Detailed summary of the lectures and sheets of the course Sustainable Entrepreneurship, for the master Strategic Management at Tilburg University. The articles are spread around the summary, as handled in the lectures.
Greening goliaths and Emerging davids
This paper analyses the interplay between Greening goliaths and Emerging davids and
theorizes about how it is their compounded impact that promotes the sustainable
transformation of industries.
In the article, firms are divided into two categories:
1. Greening goliaths
- Represent larger incumbent firms using incremental innovation to bring about
sustainable development.
2. Emerging davids
- Start-ups and young companies introducing disruptive innovations
Both can play a role in contributing towards sustainable transformation, but they do so in
different ways. For future success, the interaction of the two types is needed.
Characteristics of davids and goliaths
Criteria Davids Goliaths
Age Rather new Old, incumbent
Size Small Large
Objective function Social and/or environmental Economic objectives
objectives at least as dominating,
important as economic social/environmental
objectives objectives complementary
,Innovations
Innovations can be disruptive of incremental.
Incremental innovations
Introduces relatively minor changes to an existing product, process or technology.
- Process innovation
- Introducing a new model of an existing product
- Copying an improvement of a competitor
Disruptive innovations
Based on a different set of engineering, scientific and business principles and often opens up
a new market and application.
- Innovation that requires new suppliers
- Innovation that replaces the main input for a product
Co-evolution
Sustainable transformation of an industry when both start-ups and incumbents influence each
other in the market.
The authors argue that:
- Incremental solutions will not be enough to maintain critical levels of natural and social
capital
- Sustainable entrepreneurship has a role to play
- There is a need for transformational change
Sustainable entrepreneurship
The discovery and exploitation of economic opportunities through the generation of market
disequilibria that initiate the transformation of a sector towards an environmentally and socially
more sustainable state.
Emerging davids
Business behavior:
- They are not limited by previous (technological) mindsets and are more innovative
- They are part of the solution and not seen as part of the problem
- Sustainability start-ups have a value-based approach and externalize costs by asking
customers to pay a premium for socially and environmentally superior products (and
services)
Drawbacks:
- They tend to have a single-issue focus and can be less good at addressing a broader
range of sustainability issues
- Idealistic approach can lead to little or no attention to growth strategies
- They prefer to keep their niche market small and exclusive, in order to avoid
incumbents moving into their markets
Goal to increase impact:
- Scale up operations
, Greening goliaths
Business behavior:
- Incumbents may be slow to react but are often able to catch up quickly once they have
decided to follow
- They may benefit from being able to charge premium prices, following the price level
established by the start-up
- They can launch Venture Capital funds to monitor innovating davids (e.g., Philips,
Sabic, Unilever)
Drawbacks:
- They may be able to influence the setting (or reduction) of environmental standards in
their favor (e.g., car industry lobby)
- They may try to keep standards fixed rather than encourage continuous improvement
Goal to increase impact:
- Use process innovation to reduce the costs due to greening
Maturity model
Goliaths and davids follow different approaches but they can converge.
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