What is Sustainability Entrepreneurship?

Sustainability entrepreneurship contributes to solving social and environmental problems, particularly in emerging and developing countries. adelphi supports the development of sustainable business models.

Entrepreneurs who start a business to serve both self-interests and collective interests by addressing unmet social and environmental needs are usually referred to as sustainable entrepreneurs. Compared with regular entrepreneurs, we argue that sustainable entrepreneurs face specific challenges when establishing their businesses owing to the discrepancy between the creation and appropriation of private value and social value. We hypothesize that when starting a business, sustainable entrepreneurs

  1. Feel more hampered by perceived barriers, such as the institutional environment.
  2. Have a different risk attitude and perception than regular entrepreneurs.

We use two waves of entrepreneurships, which contains information on start-up motivations, start-up barriers, and risk perceptions of approximately 3000 (prospective) business owners across 33 countries. We find that sustainable entrepreneurs indeed perceive more institutional barriers in terms of a lack of financial, administrative, and informational support at business start-up than regular entrepreneurs.

Further, no significant differences between sustainable and regular entrepreneurs are found in terms of their risk attitudes or perceived financial risks. However, sustainable entrepreneurs are more likely to fear personal failure than regular entrepreneurs, which is explained by their varied and complex stakeholder relations. These insights may serve as an important signal for both governments and private capital providers in enhancing the institutional climate.

In many developed and emerging economies people focus on short term entrepreneur’s goals which abide by the environmental rules. The businesses there work with big organizations, actors etc. so they can spread the idea of sustainable businesses amongst the Youngs of the society to be inspired by them and start similar business practices in the future.