venkataraman
2000). These situations are often platforms for creating wealth and well-being
through their transformational effect of making new products and/or services available through a firm (Venkataraman et al. 2012), because these products and services
might make a positive impact on the lives of their end users. Using products and
services to transform an end-user’s life for the better originates in the definition of
transformational entrepreneurship, that is, “the creation of an innovative virtuebased organisation for the purpose of shifting resources out of an area of lower
and into an area of higher purpose” (Miller and Collier 2010: 85).
Although the work on opportunities would wish it so, not all the opportunity
content (i.e. a requirement for an innovative virtue-based organisation and/or product or service) can be predicted (Merrilees et al. 1998; Reynolds 2005). In fact, the

A. Kauppinen (*)
College of Business, School of Management, RMIT University, Melbourne, VIC, Australia
e-mail:
© Springer Nature Switzerland AG 2019
V. Ratten et al. (eds.), Subsistence Entrepreneurship, Contributions to Management
Science, />
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A. Kauppinen

activities that result in the discovery of an opportunity might happen accidentally
(cf. Kirzner 1997), for example, as a result of a person having nothing else to do
(Martello 1996). The prior research recognises that opportunity discovery is often a
serendipitous process and that its domains are (1) the prior knowledge of the sector’s
products, (2) contingency (i.e. a lucky accident where the discovery occurs), and
(3) an active search for opportunities (Dew 2009). In this chapter, alongside individual notions from the prior research (e.g. Görling and Rehn 2008), I problematise
the concept of an active search always being one of the domains of a serendipitous
opportunity discovery. I remove the active search domain from the serendipity
model (Dew 2009), explore the driving forces of passivity, and show empirically
how this assumption changes the current understanding. The current exploration of
examples of passivity opens up a new dimension in the fields of subsistence and
transformational entrepreneurship, because traditionally passivity has a connotation
of something not done or not started, which is the opposite to one of the requirements
of entrepreneurship (i.e. an active search) (Minniti 2008).
This chapter examines opportunities in which entrepreneurs apply the method
from subsistence entrepreneurship, that is, generating subsistence income (Schoar
2010). I show interview examples (two software developers, one mobile phone
application and game developer, and one dating consultant) that were parts of my
deviant case study material [i.e. a study, which has a target to present a surprise
(Seawright and Gerring 2008)]. In those examples, discovery of an opportunity is not
only associated with entrepreneurs’ profit-seeking ambitions (compare with Ratten
and Jones 2019), but in contrast, the opportunity discovery activities reported how
entrepreneurs develop a transformational effect through their products or services
while creating profits for themselves (compare with Viswanathan et al. 2014). The
common denominator of those examples (i.e. the criteria determining they were
selected as deviant, surprise-inducing cases) was that they resulted from serendipity
and as a consequence of their discovers’ passivity rather than activity. The primary
antecedent of this passivity was frustration, which originated in internal tensions
relating to the entrepreneurs’ lives. This finding as a part of the subsistence and
transformational entrepreneurship notion might offer some interesting avenues for

future research on the topic to explore.
This chapter is structured as follows. First, it reports on notions on an individual’s
passivity suggested in prior literature; doing so involves examining the antecedents
of passivity and also the discovery of serendipitous opportunity. Second, I will
explain the data I collected during a deviant case study in Finland and Denmark. It
is important to note that I call the participants in this study firm founders (although in
prior research, such individuals might be called entrepreneurs), because that is the
exact term that they used themselves in interviews. Using the exact same wording is
a critical form of grounded theory-based research and narrative coding, which I used
in this study. Third, in this chapter, I will explain those methodological procedures.
Fourth, I will explore the details of the categories, which emerged from the interview
data. Fifth, I will conclude the chapter by discussing how the findings might offer
insights useful to the literature on subsistence and transformational entrepreneurship.


Firm Founders’ Passivity as a Source of Serendipitous Opportunity Discovery

9

I will also discuss the limitations of this study and directions for the future research
in the field.

2 Prior Research
As an example of the critical research in the field, Görling and Rehn (2008) found
that sometimes a person’s passivity towards work triggers productive outputs, such
as opportunity discovery. The reason behind this argument is that passive people
often have a large repertoire of creative thoughts in mind (Styhre 2006). More
precisely, Frith et al. (2000: 358) define passivity as an experience in which a person
feels that “his own actions are being created, not by himself, but by some outside
force”. The research on entrepreneurial serendipity—which introduces its basic

domains as prior knowledge, contingency, and active search (Dew 2009; see also
Kirzner 1997)—does not, however, yet apply the insights from this passivity
research (see Blakemore et al. 2000).
In this chapter, I develop the current understanding on serendipity by removing
the active search domain from it, attach the passivity element into it, explore the
driving forces of this passivity, and energise this analysis with a sample of
interview data. The field in general primarily considers successful opportunity
discoverers as active and passionate people, who want to discover opportunities in
their sector (Cardon et al. 2009). Because this assumption of activity being a
critical force of discovering an opportunity contradicts some notions from the
field—for example, Görling and Rehn (2008), who argued that passivity could
be the force involved—this chapter clarifies the reasons for this fragmentation and
offers empirical examples, in which an opportunity was discovered serendipitously. One of the newest research results in the field suggested that gestation
activities of those who were discovering opportunities did not contribute to their
firms’ subsequent performance (Arenius et al. 2017). This surprising finding gives
a boost to the approach, which might clarify the reasons why activity does not
always lead to success, even if one might assume otherwise.
One of the additional reasons why activities are considered so important for
entrepreneurship is the theory on affect. For example, Foo et al. (2009) explained
that positive and negative emotions that entrepreneurs experience strengthen their
new venture creation efforts. In a similar vein, Wolfe and Shepherd (2013b) found
that a firm’s improved profitability, which in many cases is a result of someone’s
deliberate action (Cardon et al. 2009), magnifies the positive effect between positive/
negative emotions and performance in entrepreneurship-related topics (Wolfe and
Shepherd 2013a). Because those effects suggested earlier in this chapter are derived
from samples, which try to generalise the effects and show trends rather than details,
I used the opposite approach, which entails showing outliers. Because my target is
not to generalise and relate how these effects would function similarly in every
empirical context, I do not offer a model to be tested but instead frame the concentration of the empirical examples around the topics of entrepreneurs’ passivity and

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A. Kauppinen

serendipities that are interesting outliers in the fields of subsistence and transformational entrepreneurship.

3 Deviant Case Study Examples from Interviews
I collected the material for a deviant case study from Finland and Denmark. This
case study follows the deviant case study logic, because in this case study form a
researcher tries to find surprises or outliers (such as those related to firm founders’
passivity instead of activity as a driver of serendipitously discovered opportunities)
instead of trying to generalise the findings empirically (Seawright and Gerring
2008). In this chapter, I report on the interview material of that deviant case study.
My target is to offer a theoretical generalisation of the topic (i.e. passivity), an
implication that can potentially provide a boundary condition (see Strauss and
Corbin 1990) for the prior research on serendipitous opportunity discovery. The
case study material offers descriptions of seemingly passive firm founders who had
discovered a transformational opportunity [one intended to change the lives of end
users (Miller and Collier 2010)], for their businesses serendipitously. Below, I
briefly describe the firms and their founders’ backgrounds.
The first firm is based in Denmark, but it employs people all over the world,
because it applies an open source technology. The founder of this firm started
envisioning his business after he broke his back and he was required to stop work.
During his recuperation, because he had nothing else to do, he began to think of a
business he could establish. This firm founder is a lawyer. This firm runs an online
application for hospitals, which medical doctors use to treat and investigate brain
strokes in order to save patients’ lives. The second firm comes from Finland
(a partner of the former), and it offers online platforms for computers and mobile
phones (e.g. the one used for the hospital product). The firm founder of this company

started thinking of starting his own business when he was frustrated having been
fired from his job. The idea of starting a business idea in the same sector as his
previous employer appealed in that it offered a potential form of revenge on that past
employer. This firm founder gained a master’s degree in computer science.
The owner of the third firm is Danish and studied in a famous business
programme (Bachelor’s level) at a Danish business school. His business runs in an
office in Copenhagen, and offerings include mobile phone applications and games.
This firm founder got the idea for his company serendipitously at a time when he was
bored at a lecture. This firm founder claims that these products make their users’
lives happier. The founder of the fourth firm is of African origin but lives in
Denmark, and his firm offers dating consultancy services for men (e.g. books,
seminars, and personal coaching) to help its customers find a partner. His idea
came into his mind after his girlfriend left him and he wanted to help other men to
succeed in their relationships (especially during the phase of building of their
relationships). This founder has no further education qualification.


Firm Founders’ Passivity as a Source of Serendipitous Opportunity Discovery

11

4 Methods
I followed Strauss and Corbin’s (1990) grounded theory method to collect this deviant
case study data. Of this material, two open interviews from four firms are explored in
this chapter. The target of this case study was to try to find a specific construct from real
life: a driving force for passivity that might result in a serendipitous opportunity
discovery. Before starting to analyse this data, a professional transcriber transcribed
this data (530 minutes of talk in total) verbatim. In the analysis, I applied open
(i.e. finding the critical categories), axial (i.e. comparing the categories), and selective
codings (i.e. reorganising the categories to find the grand category) (Corbin and Strauss

1990; Strauss and Corbin 1990). In line with this coding method applied in the
entrepreneurship field (e.g. Singh et al. 2015), my aim was to concentrate not on
individuals but on categories that emerge from the data. That is why I removed the
identifiers to each interviewee in order to concentrate on analysing narrative content.
First, when analysing the interviews, I coded the opportunity narratives: the
situations which occurred because of serendipity (i.e. the open coding). A crucial
individual-level factor, which was often encapsulated with those opportunity situations, was firm founders’ frustration (examples in Table 1). Second, I reorganised
those categories to encompass descriptions of how firm founders spoke of their
opportunities occurring because of serendipity (including as a result of frustration) in
accordance with their analysed reasons (i.e. the axial coding). I found that the
primary reason for serendipities and their antecedents (frustration) was that these
firm founders were passive instead of active. Third, I coded the grand category to
explore the driving forces of those reasons for serendipity, frustration, and passivity
(i.e. the selective coding). The most important driving force turned out to be an
internal tension that these firm founders experienced in relation to their previous or
current work. The next chapter offers examples of those descriptions.

5 Internal Tension Generating Positively Channelled
Passivity
When analysing the interview data from the deviant case study conducted in Finland
and Denmark, two common basic categories of serendipity emerged from the open
coding. Those two categories (i.e. firm founders’ frustration types) are explored in
Table 1 with examples from interviews. In fact, when the firm founders explained why
they discovered some of their opportunities by chance, they related how frustrated
they were particularly in two different areas—business life and higher education (the
categories emerging from the open coding).
These two frustration types reported above made the focal firm founders passive in
different forms: passivity towards what is traditionally expected at work (e.g. be a good
employee and follow your leader) and passivity towards what is traditionally expected to
be true (e.g. theory learned at business school). The future firm founders’ bad experiences meant they did not want to participate in those institutions at all, which led them to

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A. Kauppinen

Table 1 The categories emerging out of codings
Categories from the open coding
Frustration of working for another firm,
examples:
“I woke up and I quite a bitch took a
cigarette and lit up. You know. . . everything was down down down. So, I decided
that I wanted to go out and find a way out
from this and how to become more successful”
“I want to work alone. I found it better,
because this is not for like everybody. If a
guy comes into this, there are three things.
First, he has to feel that nobody is doing
this on the field. The third part, he has to
make a turnaround. And the last part that
is that he has to be able to be trained. He
has to be able to take the learning from his
mind to another person. So, it’s a hard
process and I prefer to work alone”
“I simply broke my back, as a little personal thing and that was session for my
stuff. We had to carry our people that I
had problem with my back and so I had to
be at home. Then after half a year, actually
I had to quit my work, I couldn’t work.
And that time, actually, I take care of the

pains so was working a lot with the software. I mean it was kind of it was my job
was a course of buying a software and at
home I could do nothing, but just being
myself and try find out what was happening at the other side of the table so to
speak”
“He saw this way of handling things as a
simple way. Because it is not actually a
job contract, but also it could a simple
client contract with this my side contract
consultancy was about three pages. It’s
extremely simple also. And he liked that
approach, I mean, he told why not to try
another project. He had this, we arranged
a meeting in Stockholm on a day I was
working there with the project my side
and then I met this sits people, I mean
those brain project people and we had a
talk and came up with some, yeah, initial
ideas of how much it costs to take the core
system, this SAS-based system that I
mean what would be the percent of the
costs and some competition. And then we

Categories from the axial
coding
Passivity towards what is
traditionally expected at
work (e.g. to follow
one’s leader)
Alternative solutions

(a product or service for
an own business):
(1) mobile phone applications, (2) software for
hospitals, (3) platforms
for computers and
mobile phones, and
(4) dating consultancy

Grand category from the
selective coding
Internal tension in a
person’s mind which
triggered those firm
founders to actually start
their entrepreneurship
journey and which
resulted in their serendipitous opportunity
discoveries (i.e. an activation of their passivity
in thoughts originating
in their frustrations)

(continued)


Firm Founders’ Passivity as a Source of Serendipitous Opportunity Discovery

13

Table 1 (continued)
Categories from the open coding

just got a meeting and they came back a
few months later and wanted to take a new
meeting in Stockholm and where they
really wanted to get into the details and
how to do this brain project”
Frustration against to higher education,
examples:
“I always wanted to start a company. I just
looked for the right opportunity. I’ve
never been hired. I’ve been, yeah I had
one paying job that hand in your tax card
and everything. Otherwise, I always had
my own company, that would then
invoice”
“What is behind the numbers? Can I trust
these numbers you learn in school? How
do I, what does a number mean? How do
you analyse reports, source criticism.
Many people just don’t think, when they
see. . . 37 percent increase in something.
They think, “oh fuck that’s a lot” but, if
that’s from 1 to 1.37 units, that’s not a lot.
That’s nothing”
“There is no one reason how one finds an
idea. It cannot be found from statistics or
theory, because those predict that generally this is going to happen in companies.
For us it has always been a result of many
people’s discussions and a result of many
factors”
“After hours it is passive what we do. We

cannot close the work, and the activitylevel of being able to react is enough,
because then the serendipities bring those
opportunities and not the theory. I think
it’s about personalities and a wish to
develop the company”

Categories from the axial
coding

Grand category from the
selective coding

Passivity towards what
it traditionally expected
to be true (e.g. theory
leaned in the school)
Alternative solutions
(a product or service for
an own business):
(1) mobile phone applications, (2) software for
hospitals, (3) platforms
for computers and
mobile phones, and
(4) dating consultancy

Source: Author’s own table

explore personal ways to discover alternative opportunities; those ideas became the
foundations of their businesses (i.e. the categories emerging out of axial coding).
This significant power of being frustrated (found in the categories emerging during

open coding) flowing from trying to find alternative opportunities (found and clarified
during the axial coding) seemed to be the most important reason why these firm
founders considered starting their own businesses instead of working for someone
else. Thus, after analysing the reasons for that negatively oriented power of ignoring the
existing institutions (e.g. other employers and business schools) and trying to act upon


14

A. Kauppinen

other chances, it turned out that each of those firm founders experienced an internal
tension (i.e. the grand category emerging out from the selective coding) (see Table 1).
This internal tension can be characterised as a contraction in a person’s mind as a
realisation that it would be wise to follow what workplace leaders or staff at education
institutions say, but they did not want to do so.
I controlled for potential bias related to education level in the data by including
one firm founder without any further education beyond basic schooling. However,
this person offered similar narratives to other firm founders, so the level of education
did not change the insights from the grand narrative. The grand narrative (i.e. the
internal tension in a person’s mind) can be related to stress in the literature on
individual psychology (Mark et al. 2008).
Studying those internal tension levels (i.e. the grand category emerging from the
selective coding) more precisely would require an in-depth case study. Mark et al.
(2008) suggested that stress can be a reason for such internal tension in a person’s
mind and that this stress might, for example, be caused by interruptions at work. A
case study, which would clarify the elements (e.g. internal tensions in one’s mind,
interruptions at work, and stress), might require observation data (see Czarniawska
2008), which was unfortunately not available to this research because the interviewees could not offer any other data. Given one of the crucial components of a
case study method is that a researcher uses multiple data sources (Eisenhardt 1989);

the interview-based analysis presented here offers a potential approach for future
scholars. This notion does, however, offer some interesting insights into passivity
and its potential to support serendipitous opportunity discovery. The driving force of
this passivity included firm founders’ frustration with business life and educational
institutions in general, alternative solutions to organise their work (their own business ideas), and internal tensions in their minds (which can be a result of stress and
interruptions at work). These insights can be interesting, because the prior research
has primarily considered entrepreneurs as active individuals (see Cardon et al. 2009).

6 Discussion and Conclusions
This chapter offers a new perspective on the understanding of serendipitous opportunity discovery as a part of subsistence and transformational entrepreneurship literatures. I offered insights from my deviant case study that explored the reasons why
some passivity can generate a serendipitous opportunity discovery. I removed the
active search domain from the prior model by Dew (2009) and then attached the
passivity element into it. In the grounded theory analysis, it turned out that surprisingly
passivity, instead of an active search (compare with Arenius et al. 2017), was the
primary source of opportunity discovery in these serendipity cases, despite the prior
research on serendipity (e.g. Dew 2009; Merrilees et al. 1998; Reynolds 2005) and on
opportunities (e.g. Kirzner 1997; Shane and Venkataraman 2000; Venkataraman et al.
2012) suggesting otherwise.
The exploration of cases in this study shows that opportunity discoveries took
place, because the focal firm founders were not interested in working for any single


Firm Founders’ Passivity as a Source of Serendipitous Opportunity Discovery

15

existing firm (suggesting passivity) but created their own firms. More precisely, they
built their businesses because their passivity was transformed into an active mood
through their frustration about educational and business organisations (of which they
were a part and which were applied in their previous workplaces). These two forms of

frustration proved to be results of the focal firm founders’ wishes to control their own
work instead of being controlled by someone else (e.g. a boss). Being controlled was
one of the reasons that made them passive towards any work at existing firms and
towards any studying efforts at higher-education institutions. Thus, being passive
was a result of their experiencing internal tensions in their minds between what they
should do and what they wanted to do. They used this internal tension as an excuse to
convince themselves to stop work and studies and start their own businesses. Future
research could extend the analysis of those internal tensions to encompass the stress
perspective, for example. Doing so would align with the suggestion of Mark et al.
(2008) that one’s internal tensions in mind as well as interruptions at work can cause
stress: one of the potential triggers for people starting businesses.
It is critical to note that these firm founders, unlike those identified in the prior
research (e.g. Cardon et al. 2009; Venkataraman et al. 2012), did not grow their
businesses because of a wish to be active society members (firm founders) but
because they wanted to avoid of being controlled by anyone else who they associated
with causing them frustration (and thus: passivity). In fact, one of the interviewees
stated the following strong opinion when talking about chances to grow a business:
No. We don’t want. No. Not 100 employees. Not more than 30. Also, the products that we
build target automation. And recurring revenues, a monthly revenue. We do not build
products that would require a large sales department. Because we don’t want many people.
We want, our products are targeted, the first target is 10,000 users that will pay us each
month for a product.

This chapter extends the serendipitous opportunity discovery perspectives by
offering a view in which a person’s passivity might produce opportunities for wealth
generation and well-being, a critical aspect of subsistence and transformational
entrepreneurship literatures (see Miller and Collier 2010). The chapter discussed
these ideas further and offered two forms of frustration (about business organisations
and education institutions) as sources of generative passivity and suggests that these
passivity elements can trigger positive outcomes, such as opportunity discovery

through correctly handled psychological effects of self-control over one’s internal
tensions (compare with Blakemore et al. 2000; Frith et al. 2000).

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