Scarcity, resource conservation, and sustainable entrepreneurship:

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An organizational economics view of antecedents of sustainable entrepreneurship.

An organizational economics view of antecedents of sustainable entrepreneurship.

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  • 1. Scarcity, resource conservation, and sustainable entrepreneurship: A multi-level perspective Olivia Aronson Texas Tech University Rawls College of Business December 5th, 2012
  • 2. Sustainable Entrepreneurship Gaining importance (World Scientists’ Warning) 1992 Rio de Janeiro Earth Summit  Urgency of environmental issues was emphasized (Etzion, 2007)  Increase in volume of sustainability-focused research literature In this process, sustainability, the practice of positively associating a firm’s financial performance, environmental resilience, and social responsibility (Cohen & Winn, 2007), replaced many previously held, negative assumptions surrounding the business environment interface (Cohen & Winn, 2007; Dean & McMullen, 2007). Sustainable entrepreneurs, who discover new goods and services while still conserving resources
  • 3. Sustainable Entrepreneurship (Cont.) Sustainable entrepreneurs:  Depend upon their own knowledge and worldview  Operate within a competitive environment – a strategic group – where the conduct of business within that group strongly bounds and influences what decisions are economically possible.  Operate within a community, where cultural norms also have a high degree of influence on acceptable business behavior. Multiple levels: the individual level, the strategic group level, and the cultural/society level
  • 4. Definition Draws upon Venkat’s (1997) definition of entrepreneurship Sustainable Entrepreneurship as defined by Cohen & Winn, 2007: “how opportunities to bring into existence future goods and services are discovered, created, and exploited, by whom, and with what economic, psychological, social, and environmental consequences.”
  • 5. How scarcity drives the model Narrative 1 Because the world is not perfect, and scarcity prevails – many of the business phenomena that emerge are created within the social world because groups tend to do better at facing scarcity than do isolated individuals.
  • 6. Narrative 2 A real world theory of sustainable entrepreneurship will align opportunities to discover new goods and services (which differ in their discovery, creation and harvest parameters) with social structures (which differ across levels in their level of individual knowledge, strategic group affiliation influence, and community culture constraints), in a holistic, mainly resource- conserving way.
  • 7. Model: Multi-level Community Strategic culture group constraints Management affiliation knowledge- influence aquisition worldview Sustainable entrepreneurship
  • 8. Management knowledge-aquisitionworldview Definition - Manager knowledge-acquisition worldview is the constellations of beliefs, values and concepts that give shape and meaning to the world a manager experiences and influences the way in which managers acquire knowledge (Norton, 1991). A manager’s knowledge – acquisition worldview can influence an organization’s strategy and performance because organizations are an aggregate of individuals (Felin & Hesterly, 2007; Madden, 2012). Organizational change is driven by the individuals that make up the organization; this includes their beliefs, judgments, abilities and overall knowledge (Felin & Zenger, 2009). Managers within the organization may engage in entrepreneurial theorizing and create new knowledge in which sustainable entrepreneurship (SE) is utilized to resolve business problems and create viable strategies
  • 9. Proposition 1 Proposition 1: Manager knowledge-acquisition worldview is associated with sustainable entrepreneurship.
  • 10. Strategic group affiliationinfluence Definition: the level of connection or association of a collection of firms with similar strategies and key decision variables (Porter, 1979: 215). Strategic group affiliation  If a strongly affiliated organization that has already obtained cognitive and sociopolitical legitimation (Aldrich & Fiol, 1994) and that is perceived to be successful engages in SE then other organizations (depending on their level of affiliation with the strategic group) may choose to participate in order to gain legitimacy and ensure they are offering the same “benefits and services as their competitors” (DiMaggio & Powell, 1983: 154).  May cause an increase in homogenization of the strategic group and an increase in participation in SE
  • 11. Proposition 2 Strategic group affiliation is associated with sustainable entrepreneurship.
  • 12. Community culture constraints Definition: the transmitted and created content and patterns of values, ideas, and other symbolic-meaningful systems as factors in the shaping of human behavior and the artifacts produced through behavior” (Kroeber & Parsons, 1958: 583) within communities. A community’s culture may call for some level of participation in SE by businesses  Can create an agency relationship (Jenson & Meckling, 1976).  Agency problems occur when “the desires or goals of the principal and agent conflict and it is difficult or expensive for the principal to verify what the agent is actually doing” (Eisenhardt, 1998:58).  Therefore, contracts have costs associated with them, such as bonding and monitoring costs. Because of these costs, both community standards for sustainability initiatives and the level of participation in SE by businesses may vary Communities should create incentives for businesses to engage in SE by reducing bonding costs and decreasing overall agency costs.  By doing this, communities can affect how businesses act. Depending upon how communities approach costs, level of participation in SE may vary
  • 13. Proposition 3Variability in community culture is associated with the level of sustainable entrepreneurship.
  • 14. Limitations While this paper does propose several theoretical models it does not attempt to empirically test them It is possible that there is a more complex interaction occurring amongst these three units of analyses. Scholars could explore the possibility of nesting both within the realm of the constructs used in this paper and in future multi-level examinations of participation in sustainable development Our propositions are limited to specific social structures  individual, strategic groups, and communities A possible future research study could examine how the outcomes of participation in SE unfold in time series, and the implications of those outcomes on the three proposed constructs.
  • 15. Implications for Theory Provides a holistic view of SE that is necessary in order to offer a comprehensive examination and explanation of potential variance in participation in SE. Contributes to the conceptualization of business’ role in society through multiple dimensions.  By examining from multiple perspectives we can better identify, address, and modify behaviors at the individual, community, and industry levels in order to appropriately address sustainability problems. Attempts to merge the business and natural environment fields under the umbrella of entrepreneurship. Multidisciplinary approach - psychology, biology, and strategy will be useful supplements Generalizable. Not only do these propositions remain distinctly independent from any affiliation towards an industry, community, or individual, but they can be applicable to a variety of countries, industries, and cultures.  The usefulness of this is that responses to the sustainable entrepreneurship construct will vary depending on country, government, industry, culture, and individuals. This paper
  • 16. Implications for Practitioners Generation of further avenues for creating organizational pathways to sustainable entrepreneurship by practitioners, and scholars, alike. Similar to Shrivastava (1995) this paper may aid in emphasizing the need for a change in the ways in which government policy is created, businesses act, and consumers behave. These changes could alter the ways in which organizations conduct business. Hope to broaden practitioner mindsets in order to makes sustainability initiatives more generalizable to a variety of industries and organizations.