Sustainable Entrepreneurship
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Sustainable Entrepreneurship

Innovation and Transformation

Ajoy Kumar Dey

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eBook - ePub

Sustainable Entrepreneurship

Innovation and Transformation

Ajoy Kumar Dey

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About This Book

The cases contribute to the understanding of a systemic change from a linear economy to a circular economy and how businesses and organisations can transform their businesses and practices towards a sustainable future through innovations and creating sustainable business opportunities. Sustainable and social aspects of the cases within the organisation and with the stakeholders draw a clear picture of staying competitive, profitable and show the ability to create sustainable value. The cases provide insight into different cultural and societal aspects in the ever-changing business environment by creating an understanding of the circular economy, social entrepreneurship, and competitive leadership, and effective performance.

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Information

Year
2021
ISBN
9789354350559
Subtopic
Gestión
Edition
1
THEME 1
Circular Economy and Sustainability
Drivers for Sustainable Circular Economy Business Opportunity Recognition in Wood Construction
Ville-Veikko Piispanen1, Sini-Tuulia Suokas2, Kaisa Henttonen3 and Hanna Lehtimäki4
ABSTRACT
The purpose of this study is to find out the main drivers that relate to the entrepreneur’s circular economy business opportunity recognition. We present a multiple case study on wood construction as it is seen as the part of the circular economy by its core element of being sustainable and renewable form, but also its features as reducing carbon emissions. This study contributes to earlier research by showing that traditional six drivers influence the recognition of business opportunities that are environmental conditions, social capital, prior knowledge, systematic search, cognition and entrepreneurial alertness and moreover, they are intertwined in a complex and processual phenomenon as a business opportunity. Moreover, for the drivers of sustainable opportunity recognition the prior knowledge on natural and communal environments and altruism is evident. The recognition of opportunity is not solely based on any of the individual drivers but are indeed mostly in continuous interaction when the entrepreneur is creating a business opportunity. This study also contributes to the understanding of the opportunity process that it was not only in the hands of the discoverer but also dependent on the opportunity. Wood construction industry entails newness and innovativeness and being a forerunner within the new economic model can provide new economic, social, and environmental value creation opportunities.
Dilemma/Questions: What are the drivers for CE business opportunities recognition within the wood construction industry?
Theory: The theoretical framework of this study is built based on the theory of business opportunity recognition, lifting the issues how the opportunities are recognized and what are the influencing drivers behind opportunity recognition in the context of a circular economy.
Basis of the Case: Phenomenon.
Type of the case: Applied Decisional.
Protagonist: Not Needed.
Findings/Options: When regarding the research question how entrepreneurs within the CE in the wood construction recognise business opportunities, the results show that six drivers play a crucial role. These are environmental conditions, social capital, prior knowledge, systematic search, cognition and entrepreneurial alertness and they are intertwined in a complex phenomenon as business opportunity recognition.
Discussion/Case Questions: This study contributes to earlier research by showing that traditional six drivers influence the recognition of CE business opportunities that are environmental conditions, social capital, prior knowledge, systematic search, cognition and entrepreneurial alertness and moreover, they are intertwined in a complex and processual phenomenon as a business opportunity. However, when we focus on drivers for sustainable opportunity recognition, we see that the prior knowledge of especially on natural/communal environments and altruism is critical. This is consistent with the entrepreneurs with positive views on how wood construction can have a role in creating a communal environment.
Keywords: Business opportunity, circular economy, entrepreneur, opportunity recognition, sustainability, qualitative study, wood construction
INTRODUCTION
Circular Economy (CE) as an economic model is a transition from an existing linear model to create economic, social, and environmental value by closing resource loops with new business models and strategies (Bocken et al., 2016; EMAF, 2013; Murray et al., 2017). The CE is embraced with businesses with the potential business opportunities it sets (EMAF, 2013), but also among policymakers (European Commission 2019, 2020; Geissdoerfer et al., 2017). For a long time, there has been debate about sustainability and recycling, but the linear economy does not support these factors by its core idea when the product is produced, consumed, and then disposed of. A linear economy produces the products from virgin raw materials and the loop for consumption is not closed. The CE brings up the possibility to use waste material as a raw material. Thus, there is likely a lot of business opportunities to be recognised and exploited. Even if we forget about the different perspectives arguing that opportunities are identified (Barringer & Ireland, 2008), created or discovered (Alvarez & Barney, 2007), there is a paradox in the literature concerning entrepreneurial opportunity identification or recognition. Hanohov and Baldacchino (2018) state that opportunity recognition is considered for being a core part of entrepreneurship and even larger extent of sustainable entrepreneurship in the realms of CE. Regardless of this, it has received much less attention than conventional entrepreneurship (Hanohov & Baldacchino, 2018). It is recently that the drivers leading sustainable entrepreneurs to an entrepreneurial opportunity identification have started to gain interest in research (Hanohov & Baldacchino, 2018).
Thus, based on these arguments our research question is the following. What are the drivers for CE business opportunities recognition within the wood construction industry? We aim to understand the drivers of opportunity recognition and exploration rather than the personal traits of the entrepreneur. We focus on the wood construction in Finland because it is a growing business for the many opportunities it offers, i.e. design opportunities, cleaner inside air, building lifecycle, sustainability, carbon footprint, energy efficiency and potential cost savings (MacGilleon, 2020; Metsälehti, 2020; Rakli, 2019). Furthermore, the Finnish government has set the goal, that Finland will be in the leading role in the CE. With the CE, one of the aims is to decrease the carbon footprint within habitation and construction. Wood construction plays a critical role in achieving the aim as the buildings act as carbon sinks (Finnish Government, 2019).
BUSINESS OPPORTUNITY RECOGNITION
Entrepreneurial opportunities are circumstances, which support and set the positive ground for entrepreneurial actions (Shane et al., 2010). Research distinguishes two perspectives on the opportunity. The first claims that opportunities are recognised and the other that they are created (Alvarez & Barney, 2007). Alvarez and Barney (2007) provided a synthesis of the two perspectives by arguing that opportunities can be formed by exogenous shocks or by entrepreneurs. Thus, opportunity identification focuses on the way entrepreneurs become aware of an opportunity, whether recognised or created (Alvarez and Barney, 2007). Furthermore, Barringer and Ireland (2008) suggest that opportunities are either externally or internally stimulated. Hence, the internal stimulation means that an entrepreneur who decides to start a firm, then searches for and identifies an opportunity and exploits it. The external stimulation, on the other hand, highlights that the entrepreneur identifies an opportunity in the external environment and creates a business to fulfil it. To summarise, internal stimulation refers to the creation of opportunities (internal stimuli lead an entrepreneur to create the opportunity) while external stimulation relates to identifying opportunities (environmental factors lead the entrepreneur to identify the opportunity). Thus, in case entrepreneurial opportunity identification is the first milestone towards entrepreneurship, there is still a question of what drives or triggers the process.
Previous literature has identified drivers for opportunity recognition. Six drivers have been typically identified, that is, environmental conditions, social capital, prior knowledge, systematic search, cognition, and entrepreneurial alertness (George et al., 2016). The entrepreneurial process is always context-dependent, and the decisions are made based on the nature of the context (Alvarez & Barney, 2007). The data of the opportunity can be collected but it might take time (Alvarez & Barney, 2007). Therefore, entrepreneurial action is the ultimate source of opportunities. When opportunities are created the entrepreneurs interact with the environment, thus environmental conditions can influence opportunity recognition (George et al., 2016). The market is a social construction bringing and lifting the viewpoints and opinions of those individuals who are part of that environment. Also, market orientation influences on business opportunity recognition. When a company has a strong market orientation, it has more operations that generate knowledge. Understanding increases opportunity recognition as well as innovation (Webb et al., 2011).
Prior knowledge gives a lot of advantages and social capital creates possibilities for grinding the old cognitive framework throughout social events (George et al., 2016). Cognition and personality straits influence a great deal on our behaviour, for example, some people are more likely to take risks than others and gain more opportunities that way (Baron, 2006). Others see opportunities when others see possible threats or failures (Li, 2011). Positivity also influences the amount of opportunities that one meets (Baron, 2006). Further, embeddedness is posited to have a strong influence on strategic opportunities and resources (George et al., 2016). Cognitive processes have an impact on opportunity recognition. It seems that entrepreneurs make a mental connection when opportunities are recognised (Grégoire et al., 2010).
The systematic search considers entrepreneurs ability, awareness, and overall knowledge to utilise information channels and quickly respond to information that can have an impact on opportunity recognition (Fiet, 2007; George et al., 2016). Environmental changes may accelerate the discovery or creation of new opportunities throughout the change and development (Shane & Venkataraman, 2000). Systematic search is a driver that is useful for finding opportunities (Zahra et al. 2009). It links prior knowledge to venture creation and uses them together (Baron, 2006).
Entrepreneurial alertness plays an important part as well. Scholars have found that a person who is very alert may be able to discover opportunities even without an active process (George et al., 2016). Moreover, prior research has found that entrepreneurs with a complex and adaptive mindset and mental capabilities can have a radical effect on the industrial and social environment (Gaglio & Katz, 2001; George et al., 2016).
There is, however, also a small and recent emerging literature on sustainable entrepreneurship (Patzelt & Shepherd, 2011) including sustainable CE entrepreneurship. Typical to sustainable entrepreneurship and recognising opportunities is that it requires that entrepreneurs go beyond personal economic gain (Baron & Ensley, 2006). Hence, entrepreneurs who identify opportunities that promote sustainability could be interested in slightly different aspects of their environment in comparison to those entrepreneurs who recognise opportunities solely based on economic gains (Patzelt & Shepherd, 2011). The greater the prior knowledge of the natural/communal environment, and the positive perception of the threat of the natural/communal environment as well as the greater altruism toward others and the greater the entrepreneurial knowledge are, they increase the potential recognition of sustainable opportunities (Patzelt & Shepherd, 2011). That is, the more entrepreneurs view the natural or communal environment from the perspective of economic, environmental and social aspects, the more likely they are to recognise sustainable opportunities that can have a meaningful impact on natural, communal and market environments (Patzelt & Shepherd, 2011).
METHODOLOGY
In this multiple case study, the data comprises of six individual interviews with entrepreneurs from wood construction industry located in Finland. The study aims to increase understanding of business opportunity recognition in wood construction as a phenomenon. The interviews were semi-structured and guided beforehand with prepared thematic topics. The method gives a possibility and freedom to be flexible with the words and order of the topics in the interview situation. This gives the advantage to be systematic, but the situation is informal and more conversation-like (Eriksson & Kovalainen, 2016). The six interviews were transcribed and analysed with inductive content analysis. The inductive way of analysing the context of the interviews reveals new categories, patterns, themes, activities and makes it possible to look behind the theories and find new elements. With this method, as the analysis is proceeding, the research questions are formulated or refocused and refined (Eriksson & Kovalainen, 2016). Direct quotations (in italics) are marked with quotations marks and identified with interviewed person I1, I2, I3, I4, I5 and I6.
Results - What are the drivers for CE business opportunities recognition within wood construction industry?
When regarding the research question how entrepreneurs within the CE in the wood construction recognise business opportunities, the results show that six drivers play a crucial role. These are environmental conditions, social capital, prior knowledge, systematic search, cognition and entrepreneurial alertness and they are intertwined in a complex phenomenon as business opportunity recognition (Alvarez & Barney, 2007). In addition, prior knowledge on the natural/communal environment, altruism and entrepren...

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