Knowledge intensive social entrepreneurship: a social system perspective

Knowledge intensive social

entrepreneurship: a social

system perspective

Master Thesis

Msc Business Administration

Small Business & Entrepreneurship

University of Groningen

Faculty of Economics and Business

Zernike, Nettelbosje 2,

Groningen, 9747 AE

Tel: +31 50 363 4624

By

Melanie Zwerink

Student number: 2125315

m.m.c.zwerink@student.rug.nl

Supervisor: Dr. O. Belousova

Co-assessor: Prof. Dr. A.J. Groen

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Abstract

The purpose of this paper is to uncover how people without industry-specific knowledge can launch and build an enterprise in knowledge-intensive areas. This study helps us to understand complex entrepreneurial processes and contributes to the literature on social entrepreneurship and social systems by showing a theory development on social entrepreneurship from a social system perspective. The main research question is: ‘What are the key capitals at different stages of the social entrepreneurial process?’ To answer this question we build on social system theory applied to entrepreneurship. We use a case-study approach with two cases at orphan disease drug development. In both cases, the entrepreneurs started in their own company in a knowledge-intensive industry without prior experience or knowledge in the biomedical technology field. What makes them able to launch and build their enterprises?

Key words: Social entrepreneurship, social system, social entrepreneurial processes, social enterprise, strategic capital, cultural capital, social capital, economic capital

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Acknowledgements

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Content

Difference between traditional entrepreneurs and social entrepreneurs ... 8

Social entrepreneurial process models ... 8

Comparison of social entrepreneurial processes ... 11

Development social entrepreneurial process model ... 12

Social system theory ... 15

Mapping capitals on social entrepreneurial process... 16

Methodology ... 19

Data collection ... 19

Data analysis ... 20

Case description and analysis ... 23

Treeway ... 23

Accelerated Cure Project ... 26

Results ... 30

Stages ... 30

Capital dynamics during stages... 31

Discussion ... 38

Conclusion ... 42

Limitations and future research... 42

Theoretical and managerial implications ... 43

References ... 44

Appendices ... 50

Appendix A.1 – Interview guide 1 ... 50

Appendix A.2 – Interview guide 2 ... 51

Appendix B.1 – Transcript interview 1 – Bernard Muller (05-04-2016) ... 52

Appendix B.2 – Transcript interview 2 – Hollie Schmidt (05-04-2016) ... 57

Appendix C.1 – Detailed analysis of Treeway... 64

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Introduction

‘One man can and will find a way, why not be that man…’ A citation of Bernard Muller, a serial entrepreneur within the maritime and oil industry. In 2010, Muller was diagnosed with ALS (Amyotrophic Lateral Sclerosis), a fatal neurological illness. Two years later he founded Treeway, a pre-clinical biotech company, and has initiated the largest genetic research of the disease that has been done so far, called project MinE (Treeway, 2015). Art Mellor, a serial technology entrepreneur, faced a similar situation. In 2000 he was diagnosed with MS (Multiple Sclerosis), a chronic, degenerative disease of the central nervous system. One year later he founded Accelerated Cure Project, a nonprofit organization to foster collaborative research to better understand this disease (Accelerated Cure, 2015).

These stories are examples of social entrepreneurs who are triggered into business by an immediate life event (Yitshaki and Kropp, 2015). In both cases, the entrepreneurs started in their own company in a knowledge-intensive industry without prior experience or knowledge in biomedical technology field. By developing a new drug for a disease with low prevalence, high costs are associated. Such developments would be financially unviable for the pharmaceutical industry (Cui and Han, 2015). Because of this, rare diseases are not cost effective to treat (Aronson, 2006). Patients and parents are increasingly doing more to stimulate research and try to fund, discover and develop treatments for rare diseases (Wood, Sames, Moore and Ekins, 2013). What makes them able to launch and build their enterprises?

Groen (2005) applied the social system theory of Parsons (1964) to entrepreneurship. He suggests the following functions for entrepreneurs to develop their business: goal attainment, pattern maintenance, social networking and economic optimization. From these functions, four related capitals are required to develop sustainable enterprises: strategic capital, cultural capital, social capital and economic capital (Groen, Wakkee and De Weerd-Nederhof, 2008). In social entrepreneurship there is no proven method, code of practice or core business model to follow (Roberts and Woods, 2005, p. 46). Examples of ‘best practice’ have been brought together by academics (Roberts and Woods, 2005) and it is to practitioners that we now look to gain a sense of what social entrepreneurs actually do when launching a social enterprise. The existing literature about the social system perspective argues that the four capitals enable rich descriptions of complex entrepreneurial processes. Groen et al. (2008) found that high-tech start-up firms require all four capitals to build a sustainable position in the long-term. A lack of economic capital in the early stages of the development of the high-tech firm is compensated by social capital. In their research, the questions arise of how to determine what the minimum level of a capital is, and what the short term and long term actually are (Groen et al., 2008). They suggest that further research is needed to increase the understanding of the social system framework.

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This paper includes a case-study approach with two cases aiming at orphan disease drug development. The cases are about two social entrepreneurs who are immediately involved with a rare disease. The purpose of the paper is to uncover how people without industry-specific knowledge can launch and build an enterprise in knowledge-intensive areas. To answer this question we build on social system theory applied to entrepreneurship (Groen, 2005). As mentioned above, all capitals need to be developed to a minimum level for a venture to exist, but some capitals can compensate the lack of others (Groen, 2005). The questions that arise are: What is this minimum level? How does it actually work? According to this, the following research question will be addressed:

‘What are the key capitals at different stages of the social entrepreneurial process?’

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Literature Review

To investigate which capitals are key during the social entrepreneurial stages, we will establish a detailed understanding of the relevant concepts included in this study. First, social entrepreneurship will be explained. Second, we will mention the differences between traditional and social entrepreneurs. Third, social entrepreneurial processes will be explained. Fourth, we will develop our own social entrepreneurial process model. Fifth, the social system theory will be described. Lastly, we will mapping capitals on our social entrepreneurial process model.

Social entrepreneurs

In literature, there is no common definition of social entrepreneurs. Bloom and Chatterji (2009) define social entrepreneurs as: ‘individuals who start up and lead new organizations or programs that are dedicated to mitigating or eliminating a social problem, deploying change strategies that differ from those that have been used to address the problem in the past’ (p. 114). Guzman and Trujillo (2008) define social entrepreneurs as a specific type of entrepreneur who seeks solutions for social problems by building, evaluating and pursuing opportunities that permit the generation of sustainable social value, achieving new stable balances between direct action by nonprofit organization, firms and governmental organizations. In this paper, we use the following definition of Thompson, Alvy and Lees (2000): ‘social entrepreneurs are people who realize where there is an opportunity to satisfy some unmet needs that the state welfare system will not or cannot meet, and who gather together the necessary resources and use these to ‘make a difference’’ (p. 328). A social entrepreneur addresses a need and develops a vision to fulfil this need. He is able to gather together the resources needed to operationalize the vision (Thompson et al., 2000). The purpose of social entrepreneurs is helping to solve social problems and develop a project with long-term vision.

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Difference between traditional entrepreneurs and social entrepreneurs

Pache and Chowdhury (2012) argue that the context in which social entrepreneurs engage in entrepreneurial activities is very different than the context of traditional entrepreneurs. The difference between these two types of entrepreneurs is, on the one hand, that traditional entrepreneurs engage within the boundaries of the commercial sector (Pache and Chowdhury, 2012). Within this commercial sector, interaction takes place between actors who share relatively similar views of the world. On the other hand, social entrepreneurs engage in a complex network of stakeholders, who belong to ‘distinct institutional spheres’ (Meyer and Rowan, 1977). Essential to the success of the enterprise from these various institutional spheres, social entrepreneurs need to understand the different interests and cultures of different stakeholders. This is needed to meet the expectations and to obtain their support, in social or financial aspects (Seelos, Mair, Battilana and Dacin, 2011). Dees, Emerson and Economy (2002) argue that the key difference between social entrepreneurs and traditional entrepreneurs is that social entrepreneurs start with an explicit social mission/problem in mind. This influences the way they measure success and how the enterprise is structured.

Social entrepreneurship differs from traditional entrepreneurship in the way that social entrepreneurship gives relatively higher priority to promoting social value and the development versus capturing of economic value (Mair and Marti, 2006). Because of these differences, we argue that social entrepreneurs act differently than traditional entrepreneurs. We build on social system theory applied to entrepreneurship (Groen, 2005) and apply this into a new context: social entrepreneurship.

Social entrepreneurial process models

We have identified various stage models of social entrepreneurial processes. Stage models have been acknowledged as valuable descriptive approaches to understand the venture creation process (Perrini, Vurro and Constanzo, 2010). We selected models which include the most general and important stages of the process since they are used in many studies. The analyzed models describe similar stages, which give a good basis for our model. The aim is to broaden the understanding of the most important stages of the social entrepreneurial process.

The first model we have analyzed is the model of Guclu et al. (2002). They divide the process into two parts. The first stage is generating promising ideas. Factors that can trigger this stage are the recognition of social needs, social assets, personal experience and change (Guclu et al., 2002). The second stage is developing promising ideas into attractive opportunities. An opportunity is 'attractive' if it has enough potential for positive social impact to invest in time, energy and money. According to Guclu et al. (2002), the core of a social venture idea is represented by an effective operating model and a viable resource strategy. These two elements are described in the business model. The business model and social impact theory (how the enterprise will achieve its intended social impact) can lead to grounded actions which increase the probability of success (Guclu et al., 2002). In this stage, it is important that there is a personal fit with the entrepreneur and the external environment (Guclu et al., 2002).

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technological resources. The fifth stage is opportunity exploitation, a legal enterprise is created and the business activities can start. Stakeholder reflection is the last stage and describes the evaluation of performance and outcomes, and the feedback to stakeholders. Haugh (2007) emphasizes resource acquisition and network creation which take place before the creation of the social venture.

Third, we have analyzed the model of Dees, Emerson and Economy (2002). The first stage is defining mission, to create and sustain social value. Identifying opportunities is the second stage and is about the recognition and continuous pursuit of new opportunities to foster the mission of social value creation (Dees, 1998). The next stage is mobilizing resources, without being limited by current resources (Dees, 1998). Exercising accountability is the fourth stage described as a high sense of accountability to the stakeholders and for the created outcomes (Dees, 1998). After that comes the stage managing risks and then a stage about understanding customers. It is important to understand the needs of the customers. Being innovative is the next stage, which is described as continuously engaging in innovation and modification (Dees, 1998). The last stage of this model is about handling finances.

Lumpkin, Moss, Gras, Kato and Amezcua (2013) describe the social entrepreneurial process by first explaining four antecedents. Lumpkin et al. (2013) do not describe the sequence of the antecedents. We have determined the sequence based on the other analyzed models. One antecedent is social motivation/mission. This is about the motivation of the social entrepreneur and the goals required to address this motivation (Lumpkin et al., 2013). Another antecedent is opportunity identification, which is the application of entrepreneurial solutions to social problems (Lumpkin et al., 2013). Multiple stakeholders is another antecedent that they describe. According to Shaw and Carter (2007) clients, users, trustees and community or local groups are included in social ownership structures. They describe also access to capital/funding as an antecedent of the social entrepreneurial process. After the described antecedents there follows a stage of entrepreneurial orientation. Innovativeness, pro-activeness, risk-taking, competitive aggressiveness and autonomy are entrepreneurial orientations (Lumpkin and Dess, 1996). These are different dimensions that represent configurations of practices, processes and policies (Lumpkin and Dess, 1996). The last stage is the outcomes stage. This stage includes: social value creation, sustainability of solutions and satisfying multiple stakeholders (Lumpkin et al., 2013).

The model of Monuz, Steiner and Farmer (2014) starts with legitimacy. Facilitated meetings, informal activities and engagement with existing groups take place. During this stage, key individuals within the community ‘engage’ (Monuz et al., 2014). The second stage is needs/opportunity recognition. This stage is about the identification of new unmet/embedded needs and identification of crises point (Monuz et al., 2014). After that, group coalescence takes place. This stage is about skills recognition and skills building, start-up funding and coalesces of group and getting local support (Monuz et al., 2014). Another element of this stage is legitimacy embedding with the public sector (Monuz et al., 2014). The next stage is organizational establishment. During this stage, the business planning takes place. The last stage is social enterprise operates. This stage is defined as ‘a form of social enterprise emerges that is fit for purpose and sensitive to local needs and culture’ (Monuz et al., 2014, p.7).

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developed during this stage (Perrini et al., 2010). After that, the opportunity exploitation stage takes place which is about the development of intervening model and organizational and legal form (Perrini et al., 2010). Opportunity scaling-up is the last stage. During this stage, replication and maximization of social change take place (Perrini et al., 2010).

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Comparison of social entrepreneurial processes

1 Guclu et al.

2002 Generating promising ideas Develop idea into attractive opportunity

2 Haugh 2007 Opportunity identification Idea articul ation Idea owners hip Stakeholder mobilization

Opportunity exploitation Stakeholder reflection

3 Dees et al.

2002 Define mission Identifying opportunities Mobilizing resources Exercising Accountability

Managing risk Understanding customers Being innovative Handling finances 4 Lumpkin et al.

2013 Social motivation/ mission Opportunity identification Multiple stakeholders Access to capital/ funding

Entrepreneurial orientation Outcomes

5 Monuz et al.

2014 Legitimacy Need/ opportunity recognition

Group coalescence Organizational establishment

Social enterprise operates

6 Perrini et al. 2010 Opportunity identification Opportunity evaluation Opportunity formalization

Opportunity exploitation Opportunity scaling-up

7 Zwerink 2016 Mission definition Opportunity identification Opportunity evaluation Opportunity formalization Access to capital/ funding

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Development social entrepreneurial process model

Based on the above mentioned models, we selected the most important stages and developed a model for social entrepreneurial process.

Stage 1 - Mission definition. The goal of social entrepreneurs is fulfilling a social mission (André

and Pache, 2013). André and Pache (2013) propose that social entrepreneurs care about specific issues or specific people and they feel a responsibility to take care of them. Both Dees et al. (2002) and Lumpkin et al. (2013) start with this stage. According to Lumpkin et al. (2013), mission is the basis for action. Mission includes the motivation and the required goals (Lumpkin et al., 2013). Defining a mission is important to create and sustain social value (Dees et al., 2002). The mission of a social venture is about economic, social and/or environmental value (Haugh, 2007). The first stage of the model of Monuz et al. (2014) is legitimacy. They argue that legitimacy must be established within the community. According to them, the first stage is about the understanding of current activities of the community and implementing dialogues with community members. We argue that this stage belongs to our mission definition stage because the mission of an enterprise affects the legitimacy obtained by community members. Besides that, we argue that the need/opportunity recognition stage also belongs to our mission definition stage because this stage includes the identification of particular needs that could be met through social enterprises (Monuz et al., 2014). It is about the translation of meet into action (Monuz et al., 2014). According to various researchers, social mission is a key dimension of social entrepreneurship (Sullivan Mort, Weerawardena and Carnegie, 2003). Moreover, Bacq and Janssen (2011) state that mission definition is at the core of the social entrepreneurial process. Therefore, this is the first stage of our model.

Stage 2 - Opportunity identification. ‘An opportunity may be the chance to meet a market need

through a creative combination of resources to deliver superior value’ (Ardichvili, Cardozo and Ray, 2003, p.108). An opportunity is 'attractive' according to Guclu et al. (2002) if it has enough potential for positive social impact to invest in time, energy and money. During this stage, a need/opportunity is perceived which can be derived from various sources such as personal experience, local knowledge and actions from local people (Haugh, 2007). Monuz et al. (2014) describe opportunity identification as part of the need/opportunity recognition stage, therefore, this stage has partly overlap with our described stage. According to Perrini et al. (2010) social opportunity identification reflects the awareness of the need for challenging current views around a social burden. Even though social enterprises may be primarily started by seeing a social need, opportunity identification is still a very significant stage, same as for commercial entrepreneurs. According to McGrath and Venkataraman (1994), entrepreneurs start a new business when they believe there is an opportunity to rearrange resources to more promising opportunities. Opportunity identification is a crucial stage in developing an enterprise (Shane and Venkataraman, 2000). This stage is described in all the analyzed models. From this, we can conclude that this is an essential stage in the development of social enterprises. Therefore, the second stage of our model is opportunity identification.

Stage 3 - Opportunity evaluation. The third stage is opportunity evaluation. A feasibility analysis

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the opportunity takes place before the idea articulation stage described by Haugh (2007) because during this stage, the idea is expressed. Perrini et al. (2010) describe the evaluation stage as balancing the extent to which a long lasting change will be achieved and about the economic sustainability of the opportunity. The expected social change and economic viability of the opportunity are evaluated in this stage (Perrini et al., 2010).

Stage 4 - Opportunity formalization. The next stage is opportunity formalization. Formalization

facilitates the standardization and codification of processes and actions (Foss, Lyngsie and Zahra, 2014). Formalized processes of the realization of opportunities may reduce needed resources (Foss et al., 2014). It can also help by the coordination of complementary assets, actions and investments, which speed up the opportunity realization (Foss et al., 2014). According to Perrini et al. (2010), within the opportunity formalization stage, the innovativeness of the offering, the expected social impact and the bases for the sustainability is consistently expressed. The idea articulation stage described by Haugh (2007) is similar, since it is about the discussion of the alternative ways of the idea development to benefit the society and tacit knowledge is drawn on to get more focused. We include this stage because this is an essential stage in the social entrepreneurial process. Reasons why this stage is essential are based on Perrini et al. (2010). First, they argue that clarification about the stages and boundaries is important to mobilize resources. This is comparable with the stage of mobilizing resources of the model of Dees et al. (2002), therefore there is an overlap between these stages. Also the stakeholder mobilization stage described by Haugh (2007) is similar to this stage because they state that it is about ‘gathering of human, physical, financial and technological resources’ (p.170). Second, formalization can create legitimacy, which is also the first step of the model of Munoz et al. (2014). However, they use it in a different way, namely, as creating legitimacy within the community that will provide or receive the service. The group coalescence stage of Monuz et al. (2014) occurs parallel because during this stage the skills needed to be drawn on to obtain legitimacy of the enterprise with the public sector. Third, formalization is essential to convince interested stakeholders to support the project (Johnstone and Lionais, 2004). The social mission and core values are included in this stage (Perrini et al., 2010).

Stage 5 - Access to capital/funding. After the formalization stage we use the stage described by

Lumpkin et al. (2013) of access to capital/funding. They argue that commercial ventures are attractive for bank loans or private capital when they have a prospect of generating cash flow in the future. On the other hand, social entrepreneurship may be less attractive what leads to less access to such forms of capital. Therefore, social entrepreneurs may be dependent on a mix of income, investments and donations (Lumpkin et al., 2013). The stakeholder mobilization stage of Haugh (2007) and the mobilizing resources stage described by Dees et al. (2002) occur parallel to this stage because gathering of financial resources is included.

Stage 6 - Opportunity exploitation. After the formalization stage, the exploitation takes place.

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arrangement of the financing (Haugh, 2007). Perrini et al. (2010) state that the opportunity exploitation stage is about the translating of the mission and principles into a suitable intervention model and an organizational form. In this stage, community members take responsibilities for their requirements to benefit the community in terms of delivering social value, which is the last stage of Monuz et al. (2014). Lumpkin et al. (2013) describe the entrepreneurial orientation stage that helps to understand the entrepreneurial decision processes including planning, analysis and decision-making to achieve their purpose and sustain their vision. We argue that this stage is similar to the opportunity exploitation stage. The four stages of exercising accountability, managing risks, understanding customers and being innovative are also part of the opportunity exploitation stage.

Stage 7 - Opportunity scaling-up. The last stage of our model is opportunity scaling-up. For the

organization’s ability to grow and to be replicated, scalability is essential (Dees, Anderson and Wei-Skillern, 2004). This stage is about spreading the social innovation as widely as possible to maximize social change (Drayton, 2002). Strategic decisions are made about the future direction of the enterprise, which is part of the stakeholder reflection stage described by Haugh (2007). We argue that during the scaling-up, handling finances is an important element, which is the last stage of Dees et al. (2002). According to Lumpkin et al. (2013) the outcomes of the entrepreneurial process are classified into value creation, satisfying multiple stakeholders and the sustainability of solutions which are part of the opportunity scaling-up stage.

Figure 1 shows the model including the social entrepreneurial stages.

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Social system theory

'A social system is a system developed by any process of interaction between two or more actors' (Brennan, 1958, p.115). Brennan (1958) argues that four imperatives must be met to achieve equilibrium in the system. First, pattern maintenance and tension management are described. Pattern maintenance is about ‘the stabilization against pressures from outside the social system’ (Brennan, 1959, p. 115). Tension management refers to the stabilization of internal threats. The second imperative is goal gratification, which is about maximizing the stability of the system (Brennan, 1959). The third imperative is adaption, which is explained by controlling the environment. The last imperative is integration and is about solidarity in relations (Brennan, 1959). Social system theory can be used to analyze and explain both economic and non-economic social phenomena (Brennan, 1959).

Based on this theory, Parsons (1964) determined the major factors of a social system from the structure of social action. Parsons (1964) defined social system as ‘....a social system consists in a plurality of individual actors interacting with each other in a situation, which has at least a physical or environmental aspect, actors who are motivated in terms of a tendency to the ‘optimization of gratification’ and whose relation to their situations, including each other, is defined and mediated in terms of culturally structured and shared symbols’ (p. 5-6). Based on this, Groen et al. (2008) suggest that entrepreneurs use the following types of functions to develop their business: goal attainment, pattern maintenance, social networking and economic optimization. As mentioned previously, from these functions, four related capitals are required to develop sustainable enterprises: strategic capital, cultural capital, social capital and economic capital (Groen et al., 2008).

Goal attainment – strategic capital. The goal attainment function is about the actor’s capacity to

mobilize resources and actors in the interest of attaining its particular goals (Groen et al., 2008, p.62). The capital that is related to this function is ‘strategic capital’. Strategic capital is defined as ‘the set of capacities that enables actors to decide on goals and to control resources and other actors to attain them’ (Groen et al., 2008, p.62). Actors who have a high level of strategic capital are able to set agendas to influence other actors and to set up resources to achieve goals (Groen et al, 2008).

Pattern maintenance – cultural capital. The pattern maintenance function is about the integrated

structure of a social system and creates a state of order in a symbolic system of values, norms, beliefs, assumptions, symbols, rule sets and artefacts (Bourdieu, 1985). The capital that is related to this function is ‘cultural capital’. Cultural capital is defined as ‘the set of values, norms, beliefs, assumptions, symbols, rule sets, behaviors and artefacts that define the actor in relation to other actors and environment (Groen et al., 2008). Another definition of cultural capital is: ‘institutionalized, i.e., widely shared, high status cultural signals (attitudes, preferences, formal knowledge, behaviors, goods and credentials) used for social and cultural exclusion’ (Lamont and Lareau, 1988, p.156)

Social networking – social capital. Social capital is defined as ‘the set of network relations

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Economic optimization – economic capital. Economic capital is defined as ‘the set of mobile

resources that are potentially usable in exchange relationships between the actor and its environment in processes of acquisition, disposal or selling (Groen et al., 2008, p. 63).

As stated earlier, previous research suggests that each of these four capitals must be developed to a minimum level in order to create a sustainable social system. Networks are not only relevant to the start-up stage, but also during later stages networks are required for business information, advice and problem solving, with some contacts providing multiple resources (Johanisson, 1995). Moreover, McKelvey and Lassen (2013) state that a variety of different networks exist, which could provide the venture with benefits such as the four functions (goals attainment, pattern maintenance, social networking and economic optimization).

Mapping capitals on social entrepreneurial process

In this section, the conceptual model will be explained. Based on the social system theory, we developed a conceptual model which shows the expected key capitals of stages of the social entrepreneurial process (Figure 2 and Table 2). Next, we explain our expectations regarding the capitals.

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Stage/Capitals Strategic capital Cultural capital Social capital Economic capital

1. Mission definition X X 2. Opportunity identification X X 3. Opportunity evaluation X X 4. Opportunity formalization X X 5. Access to capital/funding X X 6. Opportunity exploitation X X 7. Opportunity scaling-up X X

Table 2 Expected key capitals during stages

Stage 1 - Mission definition. This stage is about the social mission of the entrepreneur. We argue

that network relations are important during this stage. A small group of close contacts is used to discuss ideas (Greve and Salaff, 2003). By using their social network, entrepreneurs could obtain support, knowledge and access to other channels (Greve and Salaff, 2003). Furthermore, it can enable access to information (Shane and Venkataraman, 2000). Connections with people who share interest in the purpose and those with experience in business creating will be sought (Nohria, 1992).Therefore, social capital is expected to be a key capital. Cultural capital is also expected to be a key capital since during the mission definition stage values, norms and beliefs are developed.

Stage 2 – Opportunity identification. Prior knowledge can play an important role during the

identification of opportunities (Shepherd and DieTienne, 2005). Differences in knowledge storages of entrepreneurs influence the opportunity identification process (Shane, 2000). Therefore, we argue that cultural capital is a key capital during this stage. Further, cultural capital allows for learning, which can be important during this stage. Strategic capital is another key capital during this stage, since this capital is heavily dependent on the knowledge in the organization (Smith, 2005). Furthermore, the attitudes of the members towards the business plans, which are part of the culture of the organization, influence the strategic capital (Smith, 2005).

Stage 3 - Opportunity evaluation. As stated earlier, this stage is about the expected social change

and economic viability of the opportunity. Therefore, we argue that economic capital will be a key capital during this stage. Further, strategic capital is an important capital during this stage, since it is about the capability to successfully plan and execute strategy (Smith, 2005).

Stage 4 - Opportunity formalization. This stage is about the standardization and codification of

processes and actions. It is also about mobilizing resources. Strategic capital is expected to be a key capital because this includes the setup of resources to achieve goals (Groen et al, 2008). During this stage there is not much access to capital or funding. Adler and Kwon (2002) argue that social capital can compensate for a lack of economic capital because of superior ‘connections’. Therefore, social capital is expected to be a key capital.

Stage 5 - Access to capital/funding. The network becomes important to obtain access to more

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Stage 6 - Opportunity exploitation. This stage is about responsibility decisions, tasks allocation,

training implementations and professionalization (Haugh, 2007). Foss, Lyngsie and Zahra (2013) studied the interactions between firms and external knowledge sources during the opportunity exploitation stage. It is important that the structure of the organization allows the right knowledge to reach the right members of the organization (Foss, Laursen and Pedersen, 2011). Foss et al. (2013) conclude that during this stage, there should be a focus on the organizational structure. Therefore, strategic capital is expected to be a key capital. Another expected key capital is cultural capital. One of the types of opportunities that is described by Drucker (1985) is the exploitation of market inefficiencies that derives from asymmetrical information, which is related to cultural capital. Further, actors are able to exploit opportunities when they have the relevant cultural knowledge and experiences crucial for the exploitation of that opportunity (Ridgeway and Erickson, 2000). Therefore, cultural capital is expected to be a key capital.

Stage 7 – Opportunity scaling-up. Expected key capitals during this stage are: strategic capital

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Methodology

As stated in the literature review, the social system perspective is already described to the field of entrepreneurship. This study will focus on social entrepreneurship in knowledge-intensive areas. We will build on the study of Groen (2005) by applying the social system view. We do not yet know how these social entrepreneurs are able to launch and build their enterprise. By exploring this phenomenon we will make a contribution to the literature on social entrepreneurship and therefore development is needed to explore this phenomenon.

Data collection

This paper applies a case-study approach with two cases aiming at orphan disease drug development. The case-study approach focuses on understanding the dynamics present within single settings (Eisenhardt, 1989). The cases are about two social entrepreneurs who are immediately involved with a rare disease. Six to seven thousand rare diseases have been discovered, which affect 55 million people in Europe and the USA alone (Orphanet, 2015; Stolk, Willemen and Leufkens, 2006). The USA Orphan Drug act defines rare diseases as diseases that affect fewer than 200 000 people in the USA (Stolk et al., 2006). The European regulation defines rare diseases as diseases that affect fewer than 5 per 10 000 inhabitants (Stolk et al., 2006). Patient and parents whose child is diagnosed are increasingly doing more to stimulate research and try to fund, discover and develop treatments for rare diseases (Wood et al., 2013). A process study is done including data from multiple respondents and several other sources such as publications, reports or web pages. This paper follows the process of building theory from case study research of Eisenhardt (1989).

During the first stage of data collecting we use extensive documentary evidence about the organizations. We gather this data from web pages, existing interviews, books and articles. We use the following sources:

Case Sources Nature Publication

year

Case 1 – Treeway Website of Treeway Website 2015

7Ditches Interview 2014

Pharmatelevision Interview 2016

DutchLifeSciences Interview 2014

De Visser – Volkskrant Article 2014

Ploeger – Trouw Article 2014

HollandBIO Website 2014

Centerwatch Website 2014

Jinek Interview 2015

Case 2 - Accelerated Cure Project

Website of Accelerated Cure Project Website 2015

YouTube Presentation 2014

EContent Article 2004

Whitford – CNN Article 2003

Babson Case study 2010

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During the second stage we will conduct semi-structured interviews with Bernard Muller from Treeway and Hollie Schmidt from Accelerated Cure Project to triangulate and enrich the data (See Appendix A1 and A2 for interview guides). Questions are formulated before the interview by using the data conducted during the first stage. The benefit of semi-structured interviews is that there is also room for non-formulated questions that arise during the interview. The sequence of questions can be changed and questions can be adjusted. We use a sound recorder during the interview.

Data analysis

First, we create a timeline and align all the events mentioned in the secondary data. The data is structured along a timeline, to be able to recreate the order of the events and the potential causal effects. We go several times over it to increase the consistency and eliminate discrepancies. Second, we confirm and enrich the timeline by doing interviews with key informants of each case. By doing this, we can fill in the blanks and solve discrepancies. Third, we write a narrative to reveal causal relationships. Fourth, we analyze the stages for each case. To help analyze the data, we use a codebook. A codebook is a set of codes, definitions and examples used as a guide and are crucial to analyze qualitative research (DeCuir-Gunby, Marshall and McCulloch, 2011). We use the following codebook to analyze the stages:

.

Stage Example actions

Stage 1. Mission definition stage Treeway: Muller meets Stuit

Accelerated Cure Project: Mellor wants to take action Stage 2. Opportunity identification Treeway: Start working in the UMC of Utrecht

Accelerated Cure Project: Mellor discusses with his neurologist Dr. Vartanian

Stage 3. Opportunity evaluation Treeway: Ask important researchers about their needs

Accelerated Cure Project: Mellor talks a lot with Dr. Vartanian Stage 4. Opportunity formalization Treeway: Founding of Project MinE

Accelerated Cure Project: Founding of Boston Cure Project Stage 5. Access to capital/funding Treeway: Funding from Stichting ALS

Accelerated Cure Project: Launching of Repository pilot study with UMMS and BIDMC

Stage 6. Opportunity exploitation Treeway: De Greef becomes CEO

Accelerated Cure Project: Start of Accelerated Cure Project Repository and completion of main study

Stage 7. Opportunity scaling-up Treeway: Collaboration with Leiden Academic Center for Drug Research and the University of Leiden

Accelerated Cure Project: Launching of the Optimizing Treatment-Understanding Progression study

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Next, we analyze the capitals during the stages for each case. We use the following codebook to analyze the capitals:

Capital Definition Example quotes

Strategic capital

‘The set of capacities that enables actors to decide on goals and to control resources and other actors to attain them’ (Groen et al., 2008, p.62).

Treeway:

- ‘Muller studied the problem and looked for what was missing and what was demanding and form there out, he determined a strategy’

- ‘The arrival of De Greef has been a very important step, together we have determined a strategy’ (Interview 1) - ‘The EMA has granted Orphan Drug Designation for

TW001, Treeway can benefit because of access to contacts with the EMA and market exclusivity’

Accelerated Cure Project:

- ‘They recognized that a different approach was needed to increase the speed of efforts towards a cure’ (Accelerated Cure, 2015)

- ‘The Scientific Advisory Board was formed’ (Accelerated Cure, 2015)

- ‘They formed a partnership with Transverse Myelitis Association’ (Accelerated Cure, 2015)

Cultural capital

‘The set of values, norms, beliefs, assumptions, symbols, rule sets, behaviors and artefacts that define the actor in relation to other actors and environment (Groen et al., 2008).

Treeway:

- ‘He obtained a lot of information about the disease’ (7Ditches, 2014)

- ‘They collected material of 15.000 patients and got an incredible amount of information about the disease’ (Ploeger, 2014)

- ‘De Greef has already a lot of experience and expertise to bring into the organization’

Accelerated Cure Project:

- ‘He spent a lot of time in obtaining information about the disease and searched for what already was done to develop a cure’ (Babson, 2010)

- ‘Phase 2 of the Cure Map, analysis of MS research, was completed’ (Accelerated Cure, 2015)

- ‘Trying to gather a lot more information and to get a new type of a big data approach’ (Interview 2)

Social capital

‘The set of network relations through which actors can utilize, employ or enjoy the benefits of capital that is controlled or owned by other actors’ (Groen et al. 2008, p.63).

Treeway:

- ‘I met Robbert Jan Stuit’ (7Ditches, 2014)

- ‘I had contact with the UMC of Utrecht because I knew professor Van den Berg’ (Interview 1)

- ‘They start building up a network in the biotech and Life Science sector’ ( DutchLifeSciences, 2014)

- ‘Muller get into contact with De Greef via one of his contacts’ (Interview 1)

Accelerated Cure Project:

- ‘Mellor benefited from the resources of Dr. Vartanian’ (Accelerated Cure, 2015)

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- ‘The MS Discovery Forum was launched in cooperation with MassGeneral Institute for Neurodegenerative Disease’ (Accelerated Cure, 2015)

Economic capital

‘The set of mobile resources that are potentially usable in exchange relationships between the actor and its environment in processes of acquisition, disposal or selling (Groen et al., 2008, p. 63).

Treeway:

- ‘The first fundraising was received for Project MinE’ (Interview 1)

- ‘The ALS Ice Bucket Challenge raised 80 million dollars’ (Jinek, 2015)

- ‘There was a high increase of financial resources for Project MinE’ (Interview 1)

Accelerated Cure Project:

- ‘They received financial support’ (Interview 2)

- ‘Larger donations of organization within our industry’ (Interview 2)

- ‘Accelerated Cure Project received funding from Genentech’ (Accelerated Cure, 2015)

Table 5 Codebook to analyze capitals

After that, we conduct a cross case analysis to search for patterns and find similarities and differences (Eisenhardt, 1989). By using cross-case searching tactics, we improve the reliability of the theory (Eisenhardt, 1989).

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Case description and analysis

This section will describe and analyze the cases. Tables with detailed analysis can be found in Appendix C1 and C2.

Treeway

In June 2010, Muller was diagnosed with ALS (Amyotrophic Lateral Sclerosis), a fatal neurological illness. The doctors told him he has only 3 to 5 years to live. ‘After the diagnoses, I was in the first place taken aback’ he said (7Ditches, 2014). For months it was hard for him to talk about it. Therefore, he did not talk about it with anyone, except his wife. The first half a year he had not even told his sons. He was in denial. He focused on his work. Working hard gave him anything to go on. He had various businesses in the harbor of Rotterdam like oil businesses and a service business for ships that load and unload there. He had a lot of plans and wanted to go international. He did not want to think about the question 'why?' because he could spend his energy in a lot of other things (Ploeger, 2014). ‘I traveled a lot with my family and decided to pursue some business dreams’ (Pharmatelevision, 2016). ‘I was one of the stock listed companies and span out one of our companies to the AIM market in London’ (Pharmatelevision, 2016). After a while, Muller read everything that was available about the disease. Doctors knew a few about the cause or healing. In the coming 2 years, he obtained a lot of information about the disease (7Ditches, 2014). He wanted to know what it exactly is about and what already has been done in research in ALS (Interview 1).

‘Mid 2011, I met entrepreneur Robbert Jan Stuit, who was also diagnosed with ALS in May 2011 and it clicked immediately’ (7Ditches, 2014). Together, they decided to take action (Interview 1). They both felt that if they really want to make a difference, they had to use a business perspective (DutchLifeSciences, 2014). First, Muller studied the problem and looked for what was missing and what was demanding and from there out, he determined a strategy. ‘I had contact with the UMC of Utrecht because I knew Professor Van den Berg because of a second opinion for the diagnosis. In November 2011 we were invited in the UMC of Utrecht’ (Interview 1). During a tour through the UMC of Utrecht they came at a fridge with more than 5000 DNA samples and when they asked what they doing with this, they received the surprising answer 'nothing, we keep them for later' and therefore they decided to start (Interview 1). This actually became the start of Project MinE (Interview 1). They started working with each other in the UMC of Utrecht, where the ALS center is located (7Ditches, 2014). The UMC of Utrecht provided the scientific base and Muller and Stuit tried to organize the fundraising (Interview 1). They found out that collaboration was missing. Researchers, patients and money were not linked to each other because there was no infrastructure. They took action and asked important researcher about their needs. Often the answer was: money. They started building up a network in the biotech and Life Science sector (DutchLifeSciences, 2014). Money was not the only problem, also large-scale thinking was an issue (7Ditches, 2014).

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of 15.000 patients and got an incredible amount of information about the disease (Ploeger, 2014). ‘A unique part of the project is that not only researchers are working together, but also all ALS associations from different countries’ (Interview 1). ‘It is not only knowledge sharing on scientific basis, but also knowledge sharing on the basis of fundraising’ (Interview 1). ‘It’s kind of a fundraise-model, so every country has to fundraise for their own genomes’ (Pharmatelevision, 2016). Next to that, they got into contact with the organization of the Amsterdam City Swim (Interview 1). Muller and Stuit tried to help with the organization. During this event, where 1.100 people swim to fight against the disease, the first fundraising was received for Project MinE (Interview 1). Further, they created awareness about their project and it became publicized that they were two patients who made this research happen (Interview 1). Muller and Stuit were called 'men who can make a difference' (Ploeger, 2014). By reason of Project MinE is an ongoing project and time is an issue when you are diagnosed with ALS they founded Treeway, on 12 December 2012 (Interview 1). Treeway is a biotechnology company to develop therapies to cure ALS (Treeway, 2015). The idea was that they translated the results from Project MinE into therapies to help patients (Pharmatelevision, 2016).

In the first half of 2013, Muller visited a lot of conferences and talked with a various experts from the biotech industry. ‘Especially by Project MinE, the use of social media and contacts with researchers and patients around the world, I became known in the ALS world in a short time period. Today, we still benefit from that’ said Muller (Interview 1). In June, Treeway collaborated with myTomorrows to create access to new medicines in the early stages. Patients and doctors can be informed about new medicines and therapies that are safe and efficient (Treeway, 2013). Van der Geest became CDO of Treeway in August. He had broad experience in drug development (Treeway, 2015). Further, Muller got into contact with De Greef via one of his contacts. In September, De Greef became CEO of Treeway (Treeway, 2013). De Greef had already a lot of experience and expertise to bring in the organization. ‘The arrival of De Greef has been a very important step, together we have determined a strategy’ (Interview 1). ‘We set up a three step approach consisting of: slow down the disease, hold the disease and eventually cure the disease’ (Interview1; Pharmatelevision, 2016). According to Muller, ‘2013 was a year of learning, developing a strategy and forming a team’ (Interview 1).

‘In January 2014, we decided to actively participate in the development of TW001, our first medicine’

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data analysis by using population disease progression models. The purpose was to get a better understanding of ALS by developing ALS physiology-based disease models and testing the effect of interventions (Treeway, 2014). ‘They develop pharmacological models to optimize the clinical trial designs and also the choices around the doses for medication’ (Interview 1). In November, Treeway was present at Accenture Innovation Awards. Also during this month, Muller was the key speaker at Dutch Life Sciences Conference to tell his story. Further, Treeway was present at CIO Day, a unique network event in Amsterdam where a discussion took place with CEO’s of large companies, such as Akzo Nobel and KPN (Treeway, 2014). Next, in November, an important milestone took place. The European Medicines Agency (EMA) has granted Orphan Drug Designation for TW001. TW001 is the lead compound within Treeway’s pipeline. This designation is important to promote the development of the drug and support the entry to the clinical stage. Treeway could obtain benefits because of access to contacts with the EMA and market exclusivity (Treeway, 2014). ‘The designation is a stimulation to develop medicines for rare diseases’ (Interview 1). Hulskotte, who had experience in the pharmaceutical industry, joined Treeway as a Clinical Project Lead in December. To conclude, Muller said ‘in 2014, there was a high increase of financial resources for Project MinE, especially because of our attendance at events and the Ice Bucket Challenge’ (Interview 1).

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(Treeway, 2015). In September, Treeway again received a grant from the Horizon2020 program to test the feasibility of the development of the diagnostic tool. Also during this month, 2.500 people participated during the Amsterdam City Swim and € 1.832.248,53 was raised (Treeway, 2015). After this event, they had a meeting with 14 countries to see how they can accelerate Project MinE. During the Dutch Life Science Conference in November, De Greef was interviewed during a talk show (Treeway, 2015). In December, Treeway collaborated with the Cedars-Sinai Board of Governors Regenerative Medicine Institute for the development of TW002, which is the second product in development (Treeway, 2015). Together, they requested a TREAT ALS™Drug Development Contract and received a grant of $500,000 to start a preclinical study. An important milestone took place during the same month. Treeway got positive results from their phase 1 program with the lead compound TW001, which shows safety, tolerated and adequate exposure levels (Treeway, 2015). Next, Treeway received funding from ALS association to further develop TW002 (Interview 1).

In January 2016, De Greef gave a presentation about Treeway during the Science Meets Business meeting and during the Innovation for Health event in February (Treeway, 2016). In March, De Greef joined the Scientific Advisory Board of the ALS Research Forum, to speed up the development of new therapies for ALS. During this month, Muller participated in HollandBIO Orphan Café with patient organizations, health funds and companies (Treeway, 2016). ‘Like every startup we struggle with funding. If we have the financing, we can make the next growth spurt. Then we can test the medicine in a large research and by proven success, register as soon as possible’ (Interview 1).

Accelerated Cure Project

In 2000, Art Mellor was diagnosed with MS (Multiple Sclerosis), a chronic, degenerative disease of the central nervous system. There was no treatment for this disease. Mellor was entrepreneur and co-founder of three companies (PC consulting business, computer network testing company and a software company (Whitford, 2003). ‘My reaction was; here we got this problem, I am going to fix it, what causes the problem and then I found that we had actually no idea what causes it’ (YouTube, 2014). He spent a lot of time in obtaining information about the disease and searched for what already was done to develop a cure (Babson, 2010). He was frustrated about the lack of knowledge of the disease and wanted to make clear what already has been done, what needs to be done and what the difficulties are (Babson, 2010). Mellor discussed with his neurologist Dr. Vartanian about the lack of innovation and collaboration in MS research (Accelerated Cure, 2015). Furthermore, there was a lack of a centralized organization (EContent, 2004). Mellor found out that there was missing some way of directing all the useful research toward results (Whitford, 2003). Mellor benefited from the resources of Dr. Vartanian and together they recognized that a different approach was needed to increase the speed of efforts toward a cure (Accelerated Cure, 2015).

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In 2002, Mellor recruited Hollie Schmidt, who was his colleague in the high-tech firm. Schmidt was the VP of the Scientific Operations. Furthermore, the MSNews portal was launched (Accelerated Cure, 2015). Mellor went to conferences and talked with scientists to learn about interesting new breakthroughs or new findings. With this portal he started writing about what he was learning to make the information available for other people (Interview 2).

‘In 2003, we were working on the Cure Map pretty much. We had to get a lot of things done’ (Interview 2). Organizing and locating information were important activities (Interview 2).

In 2004, Accelerated Cure Project Repository pilot study was launched with University of Massachusetts Medical School (UMMS) and Beth Israel Deaconess Medical Center (BIDMC) (Accelerated Cure, 2015). The collaboration came from Dr. Vartanian’s connections, he was a neurologist at the BIDMC (Interview 2). ‘Dr. Vartanian’s original idea was to start a repository of blood samples and data that could be a scientific resource for scientist worldwide’ (Interview 2).

In 2005, the first set of repository samples and data was distributed to Oklahoma Medical Research Foundation (OMRF) for scientific use. Moreover, the first set of experimental results was received (Accelerated Cure, 2015). Furthermore, the needs for MS sample banking were discussed during a meeting at American Academy of Neurology conference (Accelerated Cure, 2015). In this year, they formed a partnership with the Transverse Myelitis Association (Accelerated Cure, 2015). They received financial support from them since this association provided a grant to fund TM collections (Interview 2; YouTube, 2014). The idea was, that each disease could be a control for the other, therefore the partnership was formed (YouTube, 2014). Accelerated Cure Project has been recognized by Charity Navigator (nation's biggest and most-utilized evaluator of charities) for the financial health, transparency and accountability of the organization in this year (Accelerated Cure, 2015).

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services. The events planned in this year raised more than $347,000 and 200 volunteers supported the Accelerated Cure Project (Accelerated Cure Project, 2015). Moreover, Phase 1 of the Cure Map, the analysis of proposed disease causes, was completed (Accelerated Cure, 2015).

In 2007, Phase 2 of the Cure Map, the analysis of MS research, was completed (Accelerated Cure, 2015). In 2008, the Scientific Summit Conference on Genes and Environment in MS took place (Accelerated Cure, 2015). In spring, they had collected a thousand repository sample sets in 18 months (Babson, 2010). Further, fundraising was a challenge (Babson, 2010).

In January 2009, Carolyn Cronin became CEO of Accelerated Cure Project. Further, the Technical Advisory Board was created. Besides that, a partnership was formed with Guthy-Jackson Charitable Foundation (GJCF). Furthermore, they formed a collaboration with Fast Forward and a symposium was held on Vitamin D in MS in this year (Accelerated Cure, 2015).

In 2010, the 10th Repository site was opened. Further, they held a symposium about Using Systems Biology and Informatics to Understand MS (Accelerated Cure, 2015).

In January 2011, Peter Schmidt became interim CEO of Accelerated Cure Project for six months (Businesswire, 2011). Mellor left the organization because he did not want to think about the disease 24-hours a day anymore (Interview 1). ‘He went back into doing high tech work, which is his original discipline and he seems happier doing that’ (Interview 1). In July, Robert McBurney became CEO and brought scientific knowledge, bioinformatics expertise and clinical support into the organization (Businesswire, 2011). Furthermore, the creation of the MS Discovery Forum has started. In November, they received the Global Leadership in Innovation and Collaboration Award from Suffolk University’s Center for Innovation and Change Leadership (Accelerated Cure, 2015). This rewards organizations that foster and inspire innovation and collaboration within the research, service and teaching missions of the University's Center.

At the start of 2012, Accelerated Cure Project participated in The Giving Library who created a video about the work of 200 nonprofits across the country (Accelerated Cure, 2015). In April, the MS Discovery Forum was launched in partnership with EMD Serono, Max Planck for Molecular Genetics (MPMG) and MassGeneral Institute for Neurodegenerative Disease (MIND). The MS Discovery Forum is an online research community that enables MS scientists to connect with each other and share knowledge. ‘They did the technical work in designing the site and coding it and we worked on the content and the community’ (Interview 2). Further, the Clinical Effectiveness Study Network, a network of MS clinics across the US that collaborates on projects to better understand MS, was founded (Accelerated Cure, 2015).

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Giving list to show donors it is a fair and honest organization (Accelerated Cure, 2015). In March, Accelerated Cure Project launched Orion Bionetworks, which is a cooperative alliance which aim is to unlock the power of shared data and predictive modeling to find new treatments. In April, Accelerated Cure Project is selected as a finalist of New England Innovation Awards. In July, Accelerated Cure Project is helped by Rancho BioSciences who curates and prepares diverse datasets. They provided expertise and resources to the organization (Accelerated Cure, 2015). In November, The National Multiple Sclerosis Society cooperated with the Accelerated Cure Project's Multiple Sclerosis Discovery Forum to increase progress (Accelerated Cure, 2015). In December, Accelerated Cure Project received a funding award from Centered Outcomes Research Institute (PCORI) to create the MS Patient-Powered Research Network in partnership with the Complex Adaptive Systems Initiative (CASI) at Arizona State University and Feinstein Kean Healthcare (FKH) (Accelerated Cure, 2015).

In September 2014, Accelerated cure Project had a lead founding sponsor agreement with EMD Serono to launch the Optimizing Treatment-Understanding Progression (OPT-UP) study (Accelerated Cure, 2015). This study is built upon the knowledge from the Clinical Effectiveness Study Network and the Repository. Quickly from the beginning of the OPT-UP study they realized that this would be an expensive study (Interview 1). ‘The total price for the OPT-UP study over 5 years was going to be 40 million dollars’ (Interview 1). Therefore, the model of funding has changed (Interview 1). ‘In the beginning our fundraising was very focused on finding donors’ (Interview 2). ‘Over the years we scaled back on the individual fundraising and also on the events, in favor of larger donations from organizations within our industry and from contracts with those groups’ (Interview 2).

In February 2015, Accelerated Cure Project has launched iConquerMS in cooperation with Arizona State University and Feinstein Kean Healthcare. With this, for instance, they enable all people who are diagnosed with MS to play an active role in research and propose topics of research that are important to them (Centerwatch, 2014). ‘We were getting into a new model of research with iConquerMS MS. That model has to do with more patient engagement in research’ (Interview 2). In July, a funding award was received by the Patient-Centered Outcomes Research to further develop iConquerMS (Accelerated Cure, 2015). In October, Accelerated Cure Project received funding from Genentech for the OPT- UP study (Accelerated Cure, 2015).

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Results

In this section, the results will be given. First, we identified the stages for each case. After that, we identified the capital dynamics during these stages. An increase is used when they obtained more of a particular capital. A leverage describes an increase which is the result of existing capital. Thus, when they benefit from the existing resources to further increase the capital. Lastly, a gap shows a lack of a particular capital.

Stages

Stage 1. Mission definition - Mission is the basis for action and includes the motivation and the goals

(Lumpkin et al., 2013). The mission definition stage started for Treeway when Muller met Stuit and they decided to take action. For Accelerated Cure Project, this stage started when Mellor wanted to take action. He wanted to make clear what already has been done, what needs to be done and what the difficulties are. By doing this, he identified the needs that could be met by social enterprises (Monuz et al., 2014).

Stage 2. Opportunity identification - The opportunity identification started for Treeway when Muller and

Stuit started working in the UMC of Utrecht. In the UMC of Utrecht they found out that researchers did not use the 5000 DNA samples. They decided to pursue the opportunity to start with research by using these samples. For Accelerated Cure Project, this stage started when Mellor started to discuss with his neurologist Dr. Vartanian shortly after his diagnosis. They discussed about gaps in research on MS and about what approach was needed to increase the efforts towards a cure.

Stage 3. Opportunity evaluation - This stage is about evaluating the expected social change and economic

viability of the opportunity (Perrini et al., 2010). For Treeway, this stage started when they asked important researchers about their needs. During the opportunity evaluation of Accelerated Cure Project, Mellor talked a lot with Dr. Vartanian to discuss how to achieve value, which is part of the evaluation stage (Ardichvili, Cardozo and ray, 2003).

Stage 4. Opportunity formalization - With the founding of Project MinE, the opportunity formalization

stage started for Treeway. Formalization can help by the coordination of complementary assets, actions and investments, which increase the speed of opportunity realization (Foss et al., 2014). For Accelerated Cure Project, this stage started when Accelerated Cure Project was founded. Other activities during this stage were the forming of the Scientific Advisory Board and the launching of the MSNews Portal. Next to these activities, they worked on the Cure Map during this stage.

Stage 5. Access to capital/funding - This stage started for Treeway when they got access to funding from

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Stage 6. Opportunity exploitation - When De Greef became CEO, the opportunity exploitation started for

Treeway. The arrival of De Greef was an important step because together they determined a strategy. This belongs to the opportunity exploitation stage because it is about the translation of the mission and principles into a suitable intervention model and an organizational form (Perrini et al., 2010). Further, during this stage, they decided to actively participate in the development of TW001. For Accelerated Cure Project, this stage started when they started large-scale, multidisciplinary studies with the Repository. Furthermore, they created the Technical Advisory Board. This is an example of task allocation, which is part of the opportunity exploitation stage (Haugh, 2007).

Stage 7. Opportunity scaling-up - Th

with LACDR to focus on the optimization of clinical trial designs and data analysis. The receiving of the Orphan Drug Designations were also important activities during this stage since this stimulates the development of medicines for rare diseases. Further, they formed a collaboration for the development of TW002. They received positive results from their phase 1 study with TW001, which are needed to maximize social change. The maximization of social change is the goal of the opportunity scaling-up stage (Drayton, 2002). For Accelerated Cure Project, the scaling-up stage started when they launched the Optimizing Treatment-Understanding Progression study and iConquerMS. With iConquerMS they got into a new model of research with more patient engagement. They enable people who are diagnosed with MS to play an active role in research.

Capital dynamics during stages

Treeway - During the mission definition stage both entrepreneurs were motivated to make a difference. Motivation, energy and vision are important parts of strategic capital. Therefore, we can note an increase in strategic capital here. They decided to use a business perspective and determined a strategy. Further, there is close contact with Stuit to discuss ideas (Greve and Salaff, 2003). The connection with Stuit increased the social capital. Muller and Stuit both used their existing knowledge and experiences of being an entrepreneur. Using existing knowledge and experience is typical for leveraging cultural capital. Accelerated Cure Project – During this stage, Mellor wanted to make clear what already has been done, what needs to be done and what the difficulties are. Again, this motivation and vision shows an increase in strategic capital. Further, Mellor obtained a lot of information about the disease. Obtaining knowledge and information are important aspects of cultural capital. Therefore, an increase in cultural capital can be seen.

To conclude, in both cases the strategic capital increased. Cultural capital is leveraged for Treeway and increased for Accelerated Cure Project. Social capital only increased for Treeway.

Stage 2. Opportunity identification