«Typologies of Ecopreneurs. Harnessing Innovative Potential of Ecopreneurs»

Thaddeus McEwen. «Ecopreneurship as a Solution to Environmental Problems: Implications for College Level Entrepreneurship Education». International Journal of Academic Research in Business and Social Sciences, vol. 3, n.º 5, May 2013. See the references in the original publication of this article.

«Typologies of Ecopreneurs

»Most researchers agree that there are two categories of environmental entrepreneurs –those who have a profit or economic orientation and those who have the sustainability orientation and want to help change or improve the environment (Taylor & Walley, 2003; Isaak, 2002; Koester, 2011). Schnick, Marxen & Freiman, (2002) refer to the categories as the two ends of the ecological orientation continuum. At one end are ecopreneurs who constantly adopt environmentally-friendly practices and at the other end are entrepreneurs who give no ecological consideration to the businesses at all. In other words, environmental entrepreneurs are either starting green businesses or making their businesses green (OECD, 2011). Table 2 presents the different types of ecopreneurs related to each category.

»One criticism of the ecopreneurship typologies is that they do not account for the changes that might occur among entrepreneurs, e.g., could ecopreneurs move between different typologies, and which drivers mainly guide their behavior (deBruin & Lewis, 2005 cited in Gibbs, 2007). In response, Isaak (1998) argued that the various types of ecopreneurs are not pure forms, but represent reference points for broad changes within businesses. The process theory of entrepreneurship supports Isaak’s “viewpoint, which emphasizes the fact that “you can’t pin people down to one type, because entrepreneurs are always in the process of ‘becoming’” (Steyaert, 2004, p. 6).


»Harnessing Innovative Potential of Ecopreneurs

»Given the growth of ecopreneurship, the question now is, how do we harness the innovative potential of ecopreneurs to exploit the opportunities within environmental degradation? In other words, how do we foster the development of new entrepreneurial firms that will create the innovations necessary to solve environmental problems?

»According to Shane and Venkataraman (2000), “entrepreneurial action is created at the nexus of two phenomena: the presence of enterprising individuals and the presence of lucrative opportunities” (p. 218). Ecopreneurs are the enterprising individuals. Some are motivated by profit and start businesses that happen to be green, while others have a sustainability orientation and are motivated by environmental needs. Their businesses are founded on the principle of sustainability and they seek to combine environmental awareness with conventional entrepreneurship (Schnick, et al. 2002). Lucrative entrepreneurial opportunities exist within the environmental degradation e.g. the problems of climate change, pollution, energy, etc.

»According to Shane (2003), the nexus is the place where the entrepreneur interacts with the environment, e.g. environmental degradation, to identify opportunities. How they interact and whether opportunity recognition and exploitation takes place depends on the resources the entrepreneur has at his or her disposal and the resources available in the environment (pg.8). Given that the entrepreneur-environment interaction is so critical to creating entrepreneurial action necessary for developing environmental innovations, what should be done to stimulate ecopreneurship?

»1. Provide high quality and reliable information to ecopreneurs.

»Lack of quality information is a major barrier to ecopreneurship. Because environmental innovations involve highly technical operations very little can be accomplished without reliable information about the nature and extent of the problems, the range of solutions available, the costs, and how to minimize them (Banks & Heaton, 1995). According to Cohen and Levinthal (1990), successful ecopreneurs recognize opportunities that others do not see because they have better access to information about the existence of the opportunities.

»Hermann (2011) also states that information availability and management help the entrepreneur or ecopreneur get closer to the opportunity i.e., where the market changes are and what is needed to access them. Clearly, the provision of reliable information directly to the potential business founders is a key factor in helping them make the decision to invest in an eco-innovation startup (Schnick, et al. 2002).

»2. Facilitate collaboration and networking among ecopreneurs and innovation intermediaries.

»“An innovation intermediary is an organization or body, which acts as an agent or broker in any aspect of the innovation process between two or more parties.” (Howells 2006, p. 172). They help the ecopreneur acquire knowledge outside their own organizational boundaries (Clarke & Roome, 1999), an as such the ecopreneur gain access to and exchange relevant ecology and sustainability-related information. Some of the different types of intermediaries are government and local authorities, NGOs, universities, industry associations and consultants.

»Collaboration between ecopreneurs and innovation intermediaries also provide access to direct assistance, e.g., advice on funding sources, advice on business operations, identification of potential collaborators, etc., which supplement the ecopreneurs resources and can lead to a startup involved with eco-innovations (Klewitz, Zeyen & Hansen (2012).

»3. Refocus the publicly funded environmental technologies (Research & Development)

»First, attracting more private sector funds for environmental technologies should be an important policy. In doing so, efforts should be made to reduce the risk for the private investors, while making sure that public money is used effectively and does not crowd out private initiatives (OECD, 2008).

»Secondly, publicly funded environmental technologies needs to be refocused. Presently, most of the funding are allocated to agencies that have very little to do with environmental technology (Department of Energy 44%, National Aeronautics and Space Association 23% and Department of Defense 11%), while a small percentage is directed to technologies that improve the environment, e.g. Department of commerce 6.2% and the Environmental Protection Agency 2% (Banks and Heaton, 1995). According to an OECD report, over 100 billion dollars are spent annually to support and conduct R&D in twenty-two agencies, but six agencies control 95 percent of the funds (OECD, 2008).

»If we are serious about attracting the innovative potential of entrepreneurs to develop environmental technologies, we need to refocus publicly funded R&D. This could be done by including improved environmental performance as a criterion for current R&D programs and also making environmentally relevant R&D a subcomponent of current programs (Banks & Heaton, 1995, p. 4).

»4. Increase the speed of commercialization of environmental technologies

»Many available environmental technologies have not been successfully introduced into the market because of market, infrastructure, production and consumption obstacles (OECD, 2009). One way to accelerate the commercialization of new technologies and the development of startups that will create clean technologies and green jobs is to establish a business incubator, e.g., cleantech business incubator. The incubator will offer flexible ready-to-go office space, lab facilities, and a supportive environment, where starting teams can share ideas with other entrepreneurs and fuel innovators. It will also give each startup the chance to work with a dedicated mentor, as well as access to a growing network of cleantech and business experts and introductions to prospective investors (Walti, 2011).

»Another way to speed up commercialization of new environmental technologies is technology certifications or validations. Quasi public bodies e.g. standards institutes will evaluate the effectiveness of the new technology and certifies its compliance with the standards. It is a one time scientific and technical performance evaluation, as well as a regulatory certification of environmental technology.

»This certification will reduce uncertainty around the new technologies and increase their acceptance, by offering third party information on technologies, which is critical to the EPA, other government agencies, and purchasers of innovative environmental technologies. Certifications and validations are other effective ways to foster diffusion and therefore speed up commercialization (Banks & Heaton, 1995: OECD, 2008).

»5. Increase access to financing

»Availability of funding and other incentives are critical for environmental innovation. Access to funding is necessary to help ecopreneurs meet the cost of technical development and to win recognition of new products and services (Schick, et al. 2002).

»Access to financing is extremely difficult for entrepreneurs in green innovation because of the immaturity of the market, the difficulty associated with accurately pricing the relative risk of the investment and the lack of history or track record of success. All of these make it more difficult for new entrants to innovation to obtain reasonable costs financing, than it is for established firms (OECD, 2011).

»To harness the innovative potential of entrepreneurs for environmental technologies, there is need to improve access to financing through strengthening financial support with loan guarantees, grants, revolving loan funds, tax credits, etc., developing relationships with the early-stage investment community, and provide information on the various financial incentives, subsidies, tax credits and grants available to encourage investments in environmental technologies (OECD, 2008; OECD, 2011).

»6. Improve access to markets

»A strong demand for new products, processes and services is the most important driver of environmental innovation. Strengthening demand could be done through regulatory policies that reward new technologies and greater use of economic incentives (Banks & Heaton, 1995).

»Regulatory signals that are strong, predictable and clear will spur environmental innovation. It is essential that the regulations discriminate in favor of new technologies rather than prolong the status quo. For example, reducing the reliance on available technology as the measure by which pollution control standards are set and looking instead to improve future capabilities (Banks & Heaton, 1995, p. 3).

»Greater use of economic and financial incentives will also stimulate demand. Presently, incentives, such as, tradable credits and charges have been used only in the context of air pollution. There is need to expand these incentives to other areas, such as, water pollution and beyond to strengthen demand and stimulate innovation (Banks & Heaton, 1995, pg.3).

»7. Establish clear policy on government procurement of green products

»The biggest challenge green businesses face is going from research to production and distribution, and government can help companies make this transition successfully by procuring green products (p. 12). Government, at all levels, must play a more important role in terms of purchasing green products and services and in showing other consumers the benefits of purchasing green products.

»Through the introduction of sustainability criteria into public procurement decisions, the government can stimulate the development and use of more environmentally-friendly technologies. The strategy should address responsibilities, resources and monitoring and evaluation procedures. The key goal should be to develop standards and create momentum towards significantly increasing the amount of green produts and services purchase by the government. (Ambachtsheer, Charest, Ksowski, Mitschele, & Nielson, 2007).

»8. Provide incentives for customers

»Consumers also have an important role to play in fostering green innovation. They account for more than 60% of the final consumption in the OECD area. The purchasing decisions that they make therefore have major impact on the extent to which markets can work to provide innovation in green growth.

»Providing incentives to consumers will stimulate the market and encourage investment in environmental R&D and environmental technologies. This is vital, because the development of environmental technologies depends on having a strong local market that allows entrepreneurs to successfully get off the ground (OECD, 2011).

»Consumers form a significant part of the market, offering incentives to encourage greener purchases will be beneficial to the cleantech sector. Although some incentives such as rebates through the Energy Star Program are currently offered to consumers, more still needs to be done to create a solid market for green products. Also, there is need to simplify and centralize existing incentives by developing a website that lists the incentives and eligible products by region and jurisdiction (Ambachtsheer, et al. 2007).

»Subsidies, such as reduced taxes or tax credits have been used to increase the attractiveness of more fuel efficient vehicles. In addition to taxes, governments can also use grants and subsidies to influence consumer behavior and to protect the environment, while at the same time creating opportunities for environmental innovation, investment, employment and green growth. The Japanese “ecoprint” system aimed at rewarding purchases of energy-saving home appliances and vehicles is a case in point (OECD, 2010).

»9. Promote flexible labor market policies and support worker skills training programs

»The transition towards a low carbon economy requires workers with new competencies to exploit the potential of the new technologies. Labor markets and training policies can play a key role in facilitating the adjustment necessary for the transition to green growth (OECD, 2010).

»The government and economic development agencies should promote and support flexible labor market policies to facilitate the movement of workers and resources from declining to innovative firms and regions. Too much rigidity in labor markets has been shown to reduce innovations (Cotis, Serres, and Duval, 2010). Having the right people is a driver for innovation, but it requires relevant education as well as the development of skills to complement the formal education (OECD, 2011).»

Innovation Typologies
Thematic Readings

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