Sustainable Entrepreneurship

Alan S. Gutterman

• Publisher: Business Expert Press
• Year: 2018
• ISBN:
  9781948976589
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

This book traces the foundations for sustainable entrepreneurship, beginning with sustainability, ecopreneurship, and social entrepreneurship.

Sustainability has become a multidimensional concept that extends beyond environmental protection to economic development and social equity-in other words, entrepreneurship guided and measured by the three pillars of the triple bottom line. Sustainable entrepreneurship is the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, the local and global community, as well as future generations.

The text continues with a review of the basic principles of sustainable entrepreneurship and how entrepreneurs can integrate sustainability into their business models. This book will be an invaluable resource for entrepreneurs looking to build a new venture based on the principles of sustainability from the outset. In addition, it can be used by academics teaching sustainable entrepreneurship, a topic of surging interest to students, and by professionals working with sustainable businesses.

CHAPTER 6

Sustainable Entrepreneurship

Introduction

By the 1990s it was becoming clear that sustainability had “become a multidimensional concept that extends beyond environmental protection to economic development and social equity”—in other words, entrepreneurship guided and measured by the three pillars of the “triple bottom line.”1 Crals and Vereeck reasoned that “sustainable entrepreneurship” could be interpreted as a spin-off concept from sustainable development and that sustainable entrepreneurs were those persons and companies that contributed to sustainable development by “doing business in a sustainable way.”2 According to the Brundtland Commission, sustainable entrepreneurship is the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, the local and global community as well as future generations.3 This definition recognizes several different stakeholder groups, not just shareholders, must be taken into account when managerial decisions are made and operational activities in furtherance of the organizational purposes are carried out. Crals and Vereeck argued that in order for entrepreneurial activity to be “sustainable” it must recognize, address, and satisfy certain standards for each of the three P’s of the triple bottom-line described earlier.4 Crals and Vereeck observed that the definition of sustainable entrepreneurship was not static given the dynamism of new ideas and standards with respect to the social and natural environment.

Definitions and Conceptualizations of Sustainable Entrepreneurship

Bell and Stellingwerf compiled what they considered to be a representative list of definitions of “sustainable entrepreneurship” that were suggested from 2003 through 2011, all of which are presented as follows, in chronological order5:

• “Innovative behavior of single or organizations operating in the private business sector who are seeing environmental or social issues as a core objective and competitive advantage.”6
• “The continuing commitment by business to behave ethically and contribute to economic development, while improving the quality of life of the workforce, their families, local ­communities, the society, and the world at large, as well as future generations. Sustainable Entrepreneurs are for-profit entrepreneurs that commit business operations toward the objective goal of achieving sustainability.”7
• “The process of discovering, evaluating, and exploiting economic opportunities that are present in market failures which detract from sustainability, including those that are ­environmentally relevant.”8
• “The examination of how opportunities to bring into existence future goods and services are discovered, created, and exploited, by whom, and with what economic, psychological, social, and environmental consequences.”9
• “Create profitable enterprises and achieve certain environmental and/or social objectives, pursue and achieve what is often referred to as the double bottom-line or triple ­bottom line”10
• “The discovery and exploitation of economic opportunities through the generation of market disequilibria that initiate the transformation of a sector toward an environmentally and socially more sustainable state.”11
• “An innovative, market-oriented and personality driven form of creating economic and societal value by means of break-through environmentally or socially beneficial market or institutional innovations.”12
• “Sustainable Entrepreneurship is focused on the preservation of nature, life support, and community in the pursuit of ­perceived opportunities to bring into existence future ­products, processes, and services for gain, where gain is broadly construed to include economic and noneconomic gains to individuals, the economy, and society.”13

From their perspective, Bell and Stellingwerf believed that the definitions collectively identified four defining attributes of sustainable entrepreneurship14:

• Balancing environmental and social concerns: Bell and Stellingwerf observed that sustainable entrepreneurship was “a balancing act of strategically managing and orienting environmental and social objectives and considerations, with entity specific financial goals steering the business objective” and that sustainable entrepreneurship required finding the right balance with the disparate economic, social, cultural, and ecological environments in which businesses must operate. They also noted that in the course of their efforts to limit and minimize the environmental and social impact of their activities sustainable entrepreneurs focused on improving the quality of their processes.15
• Economic gains: Entrepreneurship, sustainable or otherwise, has making a profit as an essential characteristic and objective and the concept of “gain” can be found throughout the definitions reproduced earlier. However, sustainable entrepreneurship is a based on a broad construction of gain that includes economic and noneconomic gains to individuals, the economy, and society. Profits are recognized as being essential to sustaining the livelihood of businesses and providing entrepreneurs with the resources that are needed for reinvestment in the sustainable goals of their companies. Bell and Stellingwerf argued that entrepreneurial activities can only be labelled sustainable, and therefore satisfy sustainable development, if there is an equal blending of, and equal consideration for, each of the three P’s of the triple bottom line described earlier.16
• Market failures and disequilibria: Half of the definitions reproduced earlier explicitly mentioned recognition and exploitation of opportunities caused by environmental and/or social imperfections and identification of opportunities has been a long-standing tenant of disruptive entrepreneurship. Cohen and Winn argued that there are four types of market imperfections (i.e., inefficient firms, externalities, flawed pricing mechanisms, and information asymmetries) that contribute to environmental degradation and provide opportunities for sustainable entrepreneurs to create radical technologies and innovative business models that can achieve profitability while simultaneously improving local and global social and ­environmental conditions.17
• Transforming sectors toward sustainability: A number of ­theorists have argued that start-ups launched by sustainable entrepreneurs can solve sustainability-related problems through the introduction of innovative products, process, and services and that the commercial success of these solutions, and accompanying support of professional investors and other influential stakeholders, can and will eventually influence incumbents to adopt similar solutions and otherwise take steps that will lead to the transformation of the entire industry toward sustainability.18 Under these theories, sustainable entrepreneurs make their impact by targeting market niches defined by a particular sustainability-related problem, generally introducing the radical changes that are outside the comfort zone of incumbents that prefer change to be incremental; however, Bell and Stellingwerf cautioned that research “in the field” lacked support.19

From all of this, Bell and Stellingwerf proposed their own definition of sustainable entrepreneurship as “startups that introduce an innovation, with the aim to solve a sustainability-related market failure, which initiates the transformation of an industry toward sustainability.”20 The “innovation” could take the form of a product, process, or service and the sustainability objectives b...