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DATE: September 17, 2008
What does Yahoo! founder Jerry Yang have in common with the sleep-deprived parents who invented the bedside bassinette? According to Sonali K. Shah, assistant professor of management at the University of Washington Foster School of Business, they are both examples of "user entrepreneurs:" individuals who develop innovative solutions to the day-to-day (or night-to night!) problems they experience, solutions that subsequently become the basis for new companies.
Shah and her coauthor, Mary Tripsas, assistant professor at the Harvard Business School, were awarded the 2008 Thought Leader Award from the Academy of Management Entrepreneurship Division for their paper, "The Accidental Entrepreneur: The Emergent and Collective Process of User Entrepreneurship." Shah explains that user entrepreneurs often happen upon an idea through their own use and then share it with others before the idea is considered for a formal venture. The open sharing of an idea with a community of users can result in the testing and refinement, as well as the word of mouth recommendations, needed to make the product commercially viable.
The paper provides the first empirical documentation of the prevalence of user entrepreneurship – the founding of a new venture by an individual or group of individuals who are also users of the innovative product (versus ventures founded based on the research of university scientists or on the knowledge of employees at incumbent firms). User entrepreneurship is especially prevalent in the juvenile products industry where approximately 84 percent of firms were founded by users. Shah and Tripsas built on existing theory and Shah’s prior empirical work to theorize about the industry conditions in which user entrepreneurship is likely to prevail over professional entrepreneurship:
- When use of the product provides enjoyment, as opposed to pure economic benefit
- When users have relatively low opportunity costs
- When the industry is characterized by small scale, peripheral, niche markets with high variety in demand
- When the market for the product is turbulent. e.g. the product is new, when high levels of uncertainty and ambiguity about user needs exist, and when those needs are evolving
Shah has been at the Foster School of Business since 2007. She was one of five young researchers nationwide chosen to receive a 2008 Sloan Industry Studies Fellowship. Her recent research has appeared in the Strategic Entrepreneurship Journal, Management Scienceand the Journal of Management Studies.
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