For the last five decades, one important goal has driven the world economy: The pursuit of growth. As the economy expands, the resource implications associated with it cannot be ignored any longer. In less than a decade, we may face significant scarcity in key resources, such as oil. Out of scholarly discussion it emerged that a transition towards a new form of capitalist development is needed, a transition towards an economy which is in line with the objectives of a sustainable society. Sustainable entrepreneurship, a form of entrepreneurship that combines ecologic, social and economic sustainability, has been generally declared as suited to advance this so-called ‘sustainability transition’. However, scholars have neglected to investigate the ‘how’ and ‘why’ of such an assumption.
This Master Thesis aims at filling this research gap by answering the following research question:
In what way can sustainable entrepreneurship influence a transition towards a more sustainable economy?
In doing so, the thesis is structured into three different research papers, each using a different research method to reach the following goals:
1. Providing a concise definition of the term "sustainable entrepreneurship" and analysis of important key concepts
2. Developing a framework for the analysis of a bottom-up sector transition led by sustainable entrepreneurs using an institutional theory perspective
3. Applying the framework to the revealing case of the Fairtrade Movement to analyse a sector transition led by sustainable entrepreneurs
This research was performed not only to gain an in-depth understanding of the process of economical transitions but also to define methods that can by used by actual entrepreneurs in real life. It's goal is to not only to close a current research gap but to serve as a practical guide for changemakers of all kinds.
The research findings have therefore been used to to define five key insights that should be taken into account in order to influence economies towards more sustainability. The section "insights for entrepreneurs and decision makers" at the end of this thesis gives practical cues based on examples from the Fairtrade Movement but also a warning to time their actions wisely - because at a certain stage each transition gains a momentum which is very hard to influence by any of the actors involved.
Table of Contents
Paper 1: Key concepts of sustainable entrepreneurship and its potential to contribute to sustainable development.
1. Introduction
2. Entrepreneurship in the context of sustainable development
2.1. Mapping sustainable development in the context of defining a ‘more sustainable economy’
2.2. Economic, environmental and social sustainability: How three forms of entrepreneurship are connected to the goals of sustainable development
3. The necessity of a triple bottom line for the pursuit of sustainable development objectives: Introducing sustainable entrepreneurship
4. Defining sustainable entrepreneurship
4.1. The discovery and exploitation of opportunities in a context of market failure
4.2. The initiation of societal and economic change towards sustainability
5. Positioning sustainable entrepreneurship in the current debate on sustainable economic development
6. Conclusion
7. Discussion
Paper 2: Developing a framework for the analysis of a bottom-up sector transition led by sustainable entrepreneurs: An institutional theory perspective
1. Introduction
2. Pathways of transition: Top-down vs. bottom-up
2.1. Top-down: Governing transition management
2.2. Bottom-up: The influence of sustainable entrepreneurship
3. Changing a sector by transforming its underlying institutions
3.1. Three pillars of institutional theory and how their misalignment can lead to institutional change
3.2. Key concepts of institutional theory
4. The four phases of transition: Aligning the S-curve model with the concept of sustainable entrepreneurship
5. Developing a framework to analyse the bottom-up transition of a sector
6. Conclusions
7. Discussion
Paper 3: The influence of sustainable entrepreneurship on the transition of an industry: The case of Fair Trade
1. Introduction
2. The global success of Fair Trade: A revealing case of a bottom-up transition
3. Methods and analytical framework
3.1. Applying the 3x4 transition analysis framework
3.2. The six steps of analysis using the paradigm model of axial coding
4. Analysis of the institutional change processes in industry transformation towards Fair Trade
4.1. Transition phase 1: Creating awareness for a different form of trade
4.2. Transition phase 2: Active manipulation on all three institutional levels
4.3. Transition phase 3: Maximizing normative pressure on incumbents
4.4. Transition phase 4: The onset of isomorphism
5. Main Findings: Insights for entrepreneurs and transition managers
6. Conclusions
7. Discussion
Objectives and Research Themes
This master thesis investigates how sustainable entrepreneurship can act as a driver for transitioning the economy towards sustainability. By addressing the gap in scholarly research regarding the "how" and "why" of this transition, the work develops an analytical framework based on institutional theory to examine how individual entrepreneurs can influence cultural-cognitive, normative, and regulative institutions within an industry.
- The role of sustainable entrepreneurship in driving sustainability transitions.
- Development of a 3x4 analytical framework to categorize transition phases and institutional pillars.
- Analysis of institutional change mechanisms using the Fair Trade movement as a case study.
- Identification of strategic responses by incumbents to sustainability pressures.
- Insights for entrepreneurs and transition managers on navigating industry transformations.
Excerpt from the Book
4.1. The discovery and exploitation of opportunities in a context of market failure
By taking a look at traditional theory from environmental and welfare economics it becomes clear that market failures within the economic system not only prevent entrepreneurial action from solving sustainability related problems, but actually motivate entrepreneurs to behave in environmentally degrading ways (Dean and McMullen, 2007). Pacheco et al. (2010) find that the reason for this lies in the divergence between individual rewards and collective sustainability goals which creates a prisoner’s dilemma for the economic actors in a society. Many scholars agree however that sustainable entrepreneurs can turn market failures into opportunities (see for example Cohen and Winn, 2005; Hockerts and Wüstenhagen, 2010; Dean and McMullen, 2007; Pacheco et al., 20010). Dean and McMullen (2007) list the five most common types of market failures (public goods, externalities, monopoly power, inappropriate government intervention and imperfect information), followed by a suggestion how each market failure poses an entrepreneurial opportunity.
The process of turning market failure into opportunity will now be explained using an example that outlines how a sustainable entrepreneur can use the market failure ‘externalities’ to create a business opportunity. Dean and McMullen (2007) cite Black (1997: 169) in order to define externalities, as “a cost or benefit arising from any activity which does not accrue to the person or organization carrying on the activity”. Externalities can be positive (if one person gets vaccinated against a disease, it also decreases the probability of another person to contract the disease) or negative (like the impact of industrial waste on the health and environment of the surrounding community) in which case the externalities have a damaging effect on another individual (Cowen, 1988, as cited in Dean and McMullen, 2007).
Summary of Chapters
Introduction to this master thesis: This chapter highlights the urgency of global sustainability challenges and introduces the research question regarding how sustainable entrepreneurship can influence the transition toward a more sustainable economy.
Paper 1: Key concepts of sustainable entrepreneurship and its potential to contribute to sustainable development: This paper defines sustainable entrepreneurship through the lens of a triple bottom line and explores how it contributes to solving market failures and initiating societal change.
Paper 2: Developing a framework for the analysis of a bottom-up sector transition led by sustainable entrepreneurs: An institutional theory perspective: This chapter introduces a 3x4 analytical matrix to categorize institutional change processes across four phases of a sustainability transition.
Paper 3: The influence of sustainable entrepreneurship on the transition of an industry: The case of Fair Trade: This empirical paper applies the analytical framework to the Fair Trade movement to demonstrate how sustainable entrepreneurs can effectively transform industry institutions.
Conclusion to this master thesis: This concluding section summarizes the research findings and discusses the implications and limitations of the developed framework for both practitioners and scholars.
Keywords
Sustainable entrepreneurship, Sustainability transition, Institutional theory, Triple bottom line, Market failure, Fair Trade, Industry transformation, Isomorphism, Bottom-up transition, Analytical framework, Sustainable development, Cultural-cognitive, Normative, Regulative, Case study
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the intersection of sustainable entrepreneurship and industrial transformation, aiming to understand how sustainable entrepreneurs can influence the transition toward a more sustainable economy.
What are the primary themes addressed?
The work explores institutional theory, the concept of the triple bottom line, the nature of bottom-up sector transitions, and the strategic behaviors of sustainable entrepreneurs versus incumbents.
What is the primary objective or research question?
The primary research question is: "In what way can sustainable entrepreneurship influence a transition towards a more sustainable economy?"
Which scientific methodology is utilized?
The thesis utilizes a qualitative, case-study based approach, employing a 3x4 analytical framework based on institutional theory and the paradigm model of axial coding (Strauss & Corbin, 1990).
What is covered in the main section of the thesis?
The main sections move from conceptual definitions to the development of a theoretical framework, followed by an in-depth empirical application of that framework to the Fair Trade movement.
What keywords characterize the work?
Key terms include Sustainable entrepreneurship, institutional theory, industry transition, bottom-up change, and Fair Trade.
How does the Fair Trade movement demonstrate the thesis's framework?
The Fair Trade case illustrates how entrepreneurs successfully manipulated cultural-cognitive and normative institutions to force incumbent adaptation and eventually mainstream the Fair Trade label.
Why are mainstream incumbents generally reactive?
The analysis suggests that incumbents tend to be reactive because they are often "locked-in" to growth-oriented regimes and only adopt sustainable practices when compelled by market share threats or institutional isomorphism.
- Quote paper
- Jamila Mohme (Author), 2012, Disrupting structural constraints. The influence of sustainable entrepreneurship on the transition towards a more sustainable economy, Munich, GRIN Verlag, https://www.grin.com/document/303581
