Environmental Entrepreneurship and Interorganizational Arrangements: A Model of Social‐benefit Market Creation

Research summary Social‐benefit markets, such as those for carbon trading, are becoming increasingly popular for combating complex social and environmental problems. However, their unique characteristics pose substantial challenges to market creation and require novel entrepreneurial approaches. Integrating the entrepreneurship literature with that of management information systems, we conceptualize social‐benefit markets as a new type of interorganizational arrangement and develop a model of social‐benefit market creation. First, we argue that a core entrepreneurial collective, comprising a plurality of actors from government, business, and social movements, is essential. Second, we elaborate a six‐phase process through which the interests of entrepreneurs are aligned and inscribed in a market artifact and the market is formed. The model is illustrated with reference to the Western Climate Initiative's carbon market creation efforts. Managerial summary Carbon markets have become a popular strategy for reducing greenhouse gas emissions, with similar market‐based solutions being proposed for other social and environmental challenges. We refer to these new structures as social‐benefit markets. Social‐benefit market creation is a complex undertaking that will require novel entrepreneurial approaches and new interorganizational information systems. In an effort to reduce some of this complexity, we propose a model to explain how entrepreneurs from government, business, and social movements must work collectively to build social‐benefit markets. We further elaborate a six‐phase process through which entrepreneurs are able to align their diverse interests and create a stable market artifact. For managers from all sectors, our work offers actionable guidance for forming collective ventures that deliver real social benefits. Copyright © 2017 Strategic Management Society