Greening Pastures: Ecosystems for Sustainable Entrepreneurship

Abstract

Sustainable entrepreneurship entails starting novel ventures that combine developing a business (profit) with sustaining the social (people) and natural (planet) environment. These novel ventures are so called sustainable start-ups. In this dissertation I focus on those sustainable start-ups that address environmental sustainability. Environmental sustainability is important because society faces several grand environmental challenges. Sustainable entrepreneurs play an important role in solving these challenges by introducing new sustainable technologies and business models. This potential role of entrepreneurs is widely acknowledged, but to fulfil their potential two conditions must be met. First, sustainable start-ups need to be present, they need to exist. Second, for sustainable start-ups to significantly contribute to solving societal challenges they need to grow, they need to maintain a healthy business performance. However, sustainable start-ups are constrained in several ways, and this causes them to encounter additional challenges in founding their business and in maintaining their business performance compared to regular start-ups. I identify four constraints. First, many technology-based sustainable start-ups are constrained because they require more investment capital than other types of start-ups. Second, sustainable start-ups create public value that is often insufficiently accounted for in the prices of goods or services. Third, sustainable start-ups are often institutionally constrained; their products or services do not always comply to market regulations, standards, norms, habits, or cognitive frames. Fourth, sustainable start-ups are often hybrid organizations founded with a combination of economic and environmental aspirations. The ability of sustainable start-ups to contribute to solving societal challenges depends on the extent to which they are influenced by these constraints. Given the importance of the surrounding environment in these constraints I draw on the entrepreneurial ecosystem framework. I aim to better understand how these constraints influence sustainable start-ups and what can be done to help sustainable start-ups overcome their constraints. As such the research question of my dissertation is: How do entrepreneurial ecosystems influence the presence of sustainable start-ups? I conclude that an entrepreneurial ecosystem for sustainable start-ups consists of generic and specific sustainability elements that together form the sustainable entrepreneurial ecosystem. I find that the quality of the generic entrepreneurial ecosystem has a strong positive influence on the presence and prevalence of sustainable start-ups. The quality of a generic entrepreneurial ecosystem is important for the presence of sustainable start-ups, even more so than for their regular counterparts. Furthermore, I find that the presence of sustainable start-ups is positively influenced by the presence of fellow (regular) start-ups, the presence of sustainability-oriented formal institutions, and to some extend sustainability-oriented resource endowments and sustainability-oriented informal institutions. Policy makers can use my results to develop policies that help build ecosystems for sustainable entrepreneurship in their region. In line with my results, policy makers with this aim could strive to improve both the generic entrepreneurial ecosystem and a sustainability specification. I argue that a first step is to focus on building a strong generic entrepreneurial ecosystem. As the quality of entrepreneurial ecosystems is more important for SSUs than their regular counterparts.