The lighthouse effect: How successful entrepreneurs influence the sustainability-orientation of entrepreneurial ecosystems

Abstract

The Sustainable Development Goals (SDGs) agreed by the United Nations are a call to action for policy-makers around the globe to tackle grand societal challenges. Sustainability start-ups can help meet some of the most pressing challenges. Regions of start-up activity are commonly referred to as entrepreneurial ecosystems (EEs), although the share of sustainability start-ups varies markedly from one EE to another. While literature on EEs is abundant, scholarly work on sustainability-oriented EEs, i.e. those with a high share of sustainability start-ups, is still relatively scarce. In particular, there is limited understanding of the reasons why some EEs have a higher share of sustainability start-ups than others. The present paper considers this gap in the literature by contrasting the EEs of Berlin and Lagos, which have very different shares of sustainability start-ups. Forty interviews conducted with founders, investors, hubs and government representatives in both EEs showed that particularly successful start-ups in an EE, so-called lighthouses, play an important role in shaping the cultural, social and material attributes of an EE. This means that the sustainability orientation of these lighthouses is instrumental in creating environments in which sustainability start-ups can flourish. Moreover, lighthouses can attract new talent and resources to a region, which further underlines their role as accelerators of an EE towards sustainability. Overall, the lighthouses are a critical factor in explaining the share of sustainability start-ups. Policy-makers can strengthen this effect by giving access to extra resources and opportunities to promising start-ups and by showcasing their success.