Sofia Abid, Ph.D. Candidate at the Entrepreneurship Research Institute, Chair of International Entrepreneurship, Technical University of Munich, Germany.
Contact: sofia.abid@tum.de
Going in…
It’s been three years since the world has been hit by the first wave of coronavirus. Three years since many of us have lived for the first time through a global pandemic. Three years since we have followed scientists from all over the globe relentlessly advance their work to come to an ultimate pharmaceutical solution or vaccine that would allow the world as we knew it to function again. Three years since governments and policymakers have been testing and rolling out measures to protect their citizens but also bubble proof their economic activities and stability. Three years since we experience a healthcare disaster in many hospitals worldwide where the demand simply would not keep up with available local resources. Three years since we watch and observe as inequalities across the continents make way to a pandemic experienced and lived differently from one country to another, one community to another. Over these three years and beyond, one thing persisted over and over again, creeping up on all formal and informal decisions made and sustained, with a heavy presence but still as the “elephant in the room” in many key global conversations: healthcare systems are on shaky grounds.
Not only that but access to proper and affordable healthcare remains for many a far-fetched reality. While COVID-19 as a global pandemic has brought a much-needed spotlight into SDG 3 “Good Health and Well-being”, it also lit up the dark corners of forgotten conversations around the contextualization of healthcare. The truth of the matter is that many communities still lack the most basic healthcare. It comes as no surprise that these communities are mostly located in the Global South. Malaria, Typhoid, Yellow Fever, and Pneumonia are just some of the diseases still very much common in parts of Latin America, Southeast Asia, and Sub-saharan Africa. Though there have been vaccines developed against these viruses, access to proper medication remains a challenge. Mostly, the biggest challenges facing individuals and communities are diagnoses, due in part to limited geographical healthcare coverage and a low doctors to patients ratio. Children and women are still the most affected demographic groups. These affected groups suffer tardiness in diagnosis and in many cases faulty and wrong. This statistic hides a more sinister reality: women and kids are further at risk of specific diseases related to pregnancy and post-pregnancy conditions for women, and early childhood infections for newborns and toddlers.
Faced with these realities, one might feel first overwhelmed and second powerless. Where do we start as individuals to tackle grand challenges in general and specific ones in particular? How do we even pick what to address? After all, we have heard it more than once: “ Always pick your battles”. In a way, it is always by picking the battles that we can choose the weapons and work out adequate strategies. Still, you’d wonder: what is your power? What can you truly do? How to move to more active participation? Is it by voting and choosing your representatives? Or is it by working towards drafting policies and influencing policy-making? For some, it might also be conducting research and developing evidence-based knowledge. For a few, it is by going all in, all hands on deck. It is by being up-and-coming and pioneering. It is by addressing problems through innovative products and services and doing so while keeping the needs of their communities at the heart of their missions. These are individuals using entrepreneurship as a force for good. A force for change.
In this blog post, I’d like to take you to Uganda, East Africa, to learn about the stories of some of these individuals, enterprising to solve some of the most pressing healthcare challenges in their country. Most of all, I’d like to show you how they do it in an environment where resources are scarce and hard to come by.
Entrepreneurship as A Force for Good
You might have encountered, in recent years, the term “social entrepreneurship”, an emerging economic concept or innovative business model, putting a social mission (and sometimes environmental as well) at the heart of its value creation, prompting a balance between economic gain and social impact. Social entrepreneurship is in a way perceived as the “people’s solutions” to problems and issues which have not been addressed by public organizations (governments) or other private players.
Social entrepreneurship has also sparked considerable interest within the research community, prompting researchers to investigate its triggers, motives, operationalizations, and more recently, outcomes. But let’s take a step back and define social entrepreneurship. Interestingly enough and up to this date, there is still a lack of consensus as to what makes an entrepreneurial endeavor “social”. Researchers and practitioners alike have yet to agree on a universal definition for SE. In the literature, SE is mostly defined not as a term itself but as the combination of different sub-elements including the social entrepreneur, the social enterprise, the social innovation process, and the social value. Thus, one can stumble upon different definitions of SE depending on specific research angles. A social entrepreneur is defined as an individual who displays all typical entrepreneurial traits such as innovative es and resourcefulness. But in addition to that, the social entrepreneur displays pro-social behavior and a heightened moral agency as well as a sociomoral motivation. The social enterprise is a hybrid organization, built on a social mission, striving to create social value while also providing economic viability and profit. The process of SE is using and innovatively combining resources with the ultimate goal to alleviate a social hurdle and sustain both social and economic benefits (see e.g. Nicholls 2010; Bacq & Jansen, 2011). Taken together, social entrepreneurship can then be modeled as an umbrella term for “all activities and processes undertaken to discover, define, and exploit opportunities to enhance social wealth by creating new ventures or managing existing organizations in an innovative manner” (Zahra et al., 2009,p.519).
At its core, social entrepreneurship aims at alleviating our society’s grand challenges from poverty to inadequate healthcare to lack of education access and inequalities. However, it also alleviates the duties of governments and public structures in addressing certain “neglected issues” for one reason or another. Some researchers have suggested that social entrepreneurship is “the pursuit of sustainable solutions to neglected problems with positive externalities, which may arise from the simultaneous market and government failures” (Santos, 2012). As previously mentioned, social entrepreneurs are individuals, like you and I, who were confronted by the realities of our societal grand challenges and decided to tap into their inner motives, behaviors, and resources to come up with innovative solutions and products and address the gaps. While the mission is mostly prosocial, operations related to a social venture still require entrepreneurial resources. These resources ensure value creation and a balance of social and economic goals. However, as is the case in traditional commercial entrepreneurship, resources are hard to come by for new entrepreneurs adventuring into new waters, in certain resource-constrained contexts.
The Toolbox of Wonders
To pursue entrepreneurial endeavors, regardless of their underlying motives, founders have to mobilize a set of tangible and intangible resources. Resources in entrepreneurship are defined as “all the tangible and intangible assets controlled by an entrepreneur, or accessible via social ties, that enable him or her to exploit an entrepreneurial opportunity”, while resource mobilization refers to “the processes by which entrepreneurs assemble the resources used to execute on an opportunity” (Clough et al., 2019, p.241). These resources include human capital, which is the individuals founding the team and their skillset, social capital, harnessing and leveraging network relationships, financial capital as in cash flow and funding, and other forms of capital such as legitimacy, cultural capital, and intellectual property. However, all these resources or parts of them are hard to come by for new founders. It is even harder for founders to start a venture in resource-scarce contexts, where money and knowledge are scarce, and where key networks to access capital are not readily available in the immediate vicinity, pushing founders in these contexts to enlarge their resource mobilization geographical scope.
Indeed, mobilizing resources controlled by other actors is a challenging endeavor for any early-stage entrepreneurial venture, yet exacerbated when resource holders are situated abroad. This is a challenge faced by technology ventures operating in the resource-scarce contexts of many low and lower-middle-income countries whose chosen industry and technology require substantial resource stocks that are not available locally. In these cases, new ventures will typically rely on resources possessed by resource holders outside their immediate spheres of control. When domestic resource holders and the assets they provide cannot meet a new venture’s needs, it can turn to resource holders abroad, by raising capital from foreign investors, and accessing knowledge from foreign partners (Lindstrand et al., 2011; Tsang, 2002), or increasing its reputation through associations with high-status, foreign organizations (Yamakawa et al., 2013), for example. Acquiring these or other resources abroad requires that ventures first liaise with one or more foreign resource holders. We refer to the establishment of these interactions as foreign tie formation (see Bell et al., 2012; Villanueva et al., 2012; Montoro-Sanchez et al., 2018).
Networking becomes a key work for these ventures. This means in other words forming ties with any potential resource holder or a key partner that might connect them to resources or capital holders eventually. A couple of challenges arise for early-stage ventures while trying to liaise with resource foreign resource holders. The first that comes into mind is, how do I reach these people? After all, there is considerable geographical distance, coupled with a cultural and legitimacy distance. The second challenge would be to strategize smartly in order to effectively use the resources at hand (already scarce) in order to reach potential capital holders. After all, there might be traveling or other obligations involved, requiring finances. So how can early-stage founders strategize around that? Finally, how can founders capitalize on their local networks to reach broader ones? These questions have led us to explore how early-stage technology ventures in resource-scarce environments form ties with foreign resource holders.
A Trip to Kampala, Uganda
These questions have taken us to Kampala, Uganda, where we traveled back in 2019 and met local technology ventures, with a pro-social mission, operating in the healthcare sector.
While the overall life expectancy at birth in Uganda rose from 45.7 years to 62.2 years for males and 50.5 years to 64.2 years for females over the period 1991 to 2014, the under-five mortality rate dropped from 187 to 55 deaths per 1,000 live births and maternal mortality ratio dropped over the period 1995 to 2015 from 684 to 343 deaths per 100,000 live births, the country still faces a plethora of challenges related to inflectional diseases (prevention, diagnosis, and treatment), in particular in maternal and neonatal health (Global Health Observatory, 2017). According to the World Health Organization (2018), Uganda’s burden of disease is “dominated by communicable diseases, which account for over 50% of morbidity and mortality. Malaria, HIV/AIDS, TB, respiratory, diarrhoeal, epidemic-prone, and vaccine-preventable diseases are the leading causes of illness and death. Maternal and perinatal conditions also contribute to high mortality. Neglected Tropical Diseases (NTDs) remain a big problem in the country affecting mainly rural poor communities. Furthermore, there are wide disparities in health status across the country, closely linked to underlying socio-economic, gender, and geographical disparities.” In addition to that, there is a considerable hurdle to “deploy, motivate and retain human resources for health, particularly in remote localities; ensuring quality of the health care services delivered; ensuring the reliability of health information in terms of the quality, timeliness, and completeness of data; and reducing stock-out of essential/tracer medicines and medical supplies.”(Global Health Observatory & World Health Organization, 2018). To fill that existing gap and to address the government and market failure related to healthcare, social technology entrepreneurs come into play.
We met and interviewed founders of ten medical technology ventures, all based in Kampala and founded by grassroots young Ugandan entrepreneurs. These MedTech start-ups develop innovative products in the form of devices (both hardware and embedded software) to address a plethora of medical conditions ranging from the misdiagnosis of Pneumonia in newborns and toddlers and prevention of postpartum hemorrhages in young mothers to early-stage self-screening of breast cancer and Malaria early detection. Interestingly enough, all founders have had firsthand experiences with the medical disorders they were hoping to solve through their innovations. One founder has lost a dear aunt due to a late diagnosis of breast cancer as she lived in a remote community with barely any access to medical caregivers. Another founder has seen family and friends repeatedly suffer from severe Malaria symptoms. One founder has lost a partner due to her postpartum hemorrhages after giving birth to their babies while one almost lost her father due to a lack of oxygen in a local medical center. These founders went to Uganda’s leading university, Makerere University in Kampala, and studied various technical disciplines such as biomedical engineering, software engineering, industrial engineering, computer science, data engineering, and informatics. None of them had any sort of academic or professional international experience prior to starting their ventures. All of them decided to start to “fix the medical bugs” they have seen in their healthcare system and to “save others from losing loved ones”.
Helas, that’s where things get complicated and tricky. While these innovations are truly groundbreaking, they do require a heavy load when it comes to capital, both in terms of knowledge and in terms of finances. First and foremost, to develop MVPs and prototypes, these founders need access to advanced laboratory apparatus. Second, they also need resources to test their devices and conduct their pilot studies, a sturdy process requiring a great deal of time and access to data through patients. Lastly, just like any entrepreneurial endeavor, these activities need financing to launch and potentially scale. Unfortunately, Uganda is currently not a haven for technology entrepreneurs due to a severe lack of local resources. As one of our informants puts it:
“I think the landscape is vast. Logistics [are] an issue. Talent recruitment is an issue. Access to funding is certainly an issue. What we see is also that, beyond basically friends and family, it’s very hard to get funding [for] companies. Banks are usually not willing to—there is no venture capital, as you know, out there.”
Uganda’s low scores on the Ease of Doing Business (World Bank, 2018) and Global Competitiveness (World Economic Forum, 2019) indices show that it is an unfavorable environment for businesses, especially early-stage technology ventures, which often have substantial resource needs from day one. There is no domestic venture capital sector, angel funding is largely unavailable, and bank lending for new ventures is unusual and expensive (Center for Development Alternatives, 2018; Global Entrepreneurship Monitor, 2014). Large parts of society do not support individuals’ aspirations to found their technology ventures, either. Doing business day-to-day involves navigating corruption (Hatchile Consult Limited, 2015; Transparency International, 2015, 2019), nepotism, and favoritism. The situation is particularly dire for medical technology ventures that require access to high levels of skill, knowledge, materials, and sophisticated machinery. Yet, because Uganda’s medical technology industry is young, adequate local research and production facilities and essential knowledge and talent are particularly scarce, even in the capital Kampala, the center of most of the nation’s technological innovation. The nation’s few extant medical technology firms have largely exhausted local universities’ and technology institutes’ support capacities, and there are no high-tech clusters as opposed to neighboring Kenya for example. Consequently, early-stage medical technology ventures that seek to develop, test, and ultimately roll out new products must seek resources abroad by forming ties with foreign resource holders—a common imperative in international tie formation from lower-income to higher-income markets (see Yamakawa et al., 2013). And that#s exactly where our interest lies!
We adopt a multiple case study approach to dive a little deeper into how these founders reach out to foreign resource holders abroad and how they strategize to network. To do so, we rely on semi-structured interviews with informants from the ventures (mostly founders), fieldnotes and observation data from our visit to Kampala, archival data, and social media postings. We collect data across three waves in 2019, 2020, and 2021.
Networking, networking, networking
Our analysis revealed a fascinating international networking activity of the early-stage prosocial MedTech ventures. All start-ups in our sample have reached out to potential partners abroad and even managed to form instrumental ties and partnerships with these foreign resource holders. This activity spoke first and foremost of the incredible dedication and resilience of all entrepreneurs who were adamant in the pursuit of capital allowing them to build their MVPs, conduct their clinical trials and launch their products. The ventures in our sample actively searched and reached out to potential resource holders through participating in events and conferences, cold-emailing and cold-calling potential investors and funding organizations, applying to grants and competitions, applying and joining local and international incubator and accelerator programs, and tapping into their local existing networks.
Upon closer look and dissection of their networking actions for resource mobilization across time, we identified two main networking strategies: Network Broadening & Exploring and Network Deepening & Exploiting (See Vissa, 2012).
We define the first as Any networking action that is targeted at acquiring new partners or forming new partnerships or results in the acquisition or formation of new network ties. Broadening actions widen the venture’s network and pool of potential partners and imply an active involvement from founders. It includes meeting in and forging visibility through events, engaging in conversations with potential partners,strategizing to approach potential partners, planting seeds and getting ready for potential partners,learning more about potential partners, actively reaching out to potential partners, and looking for the right partners.
We define the second as any networking action that uses or involves an existing partner, tie, or network member (acquired through network broadening actions), either to form further ties or acquire more partners or capitalize on existing ones and evolve the relationship further. That includes leveraging existing networks, forging new ties through existing ties, learning more about existing partners, and exploring longer-term partnerships with existing partners.
The interplay of both networking strategies across time led to three distinct configurations or archetypes in our sample. We name and describe them as follows:
- Cross Pollinators: These are ventures that have engaged extensively in network-broadening actions, exploring their options and widening their reach as far as possible, before securing a key partnership which then allowed them to tone the broadening efforts down and engage more in leveraging the established networks. These are ventures that managed to amass substantial financial resources and key research partnerships with foreign entities and had the widest geographical reach.
- Locals: These ventures have started locally, already leveraging their existing imminent network such as university programs or local incubators before securing a key partnership, which then opens them into a world of possibilities, prompting them to engage in more network exploring and broadening actions. These ventures were able to gather important financial resources and research affiliations.
- Settlers: This group goes into venturing with an already established local or foreign partnership, though not as instrumental. However, ventures in this category heavily rely on that one affiliation and thus fail to broaden or exploit options and only engage in proactive networking later on in their venture’s life. These were the less successful in terms of resource endowment and geographical reach for partners.
What does it all mean? Wrapping it up
First, we have uncovered mechanisms through which medical technology ventures in resource-constrained environments can gather instrumental resources (i.e. money and knowledge), in order to develop and launch their medical devices. Through those findings, we propose strategies ventures can leverage to mobilize resources abroad, as they lack from home. This is particularly important and relevant for prosocial ventures in emerging markets as they navigate entrepreneurial challenges to create social value. Second, we highlight the concept of agency in networking. In other words, our results show that ventures can overcome their liability of foreignness and newness if they actively and proactively broaden their network and strategize around leveraging the ties they build. Third, we have demonstrated that different sequencing of networking action over time can yield different results in terms of resources mobilized and geographical scope of partnerships.
Taken together, this blog entry sheds the light on an understudied context: technology venturing for social wealth creation in the Global South. Not only do we shed the light on an exciting new context, but we also uncover important mechanisms for technology founders operating under extreme resource constraints and show that networking proactively, strategically, and widely across geographies can lead to positive resource mobilization results. For a broader entrepreneurship practitioners audience, we show that events, incubators, accelerators, and competitions carried out in the Global South can be an important playground to meet founders with innovative technologies and social missions and directly invest in their ventures. In other words, pouring (financial) resources into those spaces is tied to investing for impact and for ensuring the betterment of local conditions through grassroots entrepreneurs and locals who are ardently working for alleviating hurdles in their communities.
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