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Abstract

This article explains how entrepreneurship can help resolve the environmental problems of global socio-
economic systems. Environmental economics concludes that environmental degradation results from the
failure of markets, whereas the entrepreneurship literature argues that opportunities are inherent in market
failure. A synthesis of these literatures suggests that environmentally relevant market failures represent
opportunities for achieving profitability while simultaneously reducing environmentally degrading economic
behaviors. It also implies conceptualizations of sustainable and environmental entrepreneurship which detail
how entrepreneurs seize the opportunities that are inherent in environmentally relevant market failures.
Finally, the article examines the ability of the proposed theoretical framework to transcend its environmental
context and provide insight into expanding the domain of the study of entrepreneurship.

Keywords: Entrepreneurship; Opportunity; Market failure; Environment; Sustainability

Article Outline

Sustainable entrepreneurship in SMEs.


Theory and Practice.
Evy Crals and Lode Vereeck
Limburgs Universitair Centrum
Universitaire Campus – Building D
B-3590 Diepenbeek, Belgium
Email: {evy.crals;lode.vereeck}@luc.ac.be

Abstract:

Sustainable entrepreneurship is a spin-off concept from sustainable development that can be


defined as 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 entrepreneurship is an approach that is applied mostly by large, often industrial
companies. In their wake, a whole range of sustainability certificates came about. Because of
the proliferation of complex and costly procedures to obtain them, SMEs have almost
unanimously ignored and repudiated the idea of sustainable entrepreneurship. Since the gains
can be substantial in terms of risk control, business relationships with large companies and
positive reputation, the question is raised whether SMEs can actually afford it to do business
in a sustainable manner.
The case study points out what the preconditions are for the implementation of sustainable
business practices by SMEs. First of all, the smaller financial resources of SMEs are not a
prohibitive determinant. Lack of time, however, is. When solved, SMEs should select a
simple, pragmatic and effective format that is tailored to their needs. The case study offers
some convincing examples. Finally, SMEs should look at the return and the opportunity costs
of a sustainability strategy rather than the financial costs. 2
1. Introduction
Currently, there is a business hype in sustainable entrepreneurship. Every self-respecting
company tries to brand itself as a sustainable entrepreneur. Business schools and employers’
organisations devote whole conferences to the topic. Many terms are used like corporate
social responsibility, ethical funds, eco-efficiency and so on. Although these words reflect
different concepts, they all point at various aspects of sustainable development. There is also
a booming business in (expensive) sustainable entrepreneurship certificates. Yearly
sustainability reports are published almost exclusively by big companies. This raises the
question whether SMEs that constitute up to 90 percent of all businesses, actually can afford
to be sustainable entrepreneurs?
In 1987, the World Commission on Environment and Development of the United Nations
(the often cited Brundtland Commission) first described and defined sustainable development
as a process in which the exploitation of natural resources, the allocation of investments and
the process of technological development and organizational change are in harmony with
each other for both current and future generations. Sustainability is a concept that is oriented
towards the long term and future generations as much as the present. Therefore, sustainability
is at conflict with our fast consuming society and short term and short-sighted policies.
Sustainability fits nicely in the altering view on the prime responsibilities of companies and
organisations and their stakeholders1 that go beyond the classical view in which a company’s
sole aim was profit maximization in the interest of the shareholders.
Hence, sustainable entrepreneurship can be interpreted as a spin-off concept from sustainable
development. Sustainable entrepreneurs are those companies that contribute to sustainable
development by doing business in a sustainable way. As Kofi Annan pointed out (United
Nations Global Compact Network):
‘… let’s choose to unite the powers of markets with the authority of universal ideals. Let us
choose to reconcile the creative force of private entrepreneurship with the needs of the
disadvantaged and the requirements of the future generations…’
Sustainable entrepreneurship can be defined as 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
(World Business Council for Sustainable Development). From a sustainable entrepreneurship
perspective, a company is a nexus of responsibilities towards the shareholders, but also
towards nature, society and future generations. When the interests of these stakeholders are
part of the decision making process in a company, we can genuinely speak about a whole
new type of a company with a new type of operational management. A company does not
operate
1
Stakeholders are those groups and individuals that can affect, or are affected by, the accomplishment of
the organizational purpose. 3
on a deserted island, but is embedded in an economic, social, cultural and ecological
environment. This offers possibilities and poses threats and obligations. And the theory and
concepts of sustainable entrepreneurship try to find the right balance.

2. The essence of sustainable entrepreneurship


Following a well known marketing principle, sustainable development is said to deal with the
3 P’s, which stand for People, Planet, Profit. All three aspects (including the last) have to be
satisfied before an entrepreneurial activity can be labelled as sustainable.
The first aspect ‘people’ is about the behaviour of companies in social and ethical issues.
How does a company treat their employees (or human resources) and does it promote social
cohesion? The issues that need to be adequately dealt with are the protection of human rights,
the non-indulgence towards fraud and corruption, the use of child labour, the gender
relationships and discrimination on the work floor, labour participation in management and
profits, behavioural codes and so on. While many labour regulations were imposed in the
beginning of the 20th century by labour and socialist movements as well as in the golden
sixties, voluntary, self-imposed systems in this area are most recent, for example SA 8000
and AA 1000.
Secondly, sustainable entrepreneurship takes care of the natural environment. ‘We did not
inherit the earth from our ancestors; the earth is on loan from our children’, says the Indian
adage that clearly summarizes individual and corporate responsibility towards the natural
environment. The second aspect ‘planet’ raises the question of the effect and remedy of the
impact of a company on natural resources and the landscape. Environmental care, chain
management, eco-efficiency, clean products, sustainable technology development,
sustainable industry fields and eco-design are concrete examples of these issues. The
consequence for business behaviour is that either environmental integrity becomes a business
goal next to profit seeking or that environmental protection becomes a real constraint on
profit maximization (the mathematical calculus in business optimization model leads in both
instances to same outcome). The integration of environmental concerns into business
practices is driven by both regulation (environmental legislation) and self-regulation (ISO
14000 and so on).
Finally, the third aspect ‘profit’ does not – as one might expect - relate solely to the purely
financial results of an enterprise. Profit is also about the use and allocation of value added for
employment, investments in machines and infrastructure and sponsoring and about the
distribution (e.g. labour participation). The definition of sustainable entrepreneurship is not a
static one since the world and the ideas that emerge are by nature dynamic. But, while the
former two aspects of sustainable entrepreneurship (which relate to the material and
immaterial contributions of dynamic corporate behaviour to nature and to global and local
communities which shape our natural and social environment (Bos, 2002)) are subject to 4
changing views on people and planet, the last aspect is the very essence of a business
enterprise.
Janssen (2001) provided a list of ten ground rules for becoming a sustainable entrepreneur:

1. The corporation should start reducing the environmental damage, respecting human
rights and treating its employees with great care;

2. Sustainable entrepreneurship has to be a self-initiated process and should not simply be


a response to external pressure;

3. If a corporation wants to practice sustainable entrepreneurship, it should identify clear


aims and targets;

4. The aims should be closely related to the corporation’s practice and should match the
corporate values and its primary activities;

5. The aims have to be closely related to the consumers’ needs;

6. The corporation has to be capable of explaining the relationship between sustainability


and its activities and production process;

7. The corporation should adhere to these aims on a long term basis;

8. Consumers and pressure groups should have a transparent overview of investments


made by the corporation related to sustainable entrepreneurship;

9. Sustainable entrepreneurship practiced by the corporation should not shifted to the


consumers via a price increase; and

10. A corporation should not attempt to overemphasize its efforts.

Bos (2002) added an additional rule to the list:


11. A corporation should make sure that its practices are shared by the corporation as a
whole, and that they are not solely efforts of the management.

3. Sustainable entrepreneurship and SMEs


Sustainable entrepreneurship is a business approach that seems almost exclusively reserved
for large industrial companies. They certainly took the lead in this development after Shell
decided in 1995 to dump the Brent Spar Oil Platform in the Atlantic Ocean. The pressure
from Greenpeace and other environmental organisations as well as the heated protests by
consumers and ecological activists alike forced the Shell Oil Company to reconsider and
change its plan. Although initially unintended, it is fair to say that the decision about the final
destination of the Brent Spar was made in consultation with Shell’s stakeholders, in particular
public opinion and environmental interest groups. The affair had some further consequences:
it changed Shell’s global style of doing business. Sustainable entrepreneurship became their
business approach and, from previously irresponsible polluter, Shell is now clearly one of the
(self-declared) market leaders in sustainability. The old policy of Shell, summarized as
‘Decide Act Defend’ was transformed into a business model ‘Dialogue Decide Act’ that 5
determines the process of important decisions. Many (big) companies followed suit: Nike,
Levis, Philips, Unilever and so on. More large companies are engaging in sustainable
entrepreneurship policies, more specifically the ones that focus on product- and chain-
directed environmental care.
Sustainable entrepreneurship presupposes that companies are fully aware of the impact of
their behaviour on the material and immaterial situation of their direct and indirect
environment (see Bos, supra). It involves not only the scanning of opportunities and threats in
the market, but also of the environment. The fact that sustainable entrepreneurship is up till
now largely a large companies’ playground is partially due to the more limited resources of
SMEs. However, as we will show later on, it is impossible for them to ignore this new
economic reality.
Small and medium-sized enterprises make a substantial contribution to economic growth and
employment in most countries around the world (Organization for Economic Co-operation
and Development, 1997). The individual impact of SMEs is relatively small, but their
collective impact is substantial. SMEs typically represent about 95 % of all private sector
firms in most modern nations, and so form a major portion of all economic activity (Schaper,
2002). Furthermore, they account e.g. for 35 % of exports from Asia and approximately 26 %
of exports from developed countries including the United States (Organization for Economic
Cooperation and Development, 1997). In selected countries such as Italy, South Korea and
China, SMEs contribute as much as 60 % of total national exports (Knight, 2000, p. 12-13).
In Belgium, they represent 95% of all businesses and employ 40% of the labour force in
private companies.
There is no unequivocal definition of a SME. A whole set of definitions exists that are used
in various institutions. The European Commission (Commission of the European
Communities, 1996) recommends the following definition that guides all its measures aimed
at micro-, small and medium-sized enterprises. SMEs are defined as enterprises which:

- have fewer than 250 employees2;

- have either an annual turnover not exceeding 40 million Euro, or an annual balance-
sheet total not exceeding 27 million Euro; and

- conform to the criterion of independence3.


2
The number of persons employed corresponds to the number of annual working units (AWU), that is to
say, the number of full-time workers employed during one year with part-time and seasonal workers being
fractions of AWU.
3
Independent enterprises are those which are not owned as to 25 % or more of the capital or the voting
rights by one enterprise or jointly by several enterprises that fall outside the definition of an SME. This
threshold may be exceeded in the following two cases:

- if the enterprise is held by public investment corporations, venture capital companies or institutional
investors, provided no control is exercised either individually or jointly;

- if the capital is spread in such a way that it is not possible to determine by whom it is held and if the
enterprise declares that it can legitimately presume that it is not owned as to 25 % or more by one
enterprise or jointly by several enterprises that fall outside the definition of an SME.
6
When it is necessary to distinguish between small and medium-sized enterprises, the former
are defined as enterprises which:

- have fewer than 50 employees;

- have either an annual turnover not exceeding 7 million Euro, or an annual balance-sheet
total not exceeding 5 million Euro; and

- conform to the criterion of independence as defined in the footnote supra.

4. The gains of sustainable entrepreneurship for SMEs


4.1. Gains for all enterprises
Bos (2002) states there are two main reasons for corporate organizations to take into account
the socio- and eco-ethical aspects of their behaviour. The first consequence for not doing so
is bad publicity. When a corporate enterprise is perceived by the general public as unethical,
this will damage its corporate reputation, which, in turn, may result in a loss of income,
profits and share value from a conscious consumers’ boycott or unconscious bypass of its
products. It is important to remember, however, that many benefits from sustainable
entrepreneurship are being defined as costs or losses avoided. Secondly, Bos emphasizes that
idealism drives more and more organizations that consider themselves to be more than solely
profit-making ventures. If not led by idealism, however, corporate enterprises can still
enhance their public reputation by showing respect for people and planet instead of only for
profit.
Sustainable entrepreneurship gives companies an opportunity to distinguish themselves from
others. So far, the results have been encouraging as shown by the returns on funds of
companies that are engaged in sustainable development. Examples are the RG Sustainable
Shares Fund, ABN-AMRO Sustainable World Funds and the SNS Eco Shares funds. Also
the Dow Jones Sustainability Group Index, launched in 1999, shows that sustainable
companies financially outperform others. The Dow Jones Sustainability Group Index
includes the best performing companies with regard to financial results, social and
environmental accountability.
4.2 Gains for SMEs
A general gain of adapting sustainable entrepreneurship in SMEs is the internal dynamics
that sustainable approaches introduce in the production process and human resource
management. It is likely to lead to a more bold investment policy in both technology and
personnel that will yield results in the long run. A direct and obvious gain accrues to those
SMEs that supply their products to large companies which themselves are sustainable
entrepreneurs and require 7
from their supplier to be so as well in order to be in business. Such large companies may
have a direct interest in product- and chain directed environmental care as well ass labour
conditions. SMEs that do not anticipate to these developments and requirements, seriously
risk loosing business to small and medium-sized competitors that do or did invest in
sustainable production methods. Another argument for adopting sustainable entrepreneurship
lies in the concentration trend of big, global companies. SMEs obviously can not compete
with these international players. SMEs should therefore focus on their surroundings, an
essential part of the definition of sustainability. Being involved in the local community may
prove a sustainability technique for SMEs that global companies will find hard to copy
which, for that reason, turn to locally well embedded SMEs. The other benefits of sustainable
entrepreneurship can be summarized as follows:

- A positive image and reputation;

- Lesser dependency on depleted resources;

- Higher motivation of employees and attractiveness for new employees;

- Efficient production due to superior technologies and better skilled staff;

- Superior insight in market preferences and opportunities;

- Risk control (environmental accidents, scandals, bad publicity, etc.);

- Lower burden from changes in (environmental and social) legislation;

- Corporate social responsibility; and as mentioned before

- Internal business dynamics,

- Business partnerships with other sustainable entrepreneurs,

- Business partnerships with global players.

Sustainable entrepreneurship requires an ongoing dialogue between shareholders and


stakeholders. Since a healthy financial basis remains essential, not only will shareholders
have to live up to their social and environmental responsibility, but - especially in the case of
SMEs - will stakeholders have to understand that sound financial results are essential for the
survival of the company. If not, there is no company, let alone a sustainable one. After listing
the potential gains of sustainable entrepreneurship for SME, the key question remains: can
they afford it?

5. The instruments of sustainable entrepreneurship


As mentioned earlier, sustainable entrepreneurship became en vogue after the successful
1995 protests against the dumping of the Brent Star Oil Platform in the open sea. The owner
of the platform, the Dutch multinational Shell, withdrew its decision and started to consult its
stakeholders. Sustainable entrepreneurship became the new approach and buzz word. Many
big companies like Nike, Levis, Philips, and Unilever followed suit and they all now publish
their yearly sustainability reports. 8
Ever since, a whole battery of techniques and procedures have been developed to promote
sustainable entrepreneurship: in audit: ISO 14010/14011/14012/14031 (recently superseded
by ISO 19000), AA 1000; codes: Levi, Nike, GAP, C&A, ICFTU, AIP, ETI; in management:
ISO 14001, EMQS, SA 8000, AA 1000; labels: ecolabel, GSC, FLO and so on.
Standards for production have been available for quite a while. They were originally created
to define product quality. More recently, standards for human resource management at a
company level came about that were meant to induce and maintain good housekeeping.
Whereas it is rather easy to decide whether or not a product complies with a standard,
processes are more difficult to assess. Consequently, these types of standards are less easy to
interpret and compare. The first international management standard, the quality standard ISO
9000 came into use in the beginning of the 1990s and was followed by the environmental
standards, the ISO 14000 series (now ISO 19000). The standards, however, were considered
in some cases to be too complex or too general. As a result, specific standards (QS 9001) or
simplified ones (ISO 14001-light) were developed. Different industries also take a different
approach to management norms and have adopted their own versions. There are also new and
modified versions of international standards emerging such as the new version of ISO 9000
and an unofficial version of ISO 14000 for the working environment. Certification is also
beginning to occur in relation to social accountability, information security, ethical trade,
equality in the workplace and fire prevention (Martensson, 2000). In the next paragraph, we
will briefly discuss some techniques and procedures.

5.1. Audits

5.1.1. Environmental audits

An environmental audit is one of the procedures in sustainability support devices. An


environmental audit often has a descriptive character. The organisation as a whole and its
environmental management in particular are being evaluated (competences, responsibilities,
communication, education, etc.). In 1996, ISO developed three standards for environmental
auditing: ISO 14010, ISO 14011 and ISO 14012 that were recently superseded by ISO 19K.
In general, ISO is an audit process that assesses environmental control systems. 4 These audits
are executed by an audit team by order of a client. This client can be the company itself or a
body that has the legal or contractual authority to request an audit. The client determines the
goals. The audit team should be independent and not related to the client or the activities they
audit; it should be objective and free from bias and conflict of interest throughout the process.
The use of external or internal audit team members is at the discretion of the client. Other
conditions are: sufficient information about the subject that needs to be audited, sufficient
4
In this case, we are talking about EMS’s or Environmental Management System Audits. An EMS is
defined as a systematic and documented verification process of objectively obtaining and evaluating audit
evidence to determine whether an organization’s environmental management system conforms to the
environmental management audit criteria, and communicating the results of this process to the client. 9
cooperation from the enterprise under scrutiny and a systematic way of working. There is a
standard procedure that describes the way of preparing and executing the audit (kick-off
meeting, gathering of information, end meeting, etc.), the way of composing the documents
(reports of meetings, procedures and checklists to assess the different elements of the
environmental control system, etc.) and it also describes the lay-out of the report. In
conclusion, it is fair to say that an environmental audit costs a lot of time and effort. It can
also become an expensive process when the company audited is unfamiliar with ISO and/or
not environmentally conscious.

5.1.2. Social Audits

Contrary to environmental audits, there is to our knowledge no internationally recognized


norm for social audits. Nevertheless, AA1000 and SQAS (the latter for the transportation
industry) are well known. A social audit is defined as the process by which an organization
reflects on, measures, evaluates and reports on its social impact and ethical behaviour and
adjusts them according to its goals and values and those of its stakeholders. A social audit has
also been described as a learning process with four major building stones (Borgo, Mazijn and
Spillemaeckers, p. 46):

- Dialogue with the stakeholders;

- Use of quantitative and qualitative performance indicators and benchmarks. This


requires a social bookkeeping system. Examples of indicators: absenteeism,
dismissals and resignations, labour accidents, total earnings and so on;

- External verification (necessary for the credibility of the next step); and

- Reporting of and communication about goals, efforts and results.

5.2. Codes
Corporate codes of conduct are defined as a statement of principles by which a business
agrees to abide voluntarily over the course of its operation. Such a code of conduct creates
and continuously evaluates benchmarks for the company’s management. It more or less
forces the company to behave according to its own principles for its own good and for the
better of their direct and indirect environment. Famous international companies have drawn
up a corporate code of conduct, primarily in reaction to their critics and activists from
consumers’ organizations and other pressure groups. Well-known examples are the Levi-
Strauss global sourcing and operating guidelines, the Nike code of conduct and the GAP code
of vendor conduct. Most of these codes are rather vague and idiosyncratic. Recently, there is
a tendency to create more uniform codes. 10
5.3. Management
A management system can be defined as the organizational structure, responsibilities,
procedures, processes and operational duties necessary to carry out certain goals. General
management is concerned with the overall operational, financial and strategic management.
However, different management systems can be put in place for various goals like
environmental care, quality assurance, safety, etc. The best known standard for quality
management is probably ISO 9000/9001. Examples of environmental management systems
are ISO 14001 and EMAS. The best known social management system is SA 8000.

5.4. Labels
A label is put on a product when that product distinguishes itself in a specific product
category. The criteria for labelling should be well defined and transparent. Following the ISO
approach, environmental labels are classified into three types:

- Type I environmental labelling programs are voluntary programs where an independent


labelling authority sets the criteria based on the lifecycle approach of the concerned
product group;

- Type II labelling is about environmental labels that form an integral part of the
marketing effort for the product. ISO 14021 sets the standards under which
conditions a product can be labelled as environmentally friendly;

- No criteria are set for a type III labelling, but an independent labeller is involved. It is
barely used.

Examples of environmental labels are the European Eco-label and FSC5.

6. The affordability of sustainable entrepreneurship for SMEs


The proliferation of new types of management systems and their certification techniques
seems to create its own problem of sustainability especially for SMEs. While management
systems supposedly have the effect of introducing a systematic approach to the issues of
environmental protection, health and safety of employees and neighbours, quality
management, etc., there is the pertinent risk that the sheer variety of systems creates overlap
and waste. These instruments then require more material and financial resources that a small,
individual company can afford. Another risk is that companies, especially SMEs, become
disenchanted by the whole idea of sustainable management systems. While an SME can
afford to invest in one ISO-certificate, to obtain all certificates that prove (or signal to the
outside world that) the company is a sustainable entrepreneur may prove prohibitively
5
Forest Stewardship Council (FSC) 11
expensive for an SME. While the advantages are many, can SMEs afford to become
sustainable entrepreneurs?
Well, the SMEs seem to think that they can not. The vast majority is sitting on the sidelines
when it comes to the ISO game, let alone sustainable entrepreneurship. In 2000, only 0,1 %
of European non-micro companies had an accredited environmental management system
(EMS) such as ISO 14001 or EMAS. Although eco-efficiency schemes have reached tens of
thousands of companies, they only represent a tiny fraction of the millions of European
SMEs. Even fewer companies are aware of eco-design and sustainable manufacturing
concepts. Attitudes to the environment and understanding of sustainable development remain
very poor, but cost and time pressures seem the crucial factors. SMEs as a group have not
been persuaded that spending (quite some) money to obtain an ISO-certificate is a sound
business decision in terms non-specific promises of cost savings. For most SMEs, shortage of
resources – time, personnel as well as money – is the rule. Therefore, the tendency is to
ignore complicated, new systems is easy to understand.
SMEs face the following problems that SMEs with regard to sustainable development
(Hilton, 2000):

- Lack of resources, time and money;

- Lack of capabilities, skills and knowledge;

- Lack of awareness of issues, risks, regulation;

- Lack of training needs analysis (TNA);

- Lack of awareness of tools and techniques;

- Lack of awareness of provisions and their benefits;

- Lack of strategic and holistic thinking;

- Lack of internal communication and integration;

- Lack of work floor staff involvement;

- Lack of flexibility and fear of change;

- Lack of external communication (networking); and

- Mistrust of other companies in groups.

While there has been a large increase in the number of initiatives aimed at SMEs, the
measures of support have not always been correctly tailored to the needs of SMEs. Support
systems are often found to be too abstract and impractical, too general (insufficiently apt for
specific industries), too passive, superficial or lacking in quality, too expensive, time-
consuming or inflexible or poorly targeted or promoted. There has also been an overemphasis
on environmental management systems and certification6 at the expense of eco-efficiency,
eco-design, integrated approaches7 and sustainable production8.
6
Certification as such does not guarantee significant improvements, let alone cost savings.
7
For instance including environment, health, safety and quality.
8
For instance based on renewable resources. 12
Nonetheless, these initiatives can become successful by means of at least putting sustainable
development on the agenda of SMEs and their federations. Also regional partnerships can
help to ensure proper co-ordination, provide pragmatic support, reduce confusion, develop
individual relationships and provide all the right incentives for SMEs. Finally, SMEs should
be encouraged to form or join self-help networks, for example environment business, eco-
efficiency and joint-EMS implementation clubs. But whatever the approach taken, it should
be simple and transparent.

7. Case Study: ES Tooling


ES Tooling is a Belgian SME (following the Belgian and European definition) that positions
itself as a sustainable entrepreneur. The company has put sustainability into practice in a way
that is compatible with its own objectives, values and limited resources, but also in a unique
manner that may prove useful for many SMEs around the world. ES Tooling was thus not
randomly selected as a case study, but rather as a precedent. ES Tooling has come up with a
transparent and effective approach that may induce other SMEs to become sustainable
entrepreneurs as well.

7.1. ES Tooling: Introduction


ES Tooling was founded in 1996 by Erik Schildermans and his wife Carine Melotte. The
company is located in the industrial zone of Beringen, a town in north eastern part of
Belgium. ES Tooling is specialised in precision technology. The technology allows to
produce parts with a precision level of 0,0005 of a millimetre. ES Tooling currently produces
fine mechanical parts, adjustment and measuring tools and moulds for prestigious companies.
These parts are used as components for cutting tools in the automotive and optical industry,
for small automation in the measuring and control engineering industry, and in various other
industries (e.g. health). ES Tooling claims to uphold high standards and values in relationship
with its customers, employees, and the local community and to care about the natural
environment.
The company’s business profile (towards its customers) is that of a reliable producer of fine
mechanical parts that guarantees the highest quality by using the latest modern technology in
high precision cutting machines. An active investment policy allows ES Tooling to replace its
machines every five years. That is the only way to remain technologically up-to-date. The
hypermodern measurement tools make it possible to pursue an internal quality control. All
this has lead to a financially healthy business (profit).
Transparency towards and participation of the employees is actively stimulated (people).
Schildermans strongly believes in a learning organization and gives his employees the
opportunity for extra training, courses and personal development. Although there is no profit
sharing, all employees participate in the decision making process of the company. They are
13
consulted for important decisions with regard to investments and/or recruitments. The
comfortable central refectory is also being used as a meeting room where the whole team gets
the chance to air their opinions. A visit of the premises will learn that ES Tooling deeply
cares about safe, hygienic and healthy labour conditions.
ES Tooling also wants to accomplish its environmental obligations in a pro-active way. The
company goes beyond its legal obligations and has invested heavily in garden that surrounds
the production hall.

7.2. Report Sustainable Entrepreneurship

In June 2003, ES Tooling proudly presented its report entitled ‘Sustainable


Entrepreneurship’. Being an SME, ES Tooling surprised many professionals in the academic
world, business community and financial press. For months, the staff had worked mapping
out the company and its mission as well as its financial, social and environmental
achievements. The report defines the goals with regard to its activities, values and
stakeholders.

The core business of ES Tooling is technology and the production of fine mechanical parts
by means of highly precise machines. The company has an outstanding reputation for its
service, products and technology. ES Tooling aims to hold or obtain a lead position in all the
markets in which it is present. The focal point is technological innovation. ES Tooling
chooses for quality as the key instrument for a successful implementation of its strategy.

Individuals are put in the centre of its system of values entailing individual rights as well as
obligations. The company stimulates personal development on the basis of equal opportunity.
The ‘sustainable entrepreneurship’ report puts particular emphasis on this personalised
approach by showing the name and picture of every employee (often in front of the piece of
technological equipment for which the person is responsible). The remuneration and
compensation system is both competitive and fair. Teamwork is essential in the line of
activity in which ES Tooling is engaged. ES Tooling is said to care about healthy and safe
labour conditions which becomes clear to any visitor of the production plant. Communication
with employees is essential element in the practical implementation of a sustainable business
strategy. ES Tooling’s management keeps the employees well informed about almost
everything that happens on the work floor and beyond. Every month, after lunch (not during),
Erik Schildermans chairs a meeting with all his personnel and staff. On the agenda are all the
major issues related to the company. Every employee is free to comment. It is only after and
on the basis of the discussion with his employees that a decision is made by Erik
Schildermans. Respectful of his final decision, the employees genuinely appreciate this
modus operandi.

Stakeholders are an important aspect of sustainable entrepreneurship. ES Tooling’s


customers rely on ES’s experience and devotion to perfection. It makes the company a
privileged partner for global players (in particular aircraft and space industry). Growth is seen
as a challenge and 14
change is seen as an opportunity. Therefore, ES Tooling stimulates a learning organization.
The quality of its product which is based on the professionalism of its employees has enabled
ES Tooling to reach its goals, to finance its growth and to offer its shareholders accurate
profits.
Sustainable entrepreneurs are thought to also have an eye for the environment. Behind the ES
Tooling building, an astonishingly beautiful garden arises. This garden not only allows the
employees to have their lunch in a relaxing atmosphere, it is a shining example of the
ecological potential of industrial zones. The garden clearly is also a front piece of ES
Tooling. Furthermore, the company takes up its social responsibility by sponsoring valuable
local initiatives such as the youth orchestra St. Cecilia of Beringen.

7.3. The gains of sustainable entrepreneurship for ES Tooling


Although ES Tooling holds an ISO 9000/9001 certificate, Erik Schildermans decided not to
pursue its environmental counterpart ISO 14000 or an OHSAS certificate. Given the
company’s experience in ISO-procedures and its record in environmental care, the costs for
obtaining for obtaining an additional certificate would be comparatively low. Instead, ES
Tooling opted to invest four times as much in the writing, layout and printing of a
sustainability report plus the building of a showpiece garden. This puts a completely different
perspective on the question whether SMEs can afford to be sustainable entrepreneurs.
ES Tooling admits that the decision to invest in a sustainability report was controversial and
even put in doubt during the process. The report (and the garden) implied a substantial
investment. However, the opportunity cost, i.e. the value of the alternative forgone, was
rather low. The time and the money were better spent on the report and the garden since ES
Tooling understood that (four) more certificates would not have any impact on the outside
world. More importantly, six months after publication, the management states that the report
has helped to open doors that beforehand remained closed.
It is fair to say that in the case of ES Tooling, sustainable entrepreneurship has yielded a high
return making it both an effective and efficient tool. This results from:

- the public exposure and positive image of the company;

- new business opportunities; and

- the low opportunity costs in spite of substantial financial and time costs.

The lesson to be learnt is straightforward: SMEs can afford to become sustainable


entrepreneurs. When they choose to do so, they should be willing to devote time and effort to
the project and select a sustainability instrument that fits their needs. Furthermore, they
should look at the return and the opportunity costs of such a strategy rather than the financial
costs. 15
8. Conclusion
Sustainable entrepreneurship is a spin-off concept from sustainable development that covers
many new evolutions in business like corporate social responsibility, ethical
entrepreneurship, ecological care, stakeholder participation and so on. It can be defined as 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 entrepreneurship is an approach that is applied mostly by large, often industrial
companies. In this article, the question was raised whether SMEs could afford it to do
business in a sustainable manner. The gains are clear: business relationships with large
companies that require sustainable partners, a positive reputation that attracts and motivates
employees and risk control.
This evolution led to the creation of a whole battery of certificates to promote sustainable
entrepreneurship. However, the proliferation of complex and costly procedures to obtain
them has caused the almost complete repudiation of sustainable entrepreneurship by the SME
community. Given the opportunities, this is short-sighted strategy.
The case study presented in this article pointed out what the preconditions are for the
implementation of sustainable business practices by SMEs. First of all, it is important to learn
that smaller financial resources of SMEs do not need to be a determining prohibitive
constraint. However, when SMEs choose to become sustainable entrepreneurs, they should
be willing to devote time and effort to the project and they should select a simple, pragmatic
and effective format that is tailored to their needs and compatible with their style. The case
study offers some great examples. Furthermore, SMEs should look at the return and the
opportunity costs of a sustainability strategy rather than the financial costs.
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EntSustainable entrepreneurship and innovation
Anne Gerlach
Centre for Sustainability Management (CSM), University of Lueneburg
This paper aims to systematise existing conceptual approaches of sustainable entrepreneurship
and
to outline the role sustainable entrepreneurs can play for the implementation of innovations in the
context
of sustainable development. Based on a review of existing literature on ecopreneurship, social
entrepreneurship and sustainable entrepreneurship the first section gives an overview of existing
conceptual
approaches of entrepreneurship in the context of sustainable development. Having a closer
look on this context, the second section outlines the discussion about sustainable development
and
analyses the role of innovation for sustainable development by reviewing the relevant literature.
Founded on this analysis the process of implementing sustainable development is defined as a
multi
innovation process. From this perspective the implementation of sustainable development is a
problem
of successful innovation management. Therefore, in the third section the promoter model – a
model of innovation management – is suggested to identify the role of sustainable entrepreneurs
for
sustainable development. Promoters are – similarly to entrepreneurs – persons who actively
foster
innovation. In a fourth step the role of sustainable entrepreneurs for implementing sustainable
development
is compared to the role of promoters for successful innovation processes. The profiles of
technological promoters, power promoters, process promoters and relationship promoters are
applied
to the concept of sustainable entrepreneurship. Finally, it is concluded that a concept of
sustainable
entrepreneurship should consider factors that provide an innovative environment and thus foster
the
appearance of promoters and facilitate entrepreneurial behaviour.
Existing conceptual approaches of ecopreneurship, social entrepreneurship and sustainable
entrepreneurship
In the reviewed literature the terms ecopreneurship and environmental entrepreneurship are used
synonymously meaning innovative behaviour of single actors or organisations operating in the
private
business sector which see environmental aspects as a core objective and competitive advantage.
Ecopreneurs identify environmental innovations and their market opportunity and successfully
implement
these innovations resulting in new products or services (Lober 1998, 26; Pastakia 1998, 157;
Petersen & Schaltegger 2002a, 13). Most authors do not restrict their definition of ecopreneurship
to
single actors such as founders of environmentally oriented organisations or environmental
intrapreneurs
who are operating within an existing organisation. Instead, most definitions also consider
ecopreneurial
organisations, i.e. organisations that behave ecopreneurial and foster ecopreneurs and
environmental intrapreneurs. In addition most authors agree that ecopreneurship is about the
implementation
of innovations. In the following, existing conceptual approaches of ecopreneurship shall be
discussed according to their main perspective and according to the way they treat innovation.1
One category of authors views ecopreneurship as a matter of strategy (Schaltegger & Petersen
2000;
Petersen & Schaltegger 2002a; Petersen & Schaltegger 2002b; Volery 2002; Azzone & Noci
1998;
Isaak & Keck 1997; Isaak 1999, Lober 1998, Pastakia 1998, Farrow et al. 2000, Larson 2000,
Welsh
1998). The contributions in this category have in common, that they assume that ecopreneurial
activities
provide a competitive advantage. Most contributions in this category highlight that a main
characteristic
of ecopreneurship is that ecopreneurs view environmental issues as one of their main business
objectives (Azzone & Noci 1998, 99; Isaak 1999, 89; Schaltegger & Petersen 2000).
Schaltegger & Petersen (2000, 12) define ecopreneurship as actors who recognise, create and
make
use of market opportunities arising from ecological innovations. In some degree all approaches of
this
category discuss factors that foster or hinder ecopreneurship (Isaak 1999, pp. 107; Petersen &
Schaltegger 2002a, 15; Azzone & Noci 1998, pp. 108 Lober 1998, pp. 27).
A second group of authors takes a cognitive approach asking how the identification of
environmental
opportunities can be encouraged in order to support environmental intrapreneurship (Krueger
1998;
Hostager et al. 1998) or which role environmental commitment and attitudes play in
ecopreneurship
1 Asthis paper focuses on case studies and conceptional approaches which contribute to the scientific
discussion, it does not consider practical how-to-do-guides on ecopreneurship or (later on) social
entrepreneurship such as Bennet (1991) or Brinckerhoff (2000). Bennet 1991
(Keogh & Polonsky 1998). Krueger (1998) as well as Hostager et al. (1998) start from an
intentionsbased
model of opportunity perception which they apply to ecopreneurial issues in order to point out
factors that increase the perceptions of desirability and feasibility of innovative activities
concerning
environmental issues (Krueger 1998, 179; Hostager et al. 1998, 14, 17).
A third category is formed by two authors who approach the topic from a socio-historical
perspective
(Anderson 1998, Kyrö 2001). Kyrö (2001) examines the roots of environmental economics and
entrepreneurship
whereas Anderson (1998) starts from analysing the roots and essences of environmentalism
and enterprise. Both approaches of this category state that entrepreneurship can be used as
an instrument for changing society (Anderson 1998, 142; Kyrö 2001, 24). Table 1 gives an
overview
of the conceptual approaches of ecopreneurship.
Perspective Strategic Cognitive Socio-historic
Research
question
Which features characterise an ecopreneurial
strategy / Which ecopreneurial
strategies are in use? / Why
and how should they be fostered?
How can identifying environmental
opportunities be fostered? / Which
role play environmental commitment
or attitudes for ecopreneurship?
Which role plays
ecopreneurship
in society?
Addressing
innovation
Environmental Innovation is viewed as
a competitive advantage2
• Concentrating on the first stage of
innovation: opportunity recognition;
• innovative climate is an important
factor of fostering environmental
innovation.
Ecopreneurship
as instrument for
social change
(social
innovation)
Authors Schaltegger & Petersen 2000;
Petersen & Schaltegger 2002a;
Petersen & Schaltegger 2002b; Volery
2002; Azzone & Noci 1998; Isaak &
Keck 1997; Isaak 1999, Lober 1998,
Pastakia 1998, Farrow et al. 2000,
Larson 2000, Welsh 1998
Krueger 1998; Hostager et al. 1998;
Keogh & Polonsky 1998;
Anderson 1998,
Kyrö 2001
Table 1 Existing conceptual approaches of ecopreneurship
Considering the findings above, one would expect that social entrepreneurship means innovative
behaviour of single actors or organisations operating in the private business sector which see
social
aspects as their core objective. Partially this is true. Social entrepreneurs are defined as
important
source of innovation, as actors who – by combining a social mission with business skills – identify
under-utilised resources and create new welfare services (Leadbeater 1997, 8; Dees 1998b;
Thompson et al. 2000, 328; Bent-Goodley 2002, 291).
However, taking a closer look, there are two obvious distinctions between the concepts of social
entrepreneurship and ecopreneurship. Firstly, used in a very broad sense of “concerning society”
the
term ‘social’ includes environmental issues. Thus, in some approaches social entrepreneurship
encompasses
ecopreneurship as a subcategory (Dees 1998a, 56). Secondly, in contrast to the ecopreneurship
approaches – that mainly address business organisations with environmental objectives
– most of the social entrepreneurship approaches address a different group of actors: non-profit
organisations. According to most authors a main characteristic to identify social entrepreneurs is
that
their core objective is a non-profit objective (Drucker 1989, 89; Leadbeater 1997, 19; Brinckerhoff
2000, pp.1). According to the precedingly discussed conceptual approaches of ecopreneurship,
the
main focus of this paper is social entrepreneurship in the business sector. The following section
therefore discusses the approaches of social entrepreneurship according to this criterion. Table 2
gives an overview.
Numerous authors do, at first sight, integrate business organisations into their concepts of social
entrepreneurship. Yet, most of them mainly address non-profit-organisations (Dees 1998a;
Drucker
1989; Dees 1998b; Fowler 2000; Amalric 1998; Thompson 2002; Thompson et al. 2000;
Leadbeater
1997; Bent-Goodley 2002). For example, Thompson (2002) states that social entrepreneurs can
be
found in profit-seeking businesses, social enterprises and the voluntary sector, yet he restricts
this
2 Many of the contributions of this category refer to Porter & van der Linde (1995) who state that innovations
which enhance resource productivity not only lead to dramatically lower environmental impact but also result
in
lower costs, better product quality and enhanced competitiveness (Porter & van der Linde 1995 S. 120–
121).
idea by emphasising that “the main world of the social entrepreneur is the voluntary sector”
(Thompson 2002, 413).3 Social entrepreneurs from this perspective are driven by their social
mission.
The authors of this category view innovation as a means to fulfil unmet social needs.
A second category is formed by three contributions that concentrate on social entrepreneurship in
the
business sector. Hodgkin (2002) creates a framework of business social entrepreneurship by
integrating
the three concepts of sustainable community development, social responsibility and social
entrepreneurship (Hodgkin 2002, pp. 35) and applies the concept to four case studies in order to
derive
recommendations how to support business social entrepreneurship. Still the concept she
develops
does not give business issues top priority. The business social entrepreneur is not in the first
place profit-driven but value-driven (Hodgkin 2002, 79).4 This does not correspond with the
strategic
perspective of seeing social issues as a competitive advantage which would suggest that
implementing
innovations concerning social issues can be a tool for making profit rather than the other way
round - using profit as a tool to create social change (Hodgkin 2002, 74). Two other contributions
in
this category each present a case study of a profit-oriented organisation seeing social issues as a
core objective (Schäfer 2003;Tenenbaum 1996).
Focus Non-profit organisations Business organisations
Research
question
What are the differences between businesses and
non-profits and what can they learn from each
other? Which are the skills and characteristics of
social entrepreneurs? How can social entrepreneurship
in the voluntary sector be fostered?
How can the business social entrepreneur
profile be described? Which criteria
characterise business social entrepreneurs?
What examples of business social entrepreneurship
exist in practice? How can
business social entrepreneurship be
fostered?
Addressing
innovation
Innovation as means to respond to unmet social
needs.
Innovation as means to make profit in order
to pursue social objectives; profit as tool for
social change
Authors Dees 1998a; Drucker 1989; Dees 1998b; Fowler
2000; Amalric 1998; Thompson 2002; Thompson
et al. 2000; Leadbeater 1997; Bent-Goodley 2002
Schäfer 2003; Tenenbaum 1996, Hodgkin
2002
Table 2 Existing conceptual approaches of social entrepreneurship
Though many authors mention sustainable development (Schaltegger & Petersen 2000, 9;
Pastakia
1998, 157; Welsh 1998, 145; Kyrö 2001, 16; Anderson 1998, 135; Amalric 1998, 35), the
conceptual
approaches reviewed for this paper are not primarily based on the concept of sustainable
development.
5 This paper aims to link sustainable development and entrepreneurship. By drawing on the
concept
of sustainable development, especially highlighting the importance of innovations in this context,
it identifies the role sustainable entrepreneurs can play for sustainable development.
Based on the results of the literature review, sustainable entrepreneurship can be defined in a
broad
sense as innovative behaviour of actors in the context of sustainability, including actors from
governmental
and non-governmental, profit and non-profit organisations. In a more narrow sense, sustainable
entrepreneurship is defined as innovative behaviour of single actors or organisations operating in
the private business sector who are seeing environmental or social issues as a core objective and
competitive advantage. This paper adopts the narrow definition and thus takes a business
perspective.
Sustainable entrepreneurs identify market opportunities for innovations concerning sustainability,
successfully implement these innovations and create new products or services. From the view of
this
paper the concept of sustainable entrepreneurship encompasses founders and owners as well as
intrapreneurs and entrepreneurial organisations in the business sector.
3 Leadbeater (1997) also expresses that there are three main sources of social entrepreneurship: the public
sector, the private sector and the voluntary sector (Leadbeater 1997, 17). But: “Social entrepreneurs are
most
ususally found in what is called the voluntary sector.” (Leadbeater 1997, 20).
4 Moreover, the conception is restricted to local businesses (Hodgkin 2002, 74).
5 For an exception see Volery 2002 or Hodgkin 2002. Though both of these contributions concentrate on
either
environmental responsibility or social responsibility.
The role of innovation for sustainable development
To create a framework for analysing the role of sustainable entrepreneurs for implementing
sustainable
development, an analysis of the discussion of sustainable development from the perspective of
innovation is required. This section first gives a brief overview of different types of innovations,
then
presents crucial issues of the discussion on sustainable development and at last analyses the
role of
innovations for implementation strategies of sustainable development. In literature, definitions of
innovation
range from narrow perspectives that restrict the meaning of innovation to the (initial) commercial
exploitation (Hauschildt 1997, 6), to broad views encompassing not only the first adoption but
also
the invention and the diffusion of new ideas, practices or products (Brockhoff 1994, pp. 28).6 In
this
paper innovation is defined as adoption and diffusion of a new idea, practice or product aiming at
market success. In particular, the focus lies on innovations that enhance sustainability. A
successful
sustainable innovation is accomplished when entrepreneurial actors achieve competitive
advantages,
i.e. economic success by applying innovative environmental and/or social practices.
Innovations are mostly classified according to their degree of novelty (radicalness) or according to
the
object of innovation. Concerning the former, Mensch (1977) distinguishes fundamental
innovations
and improvement (incremental) innovations (Mensch 1977, pp. 56). Fundamental innovations
result in
radical course changes that widely differ from existing alternatives concerning technological or
sociocultural
areas whereas improvement innovations lead to incremental changes based on further
development
of preceding fundamental innovations.7 Employing the object of innovation as criterion to classify
innovations, most authors distinguish product innovations (including new products and services),
process innovations and social innovations (Thom 1992, 8). The latter refer to social changes
within
the organisation (Thom 1992) or within the society (Zapf 1989). Figure 1 shows the integration of
the
two distinctive features – degree of novelty and object of innovation and illustrates them with
examples
from the area of mobility and of passenger cars in particular.
Figure 1 Categories and examples of innovations concerning mobility by passenger cars
To point out the role of innovation in sustainable development, the discussion of sustainable
development
is outlined and the innovation categories described above will be applied to this context.
As starting point of the discussion on sustainable development authors unanimously mention the
WCED-report „Our Common Future“ (1987)8 and the conference of the United Nations
Conference on
Environment and Development (UNCED) in Rio de Janeiro in 1992. Since then many actors have
developed
various concrete approaches to the concept of sustainable development (McNeill 2000, 10;
6 For an overview of definitions see Hauschildt 1997, pp. 3
7 The criterion this distinction is based on is the extent to which an innovation differs from existing
alternatives
(Knight 1967, 482; Zaltman et al. 1984, 23). Other classifications according to innovation radicalness draw
on the
extent to which the innovation implies changes in behaviour, e.g. concerning established consumption
patterns
(Robertson 1971, 7; Zaltman et al. 1984, 24).
8 The report of the World Commission on Environment and Development (WCED) – apart from Agenda 21
(Bundesministerium für Umwelt Naturschutz und Reaktorsicherheit (BMU) 1992) – is considered to be one
of the
basic documents of the sustainable development process.
Degree of
novelty
Fundamental
innovation
Incremental
innovation
Object of
innovation
Social
innovation
Process
innovation
Product
innovation
Fuel cell
technology
Car sharing Fuel-efficient
passenger
cars
Catalytic
converter
(Voluntary)
speed limit Optimising processes
e.g. paintwork
processes
Dryzek 1997, 124). Most approaches start with the definition of the WCED-report: „Sustainable
development is development that meets the needs of the present without compromising the
ability of
future generations to meet their own needs.” (World Commission on Environment and
Development
(WCED) 1987, 8). The definition is intentionally kept wide and allows various interpretations.
Though
hundreds of variations exist, the WCED definition still is generally valid (Hardtke & Prehn 2001,
58).
Considering the various groups of actors involved in the process of conceptionalising and
implementing sustainable development, the process has been referred to as multi-stakeholder
process (UNED Forum on 03.04.2003).
Some authors describe sustainable development as a diversely structured area of discourse
(Brand &
Jochum 2000; Dryzek 1997, 123- 125, Springett 2003). The idea of weighing, negotiating and
reconciling
interests and different perspectives suggests that areas of consensus as well as lines of conflict
occur (Brand & Jochum 2000, 175) depending on overlapping or contradicting interests. Dryzek
(1997) summarises the areas of consensus9: “Economic growth should […] be promoted but
guided in
ways that are both environmental benign and socially just. Justice here refers not only to
distribution
within the present generation, but also to distribution across future generations” (Dryzek 1997,
129).
This comprises three widely accepted aspects (Brand & Jochum 2000, 175):
The aspect of integration highlights that the ecological, social and economic dimension of
sustainable
development are complexly linked (Boersema & Bertels 2000, 85, 92, McNeill 2000, 17) which
demands
to consider the interdependencies between the three dimensions. This perspective is based
on the assumption that the current global problems cannot be solved separately but have to be
treated as interconnected elements of a whole complex of problems (Siebenhüner 2001, 61;
Dryzek
1997, 7-8). The aspect of intergenerational equity of the concept of sustainable development
emphasises
the responsibility for future generations. This demands long-term protection of natural resources
(Brand 2002, 19). The aspect of intragenerational equity focuses on questions of distribution
(both
within a country and between countries) and the responsibility of maintaining access to natural
resources,
nutrition, health and education.
As sustainable development is a normative concept its implementation calls for changes
compared to
the status quo. Therefore, implementing strategies seem to be a crucial point for the analysis of
sustainable development and innovation. Huber (1995) describes three main strategies to
achieve
sustainability: sufficiency, efficiency, consistency.10 These three strategies will be analysed
regarding
the role of innovation for implementing sustainable development.
The central idea of the sufficiency strategy is that natural resources are limited which implies a
restriction
of economic growth (Sachs 1999, 39). According to the question “how much is enough”
proponents
of sufficiency demand a rethinking of current consumption and production patterns. They call for
changes of current life styles based on principles of precaution, modesty and frugality in which
they
see a key to well-being (Sachs 1999, pp.209, Huber 1995, 123). Thus sufficiency clearly focuses
on
social innovations to implement sustainable development (Huber 1995, 125). The radicalness of
these
innovations is probably restricted by lacking social acceptance.
The efficiency strategy is based on the concept of resource productivity (Sachs 1999, pp. 175).
The
economic principle is applied to an ecological and social context (Huber 1995, S. 131).11
Proponents
of the efficiency strategy have developed factor X approaches (von Weizsäcker et al. 1996) that
are
supporting dematerialisation of production processes. Concerning innovation, these approaches
focus
on improving current products and processes rather than searching for substitutes. Critics state
that
proponents of efficiency “[…] concentrate on the revision of means, rather than on the revision of
goals” (Sachs 1999, 41). The impact of efficiency concerning the implementation of sustainable
development
is criticised to be constrained in that achievements of less resource use on the micro level
may be diminished by an increased resource consumption on the macro level caused by effects
of
rebound, volume and growth (Huber 1995, 134; Sachs 1999, 183).
9 Dryzek calls this the core story line of sustainable development (Dryzek 1997, 129).
10 It
has to be noted that all of these strategies strongly focus on the ecological dimension of sustainability.
Their
core issues are the use of natural resource and material flows.
11 The term “eco-efficiency” defines the ratio between the environmental damage caused per value added
(Schaltegger & Sturm 1994, 32; Schaltegger & Sturm 1990).
The consistency strategy – in contrast to the other two strategies – does not focus on measures
of
quantitative growth but concentrates on the quality of materials and consumption patterns. In the
figurative sense, consistency means compatibility or correspondence. Applied to the context of
sustainable development, consistency refers to material flows that are compatible with the cycles
of
natural resources (Huber 1995, 138). Whereas the efficiency strategy aims at reducing the
quantity of
materials, the consistency strategy aims at changing the quality of material flows. (Huber 1995,
139).
In consequence, the aim of innovating is to substitute compatible material flows for ecologically
harmful
material flows. This demands fundamental innovations (Huber 1995, 156).
The three strategies should not be thought of separately. Instead it is probable that successful
implementation
strategies in practice combine all three of them (Sachs 1999, 41, 185; Huber 1995, 157).
Figure 2 summarises the considerations on innovation and implementation strategies.
Figure 2 The role of innovation for implementation strategies of sustainable development
The findings of the analysis of implementation strategies for sustainable development and
innovations
suggest that sustainable development can – in addition to the term multi-stakeholder process –
be referred
to as a multi-innovation process (Hauschildt 1997, 30). This implies that many innovation
processes
take parallel courses, overlap and influence each other.
Actors in innovation processes – the promoter model
As a success factor for an implementation of sustainable development by means of innovation
Huber
(1995, 156) suggests the occurrence of promoters referring to the promoter model by Eberhard
Witte
(1973).12 The basic idea of this model is that innovations are impeded by barriers that occur
during
the innovation process and that two or more promoters collaborate closely to overcome these
barriers
(Witte 1973). The promoter model assumes that the invention already exists and concentrates on
the
adoption phase of innovation.
Witte distinguishes two types of barriers: barriers of willingness and barriers of capacity. Barriers
of
willingness are caused by executives who are lacking commitment to the innovation process and
instead
strive to maintain the status quo (Witte 1973, 6). Barriers of willingness can be overcome by
incentives, promising benefits to those who give up their opposition and announcing negative
sanctions
for those who stick to their resistance (Witte 1973, 8). Barriers of capacity depend on the novelty
and the complexity of innovations. They can be overcome by expertise enabling the actor to solve
complex new problems or tasks (Witte 1973, 8-9).
The innovation barriers are personified by human individuals who lack either the willingness or
the
capacity to innovate (Witte 1973, 15). The energy to overcome these barriers is also linked to
human
12 Huber states that the promoter model appropriately describes incremental innovation processes whereas
it
does not adequately depict fundamental innovation processes (Huber 1995, 156). But as the perspective of
sustainable development as a multi-innovation process highlights the many single innovation processes
influencing each other it may be possible to apply the promoter model also to fundamental innovation
processes.
Sufficiency Efficiency Consistency
Fundamental /
radical innovation
(technological focus)
product-/service
innovations
product-/service,
social and
production process
innovations
Social /
life style
innovations
Acceptance assumed
high / resistance
assumed low
Fundamental /
radical innovation
(social focus)
Improvement /
incremental
innovation
Acceptance assumed
low / resistence
assumed high
actors. Promoters are actors who actively and intensively foster the innovation process (Witte
1973,
15-16). Corresponding to the types of barriers Witte distinguishes two types of promoters: power
promoters
and expert promoters. Power promoters foster innovation processes by means of hierarchical
power and by their specific behaviour which includes convincing, encouraging and motivating
other
individuals who are involved in the innovation process (Witte 1973, 17-18). They contribute
material
and non-material support and tolerate mistakes. Technology promoters foster the innovation
process
by their specialist knowledge (Witte 1973, 18). Their main task is to provide arguments in favour
of the
innovation and thus passing his knowledge on to supporters and opponents of the innovation
process
(Witte 1973, 19). The technology promoter is not necessarily the inventor.
The original promoter model has been extended twice. Hauschild and Chakrabarti (1988) have
added
the process promoter who establishes the connection between the power promoter and the
expert
promoter (Hauschildt & Chakrabarti 1988, 384). The main tasks of process promoters are
communication,
motivation and coordination. The activities of power promoters, expert promoters and process
promoters are restricted to an intra-organisational level. With adding the relationship promoter
Gemünden & Walter have extended this perspective to an inter-organisational view (Gemünden &
Walter 1995, 972; Gemünden & Walter 1999, 114). They define the relationship promoter as an
actor
who fosters inter-organisational exchange processes by means of his social network in order to
provide
access to critical resources (Gemünden & Walter 1995, 976). Relationship promoters help to
overcome barriers of inter-organisational cooperation. Their tasks correspond to those the
process
promoters fulfil on an intra-organisational level.
The differentiation between the promoter roles is rather analytical. In practice it is probable that
different roles, and the roles of the process promoter and the relationship promoter in particular,
can
be adopted by the same individual.
Sustainable entrepreneurs – promoters of innovation processes for sustainable development
Promoters are actors who cooperate to put innovation plans into action. Sustainable
entrepreneurs
have been defined as innovative actors who foster the implementation of sustainable
development.
Thus the role of sustainable entrepreneurs for implementing sustainable development seems to
be
comparable to the role of promoters for the innovation process. Applying the promoter model to
the
context of sustainable development, two aspects have to be considered. First, the promoter
model
has been designed to explain the implementation of technological innovations in the first place.
Therefore it seems rather straight forward to apply the model to technological innovations in the
sustainability context. Problems may arise when the model is applied to social innovations.
Second,
the promoter model has been developed to explain single innovation processes within
organisations.
Viewing sustainable development as a multi-innovation process requires far reaching cooperation
not
only within organisations but also between various types of organisations.
Applying the promoter model to sustainable entrepreneurship two perspectives can be
distinguished.
First, the promoter model can be applied to sustainable intrapreneurship considering individuals
as
entrepreneurial actors. Second, looking at organisations as entrepreneurial actors, the model can
be
applied to sustainopreneurial organisations. From the intrapreneurship perspective, cooperation
between
technological promoters, power promoters and process promoters is viewed as success factor
for innovation processes within an organisation. Taking an organisation concerned with putting up
or
repowering wind turbines as an example, entrepreneurial actors with technological expert
knowledge
and the power to implement innovations and enhance the acceptance are required. The
cooperation
between power promoter and technology promoter can possibly be encouraged or improved by
another
actor with special communication skills (process promoter). In a similar sense as the process
promoter, based on communication skills, the relationship promoter seems to play a crucial role
as he
or she builds bridges to other sustainopreneurial organisations and thus fosters innovation
processes
for sustainable development on an inter-firm level. It seems probable, that relationship promoters
occur
in marketing or public relations departments of sustainopreneurial organisations.
Adapting the promoter model to sustainopreneurial organisations, again two viewpoints can be
distinguished
- according to the narrow and the broad definition of sustainable entrepreneurship. From the
narrow perspective the promoter roles are adopted by various business organisations, whereas
the
broader view also considers cooperations between different types of organisations, including
governmental
and non-profit organisations. From this inter-organisational perspective, the roles and tasks of
the promoters have to be reconsidered. It can be assumed that organisations operating in certain
sectors are likely to adopt certain promoter roles. For example, governmental organisations may
be
compared to power promoters as they have the power to set a certain frame of regulations.
Business
organisations are likely to adopt the role of a technological promoter. In the voluntary sector
success
depends to a high degree on networking and on communication which suggests that
sustainopreneurial
non-profit organisations are comparable to process promoters.13
It is assumed that within each of the sustainopreneurial organisations all four promoter roles may
occur. The relationship promoters take up a special role as they connect the intra-organisational
and
the inter-organisational perspective. Acting on an intrapreneurial level relationship promoters
foster
inter-organisational innovation processes.
Implications and questions for further research
In this paper the promoter model has been applied to the context of sustainable development in
order
to highlight different roles that sustainable entrepreneurs, and sustainable intrapreneurs in
particular,
can adopt for the implementation process of sustainable development which has been defined as
multi-innovation process.
As the promoter model concentrates on describing the roles and tasks of the promoters and their
contributions
to overcome innovation barriers it neglects two important factors for innovation processes.
First the individual motivation that drives an actor to support an innovation and second the
circumstances
under which promoters with different roles meet and cooperate (Witte 1973, 21; Hauschildt
2001, 335). This implies the question of how innovative behaviour occurs in the context of
sustainable
development and how it can be fostered. Innovativeness is mostly discussed in the context of
organisational
culture (Kieser 1986; Hauser 1998; Hauschildt 1999, 280; Gemünden & Walter 1995, 982).
Existing research in this area does not focus on sustainable development issues. Further
investigations
could reveal helpful advice concerning factors which foster or hinder sustainable development.
Therefore a concept of sustainable intrapreneurship should consider not only structural and
strategic
but also cultural issues of innovation.
Concerning further elaboration of the idea of applying the promoter model to the sustainable
entrepreneurship
concept the following questions arise: Which are the most important barriers of the
multiinnovation
process of implementing sustainable development and which combinations of promoters
can overcome these barriers?
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Green1. Develop a regional plan for local
governments and planning or development
districts to invest in building an environment
supportive of entrepreneurs.
2. Provide regional training for local government
offi cials on the importance of entrepreneurship
and the signifi cant steps they can take to create a more
entrepreneurial community.
3. Create a regional Access to Capital Network
that would work with local and regional banks, loan
funds, angels and venture funds to increase the fl ow of
capital to entrepreneurs.
4. Set up high visibility state and regional awards
for outstanding entrepreneurs.
5. Provide incentive funds to set up programs and
projects to support entrepreneurs in communities.
“Networks
are a central
component of an
entrepreneurial climate — a
cultural, social and economic milieu that
encourages and nurtures the creation of new
business ventures.” Edward Lowe Foundation
EXAMPLES OF LOCAL SOLUTIONS
West Virginia, Georgia, North Carolina and Minnesota each sponsor an annual
entrepreneurship summit. Other states have
supported capacity building in communities so that local development organizations
can better network their entrepreneurs to
the most appropriate and best sources. Maine has altered its workforce programs to
allow self-employment as an option for
retraining. CDBG funds have been used for Sirolli local entrepreneurship programs.
Nebraska has used social service funds
for micro-lending. In Nebraska, Enhancing, Developing, Growing Entrepreneurs
(EDGE), in operation since 1993, is a
community based program of support for entrepreneurs that has served 14,000
entrepreneurs. Community capacity is
developed while providing business skills for potential entrepreneurs. Communities
have also increased volunteer hours
in the community as a result of the new networks that are developed through EDGE.
Keys to success are local leaders
who are committed to the success of the program and a strong local coalition
enhancing the eff orts of the program.
POLICY RECOMMENDATIONS
POLICY INFORMED BY RESEARCH 38er Management International (GMI) 38, Sheffield: Greenleaf
Asset-based entrepreneurship is a signifi -
cant income generator.
Tourism is a $545 billion industry sector that employs
7.8 million people nationwide. In Appalachia, tourist
spending contributed more than $29 billion to the
region’s economy in 2001. Ecotourism is the fastest
growing aspect of tourism, with 10-30% rate of
annual growth. Heritage tourism visitors generate
more income per visit than the average
tourist: Historical/cultural travelers spent an
average of $623 per visit, while the average
tourist spends $457 per trip. Outdoor
recreation is a $1.6 billion industry
in Pennsylvania. Watchable wildlife
activities such as birdwatching are
the fastest growing segment of
outdoor recreation, an $85 billion
industry.
American handmade crafts
income totals $14 billion. A
Marshall University study
on the Craft Industry in
West Virginia reports that
2,539 craftspeople in the
state generated a direct
economic impact of $54
million, with a total
economic impact of over
$81 million in 2002. A
University of Kentucky
WHY ARE NATURAL CAPITAL AND PLACE-BASED ENTREPRENEURSHIP
IMPORTANT?
Place-based and natural capital entrepreneurship
make this a great place to live
and work.
Natural capital and place-based entrepreneurship
create an extremely attractive environment that
enhances pride of local residents and attracts innovative
and growth oriented businesses. Restaurants,
regional foods, festivals, artisans—all enhance the
quality and authenticity of our lives.
Despite these successful eff orts and the richness of
the region, in general Central Appalachia is missing
opportunities for celebrating its natural assets. Unfortunately,
natural assets have often been undervalued
yet over-utilized, resulting in heavy pressures on the
land and limited economic impact. A place-based
asset building strategy can simultaneously protect or
restore these resources, while increasing economic
value. Supporting natural capital and place-based
entrepreneurs will ensure that tourism and recreation
contribute as much to our economies as it does to
those in other parts of the country.
study estimates total annual sales of Kentucky craft
producers in 2000 at $252.4 million with out-of-state
sales of $148.7 million.  e median household income
for fulltime craft families is $50,000, well over the
average median family income in the U.S.
 e market for certifi ed sustainable wood products
emerging in the Central Appalachian region has longterm
potential for entrepreneurs. Most lumber and
home improvement companies now have policies that
give preference to certifi ed sustainable forest products.
With the development of the LEED Green Building
Rating System® and a new national loan program
to help buyers of homes that employ green building
principles, markets for sustainable forest products will
increase dramatically in the coming years.  e demand
for organic produce and processed foods, as well as for
natural meats, continues to expand by 20% each year
compared to 3% for the rest of the grocery market.
Our region’s assets are our
competitive advantage.
No other region has the unique beauty and heritage
of the Appalachians. As a recent Appalachian
Regional Commission (ARC) pamphlet announced:
“ e region’s natural, cultural and structural assets
are its unique calling cards.” One researcher noted
that in most regions such assets are just “waiting to
be unlocked.”

POLICY INFORMED BY RESEARCH 32