政策研究大学院大学 科学技術イノベーション政策研究センター ワーキングペーパー (SciREX-WP)
National Graduate Institute for Policy Studies, Science for RE-Designing Science,
Technology and Innovation Policy Center (SciREX Center) Working Paper[SciREX-WP-2020-#05]
Features of ecosystems to advance disruptive
inclusive innovation for the Sustainable
Development Goals: Five global case studies

2020/11Michiko Iizuka (Professor, National Graduate Institute for Policy Studies)
Gerald Hane (Visiting Research Fellow, National Graduate Institute for Policy Studies)

WORKING PAPER

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

政策研究大学院大学
科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREX-WP-2020-#05[SciREX-WP-2020-#05]

Features of ecosystems to advance disruptive inclusive
innovation for the Sustainable Development Goals:
Five global case studies

November, 2020
Michiko Iizuka, Professor, National Graduate Institute for Policy Studies
Gerald Hane, Visiting Research Fellow, National Graduate Institute for Policy Studies1

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05※. 本ワーキングペーパーの著作権は、著者もしくは政策研究大学院大学科学技術イノベーショ
ン政策研究センターに帰属しています。本ワーキングペーパーに含まれる情報を、個人利用の範囲を超えて転載、またはコピーを行う場合には、政策研究大学院大学科学技術イノベーション政策研究センターによる事前の承諾が必要となりますので、以下までご連絡ください。

【連絡先】政策研究大学院大学科学技術イノベーション政策研究センター
TEL: 03-6439-6329 / E-Mail: scirex-center@grips.ac.jp2

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Contents
Abstract ........................................................................................................................................ 4
1. Introduction .............................................................................................................................. 5
2. Review of related concepts ...................................................................................................... 6
2.1 Sociotechnical transitions and its challenges for SDGs................................................... 6
2.2 Disruptive innovation to transform value networks ...................................................... 10
2.3 Inclusive innovation to leave no one behind................................................................... 12
2.4 Innovation ecosystems and the potential to address core enabling factors ................. 14
2.5 Types of technologies, complementarities, and innovation ecosystems ....................... 15
3. Conceptual framework .......................................................................................................... 17
3.1 Disruptive inclusive innovation ...................................................................................... 17
3.2 Research questions and methodology ............................................................................. 18
3.2.1 Research questions and implications ....................................................................... 19
3.2.2 Methodology ............................................................................................................... 20
4. Case studies............................................................................................................................ 20
4.1 General overview .............................................................................................................. 20
4.2 Assessment of each case based on enabling factors ....................................................... 21
4.3. Case Summaries .............................................................................................................. 21
4.3.1. East Ventures ........................................................................................................... 21
4.3.2. Samurai Incubate ..................................................................................................... 24
4.3.3 The Aavishkaar Group .............................................................................................. 25
4.3.4 NBF/ADM................................................................................................................... 28
4.3.5 Makuake ................................................................................................................... 311
4.4. Ecosystem and cross-cutting factors .............................................................................. 33
4.5. Regulations ...................................................................................................................... 37
5. Discussion ............................................................................................................................... 37
6. Conclusion .............................................................................................................................. 39
References................................................................................................................................... 41
Appendix ..................................................................................................................................... 463

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Abstract
The transformation of sociotechnical systems is considered necessary to achieve theSustainable Development Goals. However, this transformation process is inhibited byinstitutional inertia of the public sector, vested interests of the private sector, routine
habits of individuals, and increased complexity of globalized activities. While policies tostimulate the transition exist, these policies and pathways are still insufficient. Meanwhile,
there are many individual private initiatives taking place to advance the societal agenda.
Although these are still isolated actions of new actors, they have the potential to become
broader movements. This study takes an inductive approach to examining factors thatenhance the generation of new value networks with inclusive outcomes reflecting amodel of “disruptive inclusive innovation.”

Five cases are examined that involve

venture capital, an incubator, venture companies, and a social impact fund. The study
notes that a common feature underlying the ability of these organizations to generatehigh impact is the creation of tailored ecosystems. These activities are self-generated
without much government support.

Therefore, examining these as “signals” provide

hints regarding how policy can be formulated to better complement and link relatively
isolated cases of success so that private initiatives can be scaled-up and well-integrated
with transformative policy efforts.
KEYWORDS
Disruptive innovation, Inclusive innovation, Ecosystems, SDGs, Emerging business
JEL CODEO35 Social innovation, O38 Government policy; M13 New firms and startups,

4政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Features of ecosystems to advance disruptive inclusive innovation for the
Sustainable Development Goals: Five global case studies
Michiko Iizuka and Gerald Hane, GRIPS
1. Introduction
In 2015, United Nations member states adopted the 2030 Agenda for Sustainable
Development, which outlined Sustainable Development Goals (SDGs). Under thesetargets, nations aim to create new pathways toward sustainable development whileleaving no one behind. Science, technology, and innovation (STI) are expected to play
critical roles in this process (TWI2050, 2020; Schot and Steinmuller, 2018). Currently,
countries that subscribe to the SDGs are drawing roadmaps regarding STI for SDGs
(UN-IATT, 2019). New approaches are essential because existing studies indicate thatcurrent policy instruments are either absent or insufficient for achieving the magnitude oftransformation needed in the expected timeframe.
This study is based on the hypothesis that disruptive and inclusive innovation (DII) canplay a conducive role in the transformative process to achieve the SDGs and thatcreating new innovation ecosystems are instrumental for paving new pathways.

DII isinnovation that disrupts current innovation ecosystems and creates value networks—
through disruptive innovation (Christensen, 1997; Markides, 2006)—while satisfying
unmet societal needs—through inclusive and social innovation (Chattaway et al., 2014;
Chesbrough and Di Minin, 2014; Heeks et al., 2014). Although both elements of DII(disruptive and inclusive) have different goals, there are important overlaps in how they
achieve their goals. SDGs define bold social goals that call for more disruptive solutions
and stimulate the innovation process. This paper aims to examine cases that act as`signals` to identify the factors that can promote the higher impact from innovationneeded in order to reach the SDGs. The cases selected focus on activities that havesocietal impact and face new, blue ocean customers. This overlap is key tounderstanding how socioeconomic transformation toward SDGs can take place.
Leveraging innovation for this transformation is particularly challenging in emerging
economies where the assets needed for successful innovation are not fully present.
The construction of supporting ecosystems provides a path to strategically overcome
missing factors of the context of their operation, initiating operation to fulfil the needs ofcitizens in not only delivering goods and services needed but also with new mechanism5政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

to make them available and accessible for the mass in non-business conducive
conditions.

Aided by the construction of ecosystems, companies can initiate

transformation by disrupting the status quo, creating new markets, and responding tounmet needs. This study attempts to shed light this process of transformation, theprocess of building new innovation ecosystems to pave the pathway toward SDGs (Schotand Steinmuller, 2018).
Ecosystems can facilitate value creation and value capture, both of which accelerate thepath to the SDGs. Against the backdrop of a rise in platform-based businesses using
digital technology, there has been increasing attention to the role of innovation
ecosystems to ensure competitiveness. These case studies analyze how a new
ecosystem secures a new market by creating a dominant platform. Building
complementarity to a platform (e.g., linking competitive supplier networks to dependent
users) ensures the sustainability of a business. The ways in which businesses haveextended value networks through complementarities is different from value creation, as
it is more focused on capturing value (Teece, 2018). This study pays attention to thiscomplementarity and the importance of ecosystem development of DII business casesin order to observe how value capture via ecosystems generate greater social benefits.
Value capture through ecosystem building can be a stepping stones in drawing disruptive
pathways towards SDGs from the bottom up.
Section 2 of this paper reviews the literature to formulate the conceptual framework of
DII. Section 3 explains the conceptual framework, research questions, and methodology.
Section 4 introduces cases of disruptive businesses that link the concepts with practicalexamples. Section 5 compares these cases to answer the following research questions.
How can new ecosystems advance DII and stimulate the transformation toward SDGs?
How are collaboration and ecosystems built to gain resilience to challenge the social
agenda? Finally, Section 5 offers conclusions and sets outs the limitations and future
research challenges.
2. Review of related concepts
2.1 Sociotechnical transitions and its challenges for SDGs
The transformation of existing sociotechnical systems (the way in which society andeconomic activities are organized) is considered inevitable for achieving the SDGs
(TWI2050, 2018, 2019, 2020; Schot and Steinmeuller, 2018; UNCTAD, 2014). While
recognized as essential, initiating transformation is difficult owing to path dependency

6政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

constituted of institutional inertia by incumbent actors with vested interests andconsumers and users with habits and routines. These inhibiting factors, at distinctive
levels, result in maintaining the system in its status quo. In addition, the globalization of
economic and social activities that has occurred in past decades has created intricate
webs of activities, making transformation a complex process.
Several studies have pointed out that existing policies are insufficient to initiate
transformation. These studies have claimed that while some policies can positively
encourage change (e.g., feed-in tariffs and carbon taxes), very few actively destroy theexisting systems to facilitate transitions (Kern et al., 2017; Kivimaa and Kern, 2016;
Rogge and Reichardt, 2016; Turnheim and Geels, 2012; Weber and Rohracher, 2012).
This means that unless there are substantially advantageous (simple, low cost, superior,and universal) alternatives offered to individuals and society at large, transformation isdifficult to take place (Franken, 2017). Indeed, existing policy instruments, such as
subsidies for eco-products and public procurement for large infrastructure, aim atencouraging change from the demand side. However, these public initiatives have had
limited results so far due to transformative failure that consists of failure to: identify the
future trajectory (directionality), articulate demands (demand articulation), coordinate
beyond conventional boundaries (policy coordination); and self-evaluate and correct(reflexivity) (Weber and Rochracher, 2012). This makes it imperative to collaborateclosely with private (or non-public) actors to offer distinctively new innovative solutions—disruption—to change potential users’ behavior with inclusive outcomes. In fact, there
are increasing numbers of businesses and private initiatives that place societal purpose
as one of their core objectives 1 . Currently, these efforts are somewhat isolated.
However, if aligned well they could become alternative forces in paving the road toward
SDGs (Schot and Steinmueller, 2018).
Currently, STI for SDG roadmaps are being drafted in selected countries 2 as pilot cases(UN-IATT, 2019). Drawing roadmaps can be a challenging exercise because, by design,
each government needs to determine, under the unifying global vision of the SDGs,
where to initiate the journey (starting point: assessment of current status) to the goals(priorities, target); how to reach the goals (pathways: strategies); and how to translate1
For instance, Zebras Unite, numbers of prescriber for PRI (Principle of responsible investment), emergence of conceptof shared values (Porter and Kreme 2011), valuing stakeholders than shareholders statement by Business Roundtablein 2019. https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promotean-economy-that-serves-all-americans
2
These countries are, Ethiopia, Ghana, India, Kenya, and Serbia with the EU and Japan.

7

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

goals to the implementable level (identification implementable actions and assigningtasks to relevant agents). This exercise creates a learning space for participating
governments.
At the same time, globalization has already created a complex web of global value chainsin the exchange of resources (natural, financial, and human capital) to facilitate economic
and social activities. The configuration of pathways toward prosperity can be beyond
the control of any single government. In addition, global prosperity is very muchassociated with inclusiveness obliging the Global North and the South to collaborate 3(Schot and Steinmeuller, 2018).
The efforts initiated under the UN-IATT to pave the way for successful roadmaps toward
the SDGs are still incipient and have a long way to go to become a powerful practicalpolicy tool to involve actual stakeholders in changing the course of the developmental
trajectory. This, however, does not mean that change toward a new form of society isabsent.
In fact, many “signals” of changes toward a sustainable society, independent oforchestration by the UN, are already being observed. For instance, the following aspects
have emerged: 1) There are new business actors aiming to solve societal problems, suchas social entrepreneurs, startups, and VC firms that employ emerging technologies andnew business models to seek social returns in addition to economic ones. 2) Financial
resources have emerged, focused on returns beyond pecuniary value, such as social
investors, ESG (Environment, Social and Governance) funds, impact investment funds,
and crowdfunding for social causes. 3) There are knowledge appropriation tools thatallow more open access to knowledge and innovation for further use or sharing for public
purposes, such as creative commons licenses, open and free source movement, andcopy left 4 . 4) Rules and regulations have emerged to focus on societal impacts ofinnovation or economic activities that reach beyond country and disciplinary boundaries,
such as international standards addressing environment and social and ethical issues,
including environmental certification (eco) and social labelling, sustainable and ethicalbusiness codes of conduct, such as fair trade 5 . 5) New governance methods allow
3

For example, consider the migration of labor, students, FDI, global value chains of economic activities, and mostrecently, disruptions to the production of industrial goods from the spread of the Covid-19.
4Copyleft, distinguished from copyright, is the practice of offering people the right to freely distribute copies andmodified versions of a work with the stipulation that the same rights be preserved in derivative works created later.
5
Includes Corporate Social Responsibility (CSR), Principle of Responsible Investment (PRI, 2009), Triple Bottom line
(1994), Creating Shared Value(CSV) (Porter and Kremer, 2011, 2016) among others.

8政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

experimentation to new innovative solutions so to diminish the time lag of users to benefit
from the products and services, such as regulatory sandboxes and regulatory pacing(Marchant et al., 2011), agile governance (WEF, 2019), application of virtual reality
simulations for policy and participatory or open governance (e.g., Port Alegre, Brazil andQuebec, Canada). 6) New business models have been created by the digital economy
and sharing economy, such as peer-to-peer reciprocal services, customized anddecentralized small lot production that can meet unmet needs, such as makerspaces,
decentralized (off grid) power generation, various forms of financial inclusion using
mobile phones (e.g., M-Pesa and Go-pay) with accompanying e-commerce services.
Indeed, these developments have been made possible by emerging technologies thatare said to have the potential to transform society, such as ICT, 3D printers, and artificial
intelligence (Garret, 2015).
Currently, the “signal” is still a relatively isolated force but in a short space of time, these
dots are being connected to manifest transformation from the bottom up in a variety of
combinations. This is expected to occur more rapidly in the Global South than the Global
North owing to the sheer necessity of overwriting the inhibiting factors, namely, regulation,
institutional inertia, vested interests, and habits.
The question then becomes how such changes are achieved so that they can graduallytransform systems to generate broader impacts. The key to the design is not just to focus
on generating new knowledge, but also on generating positive externalities via
collaboration with external actors (Prahalad and Mashelkar, 2010), and creating
mechanisms to capture benefits (Teece, 2018). Here, innovation ecosystems andcomplementary assets play an instrumental role (Teece, 2018: Gawer and Cusumano,2014).
Building sustainable mobility is an area in which an ecosystem approach will be essential.
Creating new technologically superior products at low cost, for example, energy-efficientcars, at massive scale would only partially respond to the needs for sustainable andaffordable means of transportation to all. Recent technology has enabled the creation ofa new "system" that allows the co-existence of diverse means of transportation—for
various geographical locations (for a rural vs. urban setting or a mountainous vs. coastal
setting, etc.), users (young vs. older generation or mothers vs. children), purpose (longvs. short distance; leisure vs work), business models (subscriptions vs. peer to peer
sharing or dynamic pricing)—and that use different technologies (self-driving or electric ).

9

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Each operates at its best in offering services to the differentiated needs of users while
being a complementing module for the effective delivery of sustainable and affordable
mobility services. This requires interoperability (universality of technology and legal
systems) that encompass diverse and customized needs. Each mode in thetransportation system also needs to be affordable, available, accessible, sustainable,
and better than the existing choice of transportation. The success of a mobility system,
therefore, is not technological “excellence” in one product but an ecosystem ofcomplementary services running on interoperative systems catering to the diversity ofunmet needs of the people.
Studies in sociotechnical system transitions offer rich insights for transformation tomeet the SDGs. These studies have analyzed historical transitions (Geels and Penna,
2015; Geels and Schot, 2007), sector- or technology-specific transition processes, andthose that address to societal problems (Geels, 2002; Schot and Steinmuller., 2018). In
particular, a multi-level approach framework that nests niche, regime, and landscapelevels offers useful policy implications for managing the transformation process (Geels,
2002). The STI for SDG roadmap includes both regime (national) and landscape(international) levels but currently pays little attention to what is happening to the niche(bottom–up, micro) level. This framework, therefore, could be effective for deeper
understanding of activities at the niche, bottom–up level.

2.2 Disruptive innovation to transform value networks
Disruptive innovation forms a new market and value network that generates disruption
and eventually replaces existing markets, firms, products, and alliances (Bower andChristensen, 1995; Markides, 2006). The disruption is generated as the outcome ofinnovation or subsequent generation of value chains and customers adapting to the newcontext (Bower and Christensen, 1995, Christensen et al., 2006).
This concept initially addressed the business and management sphere referring tobusiness strategies in the moment of technological change. Specifically, it showed thedanger of excessive reliance on known and presumed needs of current customers incompetition, because this would undermine the ability to recognize new (unarticulated
unmet) needs in the market at the firm level (Christensen, 1997). The concept, however,gradually evolved to cover a much broader connotation that addresses systemic changeof markets (Christensen et al., 2018; Kilkki et al., 2018). For example, Christensen et al.
(2006) highlighted the catalytic role of a disruptive innovator that: 1) scale ups and10政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

replicates products and services; 2) meets needs that are either overserved (overly
cumbersome, elaborate options) or underserved; 3) serves simpler and less costly
options without being an inferior alternative; 4) generates resources throughunconventional methods that are not taken by incumbent players (e.g., microfinancing,
crowdfunding); and 5) adopts an unconventional business model, because it iscustomarily considered as unattractive or unprofitable (e.g., impact investment fund,online medical care, and education) (Christensen et al., 2006). Christensen et al. (2006)
provide examples of new approaches vis a vis conventional choice: online classes(e.g.
Massive Open Online Courses: MOOC) and community colleges versus traditional
universities; microlending and crowdfunding (e.g. Kickstarter 6 ) versus banks; basic
health service providers (e.g. Minuteclinics 7 and The Healthstore foundation 8) in Kenya
versus traditional hospitals. These examples offer unconventional alternatives tomainstream products and services, and are closely associated with systemic change.
These also illustrate that disruptive innovation offers solutions for larger populations withunmet needs, potentially generating greater impacts (Christensen et al., 2006: 6;
Christensen and Raynor, 2003).
More recently, Christensen et al. (2019) focus on the role of disruptive innovation in
generating prosperity at national level. Christensen et al. (2019) emphasize its function
in “market creation,” which subsequently generates: 1) sustainable jobs from creating
new value networks; 2) profits from creating broader impacts; and 3) culture change ofan entire society by creating new access and opportunities. The authors claim that
disruptive innovation can contribute to prosperity via innovation that seeks to overcome
the absence of: 1) skills to make use of what is being offered; 2) wealth (resources) or
access to buy and use; and 3) time to consume or obtain access (e.g., time for waiting
to see a doctor and delivery time). Above features indicate that a successful businessmodel of disruptive innovation would naturally create an inclusive market by providing
simple, easy-to-use, low-cost, and accessible products/services to current “non-6

Kickstarter is a global crowdfunding platform focused on creativity. It has received more than US$ 4.6 billion inpledges to fund 445,000 creativity projects in 2019. https://www.kickstarter.com/
7
The clinic only staffed by nurse practitioners and physician assistants to offer basic services including vaccinations,
testing and treatment for sexual transmitted disease treatment, contraception services, smoking cessation, and TB
testing. https://cvshealth.com/about/our-offerings/cvs-minuteclinic
8
The HealthStore Foundation is a non-profit corporation founded in 1997. Its mission is to increase access to essential
medication, basic healthcare, and prevention services for children and families in the developing world. It takes social
franchise business format to establish the network of small clinics, called CFWshops. These shops “are to improveaccess to essential drugs, basic healthcare, and prevention services for children and families in the developing worldusing business models that maintain standards are geometrically scalable, and achieve economies of scale”.
http://www.cfwshops.org/

11

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

consumers” with unmet needs. He illustrated how disruption can be made but was not
as clear regarding how firms can overcome challenges accompanying the disruption.
2.3 Inclusive innovation to leave no one behindInnovation 9 is often associated with productivity and firm activities but it also enhances
welfare and the quality of lives of individuals by solving societal problems. Since the2000s, several types of innovation have been linked to welfare enhancement in particular,
targeting the low-income strata of population. Innovation for the “base/bottom of the
pyramid” (BOP) (London and Hart, 2004; Prahalad, 2005; Prahalad and Hart, 2002) has
emerged, focusing on the market potential of the “bottom billion” with income of less than
US$ 2 per day. This initially included the poor as potential consumers whose needs are
not being satisfied by the existing market while a later version treats the poor also as
producers. Other concepts—such as grassroots innovation (Gupta et al., 2003; Fessoli
et al., 2014)—consider the poor as a generator of innovation to improve quality of life bythemselves and have tried to actively promote this more broadly through the use of
intellectual property rights. Frugal innovation treats the poor as both users and producers
of innovation, emphasizing that under constrained living conditions (absence ofinfrastructure, finances and resources, etc.), innovative configuration of existingknowledge is generated (Prahalad and Mashelkar, 2010; Radjou et al., 2012; Tiwari and
Herstatt, 2012). The successive emergence of innovation concepts addressing welfare
enhancement has proved the increasing importance of the problem-solving role ofinnovation in the present-day context.
Social innovation is another type of welfare-enhancing innovation. Unlike the types
discussed above, social innovation does not specifically address low-income strata ofsociety but focuses on the growing role of civil society in solving societal problems
through innovation. It emphasizes the participation of stakeholders in innovation
ultimately altering organizational methods and networks to effectively meet unmet needs,
including the change in mindsets (Edwards-Schachater and Wallace, 2017; Nicholls andMurdock, 2012; Pol and Ville, 2009).

9
Similarly, the International Development Innovation Alliance, a collaborative platform of international aid agencies,
defines innovation from a development perspective as “a new solution with the transformative ability to accelerate
impact. Innovation can be fueled by science and technology, can entail improved ways of working with new and diverse
partners, or can involve new social and business models or policy, creative financing mechanisms, or path-breaking
improvements in delivering essential services and products. Innovation has been and will be pivotal for reachingsustained, scalable solutions to the world’s complex problems.” (https://www.idiainnovation.org/)12

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Von Hippel has highlighted the importance of user-led innovation (von Hippel, 1998) andsubsequently, free innovation (von Hippel, 2018). User-led innovation emphasizes therole of users in generating innovation for their own unmet needs and sharing it among
the peers. Under free innovation, von Hippel (2018) extends his argument of user-led
innovation, claiming that the latter, as part of conventional innovation, can speed up thesearch for better options, leveraging the digital transformation underway.
Inclusive innovation is derived from the concept of “inclusive growth,” which involves“marginalized” and “low-income” stakeholders in the developmental process (George etal., 2012; Heeks et al., 2014). This is closely associated with social innovation, which
focuses on the participation of stakeholders, or civil society, in meeting unmet needs via
innovation. Technology (e.g., ICT, mobile phones, and renewable energy) in this context
is portrayed as a means to support implementing innovation, serving as a platform forknowledge diffusion, learning, or exchange of products and services. Some studies
employ the “open innovation” concept to social innovation as a mechanism to increase
impact (Chesborough and Di Minin, 2014).
Similar approaches from the business literature also demonstrate the role of the businesssector in confronting the social challenges. Creating shared value (CSV) extends the
positive impact of Corporate Social Responsibility (CSR) as “business can serve newneeds, gain efficiency, create differentiation or identity, and also expand markets” (Porterand Kramer, 2011).

CSV considers that the competitiveness of a company can beenhanced while advancing the economic and social condition in the communities inwhich it operates, combining societal and economic progress (ibid:p6). These can bereached through three approaches: 1) reconceiving products and markets, 2) redefining
productivity in the value chain and 3) enabling cluster development. This idea sharesconcepts reviewed earlier that identify addressing new customers, market niches, andcollective mechanisms to support new alternatives. However, these approaches do not
fully illustrate how to bridge the present state to CSV.

Shared values of profit should

inform societal issues in the locality in which the firm operates (Porter and Kramer, 2006,2011).
Overall, Mashelker and Pandit’s (2019) “ASSURED” 10 innovation crystalizes the key
features of inclusive innovation.

The seven elements of ASSURED innovation are as

follows: 1) affordable, 2) scalable, 3) sustainable, 4) universal, 5) rapid, 6) excellent, and10

ASSURED takes the first letters of above characteristics.

13

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

7) distinctive. These characteristics are critical for creating products and services thatcan solve societal problems and will be accessible to a large population. This is an
excellent operational definition of inclusive innovation. Still remining, however, is thequestion of the mechanisms to enable these innovations to reach the populations in need.
This requires new ways of configuring stakeholders to create innovation ecosystems thatwill ultimately generate greater social impacts.

2.4 Innovation ecosystems and the potential to address core enabling factors
Innovation ecosystems are critical if innovation is to be deployed and have atransformative impact (Chesbrough and Di Minin, 2014; Christensen et al., 2019).
Innovation ecosystems are increasingly considered to play a critical role in the strategies
of firms and other actors to enhance competitiveness (Adner, 2016; Gawer andCusumano, 2014; Jacobides et al., 2018). Emerging literature emphasizes that recent
advances in digital technologies have enhanced modularity and platform capabilities,
and as a result, innovation system complementarity can be generated in a shorter time
span. For the network to successfully execute its mission of serving specific functions,
good governance, shared values, and sustainable flow of financial resources are critical.
Hence, key elements of a successful ecosystem appear more like a package (e.g.,business model) of adaptive modules than a production chain for products and services.
Here, the technologies are only half of the story, because disruptions require othercomplementary factors in a network to deploy and diffuse innovation to a mass of people.
This requires the business model to ensure: flow of finance, develop human capacity,
provide agile and adaptable physical and legal infrastructure to ensure access to themarket for both producers and users (Marchant et al., 2011; Shapiro and Glicksman,2002), partner with stakeholders that provide services and inputs (Gawer and Cusumano,2014), and be a leading/strategic intermediary or coordinating entity (Adner and Kapoor,
2010; Gawer and Cusumano, 2008, 2014; Iansiti and Levien, 2004; Jacobides et al.,2018). These factors basically determine how networks are shaped, actors are aligned,
flow of knowledge is open or closed, governance (rules of the law) is exercised, andvalues are shared (Gawer and Cusumano, 2014). Such value networks can beconsidered innovation ecosystems, which are defined as “the alignment structure of amultilateral set of particulars that need to interact in order for a focal value perspective
to materialize” (Adner, 2016: 40). The studies done on ecosystems focus on how tocreate value and be competitive; however, they fail to mention the ways to ensureprofitability (Teece, 2019). In other words, the ecosystem as a whole can become a14

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

resilient mechanism in a time of crisis by leveraging mutually beneficial relationships
among stakeholders involved.
Based on the above-mentioned literature, business success would benefit fromecosystems that consist of value creating networks aiming at both social and economic
goals.

Such a model would align financial flow, technology (as the means for

implementation), capabilities (human, institutions), access to market and customers andbusiness-conducive legal and physical infrastructure.
2.5 Types of technologies, complementarities, and innovation ecosystems
An innovation ecosystem places primary focus on the alignment of actors to generatevalue and impact from the network. This alignment of actors depends on the type ofcomplementary assets that are involved. Here three types of technology are reviewed,
emerging technology, enabling technology and general-purpose technology (GPT) to
illustrate ecosystems surrounding the technologies. The general characteristics ofdifferent technologies are compared in the Table 1.
Emerging technology is often associated with the 4th industrial revolution and isconsidered the driving force for sociotechnical transitions. It is defined as “radically noveland relatively fast-growing technology characterized by a certain degree of coherence
persisting over time and with the potential to exert a considerable impact on the socioeconomic domains(s) which is observed in terms of the composition of actors, institutions
and pattern of interactions among those along with the associated knowledge production
process” 11 (Rotolo et al., 2015: 1828, emphasis added). This indicates that the impactof “emerging technology” lies in the future. In other words, its potential can be clarified
only through implementation and the ecosystems surrounding it.
In contrast to the emerging technology, general purpose technology (GPT) exerts great
impact on sociotechnical systems, as they: 1) are pervasive (widely used), 2) capable ofongoing technical improvement, and 3) enable complementary innovation in application
sectors (Bresnahan and Trajtenberg, 1995). This means that GPT, being widely appliedin various sectors, generates second- and third-order impacts by triggering follow-up
innovations, engaging new accompanying systems, and generating cumulative impacts(Garret, 2015; Jovanovic and Rousseau, 2005). Hence, GPT is not just technology; it

11
The following five key attributes for emerging technology have been identified (Rotolo et al., 2015): 1) radical novelty,2) relatively fast growth, 3) coherence, 4) prominent impact, and 5) uncertainty and ambiguity.

15

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

can take the form of a product, a process, or an organization. Moreover, GPT has beendeveloped over an extensive period of time as the result of collaboration between
individuals with different skills and is considered to have significant impacts 12.
Enabling technology, 13 underpins innovation across many products or services, acrossa variety of industries. Enabling technology shares the characteristics of GPT on two
accounts: cumulative improvement of technology and complementary innovation inapplication. Enabling technology is often disruptive to the status quo, generating
considerable economic benefit and social surplus. Again, like GPT, enabling technology
has impacts that not restricted to product level but are likely to affect downstream users
through networks and systems.
These technologies—GPT and enabling technology—are different from emerging
technology: their impacts occur in real time and not are simply potential in the distantfuture. The critical issue is how these technologies are diffused, materialize
complementarities, and culminate to generate impacts (Carlaw and Lipsey, 2002). The
marked difference is the system that surrounds technology.
Table 1: Types of technology
Novelty
Impacts
Impact oftechnology
Observed change
Complementarity

Emerging Technology
Radical technology
Uncertain andambiguous
Coherence/Convergence

Enabling Technology
Drive radical change in use
Enhance user capability

Relatively fast growth inuse
Explore methods of use

Rapid development ofsubsequent technology
Complement for broader
impacts

Applicability to diverse field

General Purpose Technology
Affect broad socio-economic areaschange extant economic and social
structure
Creates many spillover effects
Societal transformation
Complementary for transformativechange and acceleration

Source : Based on Rotolo et al. (2015) and Teece (2018)

Teece (2018) referred to complementarity using enabling technology, and GPT. He
argues that “technological complementarity occurs when the value of an innovation
depends on altering the nature of one or more existing technologies and/or on creating
new ones. It applies when the full benefit (or even any benefit) of the innovation cannot

12

Examples of such GPT are printing, made-to-order materials, and steam engines.
The European Commission identifies the following as enabling technology: nanotechnology, industrial biotechnology,
and advanced materials. These technologies are said to underpin product innovation across many industries and to beimportant for addressing societal challenges (https://ec.europa.eu/info/research-and-innovation/research-area/industrialresearch-and-innovation/key-enabling-technologies_en).
Teece provides the examples of containerization of cargo shipping; 3G/4G, which has enabled the spread of Facebook;location sensitive mapping; and streaming media (Teece, 2018).
13

16

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

be achieved until some other, complementary technology has been created or reengineered. The complements can be related vertically, horizontally, or laterally” (Teece,
2018: 1374).
In other words, complementarity influences the degree and magnitude of impacts. For
technology to have broader impacts to disrupt, it requires complementary parts. Hence
pervasive technology may exert greater transformational change.

This requires

complementing parts to be affordable, scalable, sustainable, universal, rapid, excellent,and distinctive (as seen in ASSURED innovation) because these characteristics enablea critical mass of potential users to adapt the technology and consequently amplify the
impacts. For instance, the new generation of cellular networks requires high-performing
universal microchips and handsets at cheaper cost and at massive scale to make theservice available to potential users.

Such a new network would bring on board a whole

set of applied services and products, enabling the Internet of Things (IoT) (Garret, 2015).
All the above requires the system to align the core functions.
Understanding the differences in technology types helps us to illustrate the importanceof complementarity and ecosystems that transform the mere potential of emerging
technologies into actual impacts through involving broader segments of non-users.
Thus, although technology is an important factor to be considered in transformation, it isembedded in ecosystems that create value networks, and create effective
complementarities in order to achieve DII toward SDGs.
3. Conceptual framework
3.1 Disruptive inclusive innovation
DII exists in the intersection between disruptive innovation and inclusive innovation. It
brings about new value networks that differ from one or the other. By addressing abroad range of potential users at all economic levels, DII can accelerate the impact ofinnovations addressing societal challenges. First, DII embodies complementary
concepts, each with a distinctive trajectory: one trajectory focuses on societal impact
while the other focuses on the process of generating new value networks. DII occurs in
the overlap in which disruptive innovation includes underserved customers and when
inclusive innovation creates a new market and value networks. This is shown in Figure1.

17

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

This study draws on cases of DII, which are expected to create systemic changes withgreater inclusiveness by providing better access to product and services to large
populations.

Innovations incorporate technologies with business models so that thebenefits become accessible to potential users who were not previously served by themarket. An example of an innovation that is both disruptive and inclusive is Africa’s MPesa.

M-Pesa is a mobile phone-based money transfer system that allows those

without bank accounts to leapfrog a traditional banking system by offering financial
services via a mobile phone. This enables M-Pesa to reach a much larger population.
This is a case of success through the development of an ecosystem that included key
stakeholders. These stakeholders (Safari com, DIFD, Vodafone) established networksof cashing spots (Mas and Morawczyniski, 2009) hence enabling a business that servesa mass of people that did not use financial services before.

Supporting businesssuccess are 1) the involvement of diverse stakeholders external to the system including
government support, ODA, and DFID; 2) prior information on needs for cheaper moneytransfer in the domestic market; and 3) the prevalence of mobile phone ownership thatcan be used as the infrastructure to lower the entry barrier to getting into a new activity.
What this example illustrates is that with the inclusion of complementarities, theinnovation can realize disruptive impacts.
3.2 Research questions and methodology

18

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

3.2.1 Research questions and implications
This study aims to understand how transformation toward SDGs can take place byanalyzing existing activities with the features of DII through exploratory inquiry of
successful cases. The underlying assumption is that promotion of DII will advancetransformation toward inclusive sociotechnical systems from the bottom up, ultimately
speeding up transformation to achieve the SDGs. For any firm, choosing a disruptive
and inclusive path is a highly risky option.

Hence the research pays particular attention

to how collaboration and ecosystems are built to gain resilience to challenge social
agendas.

Key questions include the following.

1. How have innovators overcome uncertainty in initiating DII?
Here, business models entail several factors mentioned in previously reviewed
literature such as the flow of finance, access to market (customers), capable
human resources.
2. How are collaboration and ecosystems built to gain resilience to challenge social
agendas? How can a conducive environment be created? What are the missing
elements (complementarities) needed to allow transformation from the bottomup?
The hypothesized relationship between collaboration and risk-taking to enabletransformation is shown in Figure 2.

19政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Enabling factors that we posit to be important for creating sound business models tochallenge societal issues are: technology, finance, access to customers, capability(human resources), networks, and regulations and physical infrastructure.
By answering the abovementioned questions, we expect to contribute to 1) a better
understanding of how innovators can successfully achieve DII, and 2) what policies orpolicy changes can enhance the benefits of these innovations and advance thetransformations toward achieving the SDGs.
3.2.2 Methodology
This is an exploratory study to find out how emerging firms that address societal
challenges run successful businesses. These cases not only address the societal
agenda but also propose disruptive models with inclusive outcomes.

Given thesecharacteristics, it is sufficient to follow the case study approach, which enables us toillustrate the inner works of certain processes that take place in an exploratory manner(Eisenhardt, 1989; Yin, 2014).
The information to understand each case is obtained from both primary and secondary
sources. The primary sources are interviews with CEOs as well as information obtainedby the authors’ participation in seminars and events. The secondary sources include
books written by the CEOs, magazine articles on the CEOs and firms, newspaper articles,
and website information on firms and their recent activities.
The cases are selected based on the following criteria: 1) it must be a new type business(“disruptive”) (Christensen et al., 2006); 2) it must generate inclusive outcomes(Chataway et al., 2014; Heeks et al., 2014); and 3) it should concern technology andinnovation (but not be limited to high technology).

4. Case studies
4.1 General overview
This study analyzed five cases that employ technologies and business models in
unconventional ways and generate scalable social impacts. The businesses included
are summarized in Table 3. The purpose of the case study comparison is not to focus
on their differences but to observe their common enabling factors

20

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Table 3 Case overviews 14
Name

East Ventures

Samurai Incubate

Aavishkaar Capital

Activity

Venture capital

Impact investment

HQ

Indonesia
Singapore Japan
2008

Incubation/Venture
capital
Japan

Year
estab
Activitytakeplace inIndonesia

Nippon BioFuel/
ADM

MakuakeStartup

Crowdfunding

India

Japan/Mozambique

Japan

2009

2001

2013

Japan, Israel, East
Africa, South Africa

India, South Asia,
Southeast Asia, Eastand West Africa

2000*/
2012
MozambiqueJapan

Source: author. * The company was established in 2000 but operation in Mozambique from 2012 as ADM.

4.2 Assessment of each case based on enabling factors
The general trends that emerge clearly as common features of all cases are as follows.
First, building networks of actors in an ecosystem is important for business growth andfor creating social impacts. It is evident that ecosystem creation is critical in means to
overcome shortcomings of given physical infrastructure and legal institutions in emerging
economies, where the operation takes place. While these constrains, in some cases, canwork positively as stimulating conditions to nurture disruption. Second, adding on to theabove, the examples demonstrate that ecosystem creation is important not only forcreating value but also for capturing value and reducing risks, enabling space forexperimentation. Third, focusing on social needs, unarticulated demand of the mass
population, defines the purpose and targeted impact of a business. By focusing on thecore needs of a large population, entities are addressing large markets. Fourth, thenecessary ecosystem generates complementary businesses and activities, enhances
follow on impacts. Lastly, these examples demonstrate the importance of a space thatallows flexible experimentation in maneuvering innovations to different markets via
expanding activities.
4.3. Case Summaries
4.3.1. East Ventures 15
East Ventures is an Indonesian and Japanese VC firm established in 2009 whose origin
goes back to Mixi, a Japanese ICT startup.

East Ventures has three unicorns in its

portfolio, two Indonesian, Tokopedia and Traveoka, and one Japanese, Merucari. It also
14

Information comes mainly from interviews listed in the appendix.
Unless otherwise stated, information used in this section comes from company website.
https://east.vc/
15

21

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

owned part of Grab as the result of a stock sale of their mobile based payment company
Kudo to Grab in 2017 for US$ 100 million. The VC firm raised US$ 75 million in 2019 forits sixth fund. This firm notes that its mission is to “support the country’s growth withempowering local small-to-medium businesses and building the local ecosystem.” 16 By
September 2019, it had funded 300 founders, accelerated more than 160 startups,
attracted US$ 4 billion in follow-on funding from other investors, and claimed that its
invested companies had contributed more than 1.5% of Indonesian GDP and
empowered 8.5 million micro and small enterprises. This one VC has had a large impact
on the economy.
As a forerunner of venture capital in Indonesia, East Ventures has access to a broad
range of venture companies seeking investment. But when launching, they noticed thatthe ecosystem to foster venture growth was largely lacking. Companies had limitedaccess to technology and trained personnel, poor connections to suppliers andcustomers, and little access to start-up or follow-on financing. In order to foster thebusiness development of its invested companies, East Ventures created keiretsu
portfolio strategy. That is, the VC selected companies that did not compete in the same
space and then actively worked to create mutually beneficial alliances among thesecompanies to fill ecosystem gaps.

East Ventures also recruited other international

venture investors to strengthen follow-on financing.
For example, East Ventures used this strategy to build a kiosk company, Warung Pintar.
This effort started with an initial desire to assist an elderly lady who operated a very
simple, traditional kiosk directly in front of the East Ventures office building. The company
realized that if it worked with her to add services, particularly digital-based services, she
could have a much more prosperous business and a more attractive store. If successful,it could also be replicated broadly as there were countless street vendors nationally.
Working with its portfolio firms, East Ventures added numerous digital services, including
digital payment, wifi, displays, security cameras, charging stations, and accounting andlogistics support.
With the model established with this one vender, East Ventures went on to develop a
service package that could be replicated with many other kiosks. They developed apackaged service option in which vendors could receive a prefab kiosk with all needed
16
East Ventures, “East Ventures Closed Oversubscribed Sixth Fund at $75 Million,” August 22, 2019, East Ventures.
https://east.vc/east-ventures/east-ventures-sixth-fund-75-million/

22

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

equipment for US$ 5,000, with various services provided through East Venture’s portfolio
companies. East Ventures effectively strengthened the competitiveness of the kiosk
business and at the same time secured new customers for its portfolio companies,(Interview with Mr. Etoh, 2019; Russel, 2018, 2019). By mid-2019, Warung Pintar
managed over 2,000 kiosks. This project continues to expand and is engaging otherinvestors including Indonesian conglomerate Lippo, Digital Garage in Japan, Vertex in
the US, and Yahoo co-founder Jerry Yang.

Figure 3 Collaborative investment within Keiretsu:
example of Warung Pintar, smart kiosk
Source: Russel, 2018
When the COVID-19 pandemic emerged, East Ventures responded by using its venture
network and ecosystem development skills to launch the country’s first private initiative
to develop test kits. The initiative, called Indonesia Pasti Bisa, “Indonesia Surely Can”,
targets the development and production of 100,000 COVID-19 test kits.

East Ventures’newest portfolio company Nusantics, a deep tech start-up with advanced genomic
expertise, leads the test kit development in cooperation with the government’s scienceand technology agency, the Technology Assessment and Application Agency (BPPT).
BPPT led the government’s Technological Research and Innovation Task Force for
COVID-19.

23

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

To support the ecosystem, East Ventures led the development of a 10 billion IDR(approximately US$620,000) crowd funding site. Their fintech portfolio venture,
KoinWorks manages the funding and provides accountability. Indonesian media
company, IDN Media advertises the site and ensures transparency by publishing andtimestamping donations. 17 The campaign was successful in less than two weeks with
contributions from 2,101 donors. By late-May 2020 the test kits were being produced andshipped across Indonesia with a production partner, state-owned pharmaceuticalcompany Bio Farma.
4.3.2. Samurai Incubate
Samurai incubate was established in 2008 as an incubation program and soon thereafter
established its own seed stage investment fund. It has been a successful forerunner as
a combined incubator and VC in Japan, nurturing pre-seed stage ICT startups when this
support was not well established in the private sector. Samurai Incubate expanded its
activities to Israel in 2014 and subsequently to Africa in 2018. In both countries, it applieda similar model, incubating and making seed investments in local startups, including
those launched by Japanese entrepreneurs operating in these countries. In Israel,
Samurai Incubate is the first incubator-investor from Japan and it keeps its focus on hightech ventures. In Africa, Samurai Incubate started in 2018 and is already establishing its
second fund in 2020. The focus countries include Kenya, Nigeria, South Africa, Uganda,
Rwanda, and Ghana. The value of the first fund was US $4.5 million and for the second,
approximately US$10 million. The investment per company is relatively small
considering the early stage of startups. They prioritize projects that focus on solving
societal problems with the innovative application of technology and business models.
As in the case of East Ventures in Indonesia, Samurai Incubate Africa found little existing
ecosystem to support start-up businesses in Africa, so it also had to employ a concurrent
ecosystem building strategy. Samurai Incubate grew up with the culture of an incubatorand therefore targets hands on and very early engagement with companies to help theirbusinesses. In this way, they can directly assist in an intensive manner with businessplans, staffing decisions, building core and complementary assets, and finding
customers.

In the case of Africa, Samurai incubate found a strategic infrastructure

value chain focus model to be more appropriate than pure incubation model.

17
Mulia, K., “East Ventures launches program to support R&D and production of 100,000 COVID-19 test kits inIndonesia,” KrAsia, March 27, 2020.

24

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Among the startups invested by Samurai Incubate Africa 18, is MPost, a company thatcreates virtual addresses in the mobile sphere to deliver mail in Kenya. The majority ofpeople do not have physical addresses for mail delivery in Kenya. Those who need theservice usually rent postal boxes at the post office but these are sparsely located 19 andin many cases, mail is either lost or delivered very late. MPost, by collaborating with the
Postal Corporation of Kenya, Kenya Tellecom, and Safari.com, filled in the missing links
of basic infrastructure to ensure the secure delivery of postal services.
MPost forms a part of the strategic infrastructure Samurai Incubate Africa is trying toestablish with other investee companies. These companies are digital payment (Xento),
mobile delivery services with motor bikes (Sendy), and e-commerce with distributed
manufacturing (Fashpa). Samurai Incubate Africa is forming stepping stones covering
manufacturing, payment to shipment for creating value chains for e-commerce. In otherwords, the company creates markets at the same time as fills in missing
complementarities of services so that invested startups are sustainable. This
collaborative network is a key to success in generating impact, especially in the context
where there are scarce basic public services to meet the needs of potential users(Samurai Incubate, 2020; Leapfrog Africa, 2019).
Samurai Incubate is also addressing the demand side of venture innovation by partneringwith Japanese corporation Daikin.

Daikin is a leading manufacturer of air conditioners

and in November 2019 they announced a Daikin-Samurai Africa Incubate Ideathon 2019
to introduce ventures to potential sales and partnership with Daikin. The purpose was tohelp start-up companies to expand their links to a downstream customer in the venture
value chain. 20
4.3.3 The Aavishkaar Group 21
The Aavishkaar Group is a pioneer social impact fund located in India. Aaviskaar, whichmeans “invention” in Hindi, invests in social entrepreneurs with a vision to bridge theopportunity gap for the emerging 3 billion. It invests in projects that solve problems whichare 1) worth solving; 2) affect everyone, not just privileged few; 3) take more than capital
to solve; and 4) create solutions that offer a paradigm shift (Rai, presentation Nov. 2019).
18

Samurai Incubate Africa has been operating under the name, Leapfrog Africa from 2018 until 2019 and changed its
company name to Samurai Incubate Africa.
19
For instance, there are only 622 post offices in the whole of Kenya whose land mass is 580367 km2.
20
https://www.opportunitiesforafricans.com/daikin-samurai-incubate-africa-ideathon-2020/
21

The information unless cited otherwise are from Aavishkaar websites and interview.

25

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

By supporting small steps in rural societies, the Aavishkaar Group has had a large-scale
impact on the livelihood of millions.
The founder of Aavishkaar, Vineet Rai, began his journey with an idea and US$100 tolaunch his first fund in 2001.
India.

He wanted to develop the entrepreneurial potential of rural

Recognizing just providing finances was not enough, he borrowed US$2,000

from his wife and in 2002 founded Intellecap, Intellectual Capital Advisory Services toprovide know-how.

His vision was to provide leadership in rural and underserved

regions of India that would encourage aspiring entrepreneurs to launch businesses andto demonstrate to investors that profits and positive social change could be generated in
the process.

He identified the need for high quality “intellectual capital” to build an

enabling ecosystem that would nurture young rural enterprises.
Rai also recognized that he had to employ a different model than the Silicon Valley model.
He knew that even highly successful Indian rural businesses were not likely to generate
the kind of accelerated, up-side growth found in Silicon Valley. Thus, whereas Silicon
Valley investors targeted a few big “winners” and could tolerate an 80 to 90 percent
disappointment rate, Aavishkaar would need more consistent success, withdisappointment rates in the 30 to 40 percent range.

He would achieve this by focusing

on needs rather than wants, where success was driven mostly be execution rather thantechnology. Due diligence gave priority to business models that emphasized scalablesocial impact. Some of the successful investments include NAPRA waste treatment plantand Agrostar, a telephone-based distribution center for agricultural produce and supplies.
Both closely deal with the local challenges. Once the prototype is made, the businessmodels are extended to other cities in India 22
Aavishkaar would also engage in close interaction with all of his invested firms, with thehelp of partners in their networks.

The COO, Pradeep Kumar, noted: “The mostimportant factor is to keep the entrepreneur at the center of the universe. Putting together
structures that work for them, rather than what would be best from a purely investment
perspective, is the center of everything we do.” 23 Aavishkaar staff would typically spenddays with companies in their often rural and isolated locations, working with the entire

22
For instance, NAPRA is now expanding to 25 cities in India. (information obtained fromwww.youtube.com/watch?v=eqQ uxIMUuY
23
Brett, D., et.al., “Aavishkaar India Micro Venture Capital Fund,” The Impact Investor,” November 2013.
https://www.pacificcommunityventures.org/wp-content/uploads/sites/6/2016/03/casestudy_aavishkaar_v6.pdf

26

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

team to provide strategic and business guidance. Pradeep noted that “we need to behands-on, or else our model will not work.” 24In this process, Aavishkaar realized that a key challenge for businesses that they
established was in gaining further access to capital in order to grow. In addition toproviding funding guidance, Aavishkaar evolved to create other financial organizations
that would be able to finance companies. Aavishkaar evolved its own financial ecosystem
to support the birth and growth of bottom-of-the-pyramid social impact ventures.
The original fund, Aavishkaar Capital is now a part of the larger The Aavishkaar Group 25,
which consists of 3 others independent groups companies—Arohan, Ashvi, and Intellcap.
Each offers different functions that are complementary in serving the company vision.
Arohan engages in micro finance and gives credit lending services to microbusiness withloans ranging US$ 100 to US$ 1500.

Ashvi invests in small to medium companies inIndia with entrepreneurial intentions, investment range from US$3000 to US$1.5 million.
Aavishkaar Capital places investments ranging from US$500,000 to US$10 million.
Intellecap deals with consultation and business advice. Each firm within the group is
independent with siloed information walls, but all report to the same CEO, Vineet Rai,the founder of the Group.
At the end of its investment period in 2013, Aavishkaar India Micro Venture Capital Fund
(AIMVCF) made several exits which, combined with the fair market value of theremaining portfolio, represented a gross IRR of over 20 percent and roughly 13 percent
net IRR for its investors, in line with the fund’s target financial performance. By 2019,
Aavishkaar Capital had over US$1 billion under management, invested in 67 early-stage
businesses with 36 of them successfully operated (collected investments) while
generating 5500 jobs and US$105 million profits. (Nikkei, 2019).

The company

estimates that it has helped to create 150,000 jobs and improved the lives of 70 million
people. 26 Aavishkaar Capital now operates outside of India, in such South Asian
countries as Sri Lanka and Bangladesh, and is starting investments in East and West
Africa from 2020. However, challenges remain. As Aavishkaar receives its funds forinvestment from overseas investors, there are times when it cannot invest due to foreign

24

Above comments by Pradeep coincide with Vineet Rai (interview, 2019)
The formation of Aavishkaar group had a structural change since Nov. 2019-March 2020. Interview, Sept, 10, 2020.
26
Intellecap web page. http://www.intellecap.com/group/ Accessed, July, 2020
25

27

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

capital restrictions. gain regulatory clearance.

Regulatory reform is thus needed tosupport the maximal impact of the Aavishkaar impact investing approach.

Figure 4 Aavishkaar group ecosystems to capture value
Source: based on Aavishkaar group website and interview, Sept, 2020.
4.3.4 NBF/ADM
Nippon Bio-Fuel (NBF) is a startup established in 2000 with headquarters in Japan. Its
experience reflects the example of a company that did not have needed ecosystemcomplementarities in its market, so it created its own micro-ecosystem throughexperimentation and scaling up. In 2012, NBF started a business based as a jetrophabiodiesel-based energy provider to deliver electricity in rural Mozambique.

NBF thenestablished another company in Mozambique called ADM (Agro-Negócio para oDesenvolvimento) to serve the African market. After launching the business of providing
electricity with jetropha, it started to distribute solar panels and other services via
managing local kiosks in rural Mozambique. Later, in 2015 it introduced a near fieldcommunication (NFC) card as the payment systems for at their kiosks, entering into
fintech activities and electronic-based information systems. Now it aims to develop digitalplatform to support agricultural cooperatives in Africa.
NBF/ADM is a startup firm that is highly adaptable to the environment to develop thecomplementary assets that it needs for success. NBF originally started off with the ideaof generating electricity from biofuel of jetropha in areas with no electricity, but it had to
overcome two problems: low efficiency of jetropha based bioenergy and use of bio

28

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

residues. To make this effort feasible, NBF joined efforts with other private firms andobtained research funds in 2008 to create proof of concepts of research from the
Research Institute of Innovative Technology for the Earth, a semi-governmental research
institution. After 2 years of development, they successfully found the methods ofextraction which tripled productivity 27.
In 2011, NBF collaborated with three universities and received 6 years of funding toexperiment with their proof of concept (POC) in Mozambique from a scheme financedby the Japan International Cooperation Agency and the Japan Science and Technology
Agency called SATREP. In 2012, ADM was established and began working on
combining the POC with a business model. At this time, NBF also found that solar panels
for energy in these villages were economically feasible, and obtained funding from the
New Energy and Industrial Technology Development Organization (NEDO), a
governmental innovation funding organization, to experimentally implement anelectrification project in Mozambique using biofuels and solar. This operation was
successful but experienced difficulty in collecting all the payments in cash from users via
kiosks where they buy jetropha from local farmers, and sell agricultural products andelectricity services.
To improve collection of payments, ADM created its own e-money, working withJapanese electronic equipment manufacturer NEC and the Japan International
Cooperation Agency (JICA). This payment system was based on near-fieldcommunications (NFC), a technology that was becoming more widespread in developed
economies. 28 Introduction of e-money in the rural area of Mozambique went smoothly
as it was just replacing the cash used in their business. The introduction not only solved
the problem of payment collection but brought about positive externalities. The farmers
started saving money on e-cards. This enabled both ADM and farmers to trace aleverage the money flow, allowing ADM to give out microcredit as farmers started toinvest in improving their livelihood. In another words, financial inclusion became possible.
ADM conducted further pilot projects to replace cash with e-money for the Food andAgriculture Organization(FAO), the World Food Programs(WFP), and the World Bank

27
28

Obtained patents for both efficiency of oil extraction and production of fertilizer (press releases, NBF, 20xx)
Typically NFC is used in public transportation card in various countries in Europe, for instance.

29

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

between 2015-2018 29 This led to a project with the WFP to create a digital agriculture
cooperatives platform via mobile phones in Mozambique.
Having succeeded in these projects, ADM jointly established a POC to extend this model
into the Agriculture Innovation Platform with the Ministry of Agriculture, Forestry and
Fishery of the Japanese government and participating private firms under the Africa
Business Council’s working group on agriculture (African Business council WG for
Africa’s Agriculture, 2019).

ADM would use the experience in Mozambique in installing

the platform to provide the E-Agri platform (see Figure 5). The blueprint of this platform
was presented at the Tokyo International Conference on African Development (TICAD)
in Yokohama, Japan, 2019 as the part of Yokohama Declaration in front of African
government delegates and preparation for implementation is underway. The E-Agri
Platform tries to create a digital market to match needs of both the demand and supply
sides.

Figure 5 Agriculture innovation platform (plan)
Source: Africa business council (2019)

29
These consisted of replacing paper vouchers with electronic forms, replacing cash to the e-money. The e-money was
also used for emergency aid.

30

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

4.3.5 Makuake
Makauke 30 is an early crowdfunding firm and is the largest in the genre of project or
product-based crowdfunding 31 Established in Japan in 2013, Makuake helps emerging
businesses and projects to raise funding through their crowdfunding platform. Makuake’s
unique approach is that it does not only provide a platform for raising money, but it offers
two other platforms: 1) testing of POCs with active user feedback, and 2) fostering
connections among supporting stakeholders for startups, including through active
intermediation. This multi-sided platform approach is a powerful tool for entrepreneurs.
Since the outset, Makuake encouraged the interaction between innovators and theircustomers so that the innovator can use the Makuake platform to improve the product at
an early stage based on precious customer feedback. In addition, Makuake provides
innovators the ability to form communities with other innovators and those withcomplementary skills. This enables the formation of teams that are both virtual andphysical. The three faces of the Makuake platform – sales, market feedback, and teambuilding - offer a new model to accelerate emerging innovations that link innovators withinvestors and markets. In its fiscal year 2019, the company had US$54 million in sales
and in December achieved an initial public offering on the Tokyo MOTHERS stock
market.
Until 2015, equity purchases through crowdfunding were not allowed in Japan.
Although this law has changed, Japanese consumers are not drawn to Makuake for
equity opportunities but rather for an exchange with an innovator. Approximately 90% ofcases involve peer to peer exchange rather than equity investment.
Makuake has a high-touch strategy for customer support. One reason is because theproducts and services offered on their planform are typically new. Therefore, ensuring
the reliability of the system is essential to maintain consumer confidence and protect
against scams. In curation, approximately 50% are accepted, 20% have to brush up,
30% are rejected. 32 Makuake has about 200 projects running at any one time and about
half are able to achieve their fundraising goal. Approximately 30% of investors are also
users of Makauke. Thus, they are part of the ecosystem that brings ongoing support toinnovators. The other 70% of users are from the outside, therefore targeted promotion
30

Makuake recently became public via IPO (Mothers)30 Mother is one of Tokyo Stock Exchange’s section where
shares of start up companies are listed and traded. Mothers was established in November 1999 in Tokyo Stock
Exchange.in Japan in December 2019. It generated JPY 5.4 billion (approx. US$ 54 million) in sales in September 2019,
growing 2.5 times in 2 years 30
31
There are different types of crowdfunding genre depending on function.
32
https://www.disruptingjapan.com/crowdfunding-in-japan-is-not-about-startups-ryotaro-nakayama/31

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

leveraging media is essential. In Makuake’s case, their majority shareholder, Cybergent,is a major digital advertiser, offering a capability in Makuake’s ecosystem that proved
essential to its success.
This platform enables companies to easily launch test marketing of their products and to
make improvements before scale up.

By showing demand in the market, thecompanies are then in a stronger position to go on to receive financing from banks andprofessional investors.

By the nature of crowd financing, the products are typicallyaccessible to the general public and most innovators are pursuing small scale solutions
to what could be large scale opportunities.

The reactions from crowdfunders arevaluable, particularly for regional banks to evaluate the investment proposals from small
and medium enterprises. Innovators in large corporations also find this to be a highly
valuable way to validate their products. Market validation through Makuake supports
large company innovators who must often follow conservative, gated decision-making
processes.
An interesting feature of the business is that it can accumulate a broad spectrum ofbusiness partners from its pool of clients to improve the curating process for the next
client. For instance, over the years of collaboration with regional banks in evaluating
projects, Makuake can leverage information accumulated in the banks to address theirclient needs (e.g. providing access to good small lot manufacturers). In this way,
Makuake is able to serve as a unique business intermediary. With the decentralizationof production and diversifying consumers’ needs, Makuake has positioned itself in theadvantageous intersection where players that are regional and global, large and small,meet through extended networks.

Figure 6 Makuake’s extended networks
Source: authors, based on interview and Nakayama (2017)32

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

4.4. Ecosystem and cross-cutting factors
By selection, all the cases introduced in the previous section share the following
common characteristics:1) represents a new type of business; (disruptive); 2)
generates inclusive outcome/impacts; and 3) involves technology and innovation (notlimited to high tech). The purpose of this research is to uncover the key factors
enabling success and to identify common threads. One such common factor is thecreation of ecosystems tailored to their business models and the environment for
innovation.

The findings obtained are intended to contribute to the design of public

policies that would support achievement of the SDGs, leveraging private and public
collaboration.
Developing the appropriate ecosystem design is a valuable lever in gaining societal
impact from the innovation and sustaining business.

The ecosystems of cases

reviewed here include the venture keiretsu ecosystem of East Ventures, the value chainof the seed venture ecosystem of Samurai Incubate, the internal impact financial
ecosystem of The Avishkaar Group, the adaptive micro-ecosystem of Nippon Bio-Diesel,
and the virtual multistakeholder ecosystem created by Makuake.

Each type of

ecosystem was tailored to bring in complementary assets that were critical to bringing
successful change and impacts.
The purposeful keiretsu ecosystem design of East Ventures provides active businesslinks between portfolio companies and is a valuable way to strengthen early businessgrowth.

Examining Warung Pintar, the smart kiosk business, it can be seen that theEast Venture keiretsu provided an enhanced business model, additional technology,
staff expertise, new market access, a network of business partners, and financing. Also,targeting kiosks created new market channels with broader social impact that helped thebusiness of the keiretsu partners. East Ventures’ ability to act as a group with social
impact was well demonstrated in the early phase of Covid-19 pandemic in Indonesia.
The East Ventures group managed to raise financing, generate testing kits, and deliver
them to the people, working jointly with the government.
Samurai Incubate, with its genesis as a successful incubator and seed investor in Japan,
typically engages at the earliest stage of seed company assistance and builds theecosystem through hands-on assistance from the incubator. At the earliest stages they
engage in business plan development, technology planning, network development anddefining customer recruitments. In the case of Africa, Samurai Incubate Africa found it a33

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

faster launch strategy to first assist emerging venture companies that needed help. Using
the same hands-on approach to building the companies, Samurai Incubate Africa
selected a series of startups to generate a chain of activities that were complementary
modules in ecosystems. In the absence of an existing complementary businesses, thisinvestment strategy created its own value chain of activity to support their synergic
development. Here, digital technologies were leveraged for their synergies.
Aavishkaar created an Impact Financing Ecosystem that enables it to support its
invested companies at different stages of company growth, and by adding
complementary functions via its ecosystem.

Leveraging the internet to facilitate theinvestment process, Aavishkaar could overcome adverse conditions and scale-up toenhance impact. Their work goes well beyond financing for a project, and includes
enhancing the cashless infrastructure, managerial capacity building, and fostering betterbusiness environments for would-be entrepreneurs.

As a consequence, Aavishkaar

created its own end-to-end financial ecosystem to promote these businesses. They
provide business advice and capital that helps companies to launch, and further support
those companies to gain market expansion and grow.

Aavishkaar’s ecosystem has

made it a leading impact investor in the world.
Nippon Bio-Fuel (NBF) built its own adaptive micro-ecosystem reflexively throughmeeting the challenges on the ground and pave new pathways to business opportunities.
Seeing the irregularity of bookkeeping at kiosks, where the payments for their services
are collected, NBF introduced its own cashless payment system with the help of partners,
NEC and JICA. NBF soon discovered that their cash cards became important savings
instruments for the local population. This has led to a new business opportunity in microfinancing for financial inclusion.

First, to validate that this idea, NBF used external

project opportunities. NBF introduced a cashless payment system with the backing of
the Food and Agriculture Organization and the World Food Program to establish theproof of concept. This had led to the experimental project on digital cooperatives in
Mozambique financed by WFP. Based on these learnings, they developed an idea for aplatform business that could be incorporated with additional ecosystem partners, theMinistry of Agriculture, Forestry and Fisheries of Japan and the African Business Council,
to promote a central platform for connecting suppliers and customers under an E-Agri
Platform. (African Business council WG for Africa’s Agriculture, 2019).

Although more

exploration and experimentation need to take place, through ecosystem building
NBF/ADM is now engaging in a platform business that has broad impact. This case34

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

demonstrates a highly adaptive ecosystem involving various stakeholders to advance a
new purpose.
Makuake is using its internet platform to offer a multi-sided, multi-stakeholder ecosystemfor product acceleration. From its crowd funding financing base, their platform connects
innovators to early adopters who will provide feedback on the offering and how it can be
improved. By increasingly involving former clients as part of its ecosystem, it has
expanded the role of market mediation in its platform. The platform connects a broad
set of actors that can provide valuable services and products to the company’s newclients. It is a test bed and place for iterative improvement. An interesting feature of
Makuake is that its clients can become part of network for the curation of the evolutionof a project. The platform also enables partnerships with individuals or companies thatcan bring complementary skills. In addition, Makuake’s service is not limited to startups.
Increasingly, large corporations have begun to use the potential of this space to market
test prototypes and to validate markets for new technologies.
Building an innovation ecosystem is an important strategic choice for businessdevelopment as a valuable way to generate growth and impact, and to ensure that anorganization can achieve its social mission. Ecosystems can strengthen the value
generated from networks, enlarge financial streams, and improve market access.
Ecosystems also facilitate the innovation process itself by enabling testing and iteration
with partners and clients, filling gaps, and expanding an innovation’s appeal and utility.
Ecosystems thus have the ability to enhance adaptability to mass customization, andcater to local diverse needs.

Such ecosystems accompany various complementarities

that are essential as companies seek to exercise technology with broader societal impact.

35

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Table.4 Ecosystem factors tapped by cases
East Ventures

Samurai Incubate
AfricaVenture capital

Aavishkaar
Capital
Impactinvestment
Internal impact
financialecosystem
Solving social
challenges
through creating
broad impacts

NBF/ADM

MakuakeStart up

Crowdfunding

Adaptive micro
ecosystem

Virtualmultistakeholder
ecosystem
Providing market
channels andmarketexperimentation
opportunities all
types ofproducers/creators
Multi-sided
platform enabling
crowdfunding,market feedback,and collaboration
Crowdfunding andcommunity
building
Crowd funding

Activity

Venture capital

EcosystemType

Keiretsu network ofinvesteeSocialChallenges(aims)
mentioned

Support the country’s
growth via
empowering local
small to medium
business and building
the local ecosystem

Technology
appliedSynergies among
different services
based on digitaltechnologies

Digital technology,(Mobile and ICTs)
synergies

Digital financial
synergies

Renewableenergy anddigital money
synergies

Business
Model

Keiretsu model

Value-chain model

Financial valuechain model

Adaptive andgap filling

Finance

VC syndication

VC syndication

External funders/
Impact fund/microfinanceNetwork
established
Access to
Customers

Within group
Leverage portfolio

Leverage portfolio

Investor, internal
networks, andscale up ofinvestee

Human
Resources

Leverage returnees

Leverage VC
training

Leverage internal
networks

Regulations orcounter
measurestaken

Collective power forchangeRegulatory sandbox
in the new market

Outcome of
Ecosystem/
Sources ofresilience

New network toexperiment andexpand to new
businesses within
Keiretsu

Value chains tomutually capture thesynergies toenhance thebusiness as a wholeInternationalpresence forfinancial
regulatory
management
Accommodate
diverse scale ofneeds for theirservices

Combiningprivateinvestment,
government aid,
and grants
Partnership withdiverse actors
Expandedthroughbroadenedecosystem andplatform
Leverage local
and provide
trainings
Regulatory
sandbox in the
new market

Value chain ofinvested seedventureSolving societal
problems with theinnovative
application oftechnology andbusiness models

Within group

Within group

Providing BOP
communities
with equal
access to energy
and a financial
serviceExpanding theirbusiness anddiversifying into
new fields

Partnership withdiverse actors
Multi-sided
platform access

Leverage platform
network
Financial
regulation existedon equity
investment;
regulatory testing
Expanding theirbusiness andsocial impacts,
especially for
SMEs in theregions

Source: based on Authors
Table 4 above reveals the ecosystem elements accessed by the different cases
discussed here. Leveraging different ecosystem strategies, the investors and venturecompanies were able to enhance such cross-cutting enabling factors as technology,
networks, finance, access to customers, human resources and regulations by leveraging
the power of tailored ecosystems in order to deliver social impact.

36

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

4.5. Regulations
Finally, there is the role of managing regulations. Regulations can have a major impact
on company organization and markets. Aavishkaar needed to deal with foreign
investment regulation to enable with financing for impact fund. In Indonesia, similar
domestic control regulations were initially applied to e-commerce companies, which
forced the most promising early companies to locate their headquarters abroad. This is
not limited to developing countries. Makuake also needed to deal with regulations limiting
equity investment. In other commonly regulated sectors such as health, environment,
energy, nutrition, safety, etc., adapting regulations to new innovations is often achallenge.
On the other hand, a more permissive regulatory environment can be the one of thereasons for seeking business launch elsewhere in order to explore and experiment withnew products and services. It is possible to experiment with new technology andbusiness models prior to implementation in other developed markets that can have more
stringent rules (regulatory arbitration); making the new market a regulatory sandbox.
Regulations affecting drone use, for example, differ between countries and some areasof Africa have become important innovation test beds for drone business models.
Samurai Incubate Africa, for example, invests in digitally-based new businesses inemerging new business environment with few regulatory hurdles. 33 NBF/ADM was able
to quickly acquire a microfinance license to operate in Mozambique even though theconcept was new to the economy.

5. Discussion
The study demonstrated that successful cases have certain unique features with regard
to combining factors to increase impact and capture the value from the networks createdto mitigate risks associated with the business. Although all cases address social
challenges, they are in different businesses: venture capital, incubation, impact investing,crowdfunding and startup. All cases demonstrated that building an ecosystem is a
strategic choice not only for business development and gapping weaknesses but also
for ensuring the organization’s social missions and scale-up of their impacts. These
ecosystems are intended to maximize the value generated from networks, enlarge
financial streams, and improve market access via better adaptability to mass
33

For example, Rwanda’s government has sandbox for digital technology.

37

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

customization (catering to local diverse needs) that have emerged as a result of meeting
unsatisfied needs for clients by enabling access to the full package of lacking services:finance, infrastructure, trusting partners, and technology. Such ecosystems enablebroader society impact.
This study, based on cases, identified two streams of trends in the formation of
ecosystems to enhance impacts: one is internal consolidation to create mechanisms for
scaling up; another is to extend external collaborative networks to scale up or engage in
new activities.

For instance, East Ventures consolidates their investee firms to jointly

experiment between new businesses to scale up and expand their activities while at thesame time strengthen extant activity. Samurai Incubate Africa generates strategic
choices for their investing firms to establish complementary value chains of activities. Allof these increase impact by consolidating internal bases, filling gaps in local
infrastructure and experimenting with synergistic investing to generate POCs prior tocollective scale up. The Aavishkaar Group creates internal companies to broaden
customer coverage and create an efficient system for problem solving projects and thescaling-up successful ones.
NBF/ADM and Makuake have slightly different strategies. NBF/ADM increasingly
expands external networks to form a platform. Makuake, uses their virtual platform toengage new partners and participate in new activities through crowdfunding. NBF/ADM
entered into their digital platform through e-money as well as digital cooperatives. Bothfirms pave their pathways with multiple and iterative experimentation with external
collaborators.

This provides space to simultaneous experimentation and expand to

new activities.
The Figure 7 illustrates different ecosystem strategies by types of collaboration in a 2x2
matrix. This locates East Venture, The Aavishkaar Group, Samurai incubate Africa in thelower left quadrant as these collaborate internally to scale up their activities. Both
Makuake and NBF locate in the upper right quadrant as these collaborate externally to
expand their activity. The lower left quadrant includes venture capital investors acting inemerging countries while upper right quadrant includes platform based activities.

38政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Figure 7: Types of ecosystems: Scaling up business model vs Expansion
business model
Source: Authors

6. Conclusion
To achieve the SDGs, the transformation of sociotechnical systems is needed (TWI2030,
2020; Schot and Steinmeuller, 2018). Although efforts to create roadmaps toward theSDGs are in progress, it has become evident that there are still no clear and effective
policy mechanisms to generate transformations. Thus, fresh perspectives are needed
for innovations in policy, society, business, and knowledge generation aiming at unifying
goals for 2030. In order to contribute to the discussion of options, this study reviewed
several cases of emerging businesses that are working to advance toward the SDGs inleaps, and that are inclusive of all levels of an economy. We called these examples“Disruptive Inclusive Innovation (DII) cases”. The findings reflected key factors identified
in the literature and were intended to help us to identify generic and pragmaticsuggestions that would contribute to the roadmaps for STI to achieve the SDGs.
These case studies from the business domain demonstrated that the innovation
ecosystems and complementary are important factors for competitiveness in providing
better or critical products and services as well as generating impacts. This is consistent
with the work of Adner and Kapoor (Adner, 2016; Adner and Kapoor, 2010). This is also
critical for capturing the value generated, which is consistent with the observations ofTeece (Teece, 2018). The case studies identified two approaches in ecosystem building:consolidating internal networks prior to scaling up their activities and multiplying external

39

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

partners to strengthen platforms prior to engaging in new activities. Both approaches are
aimed to increase impacts, reduce risk and accommodate diverse needs so that no one
is left behind.

The choices of strategies are influenced by context and point to theimportance of conducive environments to carry out and support successful innovation.
Hence, ecosystems built around the new activity can generate disruption and provide
new services and products to underserved. The very creation of the ecosystem by anemerging business provides signals of what is missing.
With this understanding, it is possible to identify potential areas for public policy to takeactive role to fill ecosystem gaps.

First there is a need for policy that supports businesswith positive social goals at the early stage of business development, especially toaccelerate the impact, these should comprise a system of synergistic incentives, assets
and capabilities. This can be strengthened by targeting multi-stakeholder collaborative
mechanisms. Second is the need for supporting innovative financing. Although impact
funds and BOP accessible funds are increasing with the aid such new financing modes
including crowd funding and microfinances, effective regulations still emerge as achallenge.

Policies need to promote fund access rather than stay buried in outdated

capital controls, while at the same time ensuring transparency of management. Third,
policy should encourage opportunities to experiment with proof of concepts, prototypes,
and market testing through the support of innovation and regulatory sandboxes, both
physical and virtual. This experimentation of new technology and business models would
also inform regulatory change for innovation. Finally, there should be support for capacity
building not only for new technology and business models, but also for innovative(blended) financing, agile governance, and reflexive policy making in order to enhance
the human base for innovative capability. These policy themes would support thetransformation of systems yielding positive impacts.
The cases reviewed in this study illustrate private sectors’ roles of pioneering high impact
disruptive innovation. By advancing collaboration with these private actors, the public
sector would play active role in ensuring science and technologies developed can fully
serve the society. This paper is limited to few observations of progressive cases andfurther research is needed for designing effective policy instruments to promote
disruptive and inclusive innovation.

40

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

References
African Business council WG for Africa’s Agriculture (2019) Basic conception of Agriculture
innovation Platform in Africa, presentation material downloaded fromhttps://www.soumu.go.jp/main_content/000655695.pdf
Adner, R. (2016) Eco system as structure: An Actionable Contract for Strategy, Journal ofManagement, 43(1):39-58.
Adner, R. and Kapoor, R (2010) Value creation in innovation eco systems: How thestructure of technological interdependence affect firm’s performance in newtechnology generation, Strategic Management Journal 31 (3): 306-33.
Brett, D. (2013), “Aavishkaar India Micro Venture Capital Fund,” The Impact Investor,”
November 2013.
https://www.pacificcommunityventures.org/wpcontent/uploads/sites/6/2016/03/cas
estudy_aavishkaar_v6.pdf
Bresnahan, T., Trajtenberg, B., (1995) General purpose technologies 'Engines of growth'?
Journal of Econometrics, 1995, vol 65: no1: 83-108
Bower, J.L., Christensen, C.M. (1995) Disruptive Technologies: Catching the Wave,
Harvard Business Review, January–February 1995 Issue.
Bower, J.L., Christensen, C.M (1995) Disruptive Technologies: Catching the wave, Harvard
Business Review, January-February 1995 Issue.
Carlaw, K., Lipsey, R.G. (2002). Externalities, technological complementarities andsustained economic growth, Research Policy, 31 (8-9): 1305-1315
Chattaway, J., Hanlin, R., Kaplinsky, R (2014) Inclusive innovation: an architecture forpolicy development. Innovation and Development 4(1), 33-54.
Chesbrough, H. and DiMinin, A (2014) Open Social Innovation, in Chesbrough, H,
Vanhaverbeke, W. West, J (eds) New Frontiers in Open Innovation, Oxford,
Oxford University Press: 167-188.
Christensen, C. M. Raynor, M., McDonald, R (2015) What is disruptive innovation, Harvard
Business Review, 93, 44-53.
Christensen, C.M (1997) The Innovator’s Dilemma: when new technologies cause greatfirms to fail, Boston, MA: Harvard Business School Press
Christensen, C.M., Baumann, H., Ruggles, R., Sadtler, T.M. (2006) Disruptive Innovationfor Social Change, Harvard Business Review, December, 2006
Christensen, C.M., McDonald, R., Altman, E.J., Palmer J.E (2018) Disruptive innovation:
An intellectual history and directions for future research, Journal of Management
Studies, 55(7):1043-1078.

41

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Christensen C.M. Ojomo, E., Dillon, K., (2019) Prosperity Paradox, Boston, MA: Harvard
University Press.
Christensen C. M, and Raynor, M (2003) The Innovator’s Solution; Creating and Sustaining
Successful Growth. Boston, MA: Harvard University Press
Eisenhardt, KM. (1989) Building theories from case study research, Academy ofManagement Review, 14, 532-550.
EC https://ec.europa.eu/programmes/horizon2020/en/area/key-enabling-technologies
Edwards-Schachater, M. and Wallace, M. (2017) ’Shaken, but not stirred’: Sixty years ofdefining social innovation, Technological Forecasting and Social Change 119:64-79
Franken, K. (2017) A Complexity theoretic Perspective on innovation policy, Special Issue:
Complexity, Innovation and Policy: 35-47
Fessoli M., Around, E., Abrol, D., Smith, A., Ely, A., Dias, R., (2014) When grassroots
innovation movements encounter mainstream institutions: implications for models
of inclusive innovation, Innovation and Development, 4(2): 277-292
Garret, B., (2015) Technology will keep changing everything-and will do it faster, Atlantic
council.
Ganstand, O., Holgersson, M., (2020) Innovation ecosystems: A conceptual review and a
new definition, Technovation (90-91), 102090
Gawer A and Cusumano, M. (2014) Industry Platforms and Ecosystem Innovation, Journalof Product Innovation Management, 31(3): 417-433.
Gawer A and Cusumano, M. (2008) How Companies Become Platform Leaders, MIT Sloan
Management Review 49(2):28-35
Geels, F.W., 2002. “Technological transitions as evolutionary reconfiguration processes: amulti‐level perspective and a case study”. Research Policy 31:1257‐1274.
Geels, F. 2004. From sectoral system of innovation to socio‐technical systems insights
about dynamics and change from sociology and institutional theory. Research
Policy 33: 897–920.
Geels, F. W. and J. Schot. 2007. Typology of sociotechnical transition pathways. Research
Policy 36: 399‐417.
Geels, F.W.,J.Schot, J., 2010. “The dynamics of sociotechnical transitions—a socio‐
technical perspective”. In :Grin, J., Rotmans, J., Schot, J. (eds.), Transitions to
Sustainable Development. Routledge: 9‐101.
George, G., McGahan, A.M, Prabhu, J. (2012). Innovation for Inclusive Growth: Towards a
Theoretical Framework and a Research Agenda. Journal of Management Studies.
49, (4), 661-683.
Goda, M. (2018) Nijuokuninn no Miraiginkou, Nikkei BP sha, Tokyo42

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Gupta, A.K., Sinha, R., Koradia, D., Patel, R., Parmar, M., Rohit, P., Patel, H., Patel, K.,
Chand, V.S., James, T.J., Chandan, A., Patel, M., Prakash, T.N. andVivekanandan, P. (2003) ‘Mobilizing grassroots: technological innovations andtraditional knowledge, values and institutions: articulating social and ethicalcapital’, Futures, 35: 975–987.
Helfat, C., Raubitschek, R.S., (2018) Dynamic and integrative capabilities for profiting frominnovation in digital platform-based ecosystems, Research Policy 47: 1391-1399
Heeks, R., Foster, C, & Nugroho, Y., (2014) New models of inclusive innovation fordevelopment, Innovation and Development, 4:2, 175-185
Iansiti, M and Levien, R (2004) Strategy as Ecology, Harvard Business Review, March,
2004.
Jacobides M.G., Cennamo, C., Gawer, A. (2018) Towards a theory of ecosystems,
Strategic Management Journal, 39:2255-2276.
Jovanovic, B., Rousseau, P.L., (2005) General Purpose Technologies, NBER Working
Paper No. 11093.
Kern, F., Kivimaa,P., Maritiskainen, M., (2017) Policy packaging or policy patching? The
development of complex energy efficient policy mixes. Energy Research in Social
Science, 23: 11-25.
Kivimaa P., Kern, F., (2016) Creative destruction or mere niche support? Innovation policy
mixes for sustainability transitions, Research Policy 45(1): 205-217.
Killkki, K., Mantylaa, M.、 Karhua, K., Hammainena, H., Ailistob H., (2018) A disruption
framework, Technological Forecasting and Social Change, Vol 129: 275-284.
London, T. and Hart, S.(2004) Reinventing strategies for emerging markets: beyond thetransnational model, Journal of International Business Studies, 2004, vol. 35, issue
5, 350-370
Leapfrog ventures, Toshisaki ni tsuite (about our investments), document obtained from theinterviee. Company document.
Mashelkar, R., Pandit, R., (2019) Leap frogging to Pole Vaulting: Creating the Magic ofRadical Yet Sustainable Transformation, Penguin Random House: India.
Markides, C. (2006) Disruptive innovation: in need of better theory, Journal of ProductInnovation Management, 23: 19-25.
Marchant, G. E., Allenby, B. R., & Herkert, J. R. (Eds.). (2011). The growing gap between
emerging technologies and legal-ethical oversight: The pacing problem (Vol.7).
Springer Science & Business Media.
Mas, I. Morawczyniski, O. (2009) Designing Mobile Money Services Lessons from MPESA, Innovations, Spring.

43

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Mulia, K., “East Ventures launches program to support R&D and production of 100,000 COVID19 test kits in Indonesia,” KrAsia, March 27, 2020.

Nakayama, R.(2017) Crowd Funding Kakumei, PHP Shuppan, Tokyo.
Nicholls A. and and Murdock, A (eds) (2012) Social Innovation: Blurring Boundaries to
Reconfigure Markets, London: Palgrave Macmillan,
Nikkei Shimbun (2019) Inpakuto inbesutomento indo no kusawake ni syusshi MS&AD kei,
Nikkei electronics version, December, 1st, 2019.
Penna, C.C. R., Geels, F.W. (2015) Climate change and the slow reorientation of theAmerican car industry (1979–2012): An application and extension of the Dialectic
Issue LifeCycle (DILC) model, Research Policy, 44 (5): 1029-1048
Pol, E. and Ville, S. (2009) ‘Social innovation: buzzword or enduring term?’, The Journal of
Socio-Economics, 38: 878–885.
Porter, M.E., Kramer M.R. (2006) Strategy and Society: The link between Competitive
Advantage and Corporate Social Responsibility. Harvard Business Review.
Porter, M. E., Kremer, M.R., (2011) Creating Shared Value: how to reinvent capitalism andunleash a wave of innovation and growth, Harvard Business Review, JanuaryFebruary2011.
Prahalad, C.K. (2005) The Fortune at the Bottom of the Pyramid: Eradicating Poverty
through Profits, Upper Saddle River, NJ: Prentice-Hall.
Prahalad, C.K. and Hart, S.L. (2002) ‘The fortune at the bottom of the pyramid’, Strategy
and Business, 22: 2–14.
Prahaland, C.K. and Mashelkar, R.A. (2010) ‘Innovation’s holy grail’, Harvard Business
Review, July–August: 1–10.
Radjou, N., Prabhu, J., Ahuja, S., (2012) Jugaad Innovation; Think Frugal, Be flexible.
Generate Breakthrough Growth. Jossey-Bass/Wiley, London.
Rogge, K.S., Reichardt, K (2016) Policy mixes for sustainability transitions; an extended
concept and framework for analysis, Research Policy, 45(8);1620-1635.
Rotolo, D., Hicks, D., Martin B.R. (2015) What is an emerging technology? Research
Policy: 441827-1843.
Russell, J. (2018) New project outfits Indonesia’s street vendors with free Wi-Fi and smarttech, online news February 12, 2018. Accessed: Feb.2020.
https://techcrunch.com/2018/02/12/warung-pintar-indonesia-smart-kiosk
Russell, J. (2019) Warung Pintar rises $27.5M to digitize Indonesia’s street vendors, online
news January, 21, 2019. Accessed: Feb. 2020.
https://techcrunch.com/2019/01/21/warung-pintar-raises-27-5m/
Sakakibara, K (2013) Nijyudai no Kigyoron, Diamond, Tokyo.

44

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Schot, J., Steinmueller, W.E., (2018) Three frames for innovation policy: R&D, systems ofinnovation and transformative change, Research Policy: 47,1554-1567.
Shapiro, S.A., Glicksman, R.L., (2002) Risk Regulation at Risk Restoring a Pragmatic
Approach, Stanford University Press
Teece, D.J, (2018) Profitting from innovation in the digital economy: Enabling technologies,
standards and licensing models in the wireless world, Research Policy47:13671387.
Turnheim B, Geels, F.W. (2012) Regime destabilization as the flipside of energy
transitions: lessons from the history of the British coal industry 1913-1997. Energy
policy 50: 35-49.
Tiwari, R. and Herstatt, C. (2012) ‘Frugal innovation: a global networks’ perspective’,
DieUnternehmung, 66 Jg, 3/2012.
TWI2050 - The World in 2050 (2020). Innovations for Sustainability. Pathways to an
efficient and post-pandemic future. Report prepared by The World in 2050 initiative.
International Institute for Applied Systems Analysis (IIASA), Luxemburg, Austria.
United Nations Inter-Agency Team on Science, Technology and Innovation for the SDGs
(IATT)(2019) A Guidebook for the preparation of STI for SDGs Roadmaps, Final
draft for IATT discussion
UNCTAD (2014) World Investment Report, 2014, Geneva, UNCTAD
von Hippel, E. (1998) The Sources of Innovation. New York: Oxford University Press.
von Hippel, E. (2018) Free Innovation. New York: Oxford University Press.
Yin, R.K (2014) Case study Research, Design and Methods, Sage Publications, Thousand
Oaks
Woodson, T., Torres Alcantara, J., do Nacimiento, M. S., (2019) Is 3D printing an inclusive
innovation?: An examination of 3D printing in Brazil, Technovation, 80-81:5462(2019)
World Economic Forum (2019) Global Technology Governance: A Multi-stakeholder
Approach, White paper, World Economic Forum, 1-36.
Weber, K.M, Rohracher, H (2012) Legitimizing research, technology and innovation policies
for transformative change, combining insights from innovation systems and multilevel perspective in a comprehensive ‘failures’ framework, Research Policy, 41,1037-1047.
Information used for companies
Makuake
Web page https://www.makuake.com/
Samurai Incubate

45

政策研究大学院大学科学技術イノベーション政策研究センター (SciREX センター)
ワーキングペーパー SciREXWP-2020-#05

Presentation Materials
Website https://www.samurai-incubate.asia/
East Ventures
Website: https://east.vc/
Aavishkaar Capital
Website: https://www.aavishkaar.in/
African Business council WG for Africa’s Agriculture (2019) Basic conception of Agriculture
innovation Platform in Africa, presentation material
Presentation material downloaded fromhttps://www.soumu.go.jp/main_content/000655695.pdf

Appendix
List of interviews conducted
Organization

Title

Name of Interviewee

Date of interview

MakuakeCEO, Founder

Mr. Ryotaro Nakayama

April 8, 2019

Samurai Incubate

CEO, Founder

Mr. Kentaro Sakakibara

April 11, 2019

East Ventures

CEO, Founder

Mr. Batera Etoh

August 5, 2019

Aavishkaar Capital

CEO, Founder

Mr. Veneet Rai

November 8, 2019

Aavishkaar Capital

AdvisorMr. Hashimoto, Yoshiki

September, 10, 2020

NBF/ADM

CEO, Founder

Mr. Makoto Goda

February 27, 2020

Source: author

46

科学技術イノベーション政策研究センター
Science for RE-Designing Science, Technology and Innovation Policy Center (SciREX Center)〒106-8677 東京都港区六本木 7-22-1 / Tel 03-6439-6329 / Fax 03-6439-6260
7-22-1 Roppongi, Minato-Ku, Tokyo 106-8677 JAPANTel +81—(0)3-6439-6329 / Fax +81-(0)3-6439-6260