Sustainability
Opinion Article
December 22, 2020

Hey Homo Economicus – Are You Still Alive?

In 2016, the Paris Agreement was signed to fight climate change and limit global warming to well below 2 degrees. Basis for this is a system transition towards a low-carbon and green economy while keeping earth system processes within its‘Planetary Boundaries’ in which humanity can strive and sustain the planet (Steffen et al., 2015). Future scenarios see great business opportunities within these transition processes through sustainable entrepreneurship as a game changer to mitigate anthropogenic climate change and foster the Sustainable Development Goals (SDGs). Sustainable entrepreneurship combines multiple value creation for economic, social and environmental purposes. It aims to solve environmental and social issues through the means of successful for-profit ventures (Parrish and Tilley, 2009; Parrish and Foxon, 2009; Cohen and Winn, 2007; Dean and McMullen, 2007; Schaltegger and Wagner, 2011).Particularly important key actors for the development and implementation of sustainable innovation are sustainable start-ups because they show a stronger impact on transition processes than incumbent firms(Bergset and Fichter, 2015).

But who is the one running a sustainable venture and is there anything different compared to traditional solely rent-seeking entrepreneurs? To date, there remain major knowledge gaps in understanding sustainable entrepreneurs, more precisely how their identity shapes the way a sustainable start-up is built and run, i.e. how it is imprinted[1](Fauchart and Gruber, 2011).

In my master thesis, I examined the question In what way does founder identity shape the imprinting of a sustainable start-up in the early start-up stage? through investigating founder identities of sustainable start-ups that are part of the ‘Green-Start Up Program’ from the German Federal Foundation for the Environment (DBU). DBU governs its funding capital along the SDGs and Planetary Boundaries. Through in-depth interviews with the founders and multiple rounds of coding, categorizing and synthesizing(following Eisenhardt, 1989), I was able to uncover common themes and variations along the entrepreneurs’ identities.

The study revealed two different groups of founder identities. One group represents sustainable entrepreneurs with salient profit-driven traits (called Darwinians). The other group categorizes founders who were rather mission and impact-driven (called Missionaries). The contrasting behavior of these two types was analyzed in depth across six the meson venture imprinting that emerged throughout the first round of interviews.The six themes are called: Impact Prioritizing, Open Source Approach, Pricing Strategy, Leading/Corporate Culture, Profit Appropriation and Sense of Ownership.

Although both founder identity types in the study perform business towards sustainable development, key findings show that founders with salient Darwinian traits apply profit-driven business logics across the six venture imprinting themes. They demonstrate an extrinsic motivation towards sustainable impact as a downstream activity. When we compare this to the literature about sustainable entrepreneurs it contradicts, and thus expands,existing studies which reflect Missionary traits in sustainable entrepreneurs.These are only supported by the study’s findings within the second founder group of impact-driven identities, demonstrated through moral values and ethical behavior (see Table 6 for an overview of key findings).

 

Key results provide evidence that sustainable entrepreneurs may be driven by profit and must not show a pre-dominant motivation to change the world as it has been seen so far. It is interesting and surprising that sustainable entrepreneurs with salient Darwinian traits are hardly reflected by recent sustainable entrepreneurship literature. Is this a new phenomenon which has not yet been investigated or was it overlooked? We can be sure, the sustainable start-up bubble is flourishing at the moment and there is ample research to do. New people are entering the field, incorporating entrepreneurs with diverse mind-sets. And so do founders with salient Darwinian traits. They may boost sustainable innovation as we see that not only impact-driven individuals pursue business towards sustainable development. It seems like even the term ‘Homo Economicus’ may get a chance to be seen under a new paradigm in the context of sustainable entrepreneurship.

I initially stated that future scenarios see great business opportunities through sustainable start-ups. My research revealed that we can see an increasing number of sustainable entrepreneurs with Darwinian traits who act on sustainable business opportunities as a catalyst. Indeed, this is a positive outcome regarding sustainable development. To improve the governance of funding capital in a more supportive way toward the SDGs, I advise to add an impact assessment on top of the founder identity analysis so we can find out which type of founder identity performs best towards sustainable development and sustainable impact beyond profit.

Hereby, we see promising areas for future research to expand the understanding of sustainable entrepreneurs who are key actors in the transition process toward a prospering planet and society.


[1] The term ‘venture imprinting’ refers to a set of activities that unfold during a sensitive period (in this case the early start-up stage), executed by individual founders regarding the venture’s strategy, structure and performance(Marquis & Tilcsik, 2013). This study uses ‘to build and run a firm’ as a synonym for ‘to imprint a venture’.

List of References

 

Bergset, Linda and Klaus Fichter. 2015. “Greenstart-ups – a new typology for sustainable entrepreneurship and innovationresearch.” Journal of InnovationManagement, 3(3): 118-144.

Cohen Boyed, and Monika I. Winn. 2007.“Market imperfections, opportunity and sustainable entrepreneurship.” Journal of Business Venturing, 22(1):29–49.

Dean, Thomas J. and Jeffrey S.McMullen. 2007.“Toward a theory of sustainable entrepreneurship: reducing environmentaldegradation through entrepreneurial action.”Journal of Business Venturing 27(1): 50–76.

Eisenhardt, Kathleen M. 1989.Building theories from case study research. Academy of Management Review, 14:532–550.

Gruber, Marc and Ian C. MacMillan. 2017.“Entrepreneurial Behavior: A Reconceptualization and Extension Based on IdentityTheory.” Strategic EntrepreneurshipJournal, 11: 271-286.

Fauchart, Emmanuelle and MarcGruber. 2011. “Darwinians, Communitarians, andMissionaries: The Role of Founder Identity in Entrepreneurship.” Academy of Management Journal, 54(5):935-957.

Marquis, C. and András Tilcsik. 2013.“Imprinting: Toward a multilevel theory.” Academyof Management Annals, 7: 193-243.

Pan, Nettra D., Marc Gruber andJulia Binder. 2019. “Painting with All the Colors: The Value of Social IdentityTheory for Understanding Social Entrepreneurship. DIALOGUE.” Academy of Management Review, 44(1):213-226.

Parrish, Bradley D. and FionaTilley. 2009. “Sustainability Entrepreneurship: Charting aField in Emergence.” In: Marking Ecopreneurs: Developing SustainableEntrepreneurship, ed. M. Schaper, Aldershot, UK: Gower.

Parrish, Bradley D. and Timothy J.Foxon. 2009.“Sustainability entrepreneurship and equitable transitions to a low-carboneconomy.” Greener Management International,55: 47–62.

Schaltegger, Stefan and MarcusWagner. 2011.“Sustainable entrepreneurship and sustainability innovation: categories andinteractions.” Business Strategy and theEnvironment, 20(4): 222–237.

York, Jeffrey G., Isobel O’Neil andSaras D. Sarasvathy. 2016. “Exploring Environmental Entrepreneurship:Identity Coupling, Venture Goals, and Stakeholder Incentives.” Journal of Management Studies, 53(5):695-737.

Nele Terveen

Nele Terveen

MSc. Alumna, Nele Terveen focuses her research on sustainable entrepreneurship and impact during her PhD at TU Munich while managing a research project about sustainable ecosystems and accelerator programs in German.

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