3 Co-ideation by Entrepreneurs 3 INTRODUCTION The second category of key players at the co-ideation level i the category of entrepreneurs: It isthe category of people with a strong feling for the Creation and opening of new markets. The eco-innovative and sustainable fntreprencur is, more than other types of professionals, interested in sus tainabilty asa means 0 profits The sustainable entrepreneur interprets sustainability primarily as 2 value driver; the entrepreneur knows that it ca al chooses to focus om it as a value driver. The sustainable entrepreneur needs to have the same characteristics as the more traditional entrepreneurial type bt is clistinguished by this belief in sustainahilty as a source of profit and ‘Wealth, Most entrepreneurs ae keen on searching and finding new opportu nities. They often focus on finding the latent desires of potential cust in markets that da not exist yet but that can emerge in the near future They tend to Took for chances and possibilities and ty to develop new ideas for products, services and business models to serve new market segments Entrepreneurs are aware ofthe fact that their propositions for new prod net, services and business processes have to be diferent from what already exists in the market: They thus try to develop ideas that ate unique and, for iply or serve customers who are not served by competitors or who are located in neglected geographic areas. They offer products with dis- Tinctve features and designs that separate them from competitors in already existing markets. A sostainable entrepreneur needs the traits of any other Entrepreneur and in addition concentrates on creating value, on opening markets and on developing new products, services and businesses that have sustainability as the core element that makes them unigue and valuable. The sustainable entrepreneur is convinced thatthe socal, sustainable and societal attributes of his or her new business propositions are valuable, that these are worth a price and that they will attract customers. Eneepre neurs are the second element atthe co-deation level of the model of eco innovation and sustainability management (sce Figure 31), nerate value and to create markets, turnover andtegory forthe snable rand sivas | per bat sltype Conideation by Entrepreneurs 29 1 Covideston by entrepreneurs This chapeer starts with an overview of theory that forms the basis of the entepreneurship element of the model (Section 3.2). Ie continues with the methods used to further explore this element in practice and in theory (Section 3.3. Ie then explores the analytical value of the entrepreneurship element in practice (Section 3.4) and in theory (Section 3.5) and concludes with a summary of the main findings (Section 3.6) 32 THEORETICAL BASIS The entrepreneusial function in business consists of many characteristics and comprises a complex of traits and behaviors that 8 not easy to per form: The sustainably conscious entrepreneur who wants to develop iniia- tives toward eco-innovation and sustainabiliyy has to be environmentally, socially and socieally aware. Today's entrepreneurs act beeause they have 2 fel for emerging opportunities and for how to exploit these by creat jing unique ideas for new products and services. A sustainable entrepreneur feeds all these traits, behaviors and skills and should also be able to sce30 Eco-imnovation and Sustainability Ma 7 where economically fruitful propositions for new environmental, socal or Societal product, services and business emerge. Opportunity ates drives and controls the innovation strategies and The enteeprenes ini ization and takes the initiative o develop new prod processes in the org jets and services (Schumpeter, 1934). The entrepreneur is constantly look ing for new ways to make money and always identifies new opportunities to sell product, smells where the opportunites are, launches crispy initiatives land projects and stars ventures to introduce products and services and co ‘open markets (Beveridge and Guy, 2005). Stated boldly, the entreprenenr is driven by the possibilities of succesful innovation and isnot scared by the tsks of failure (Dixon and Clifford, 2007; Klein Woolthuis, 2009). Ac ording to Burgelman, Christensen and Wheelwright (2004), there is more to entrepreneurship than the classic example of the enthusiastic individual ‘with the starvup venture. Alot of entrepreneurship is going on in frms that already exist. Entrepreneurial individuals, for example, often work for in Ccumbent-that is large, powerfal and leading—firms. The entrepreneurial issue in these incumbent is how to use the initiatives of entrepreneurial temployees and to provide them the possibilities ro develop their en neural propositions forthe benefit ofthe firm, When an entrepreneurs ni tiatives are considered very important, these canbe integrated directly into the firm's business processes and market activities, I is also an option for incambene companies t0 establish a new product or service development artment of t0 create a special business unit. This means that entepre fens create organizations by starting one for themselves or forthe firms they work for Creation According to Williams and McGuire (2010), main driver of national eco- nomic growth is celated to the ereatvity of the nation’s entrepreneurs. AL though this statement is often posited and supported by many sources in the literature, the question remains how incumbent firms can stimulate and monitor the de al em ployees. Willams and McGuire (2010) contend that frms’ entrepreneurial tivity can be evaluated by using measures such a, for example, the mum: ber of patents and publications the firm's employees realize. Patents and pubs pment of innovative ideas by their enteeprene lications are an indicator of a nation's economic creativity. Patents codify the creation, retention and transfer of knowledge. Publications capture the Knowledge that is gathered, used, transformed and further developed by people in companies, universities and commercial laboratories. While pat tents and publications can be measured and ate an indicator of the entre= preneurial activity of an organization, R&CD spending is another indicatorCosideation by Entrepreneurs. 31 of innovation and entrepreneurial activity, Willams and MeGuite (2010) trite that “R&D spending may reflect an organization’ ability to identi, absorb, and improve on technologies and know-how in order t@ maximize Competitive advantage” (p. 401), R&D spending can also have @ postive fect on other indicators of innovation creation by a firm’ entrepreneurs, ‘sich as tademarks and license fes. Commercialization of intellect prop fy inthe form of trademarks and license fees can lead to an increase of revenues for companies. Williams and McGuire (2010) also maintain that the activity of independent entrepreneurs who have their own firms can also contribute to a nation's innovativeness and mention a county’ sll employment rates as another indicator oft innovativeness Self-employment rates can be an indicator of the number of independently organized entre preneurs in a country. These people choose or are forced to open and serve ‘markets on their own, for themselves, and with unique business proposals Uniqueness ‘Wo, Chang and Chen (2008) establish that a fr’ intellectual eapital can be one of the main sources of enduring competitive advantage. Firms that hige employees with a lot of knowledge and intellectual capacity may re ve, a8 a return on their investment in knowledge and creativity, more and bette innovation than competitors that do noe invest ina knowledgeable workforce. Knowledge workers can be key persons in an entreprenedial Fim and can be eapable of developing unique proposals for new products, services and combinations of these. According to Berkhowt, Hartmann and Trott (2010), knowledge workers link product creation activities with customer demand. Knowledge workers combine the latest, state-of the-art knowledge from science and engineering with a strong commitment to and an understanding of new and unigue emerging markets. They are awate of both the technological developments in science and industry and the new topics issues, fads and trends in society and consumer markets, Tis combi- nation of technological and societal awareness can make them outstanding creators of unigue business propositions, The entrepreneurial knowledge worker confronts and aligns knowledge and insights from both technolog calevolution and market dynamics and can tigger a continuous process of «creating new propositions for new products and services withthe potential ro serve emerging markets and latent consumer needs, Economic Awareness York and Venkataraman (2010) contend that entrepreneurial activity can he highly capable of addressing environmental isues and that those iss represent anew type af opportunity that entrepreneurs re going to tackle in the coming years. York and Venkataraman (2010) suggest thatthe current lessor nonsustainable way of producing, selling, buying and using productsEconinnowation and Sustainability Management will come to an end and that society is ready for new firms with alterna- tive eoorinnovative and sustainable ideas and new people who identify with these ideas, York and Venkataraman (2010) substantiate that a forprofi sphere, that is, the presence of economic chances to generate turnover with innovative and sustainable business and make a profit, ean become the solution to rising sustainability problems. Differences in market prices and possible profits can be the triggers for new innovative entrepreneurial ati ‘ny In ine with York and Venkataraman (2010), Schalegger and Wagner 2011) agree that economic awareness can he an important characteristic an effective sustainable entrepreneur It means that the sustainable entre preneur has the ability to envision the market potential of ideas for sustain- sble products and services. Schaltegger and Wagner (2011) contend tht tntrepreneurship ean contribute to the solving of envitonmental problems land atthe same time create economic value for al hat are involved. A main challenge is thas to balance environmental and economic parameters and Schaltegger and Wagner (2011) distinguish thre types of sustainably con scious entepreneuts. The frst type of entrepreneur wants blems and docs not want ta make a profit per se. This entreprenedrial type is saised when the money balance is in equilibrium, which means thatthe same amount of money goes in and out ofthe firm each month. A second type of entrepreneue i the entrepreneur who knows that regulatory, sovital and market institutions need to change rofitable o eco mainly de i value than respectively spent and destroyed ‘nomically healthy sustainable initiatives, Such an entre veloping projects and activities chat simulate institutional decision makers to change the rules, incentives, laws and penalties in the economic system. A third category of entrepreneurs wants to contribute fo solving societal and tnvitonmental problems by building a successful business and by creating sustainable development through new corporate initiatives, Tis type of en- trepreneurs’ main challenge i to sagt with a small coneibution to sustain able development and to turn this into a large contribution that grows and changes industry ad society 3.3 RESEARCH METHOD Additional empirical and theoretical studies are carried out to further in crease the analytical value of the entrepreneurship element ofthe model of co-innavation and sustainability management for industry Step 1. Shaping the Research Model This chapter builds om the results from the intial study of Bossink (2011 (see Appendix 1), It focuses on the entrepreneurship element of the (Section 3.2) and conducts exploratory empirical research in various Detern iy with prot with sand ac Magner piste Covideation by Entrepreneurs 33 industries to investigate how the entrepreneurship clement of the model holds for other empirical contents (Section 3.4). A review of the lterarare fon evo-innovation management is cartied out to explore how this element tan be shaped to claim a broader analytical value for industy (Section 3.) Step 2. Conducting Theoretical and Empirical Studies Literature databases are consulted for research papers on entrepreneurship in the area of ecological, geen, social, societal, envizonmental and biolog il busines. In addition to this ten managers and expert i varius ind tries inthe Netherlands are interviewed and asked to reflec on the question fof what sustainability issues they think are important for their business (Klawer, 2008) Step 3. Analyzing and Synthesizing the Studies’ Outcomes The entrepreneurship clement inthe initial model (Bossink, 2011a) is com fronted with the addtional empirical and theoretical seadies. On the basis ofthe outcomes ofthis analysis, che characteristics of the entrepreneurship tement atthe co-ideaton level are defined for industry (Section 3.5) 344 EXPLORING THE EMPIRICAL FIELD “The interviewees confem that all forms of enteepreneurship can have a posi- tive effect on eco-innovation and sustainability in industry. The exploratory interviews indicate thae an entrepreneur's opportunity-seeking behavior, positive atrude toward creation and being creative, an ongoing drive to “create unique business propositions and an awareness of economic feasbik ity of new sustainable initiatives can be main elements of eco-innovative and sustainable entrepreneurship. This section isthe authors interpretation of Klawwer (2008), and quotations are taken from that source. Opportunity ln the past years it became a normal economic practice in industry to wwe resources av if they are fre. Labor and eapital are invested in mining fossil resoutees and natural matevals, but in the economic system the natural re- sources itself are considered to he abundant and avaiable for unlimited use, Nowadays it seems that this centary-spanning tradition is ehanging. Today, industry increasingly understands that natural resources, either for energy or for materials, are neither infinitely usable nor reusable. Over the past decades, society and business became aware ofthe earth's limits; chey undes- stand thatthe use of natural resources comes ata cost and tha this cost ca bre taken into consideration and can be made part of the business system,M Eco tovution and Sustainability Management Economies and businesses are increasingly aware that they can incorporate the costs of use, ownership, reuse, contamination, toxicity and environ mental change into businesses” production systems. Because industrialized countries stato integ systems, unsustainable businesses are becoming more expensive and sus tainable businesses more economically viable. In this respec, in the inter views, the representatives of provincial authorities stress the importance of| ‘new regulations and national policy. They want to offer more opportunites for entrepreneurs to sell ecological or sustainable prodiacts and services, for example by directly buying, from sustainable suppliers themselves, As one of the representatives of a provincial authority commented: "When we, on II governmental levels, focus on purchasing sustainable products, the d mand and supply for sustainable products will increase «We stimulate that entrepreneurs can develop an interest in sustainable production’ (p. 54). Another representative of provincial authority talks about help ing entzeprencurs to become aware ofthe cost reductions chat are posible “There are two options to stimulate sustainable entreprenedrship. One repressive, which means that rules, taxes and fines are applied, Two: we believe chat tis better to he positive, to increase entrepreneurs’ awarenese of the imporeance of sustainability and to let them realize that i ean also reduce costs” (p. $5). The interviews indicate that some entrepreneurs start to discover the opportunities of sustainable business the cco-costs in their economies and production Creation The interviewees agree that entrepreneurs have to cooperate with others, such as consultancy firms, research institutes, governmental agencies, or even competing firms, to ereate eco-innovative and sustainable products and services. In ather words, “No man is an island.” Sustainable initiatives ‘can become successful and can evolve from a small business into something bi but, say the interviewees, always by cooperating with counterparts, by tuying, failing and succteding with others in the same or in adjacent area never in isolation, The government is awate of this and invests in bringing together entrepreneurs who want to start a new sustainable business. One fof the interviewees, employed by importance of organizing meetings: “We organize seminars where ent prencure can learn from sustainable entrepreneurs, We are also committed to bringing several companies together; Companies that can inform and elp one another in terms of sustainability and technological development 57). The respondents all mention th the process of transforming industry ffom a resource-consuming industry into a resource-preserving industry. Alvhough itis often said that a charac teristic trait ofan entrepreneur is that he or she ea loner who is determined to achieve personal goals, most respondents’ answers indicate that coopera tion, openness, dialogue and exchange of experience and knowledge withrte piss po a Be of Coxideation by Entrepreneurs others may be a key feature of successful entrepreneurship in the fed of Gco-innovation and sustainability. Uniqueness Several respondents remark that sustainability isan aspect of busines that fan enable firms to create a unique image in the markeaplace. Neverthe less they are also uncertain about the aforementioned cooperative aspect fof eco-innovative and sustainable business creation, The interviews show ‘paradoxical piewure. On the one hand, entrepreneurs and entrepreneurial firms want to be unique and refuse to share their unigue knowledge and capabilites with others o¢ other companies. On the other hand, sustain ble innovation dynamics require them eo cooperate with and open up to ‘other firms. A respondent ofa production company that strives for unique: ness puts this as follows: a governmental agency “suggested thae we could cooperate with another frm, We do not wane that... We want exclusivity ‘vith this product. One of the major reasons for us to start developing his products competitive advantage. Tha is something we do not want to give way” (p. 60), university researcher uses a comparable line of reasoning when he states: “Small and medium sized enterprises can use their “per sonal ouch’ asa unique selling point, and this includes sustainable develop ment, ... Dutch small nd medium sized enterprises are very careful when itcomes to cooperation, This is hecause they do not want to give away busi ness processes fo other Erm” (p. 65). The key belief aiong interviewers that aligning business processes, sharing information and knowledge and bling stengths with other firms can he a threae and tha itis cifcue to turn this threat into an opportunity, The interviewees confirm that although ‘cooperation ean be a main key to the development of eco-innovative and sustainable products and services, heir main goal remains 1 create sustain able competitive advantage on their own and not in partnerships. Their preference is not to cooperate, not to share ideas, not to share knowledge andl not to join multiparty teams and projects. When tha is impossible, they start to look for opportunites to cooperate with others Economic Awareness Most respondents think that sustainability cam go hand in hand with prof ably, They stress the word “can” because they ae all aware of the diffcul- ties of turning an eco-innovative idea into a profitable business. Although they see opportunites for sustainable business, they also realize that sustain ability and proft are not synonyms, An entrepreneur working for a com- Iercial company in a businessto-business setting, for example comments My customers all require my products to catty an eco-certifcate. In xy pinion this just costs alot of ime and money and it has absolutely no ‘ditional value. In fat, chese requirements influence the entice supply36 Eco-innoustion and Sustainability Management chain. it increases the costs, but also requires costly organizational and perational changes in the production facilities" (p. 62). With respect to this, a consultant says that helping firms to implement sustainability and supporting them in cooperating with counter nely profi able yet In the ise phase I. describe the initial idea. In the second phase, ive experiment together with universities, che government and knowledge institutions and test che feasibility ofthe project. In the final phase contrac tors get involved and the project starts. In that third phase I stare ro make oney as an advisor” (p66). Nevertheless, some interviewees see glimmers ight in the darkness and foresee inevasing economic perspectives. A respondent from a research center, for example, stresses that sustainability tan have the potential of being a value driver instead of a cost driver and that its imporeant co stat analyzing what the actual benefits of sustainable initiatives can be: "Making use of new technological or other knowledge in a product, service or organization in order to add value to the total supply chain must be envisaged. For a company this means competitive advantage land higher profits (p. 63). The interviews indicate chat sustainable business may become widespread and profitable but has along way t0 go. 3.5. DEEPENING THE THEORETICAL BASIS “The review ofthe literature shows that balancing and optimizing sustain: ability and profitability isan important goal for the eco-innovative and sus tainable entrepreneur, Sources in the literature stress tht this balancing act is not easy and requires mach perseverance ‘Shepherd and Patzelt (2010) define sustainable entrepreneurship as 1 fanction that *is focused on the preservation of natuse, life support, and community in the pursuit of perceived opportunities to bring into existence future products, processes, and services for gain, where gain is broadly construed to include economic and non-economic gains to ind vidluls, the economy, and society” (p. 142). Their definition builds on wo sustainable” and “development.” Shepherd and Patzele (2010) wants to sustain the earth, bio natural concepts contend that the sustainable entrepreneur iversty and ecosystems, aims to preserve the envionment and resources and strives to protect communities and relationships between people. These communities and people share meaning, stores, norms, his tory and identity, and ths is also part of the world that needs to be sus tained. The aspects of sustainability Shepherd and Patzelt (2010) mention texceed the scope of traditional economic reasoning and of contemporary business. Shepherd and Patzele (2010) do not close their eyes tothe trad tional financial aspects of business and teade and argu that the sustain ble entrepreneur should enable economic gain for actors and for society However, they do not apply a unilateral nancial approach and take the honeconomic gains to individuals and society into account, including innal and pect ro ey and profi phase, ledge p make mers ins. A ability jr and pnable lee in 3 Co-ideation by Entrepreneurs education, health and life expectancy. Shepherd and Patzelts (2010) argu: ents support the entrepreneurship element chat is proposed in the model Of cco-innovation and sustainabilicy, Their argument couches upon the ‘opportunity-seeking behavior” of the entrepreneur and investigates the characteristics ofa society, of consumer markers and of institutional con ents that prepate for a future that demands an increase in sustainability In addition to this, they emphasize “creative competence” as an important centeeprencurial tait and stress that it can be the entrepreneur who de- ‘elope economic and noneconomie gains for individuals in industry and {ociery This directly relates to the proposed “economic awareness” ofthe sustainable entrepreneur. ‘Dixon and Cliford (2007) apply a somewhae different line of reasoning fom Shepherd and Patzcle (2010). Dixon and Clifford (2007) argue thae a sustainable entrepreneut’s main goal may be to deliver social value and that economic value is a welcome by-product. Many traditional entrepre- curs may prefer to put these rwo aspects of sustainable busines in everse ‘des but the sustainable entrepreneur is convinced that extra envicon mental, social or societal content in a product or service has the potential to generate extra incomes, The basic concept behind tis belief is thatthe Consume will pay an extra amount of money as long as producers are able to transparently explain what the extra sustainable features oftheir prod tects and services are and how they improve quality. What makes Dixon fad Clifore’s (2007) argument interesting, specifically to the research in this chapter on the entrepreneurship element, is chat it provides an alterna tive to people in business, government, research centers and institutional ‘fganizations who say thae eco-business just costs money. Dixon and Cli fords (2007) alternatives are quality specifications, quality perceptions land quality management. When companies, authorities and institutions ate able to specify the sustainable qualities oftheir products and of their intangible processes and services they may ask and receive higher prices for thir merchandise ‘Although alot of knowledge of entrepreneurship in general and sustain- able entrepreneurship in particular are aleeady available, many questions re tain unanswered, and many issues are open for further research. Recently, Dacia, Dacin and Tracy (2011) published 2 research agenda with interesting research questions in che azea of social entrepreneurship. They suggest five possible avenues for future rescarch, Theit fist proposed line of research fits trth the arguments of Shepherd and Patzele (2010) and Dixon and Cliford 2007). This ist proposed line of research addresses the question of how social entrepreneurs understand and manage the conflet of the for-profit and nonprofit logics of their actions. In addition, Dacin, Dacin and Tracy 22011) aim to broaden the research domain and also incorporate research social pont of view: One ‘questions froma different, more psychological an new line of research that they propose isto investigate the networks of the Social enteepreneur, This means that the subjects of study wil be che local38 Eco-inmovstion ane Sustainability Management 1 Frameof Reference for Ecosinnavative and Sustaina Opportnity ‘The entrepreneur sacks marker marker ‘opportunites, exploits market opportunities, serves nem ‘markets, stars ventures, ctates Organizations, develops row produce and series, thinks sustainability ft trsines, expects sustainably to bea deverof market roweh ns, develops patent, pubes, ownetademarks, ecrivesroyalin and nse fees, self-employed, has an independent posion as an entrepreneur in an incumbent Uniqueness The entrepreneur isa knowledge worker connects technology and markers, know aboot the lest technological development, knows about the latest tend in he nh, nares of ster oes cooperates with thers and other Rams and organizations Economic The entrepreneur balances sustainable and economic gxins cwarenest und constrains sees sstanabily asthe basi diver of diver does nr clue his or her ees fr the cost of eco innovation and sstainabality, markets sostainailiy 984 networks in which sustainable entrepreneurs setup their initiatives a well as the viewal networks that enable them to build communities and rapidly Share their ideas. Another prospective line of research Dacin, Dacin and Tracy (2011) introduce to study the culture of socal entrepreneurship and to focus on the rituals that are used to recognize and honor eco- and socio- preneur, such as awards and recognitions for socal heroes, They propose 8 line of research that interprets the mystifications of social entrepreneurs? successes, which lgitimizes the sustainable entrepreneur as an important person in business and society. This relates to the fourth proposed line of Inquiry, which isthe study of the sustainable entrepreneur's heroic identi and brand quality. Final a fifth line of research isthe line of entreprenee ial cognition, that is, whether the socal entrepreneur thinks and behaves dliffeently from other ent ‘and Tracey's (2011) re search agenda can be a starting point fora broader and deeper insigh imo the traits and behaviors ofthe sustainable entrepreneur “The research in this chapter indicates that entrepreneurship for eco innovation and sustainability is a profession with many characteristic tits and behaviors. The literature describes more tats, behaviors, approaches reneurs, Dacin, DacConideation by Entrepreneurs 39 and guidelines than a single entrepreneur can apply. An overview of the haracteristies of che sustainable entrepreneur shows that such people seek, find and exploit opportunities create ideas for unique business propositions and balance and optimize sustainable and economic goals (see Table 3.1). “The overview can be seen asa frame of reference, not a prescription, for Entrepreneurial behavior in favor of eco-innovation and soseainability The research in this chapter indicates that the characteristic of sustain able entrepreneurship can contribute co the development of sustainably in hovatve ideas, concepts, visions and initiatives in industry 36 SUMMARY Entrepreneurship isthe second element at the co-ideation evel of che model of ecovinnovation and sustainability management. The research shows that the behavioral repertoire ofthe sustainable entrepreneur is capacious. The Sustainable entrepreneur has a sfong sense for opportunities and for de ‘eloping ideas for profitable new sustainable businesses and organizations Te sustainable entrepreneur creates business prospects and new ideas for products and services and knows what is needed to be a unique provider ‘of sustainable goods in new and in existing markers, The sustainable entre preneur balances economic and sustainable revenues and costs and forms eas in cooperation and interaction with various stakeholders of the fim. “The susainable entrepreneur can be an important person in the co-ieation process. The thied important person atthe co-ideation level isthe champion ‘of sustainable innovation, which i the subject ofthe next chapter