In the field of new product development, brand communities have attracted a great deal of attention from both academics and practitioners as a means of facilitating consumer-producer co-creation processes. In this paper, we extend the line of research on brand communities to the field of entrepreneurship studies by examining the conditions under which new firms emerge out of these social networks. Our empirical setting is the global LEGO brand community. As a well-known pioneering firm that is constantly experimenting with new ways of collaborating with its fan and customer base, LEGO recently invited lead users to start up new companies under its brand name. In this study, we use an explorative multiple case study design to identify patterns in this new firm creation process. Our findings show that each party derives specific returns in this entrepreneurial process: The LEGO company benefits from the identification and exploitation of attractive business opportunities and the reduction of entrepreneurial risk. At the same time, the entrepreneurial lead users benefit from brand transfer and from the crucial support of the brand community in the entrepreneurial process. Moreover, the LEGO brand community enjoys a broader range of LEGO products and services. Our findings reveal the emergence of a hybrid organizational form in which new business ideas are neither exploited solely within the boundaries of the focal producer firm, nor pursued by fully independent new firms alone. We observe that this form has not emerged from a deliberate strategy on the part of the LEGO company, but rather from the proactive and entrepreneurial behavior of entrepreneurial lead users and the brand community.
Proceedings (online Program) of the 71st Academy of Management Annual Meeting, San Antonio, Texas, August 12-16, 2011, 2011