Sustainable Entrepreneurship and Social Innovation

Katerina Nicolopoulou, Mine Karatas-Ozkan, Frank Janssen, John Jermier, Katerina Nicolopoulou, Mine Karatas-Ozkan, Frank Janssen, John M. Jermier

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317606741
• Edition: 1
• Topic: Economics
• Subtopic: Sustainable Development
• Index: Economics

Sustainable entrepreneurship has attracted growing attention in both scholarly and practitioner circles. Focusing on generating social, environmental and business value, the notion has been raised more recently to address the contribution of entrepreneurial activities to sustainable economic and social development. Sustainable Entrepreneurship and Social Innovation builds on a theoretical framework that addresses related topics via a combination of insights from sustainability, policy, managerial, strategic, innovation and institutional perspectives. Providing empirical casework as well as a conceptual and theoretical framework, the book takes a global, interdisciplinary approach to the emergent field of sustainable entrepreneurship. The book highlights elements of sustainable entrepreneurship which have a societal impact as well as regional relevance and related aspects of innovation are also presented. Definitional issues are further elaborated in order to encompass the main inter-connected fields of study, sustainable entrepreneurship and social innovation.This book is an important resource for academic researchers, and postgraduate and advanced undergraduate students in the fields of entrepreneurship, innovation and sustainability.

Part I

A theoretical framework for sustainable entrepreneurship

1 Sustainable entrepreneurship and eternal beginnings

Pierre Kletz and Eric Cornuel

Sustainable entrepreneurship is drawing considerable interest from both scholars and practitioners. The first words of the title of the seminal article by Shepherd and Patzelt (2011) can help us to understand the reason for this interest: “The New Field of Sustainable Entrepreneurship.” Since this feeling of novelty is shared by many other works (Lans et al., 2014; Pinkse and Groot, 2015; Poldner et al., 2015), it is interesting to analyze its source.

Since the earliest works by Richard Cantillon and Adam Smith in the late seventeenth and early eighteenth centuries, entrepreneurship has long been the subject of wide discussion. However, it is only in the last few years that it has become associated with sustainability: “Sustainable entrepreneurship is focused on the preservation of nature, life support and community in the pursuit of perceived opportunities to bring into existence future products, processes and services for gain” (Shepherd and Patzelt, 2011, 137).

Sustainable entrepreneurship is still about developing products and services in order to obtain a profit but restraint is required in order not to deplete the environment. Sustainable entrepreneurship must bring about externalities that constitute non-economic gains.

That is why sustainable entrepreneurship is understood as a new concept; it adds to classical entrepreneurship a dimension of sustainability that is related to a new approach to both the long-term consequences of activities and concerns about the environment.

Because sustainable entrepreneurship seeks social improvement, it stems from a distinctive origin – social entrepreneurship, which is dedicated to projects aimed at social progress. Unlike “classic” for-profit entrepreneurship, economic considerations are seen as a constraint that must be coped with.

To sum up, while classic entrepreneurship is focused on economic gain and social entrepreneurship on non-economic gain, sustainable entrepreneurship concentrates on both. Unlike many works that compare sustainable entrepreneurship with for-profit entrepreneurship, this chapter analyzes it in comparison to social entrepreneurship and asks not only what new perspectives allow sustainable entrepreneurship but also how our knowledge of social entrepreneurship can improve the practice of sustainable entrepreneurship.

Social entrepreneurship, the “other” origin of sustainable entrepreneurship

The call for chapters for this book referred to a field of broad reflection “building upon a framework that addresses sustainability, entrepreneurship and social innovation.” However, the proposed perspective represents a radical change compared to the classical approach of entrepreneurship. In effect, this is an explicit reference to the work of Shepherd and Patzelt, who present sustainable entrepreneurship as being focused on “the pursuit of perceived opportunities to bring into existence future products, processes and services for gain” but “where gain is broadly construed to include economic and non-economic gains to individuals, the economy and society” (2011, 137).

Thus, this involves an approach in which it is possible to forge an alliance between economic profit and social progress in a large complex that can be called sustainable entrepreneurship.

Still, this new notion of sustainable entrepreneurship did not appear ex-nihilo. The reflection on the conditions in which entrepreneurship can generate both economic and social gains was primarily developed in the field of social entrepreneurship. Social entrepreneurship referred to a conceptual field that was much more limited in the sense that it was concerned first and foremost with creating “social value.” However, the idea that profit-oriented entrepreneurship could also respond to social needs found support.

In a seminal article, Greg Dees (2001, 64) presented a definition of social entrepreneurship in which he argued that social entrepreneurship could be implemented in businesses as well as in the nonprofit sector:

Social entrepreneurship is the process of pursuing innovative solutions to social problems. More specifically, social entrepreneurs adopt a mission to create and sustain social value. They draw upon appropriate thinking in both the business and nonprofit worlds and operate in a variety of organizations: large and small; new and old; religious and secular; nonprofit, for-profit and hybrid.

According to this definition, it is clear that the main thrust is the creation of social value and that it is possible to place the activity in the category of either a for-profit enterprise or a nonprofit one.

Dees, an authority on social entrepreneurship beginning in the 1990s (he died in 2013), included in the category of social entrepreneurship any project or organization whose goal or mission is to solve a social problem. According to this approach, this can occur even within the context of a for-profit enterprise, on the condition that the raison d’être of the enterprise includes a genuine concern for advancement in the field of social progress.

The approach proposed in this book, which clearly reflects the influence of the work of Shepherd and Patzelt, is much more global. Sustainable entrepreneurship can be (and usually is) motivated by a profit motive as long as there is a determination to create “economic and non-economic gains to individuals, the economy and society” (2011, 137). The prime motivation of the resolution of “social problems” is abandoned in favor of an approach that assumes, on the one hand, a possible convergence of the interests of individuals, the economy and society and, on the other, the coexistence of economic and non-economic gain. Obviously, the notion of “sustainable entrepreneurship” and the previously existing one of “social entrepreneurship” include major differences. In particular:

• Social entrepreneurship is generally engendered by a quest for social improvement. The focus was primarily on nonprofit organizations until it was realized that for-profits could also be associated with the search for this objective. In contrast to this, the notion of sustainable entrepreneurship derives from of the field of business administration. It was preceded by the realization that not only does social gain not obstruct economic profit, it can facilitate it.

• Social entrepreneurship was constructed to respond to the same challenges as sustainable entrepreneurship. It comes primarily from an attempt to bypass philanthropy as a more efficient way of addressing societal issues, introducing an economic rationale to improve society. Unlike the case of sustainable entrepreneurship, the question of value creation came at a later stage.

Beyond these differences, the reflection that was developed about social entrepreneurship offers interesting insights that can provide a solid basis for the notion of “sustainable entrepreneurship.”

Breaking the dichotomy between economic and social gains

Social entrepreneurship is primarily motivated by the objective of “doing good”; “changing” social conditions constitutes a first priority. Therefore, when a given situation appears unacceptable, social entrepreneurship often focuses more on the processes of changing than on the results of change. Consequently, the planning is much more oriented on how to “escape the present reality” than on the outcomes to be obtained. Many articles and books have stressed the weak points of such an approach: poor planning, vague strategy and difficulty in evaluation.

The new approach of sustainable entrepreneurship, which considers social achievements to be “non-economic gains,” is likely to give a relevant answer to these challenges: such an approach might have positive consequences especially for evaluation processes.

It remains true that the development and implementation of social entrepreneurship have revealed merits and made accomplishments possible. In particular, they have demonstrated the importance of social commitment. The social entrepreneur is often personally committed and this increases the relevance and realizations of the projects that are developed (Hemmati and Kia, 2013).

That the distance induced by an approach based on the notion of gains may cause the loss of some social commitment is a risk that must be taken into account. Beyond this, social entrepreneurship has attributed a central role to the concept of “intention.” The social entrepreneur has “good intentions” and these intentions serve as a powerful driver for the endeavors s/he leads. The question of intention appears to be even more essential for sustainable entrepreneurship because, according to this approach, the intention is not unilateral. The intention focuses on the economic motivation along with the desire to cause no harm to the environment. Sustainable entrepreneurship is satisfied with the intention “not to do” but social entrepreneurship has stressed the importance of also having an intention “to do.”

In historical terms, social entrepreneurship started developing in the seventeenth century, when societies started to promote structural reforms that gave many citizens the opportunity to become entrepreneurs.

The changes began in Europe after centuries of Crown monopolies, the Church and feudal lords, and the guilds had restricted commercial activity, discouraged innovation. … The first social entrepreneurs were called visionaries, humanitarians, philanthropists, reformers, saints or simply great leaders. Attention was paid to their courage, compassion and vision, but rarely to the practical aspects of their accomplishments.

(Bornstein and Davis, 2010, 2)

If this historical trend provides us with the context for the development of social entrepreneurship, today’s social entrepreneurship refers to different ways of developing action as it converges into a broad spectrum of definitions and perceptions. All these advances point to directions for the development of sustainable entrepreneurship while they also place a much greater stress on its social vocation than on its economic role.

Curiously, for some authors the main challenge of social entrepreneurship consists of offering a social dimension for the economic rationale. Dees, for example, comes up with an approach that is close to the dominant one nowadays by defining sustainable entrepreneurship even if it remains distinct. He draws on the works of the economists Say and Schumpeter, who claim that the entrepreneurs improve the productive capacity of society and provide “creative destruction” that promotes economic change.

Dees argues that social entrepreneurship works for the same purpose in the social field by combining people and resources that significantly improve society’s ability to identify its problems. He explains that social entrepreneurs create social values, pursue new opportunities, act courageously to leverage resources and present a degree of accountability. In other words, social entrepreneurs are those that serve as “agents of change of the social sector” (Bornstein and Davis, 2010, 38) in parallel with economic development.

In this way, a similitude is drawn between economic and social developments although the perspective is one of a dichotomy. This similitude comes from acknowledging that “creative destruction” constitutes a powerful framework in order to recognize that a new situation has appeared and that it will require new ways to deal with it, in both the economic and social spheres.

However, unlike the approach of sustainable entrepreneurship, this similitude is related only to structures and modes of developments that are similar. It does not refer to the possibility of moving forward through the same entrepreneurial endeavors and economic and social achievements. The common interpretation of the term “entrepreneur” describes a person that establishes a new business but this interpretation is very limited. Bornstein and Davis (2010, 1) define social entrepreneurship as “a process in which citizens build or transform institutions to advance social solutions to social problems such as poverty, disease, illiteracy, environmental destruction, human rights abuses and corruption in order to make life better for many.”

The new notion of sustainable entrepreneurship breaks with this dichotomy and takes the view that economic and social development can essentially coexist in the same organization. It goes far beyond the broad ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Notes on contributors
• Introduction: sustainable entrepreneurship
• Part I A theoretical framework for sustainable entrepreneurship
• Part II Empirical insights from case studies – regional and sectoral perspective
• Part III Policy and institutional perspectives
• Index