Download Sustainability Entrepreneurs: Could They Be the True Wealth

gmi55tilley.qxd
22/1/09
12:10
Page 79
Sustainability Entrepreneurs
Could They Be the True Wealth Generators of the Future?*
Fiona Tilley and William Young
University of Leeds, UK
This paper presents a model of sustainability entrepreneurship that suggests sustainability entrepreneurs could potentially be the true wealth generators of the future.
Entrepreneurship has been linked to wealth creation and economic growth and consequently been promoted and encouraged in modern society. In more recent times,
with the increased awareness of environmental and social problems the theory of
ecological modernisation has been presented as an explanation for how entrepreneurship can reconcile the twin goals of sustainable development and wealth accumulation. However, the limitations of ecological modernisation theory suggest this
may not be the panacea some first thought, thus opening up the debate for an alternative model of entrepreneurship based on the principles of sustainability. This in
turn is linked to a broader more radical definition of wealth that goes beyond a narrow financial scope to a more integrated approach that incorporates environmental
and social forms of wealth alongside the traditional economic forms.
Fiona Tilley is a lecturer in Environment and Business at the Sustainability
Research Institute, School of Earth and Environment, University of Leeds, UK.
Her research focus is the conceptual development and exploration of
sustainability entrepreneurship.
William Young is a senior lecturer in Environment and Business at the
Sustainability Research Institute, School of Earth and Environment,
University of Leeds, UK. His research focus is the role business and
consumers play in changing their behaviour to sustainability practices.
l Entrepreneurship
l Sustainable
development
l Wealth
l Ecological
modernisation
l Sustainability
entrepreneurship
u
Sustainability Research Institute,
School of Earth and Environment,
University of Leeds, Leeds LS2 9JT,
UK
!
[email protected]
u
Sustainability Research Institute,
School of Earth and Environment,
University of Leeds, Leeds LS2 9JT,
UK
!
[email protected]
* We would like to thank Bradley Parrish for his helpful comments during the writing of this paper.
GMI 55
© 2009 Greenleaf Publishing Ltd
http://www.greenleaf-publishing.com
79
gmi55tilley.qxd
22/1/09
12:10
Page 80
fiona tilley and william young
T
his paper will expand the ideas presented in the sustainable
entrepreneurship model (Young and Tilley 2006) by exploring the proposition
that sustainable entrepreneurs could potentially be the true wealth generators of
the future. Since the publication of the model the authors now prefer to use the
term ‘sustainability-driven entrepreneurship’ (for the remainder of the paper it
will be referred to as ‘sustainability entrepreneurship’) to reflect the motives of
the entrepreneurs and to more strongly associate the meaning of the concept with the
process of sustainable development as opposed to the process of sustaining anything.
Beginning with an exploration of what is meant in modern society by the term ‘wealth’,
we go on to describe how ecological modernisation theory is used to argue how conventional entrepreneurship can reconcile the twin goals of sustainable development and
wealth accumulation. The limitations of ecological modernisation theory are critiqued
allowing for the introduction of an alternative model of entrepreneurship based on the
principles of sustainability in which a broader more radical definition of wealth is proposed in the final part of the paper.
Entrepreneurship and wealth generation
Despite the modern enthusiasm for entrepreneurship, there is no universally accepted
definition. The many guises an entrepreneur can take may be one explanation for this
anomaly. The contribution entrepreneurs make to society has long been framed in neoclassical economic terms (Hebert and Link 1989). Definitions have focused on the
wealth creation and economic growth properties of entrepreneurship (Spencer et al.
2008; Wennekers and Thurik 1999). Examples of entrepreneurs can be found in literature going back hundreds, if not thousands, of years. The word ‘entrepreneur’ is attributed to Richard Cantillon, in the 18th century, who wrote about individuals who buy
materials and means of production at prices enabling them to combine them into a new
product (Hisrich and Peters 1998). Three taxonomies of entrepreneurship have been
identified by Herbert and Link (1989); each of them can be traced back to Cantillion’s
definition. In brief, these can be referred to as the German Tradition associated with
Schumpeter (1954); the Chicago Tradition associated with the work of Knight (1921);
and the Austrian Tradition associated with the work of Kirzner (1985). This taxonomy
serves to identify significant commonalities: for example, all of the traditions place the
entrepreneur in the context of economic dynamics and within the equilibrium paradigm; and each characterises the entrepreneur in functional terms rather than focusing on personality characteristics often used in the popular media. Thus the link between
entrepreneurship and economics has been made from the beginning.
Joseph Schumpeter (1954), regarded as the founder of modern entrepreneurial theory, portrayed entrepreneurs as innovators. He coined the phrase ‘creative destruction’
to describe the process by which entrepreneurs discover new opportunities and stimulate change in society. Entrepreneurship in this context is seen in revolutionary terms
as the ability to bring about something new, whether this is a production method, technological development, product/service, distribution system or even a new organisational form. The second dominant view of entrepreneurship, based on the work of
Knight (1921), viewed the entrepreneur as the person able to recognise opportunities by
managing risk and uncertainty in order to create wealth. Finally, Kirzner (1985), who
owes a debt to Knight’s work by emphasising opportunity recognition, has developed a
new theory of entrepreneurship taking it to mean having an alertness to profit opportunities (Spencer et al. 2008). In an attempt to synthesise all three traditions, Hebert
and Link (1989: 47) define an entrepreneur as ‘someone who specialises in taking
80
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 81
sustainability entrepreneurs: could they be the true wealth generators of the future?
responsibility for and making judgement decisions that affect the location, form, and
the use of goods, resources and institutions’.
Research by Birch (1979) appeared to legitimise the important contribution small
enterprises made to Western economies—the implication being small enterprising
firms are a key driving force for economic growth and development. The political
rhetoric of enterprise and entrepreneurialism which began in the 1970s is still witnessed
today in many developed countries (Lundström and Stevenson 2002). Entrepreneurs
are considered to be important in the move to a ‘global village’ and the development of
entrepreneurial skills is being encouraged in all sectors of the economy in order to take
advantage of the creativity, innovation and job-generating attributes entrepreneurs offer
society (Davies 2002). Not only can entrepreneurial activity create more jobs, but, Harding (2003) claims, there is a perception that it can contribute to higher economic growth,
regeneration and productivity.
Greene et al. investigating the effects of Enterprise Policy in the Tees Valley (UK)
noted—even though previous research by Carree et al. (2002) argued there is a longrun equilibrium relationship between economic development and the proportion of the
population that own a business—that:
there is a growth penalty in having too many, as well as too few firms, we are unaware
of any country having explicit policies to reduce the number of firms in their economy.
Instead, policies seem focused on increasing rates of new firm formation and adding to
the stock of businesses. UK Enterprise Policy is not unique in its desire to increase business start-up rates and innovation (Greene et al. 2004: 1,207).
The Global Entrepreneurship Monitor report for 2006 stated that, while a systematic
relationship exists between economic development and entrepreneurial activity, significant differences in level and type of entrepreneurial activity exist across countries with
different per capita GDP levels. The report went on to claim:
regardless of the level of development, and firm size, entrepreneurial behaviour remains
a crucial engine of innovation and growth for the economy and for individual companies since, by definition, it implies attention and willingness to take advantage of unexploited opportunities (Bosma and Harding 2007: 10).
What this all means is that entrepreneurship theory is embedded in the language of
economics, linking the entrepreneur with wealth creation, economic development,
innovation and jobs. In turn, this is translated into Enterprise Policy promoting and supporting the start-up of new ventures and of technological innovation—all of which positions our understanding of entrepreneurs and entrepreneurship in a continuation of
modernity. In this context, modernity is taken to mean the progression of industrialisation begun in the late 17th century through to the present day. When it comes to understanding the role and contribution entrepreneurs can play in a sustainable society, this
has been placed in the context of ecological modernisation theory. The next section of
this paper will explore the link between entrepreneurship and ecological modernisation.
Ecological modernisation theory and entrepreneurship
The 1980s saw the introduction and development of the concept of sustainable development. The scientific research community provided an improved knowledge base of
global environmental problems for policy-makers, business and NGOs. It was realised
that the way in which these ecological problems were framed had social as well as physical implications. Integrating economic development and environmental protection
through sustainable development became institutionally acceptable because it pre-
GMI 55
81
gmi55tilley.qxd
22/1/09
12:10
Page 82
fiona tilley and william young
sented society with a preferred ‘win–win’ scenario. By the end of the 1980s Weale (1992)
observed the conflict between economics and the environment was being reconceptualised, challenging the conventional belief that the two were mutually exclusive. The
politicians, leading industrialists and other significant officials realised that it was possible to promote economic growth by giving a higher priority to the environment. It was
no longer a case of trading off economic growth for environmental quality. This reconceptualisation of the ecological dilemma has been termed ‘ecological modernisation’
(Mol 1995; Hajer 1995).
Hajer (1995: 25) defines ecological modernisation as ‘the discourse that recognises
the structural character of the environmental problematique but none the less assumes
that existing political, economic and social institutions can internalise the care for the
environment’. Ecological modernisation theorists suggest the environmental problems
facing the world today act as a focus and driving force for future industrial activity and
economic development. A central tenant is ‘that there is no necessary conflict between
environmental protection and economic growth and that they may in fact be mutually
supportive’ (Murphy 2000: 3). Environmental challenges ought to be strongly influencing the political and corporate agendas of the future. Industrialists and scientists are
charged with the responsibility for developing alternative environmental solutions. The
implementation of new innovative technologies and techniques will, claim the ecological modernisers, lead to future economic growth and the continued progression of the
era of modernity.
Of the environmental social scientists who have advanced the theory of ecological
modernisation, Mol (1995) places Joseph Huber as the father of its theoretical beginnings. It is the work of Huber above all others that places the emphasis on economic
actors and entrepreneurs as the central agents of change in the process of transformation needed to solve environmental challenges. He presented ecological modernisation
as the inevitable next stage in the development of industrial society: beginning with the
industrial breakthrough (1789–1848), followed by the construction of industrial society
(1848–1980) and leading on to superindustrialisation (1980–present day). It is the transformation of production by what Schumpeter terms ‘creative destruction’—that is,
through the development and application of innovative new technological solutions—
that environmental challenges will be overcome (Murphy 2000). Herein lies the connection between ecological modernisation and entrepreneurship theory. This paper will
take this position forward and look at an alternative model for this.
Huber believed that there was a more limited role for government and the environmental movement in the transformation to a more environmentally sustainable society.
Other commentators are less certain of this claim. Jänicke (2008: 563) agrees that ‘marketable technological solutions for environmental problems offer a broad spectrum of
“win–win” solutions’. He also recognises the danger this presents: how do entrepreneurs get beyond the low-hanging fruit of marketable ‘win–win’ solutions to address
the more long-term protracted environmental challenges we face? There is not a known
technological solution to all our ecological predicaments. In response, Jänicke believes
that governance for sustainable development cannot succeed by relying on entrepreneurial innovation and technological solutions alone. The fears formed by the innovation that results from the entrepreneurial process of ‘creative destruction’ can bring out
the worst among the ‘modernisation losers’ (industries that are intrinsically unsustainable). This conflict with vested interests can affect non-innovative people and organisations leading to resistant, evasive and disruptive behaviours. In response to this
dilemma, Jänicke (2008) suggests a dialogue strategy, cooperative transition management, and governance that mobilises the will and capacity to win the struggle. Not only
will this be difficult, but it is not clear if combined with the eco-efficiency benefits of
‘win–win’ solutions that it will be enough (Levett 2001) or whether it is the most appro-
82
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 83
sustainability entrepreneurs: could they be the true wealth generators of the future?
priate way to frame a solution to the dichotomy between environmental protection and
economic growth.
The real-world question mark against the ‘win–win’ benefits of eco-efficiency presents a major challenge to the credibility of ecological modernisation theory. At best, relative trends of resource efficiency have been identified, only to be wiped out by absolute
levels of resource use increasing due to rising consumption levels (Revell 2007). This
is further exacerbated by the ‘rebound effect’: cost savings gained by eco-efficiencies lead
to lower prices; this stimulates market demand, resulting in increased consumption,
thus eradicating any environmental gains from the initial efficiency measure (Levett
2001). This, in some way, plays to the Marxist claims that ecological modernisation
ignores the fundamental fact that capitalism at its core is exploitative of natural
resources, so any attempts at green capitalism will bring about only shallow environmental changes. Entrepreneurial innovation can only place a ‘green gloss’ on industrial
society and the modernist project (Schnaiberg et al. 2002).
Critics of ecological modernisation have focused on the limitations of the prescriptive (normative) dimensions and the descriptive (analytical) dimensions of the theory
(Murphy 2000). Much of the criticism has been levelled at the prescriptive aspects of
ecological modernisation and some of these arguments will be echoed later in this paper.
Deep ecologists claim that ecological modernisation theorists place too much emphasis on economic growth perpetuating the notion that the environment is a mere source
of resources to be plundered and exploited (Revell 2007). Structurationists (Giddens
1998) consider the theory to be overly optimistic and not adequately informed by our
response to risk. Social constructionists (Hannigan 1995) would add to this by saying
ecological modernisation ignores the unintended consequences of implementing technological solutions to environmental problems. A more general postmodernist criticism
is the way a theory developed in a European culture is being imposed on others. NeoMarxists are critical of the lack of consideration given to issues of social equity and justice (Schnaiberg 2002). This last point has been further developed by Langhelle (2000)
who suggests that at best ecological modernisation theory can be defined as ‘weak’ sustainable development because it relates only to the link between economy and ecology
and does not extend its theorising sufficiently to embrace issues of social justice and the
equitable distribution of resources between the Northern and Southern Hemispheres.
In the section below, we differentiate between economic, social and environmental
entrepreneurs, who, each in their own way, interpret what it is to make a contribution
toward a more sustainable society. We argue that, while they each maintain their single
primacy, they are not on their own or in aggregate going to lead to sustainability. This
is because they are not combining all components of sustainable development equally,
holistically or integratively. Consequently, social, environmental and economic entrepreneurship has a primacy that overrides and therefore potentially blocks the move
towards sustainability. Whether it is possible within the structural constraints of a market economy to be a sustainability entrepreneur is a subject worthy of empirical research.
The next session of this paper will outline a theoretical model of sustainability entrepreneurship.
Model of sustainability entrepreneurship
As seen earlier in this paper the entrepreneur has been conventionally described as a
competitor, wealth generator, innovator, creative, change-agent and risk-taker. Perren
and Jennings (2005: 181) express a call to arms to challenge stereotypes of entrepreneurs
asking that we view entrepreneurs as more than cogs in an economic machine. They
GMI 55
83
gmi55tilley.qxd
22/1/09
12:10
Page 84
fiona tilley and william young
maintain that entrepreneurs may want to step outside the functionalist paradigm and
see themselves in terms of other personal aspirations that may run counter to the
national economic interest and the modernity project.
The critique of entrepreneur as economic man is not new in the literature (Perren
and Jennings 2005). There has been a call for a broadening of entrepreneurship as a
concept, even for some commentators the suggestions that
the idea that there is ‘one’ entrepreneurship and instead accepting that there are ‘many’
entrepreneurships in terms of focus, definitions, scope and paradigms . . . The differences in how entrepreneurship is defined, studied and conceived, need not lead to a
cacophony and be seen as a major weakness to overcome. They could form an important opening, which requires that we not only accept and recognise different (paradigmatic) positions but also systematically develop them (Steyaert and Hjort 2003: 5).
Further to this, it has been said that ‘discourses on entrepreneurship reflect their
times . . . the meanings of entrepreneurship . . . are grounded in descriptions, contexts
and underlying values’ (Fuller 2004). The significance of cultural values in determining the meaning, role and function of entrepreneurs in society has consequently made
attempts to formulate universal scientific theories problematic. In the last century, and
arguably still now, the prevailing perception of an entrepreneur is as a business owner
starting up and growing a successful, competitive, innovative and profitable venture.
This understanding is born out of the ideology of liberal Western thinking which can
be traced back to Adam Smith. In this way, the economic entrepreneur reflects the characteristics and values of liberalism: free markets, self-development, profit-making, private property rights, free will and the ability to determine your own future. Those
individuals who achieve success as economic entrepreneurs can gain significant public
acclaim for their entrepreneurial accomplishments and are often considered to be exemplars or role models in society.
However, if it is accepted that entrepreneurship is ‘culturally imbued with meaning’
(Fuller 2004), and that modern society is not morally absolute, it is possible that not
everyone seeking to be an entrepreneur subscribes to a liberal interpretation of its meaning. In other words, modern entrepreneurship does not have to be limited to its associations with economic growth or profit-making. Anderson (1998) supports this view,
suggesting that entrepreneurship is drawn from, and is a part of, the wider social milieu
(it is socially embedded) and that entrepreneurs are human, they are real people not economic ciphers, indicating that perceptions of value are not limited to financial profit or
economic wealth creation, but reflect personal and wider generalised value systems,
thus making it a distinct possibility that there is more than one type of entrepreneur.
Being socially embedded has other possible ramifications. Jack and Anderson (2002:
471), using structuration theory, explore this further, indicating that where there is an
entrepreneur (i.e. the individual or ‘agent’) there is also a context (i.e. the ‘structure’):
the relationship between the two in terms of the extent and the method of social embeddedness ‘will effect their ability to draw on social and economic resources. This will
impact on the nature of the entrepreneurial process and influence the entrepreneurial
event.’ In other words, social relations impact on economic outcome. This can have a
positive or a negative effect. The entrepreneurial process is viewed beyond an economic
sense as value gathering, with entrepreneurs using their social networks, relationships
and ties to find a ‘fit’ with the needs of the local situation (context). This can lead to positive or negative outcomes: for example, an inability to conform to local rules or fulfil
expectations in a location could be a barrier to business operations. The entrepreneurial process is therefore embedded in the social context and, as these social context, values and rules change, so do the entrepreneurial opportunities. The ability of the
entrepreneur to recognise and realise an opportunity is conditioned by the dynamic
84
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 85
sustainability entrepreneurs: could they be the true wealth generators of the future?
between the entrepreneur and the social structure (context or local situation) (Jack and
Anderson 2002).
Many commentators have observed the emergence of alternative forms of entrepreneur and entrepreneurship (cf. Isaak 1998; Dees 2001; Schaper 2002). The growing
recognition of social and environmental issues has provided entrepreneurs with new
opportunities, resulting in the emergence of environmental entrepreneurs (Schaper
2002) or ecopreneurs (Isaak 1998) and social entrepreneurs (Dees 2001). More recently,
there has even been reference to another form of entrepreneurship: the sustainability
entrepreneur (Young and Tilley 2006; Crals and Vereeck 2004).
Dyllick and Hockerts’s (2002) model of corporate sustainability is a useful tool in
identifying the features of these new emergent typologies of entrepreneur. They argue
that sustainable enterprises have to go beyond the ‘business case’ of eco- and socio-efficiency to include the additional criteria of eco- and socio-effectiveness, sufficiency and
ecological equity, which they refer to as the ‘societal case’ and the ‘natural case’ for corporate sustainability. Entrepreneurs and others in business have tended to focus on the
‘business case’ for sustainability, and by this Dyllick and Hockerts mean the emphasis
has been placed on using natural and social resources as efficiently as possible. They
argue this will continue until ‘external systems’ make it desirable for businesses to take
more notice of the societal and natural cases. In a world of finite resources, the ‘business case’ for sustainability is not enough. Rather than preventing social inequality and
environmental degradation, it merely slows down the rate of harm.
Crals and Vereeck (2004: 2) defined sustainable entrepreneurship as the ‘continuing
commitment by businesses to behave ethically and contribute to economic development
while improving the quality of life for the workforce, their families, the local and global
community as well as future generations’. This definition is applied to existing businesses. It does not apply to individuals seeking to start up a sustainable enterprise from
the outset. The sustainability entrepreneurship model (see Fig. 1) develops a framework
to guide individuals who seek to do just that (Young and Tilley 2006). It can be seen as
detailing the elements required of the sustainability entrepreneur. As argued above, a
driving force motivating entrepreneurial behaviour and activity is the opportunity to
apply their personal value system in the way they work. The six elements on the base of
the model can initially be seen as the values that build an entrepreneur with social, environmental or economic goals.
The point here is that the additional six elements of the model that project from the
base to the top of the pyramid need to be implemented and realised in order for the
entrepreneurial activity to be sustainable. This is challenging in the extreme to realise
in practice because many of the elements are at best theoretical. However, entrepreneurs
have the ideal characteristics required to experiment, take risks and put into practice
these elements of the model and move towards sustainability entrepreneurship. Hence,
entrepreneurs should not only be considered as contributors in a successful economy,
but the driving force of a sustainable society.
Another key question is whether sustainability entrepreneurship is a greater entity
than its 12 elements: is the whole greater than its parts? The answer is something that
the previous models of corporate sustainability have ignored (see McDonough and Braungart 2002; Dyllick and Hockerts 2002), and in doing so have failed to recognise that fulfilling only the separate goals of sustainable development does not achieve sustainable
development. It creates a mentality that focuses on maximising efforts only towards the
individual elements of sustainable development and not maximising efforts towards
sustainable development.
To illustrate this point, Hockerts (2003: 50) defines sustainable entrepreneurship as
consisting
GMI 55
85
gmi55tilley.qxd
22/1/09
12:10
Page 86
fiona tilley and william young
sustainability
entrepreneurship
Environmental
sustainability
Futurity
Intergenerational
equity
Environmental
stability
Social
responsibility
Economic
equity
Ecological
equity
Environmental
entrepreneurship
Sufficiency
Ecoeffectiveness
Environment only
Social
entrepreneurship
Socioeffectiveness
Ecoefficiency
Socioefficiency
Social only
Economic
entrepreneurship
Figure 1 the sustainability entrepreneurship model
Source: Young and Tilley 2006
. . . of the identification of a sustainability innovation and its implementation either
through the foundation of a start-up or the radical reorientation of an existing organisation’s business model so as to achieve the underlying ecological or social objectives.
The choice of words ‘to achieve the underlying ecological or social objectives’ suggests that social entrepreneurs and environmental entrepreneurs are in fact sustainable
entrepreneurs without having to incorporate the other elements of sustainable development. This paper, on the other hand, argues that, ultimately, sustainability entrepreneurship is a sum of all the 12 elements of the model operating in unison. It cannot be
achieved by subscribing only to social or environmental entrepreneurship. The sustainability entrepreneurship model does not represent a ‘direct route’ from any of the
economic, environmental or social entrepreneurship poles to sustainable entrepreneurship, but rather the relationship between these three poles and sustainability entrepreneurship. The problem for this model is that, while economic, social and environmental entrepreneurs can be found throughout the world, the sustainability entrepreneur is
not as prevalent or as easily identifiable (Tilley and Parrish 2006).
86
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 87
sustainability entrepreneurs: could they be the true wealth generators of the future?
The sustainability entrepreneur is, in our view, the only ‘entrepreneurial’ route to fulfilling sustainable development. Economic, social and environmental entrepreneurs
may partially contribute towards sustainability goals; however, on their own they do not
fully or consistently address all aspects of sustainable development. First, entrepreneurs
and their enterprises have to be financially sustainable to survive within the current economic and regulatory systems. An organisation just focusing on the environment as its
goal without a means of income beyond government subsidy or philanthropy cannot be
an entrepreneur; for example, a change of government or change of heart by the philanthropist could remove the income for that organisation and stop the environmental
work. In addition, concentrating on environmental values causes social damage: that is
to say, creating a nature reserve can exclude the local community from a resource traditionally harvested from the land the nature reserve now occupies. Similarly, concentrating on the social values can cause financial failure and environmental damage. Take
a fairtrade organisation as an example: it can help bring disadvantaged communities
out of poverty, but, if the organisation cannot sell the fairtrade products, its financial
failure stops its good work. In addition, the fairtrade organisation is damaging the environment by transporting goods across the world (contributing to climate change) and
having little regard for the impacts of the production processes on the environment
(depletion of natural resources, pesticides, hazardous waste). Hence, only those entrepreneurs that balance their efforts in contributing to the three areas of wealth generation can truly be called sustainability entrepreneurs.
Does this model help to explain the wealth creation of sustainability entrepreneurs?
Yes: it provides key areas where wealth generation does contribute towards sustainable
development. The problem is that the areas are still being developed and defined in the
business context: especially, sufficiency, futurity, social responsibility, inter-generational
equity and environmental sustainability. Does this model act as a guide to entrepreneurs
on sustainable wealth creation? Yes: it provides a guide to values and actions required
as a whole for sustainable wealth creation. The problem is that it may still be a part making up the whole rather than an overall description of the sustainable entrepreneur.
As mentioned above, there remains the problem of measuring wealth. The success
of an economic entrepreneurship and, for that matter, any of the types of entrepreneurship discussed in the model is that it is measured in financial terms. A major gap
in the current literature and research are measures of the value of social, environmental and sustainable wealth. For example, a social entrepreneur with the aim of promoting healthy eating among children from deprived backgrounds adds significantly to the
social wealth of that community. The problem is: society judges their success in measurable quantitative (often financial) terms alone and there are no adequate measures
of the contribution to the social wealth of the community at present.
Another problem that entrepreneurs seeking to express sustainability entrepreneurship in practice encounter are the necessary trade-offs or compromises currently needed
to survive in the market-based economy. This mostly results in the economic, social or
environment being the sole goal and not sustainable development. If sustainability
entrepreneurs contribute towards the economy and society, and protect the environment, surely they should be rewarded in some way, such as being given ‘tax haven’ status? A traditional business pays taxes to pay for the damage on the environment and
social costs that the state then corrects: for example, obesity from unhealthy food. In
addition, sustainability entrepreneurs actually take on the roles that would normally
have been funded by the state, such as the clean-up of wasteland or education of children on healthy eating. In a market-based economy it may appear contradictory to provide incentives or rewards to encourage sustainability entrepreneurs, but economic
interventions take place all of the time. In such economies, competition and the price
mechanisms govern the choices of consumers to achieve the efficient allocation of goods
GMI 55
87
gmi55tilley.qxd
22/1/09
12:10
Page 88
fiona tilley and william young
and services. Where market failures occur in the form of externalities, such as environmental pollution or poverty, governments often seek to intervene in order to improve
competition or to achieve a morally or socially acceptable outcome. Can the same be said
for sustainability entrepreneurs? Is there sufficient incentive in the marketplace to overcome the obstacles incurred by potential sustainability entrepreneurs without intervention from government? Sustainability entrepreneurship cannot be achieved within
the current economic and regulatory frameworks and requires substantial incentives
and rewards, such as ‘tax haven’ status.
A broader definition of wealth informed by sustainability literature
What informs sustainability entrepreneurs’ definition of wealth is their meaning of sustainable development. This is a broader more radical interpretation used by proponents
of ecological modernisation theory. It is not possible to be extremely precise; however,
it is possible to allude to the conceptual influences. In this context, sustainable wealth
means contributing a holistic net benefit to the economy, community and the natural
environment.
This paper puts forward an argument for the existence of a fourth type of entrepreneur: namely, the sustainability entrepreneur, who holistically integrates the goals of
economic, social and environmental entrepreneurship into an organisation that is sustainable in its goal and sustainable in its form of wealth generation. The problem is that
the current economic system discourages sustainability entrepreneurs. These concerns
are not recent: economists expressed alarm during the Industrial Revolution in the UK
over the lack of social wealth.
Gerald Alonzo Smith’s (1996) review of the historic perspective of the purpose of
wealth showed that many economists in the 19th century started to question the proposition that economic growth was an end rather than a means:
t J.C.L. Simonde de Sismondi (1773–1842):
– This included a comparison between craftsmen and tradesmen who worked for
themselves as opposed to working for others. The former would ‘stop producing
when he had reached the point beyond which he would prefer leisure and fruits
of his past labour to the extra income to be had from further labour’ (Smith 1996:
187). The latter would work on indefinitely.
– ‘The too much of everything is the evil of the day’ (Sismondi 1834, quoted in Smith
1996: 190; emphasis in original)
– ‘The cost in human suffering was too great for the frivolous items being produced’ (Smith 1996: 190)
t John Ruskin (1819–1900):
– ‘Something was wrong with an economy that produced so much quantity with
so little quality, yet brutalised so many people in doing it’ (Smith 1996: 191)
– ‘The law of life is that a man should fix the sum he desires to make annually, as
the food he desires to eat daily; and stay when he has reached the limit, refusing
increase of business, and leaving it to others, so obtaining due freedom of time
for better thoughts’ (Cook and Wedderburn 1903–1912, quoted in Smith 1996:
193)
– ‘There is no wealth but life’ (Tawney 1954, quoted in Smith 1996: 202)
Hence commentators from the early part of the industrial revolution believed wealth
should be seen as greater than just financial and include contributions to the wider soci-
88
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 89
sustainability entrepreneurs: could they be the true wealth generators of the future?
ety. More recently, Ekins and Newby (1998) provided a four-capital model of wealth creation containing: ecological, human, social/organisational and manufacturing wealth.
Here we are focusing on entrepreneurs contributing to ecological and social wealth.
Keijzers (2002) states that the role of companies should go beyond minimising the
impacts on of the quality of natural capital, of water, air, soil, nature, biodiversity and
space. Attention should be focused on:
. . . the preservation of quantities, stocks of natural capital, including the conservation
of stocks of fossil fuels, mineral resources, biodiversity, water and space. And, not only
for the tangible interests of our own generation, but also for the sake of future generations (Keijzers 2002: 351-52).
Lehtonen (2004: 204) views social capital as generally ‘the networks of social relations characterised by norms of trust and reciprocity that can improve the efficiency of
society by facilitating coordinated actions’. However, companies should be positively
contributing to the improvement of well-being for current and future generations
including equity and their transmission across generations on the other hand (Lehtonen
2004). Ekins and Newby (1998) also claimed that people belong to a local economy,
which is qualitatively different from the global economy and is extremely important to
the welfare and quality of life in their locality.
Many authors have commented on what a sustainable business should look like. For
example, Cramer (2002) discusses how companies are now expected to account explicitly for all aspects of their performance: that is to say, not just their financial results, but
also their social and ecological performance. This is due to a more networked society in
which regulation by civil society plays an important role alongside regulation by government, which impacts companies through the scrutiny of their stakeholders. However this is mostly aimed at ‘correcting’ current companies by bolting on environmental,
social and sustainability systems to the activities of the company aimed a financial
growth. But we argue that this is just reducing environmental and social impacts by
being more efficient, but not actually positively contributing to and restoring the wider
sense of social and environmental wealth.
This is where sustainability entrepreneurs are able to step in, because their core activity is contributing to sustainable development. Cohen et al. (2008) note the motivations
of (general not sustainability) entrepreneurs were more than wealth attainment and
included ‘lifestyle’ and ‘contribution’:
The lifestyle motivator was defined as ‘accommodating dual career situations, spending
time with family, in recreational opportunities, living where you want, having fun, and
being healthy’. The contribution motivator was defined as ‘helping others, making a difference to your organisation, community, industry and creating opportunities’ . . . It
therefore seems logical to suggest that the motivations of founding entrepreneurs will
probably reflect both their value creation strategies and the criteria by which they (and
others) can evaluate the outcomes of those strategies (Cohen et al. 2008: 109).
Hence, if entrepreneurs, in general, are contributing in some measure to social capital, then sustainability entrepreneurs are beacons of social and environmental wealth
creation. They are able to take on impossible notions such as sufficiency, which is primarily concerned with the reduction of consumption and ‘living well on less’. According to Herring (2006), this is advocated by deep ecologists, but so far remains a mainly
ethical exhortation rather than a fully worked-out, concrete practical approach that can
be adopted by Western consumers. It can be argued that sufficiency is a strong form of
sustainability while eco-efficiency and sustainable consumption (see Jackson 2005 for
a comprehensive review of the latter) are the weak form. The idea of practising sufficiency can be seen as a solution to the moral, social and environmental problems of
‘excessive’ consumption (Herring 2006).
GMI 55
89
gmi55tilley.qxd
22/1/09
12:10
Page 90
fiona tilley and william young
Social, environmental and sustainability entrepreneurs are tackling these issues that
exist in the current market-based economy, but they find the system hostile towards
their non-financial goals. In general, entrepreneurs are led by the profit motive and even
those with environmental or social goals have arguably been seduced by it: the most
famous examples are The Body Shop being sold to L’Oréal and Ben & Jerry’s selling to
Unilever. Herring (2006) argues that a policy of sufficiency would require a decoupling
of economic growth from resource consumption (simplicity or ‘living well on less’). The
implementation of a sufficiency-based scheme involves a massive challenge to the present dominant ideologies of free-market capitalism and ‘consumer choice’. In their
efforts to combat global warming, most Western governments eschew political controversy and instead seek technical fixes, such as energy efficiency, to solve the problem—
hence the popularity in government and business circles of such books as Natural
Capitalism (Hawken et al. 1999), despite its heavy criticism by some reviewers (Herring
2006).
Lux (2003) has similar thoughts, and advocates the replacement of the profit motive
by a concern for the common good. All businesses would become non-profits like many
non-governmental organisations including some sustainability entrepreneurs. This,
Lux argues, would largely eliminate the economy of unending growth and consumerism
and be replaced by, for example, environmental restoration and preservation, holistic
science, social upliftment and solidarity and the pursuit of beauty and truth. This is
where sustainability entrepreneurs are contributing now, by implementing these values
today without economic system change and leading by example in creating social and
environmental wealth. There are barriers preventing the emergence of sustainability
entrepreneurs. The biggest problem for the model is that, while economic, social and
environmental entrepreneurs can be found throughout the world, the sustainability
entrepreneur is still a theoretical abstract and will most likely remain so until issues
such as sustainable wealth and value can be fully articulated and measured. Another
significant obstacle relates to the bias towards economic entrepreneurs over other forms
of entrepreneurship that exist within the capitalist system. However, to reward and lead
entrepreneurs and companies towards sustainable business (not socio- and eco-efficiency as currently wrapped up as sustainable business) there may arguably be a need
for a system change. This is not to advocate revolutionary economic change, but more
for the recognition that interventions are a necessity if the conditions for sustainability
entrepreneurship are to be encouraged. This will need much more research to develop
a new system, but sustainability entrepreneurs provide a real example of contributing
to social and environmental wealth rather than just reducing impacts of business activities.
Conclusion
This paper presents two perspectives of the premise that ‘entrepreneurs create wealth’.
The first is a continuation of modernity linking sustainable development, entrepreneurship and economic growth (wealth) via ecological modernisation theory. The second perspective is a shift to a much broader definition of wealth creation that underpins
our model of sustainability entrepreneurship. This alternative vision of how entrepreneurship can respond to the challenge of sustainable development is considered preferable because it seeks to overcome the inherent limitations that exist in the narrow
understanding of entrepreneurship theory associated with ecological modernisation.
It may seem to mainstream economists and industrialists that the model of sustainability entrepreneurship and the broad view of wealth creation is either romantic or
90
GMI 55
gmi55tilley.qxd
22/1/09
12:10
Page 91
sustainability entrepreneurs: could they be the true wealth generators of the future?
lunacy. It, and we, are neither. We have argued in this paper that we are realists who
have seen the explosion of sustainability rhetoric but far too little absolute progress in
reducing (never mind improving) the environmental and social problems society faces
today. If entrepreneurs are to adapt to the reality of 60–90% reduction in greenhouse
gas emissions by 2050, our sustainability entrepreneurship model shows what is
required. The business community and policy-makers need to wake from their ecological modernisation trance and make some hard, but correct, decisions that will benefit
society and the natural environment of which we are part.
For researchers, it is clear that there is still much to do. We also need to change tack
away from following behind the mainstream business community in their attempts to
tackle environmental and social problems and start developing a path towards sustainable development for them to follow. This path should be littered with theories, developed by theorists and empiricists alike, on details of the changes to every aspect of
business life from the structure of enterprises through alternative supply chains to the
replacement of the most damaging of industrial processes. We therefore open the exciting challenge of the theoretical development of the meaning and implementation of
sustainability entrepreneurship and its contribution to wealth creation in the broadest
sense.
References
Anderson, A.R. (1998) ‘Cultivating the Garden of Eden: Environmental Entrepreneur’, Journal of Organisational Change Management 11.2: 135-44.
Birch, D. (1979) The Job Generation Process (Cambridge, MA: MIT Press).
Bosma, N., and R. Harding (2007) Global Entrepreneurship Monitor: GEM 2006 Summary Report; www.
gemconsortium.org/download/1217108206094/GEM_2006_Global_Results_Summary_V2.pdf, accessed 26 July 2008.
Carree, M., A. Van Stel, R. Thurik and S. Wennekers (2002) ‘Economic Development and Business Ownership: An Analysis Using Data of 23 OECD Countries in the Period 1976–1996’, Small Business Economics 193: 271-90.
Cohen, B., B. Smith and R. Mitchell (2008) ‘Toward a Sustainable Conceptualization of Dependent Variables in Entrepreneurship Research’, Business Strategy and the Environment 17: 107-19.
Crals, E., and L. Vereeck. (2004) ‘Sustainable Entrepreneurship in SMEs: Theory and Practice’, paper
presented at the 3rd Global Conference in Environmental Justice and Global Citizenship, Copenhagen,
Denmark, February 2004.
Cramer, J. (2002) ‘From Financial to Sustainable Profit’, Corporate Social Responsibility and Environmental Management 9: 99-106.
Davies, H. (2002) The Howard Davies Review of Enterprise and the Economy in Education (Norwich, UK:
HMSO).
Dees, G.J. (2001) The Meaning of ‘Social Entrepreneurship’ (Stanford, CA: Stanford University, Graduate
School of Business).
Dyllick, T., and K. Hockerts. (2002) ‘Beyond the Business Case for Corporate Sustainability’, Business
Strategy and the Environment 11: 130-41.
Ekins, P., and L. Newby (1998) ‘Sustainable Wealth Creation at the Local Level in an Age of Globalization’, Regional Studies 32.9: 863-77.
Fuller, T. (2004) ‘Is Entrepreneurship “Social Foresight”?’, Professorial Lecture, Teesside Business
School, Middlesbrough, UK, 3 March 2004.
Greene, F.J., K.F. Mole, and D.J. Storey. (2004) ‘Does More Mean Worse? Three Decades of Enterprise
Policy in the Tees Valley’, Urban Studies 41.7: 1,207-28.
Hajer, M. (1995) The Politics of Environmental Discourse: Ecological Modernisation and the Policy Process
(Oxford, UK: Oxford University Press).
Hannigan, J. (1995) Environmental Sociology: A Social Constructionist Perspective (London: Routledge).
Harding, R. (2003) Global Entrepreneurship Monitor (GEM) (London: London Business School)
Hawken, P., A.B. Lovins and L.H. Lovins (1999) Natural Capitalism: The Next Industrial Revolution (London: Earthscan).
GMI 55
91
gmi55tilley.qxd
22/1/09
12:10
Page 92
fiona tilley and william young
Hebert, R.F., and A.N. Link (1989) ‘In Search of the Meaning of Entrepreneurship’, Small Business Economics 1: 39-49.
Herring, H. (2006) ‘Energy Efficiency: A Critical View’, Energy 32.1: 10-20.
Hisrich, P.D., and M.P. Peters (1998) Entrepreneurship (Boston, MA: Irwin McGraw-Hill, international
edn).
Hockerts, K. (2003) Sustainability Innovations, Ecological and Social Entrepreneurship and the Management
of Antagonistic Assets (Bamberg, Germany: Difo-Druck).
Isaak, R. (1998) Green Logic: Ecopreneurship, Theory and Ethics (Sheffield, UK: Greenleaf Publishing).
Jack, S.L., and A.R. Anderson (2002) ‘The Effects of Embeddedness on the Entrepreneurial Process’,
Journal of Business Venturing 17: 467-87.
Jackson, T. (2005) Motivating Sustainable Consumption: A Review of Evidence on Consumer Behaviour and
Behavioural Change (London: Policy Studies Institute).
Jänicke, M. (2008) ‘Ecological Modernisation: New Perspectives’, Journal of Cleaner Production 16: 55765.
Keijzers, G. (2002) ‘The Transition to the Sustainable Enterprise’, Journal of Cleaner Production 10: 34959.
Kirzner, I.M. (1985) Discovery and the Capital Process (Chicago: University of Chicago Press).
Knight, F.H. (1921) Risk, Uncertainty and Profit (New York: Houghton Mifflin).
Langhelle, O. (2000) ‘Why Ecological Modernisation and Sustainable Development Should Not be Conflated’, Journal of Environmental Policy and Planning 2: 303-22.
Lehtonen, M. (2004) ‘The Environmental: Social Interface of Sustainable Development: Capabilities,
Social Capital, Institutions’, Ecological Economics 49: 199-214.
Levett, R. (2001) ‘Sustainable Development and Capitalism’, Renewal 9: 2-3.
Lux, K. (2003) ‘The Failure of the Profit Motive’, Ecological Economics 44: 1-9.
Lundström, A., and L. Stevenson (2002) On the Road to Entrepreneurship Policy (Stockholm: Swedish
Foundation for Small Business Research).
McDonough, W., and M. Braungart. (2002) ‘Design for the Triple Top Line: New Tools for Sustainable
Commerce’, Corporate Environmental Strategy 9.3: 251-58.
Mol, A.P.J. (1995) The Refinement of Production Ecological Modernisation Theory and the Chemical Industry (Utrecht, Netherlands: Van Arkel).
Murphy, J. (2000) ‘Ecological Modernisation’, Geoforum 31: 1-8.
Perren, L., and P.L. Jennings. (2005) ‘Government Discourse on Entrepreneurship: Issues of Legitimization, Subjugation and Power’, Entrepreneurship Theory and Practice 29.2: 173-84.
Revell, A. (2007) ‘The Ecological Modernisation of SMEs in the UK’s Construction Industry’, Geoforum
38: 114-26.
Schaper, M. (2002) ‘The Essence of Ecopreneurship’, Greener Management International 38: 26-30.
Schnaiberg, A., D.N. Pellow and A.S. Weinberg (2002) ‘The Treadmill of Production and the Environmental State’, in A.P.J. Mol and F.H. Buttel (eds.), The Environmental State under Pressure (Amsterdam: Elsevier Science).
Schumpeter, J. (1954) Capitalism, Socialism and Democracy (London: Allen & Unwin, 4th edn).
Smith, A.S. (1996) ‘The Purpose of Wealth: A Historical Perspective’, in H.E. Daly and K.N. Townsend
(eds.), Valuing the Earth: Economics, Ecology, Ethics (London: MIT Press): 183-209.
Spencer, A.S., B.A. Kirchhoff and C. White (2008) ‘Entrepreneurship, Innovation, and Wealth Creation’,
International Small Business Journal 26.1: 9-26.
Steyaert, C., and D. Hjort (2003) ‘Creative Movements of Entrepreneurship’, in C. Steyaert and D. Hjort
(eds.), New Movements in Entrepreneurship (Cheltenham, UK: Edward Elgar): 3-19.
Tilley, F., and B. Parrish (2006) ‘From Poles to Wholes: Facilitating an Integrated Approach to Sustainable Entrepreneurship’, World Review of Entrepreneurship, Management and Sustainable Development
2.4: 281-94.
Weale, A. (1992) The New Politics of Pollution (Manchester, UK: Manchester University Press).
Wennekers, S., and R. Thurik (1999) ‘Linking Entrepreneurship and Economic Growth’, Small Business
Economics 13: 27-55.
Young, W., and F. Tilley (2006) ‘Can Businesses Move beyond Efficiency? The Shift toward Effectiveness and Equity in the Corporate Sustainability Debate’, Business Strategy and the Environment 15:
402-15.
q
92
GMI 55