A complete summary of the course Sustainable Entrepreneurship for the master Strategic Management at the University of Tilburg. This summary includes all exam material (i.e., papers and lecture slides). Summary helped me get a 7.7 on the exam, all exam questions were covered in my summary. Please b...
Lecture 1: Business Models and Co-evaluation
Milestones in sustainable thinking (history):
• 1972: The Club of Rome – The Limits to Growth
o A report focused on making clear that if growth trends in population,
industrialization, resource use and pollution continued unchanged, we would reach
and then overshoot the carrying capacity of the earth at some point in the next one
hundred years
• 1987: United Nations – Brundtland report: Our Common Future
o Was were the term ‘Sustainable Development’ was coined (invented)
o Developed guiding principles for sustainable development as it is generally
understood today
o The Brundtland Report stated that critical global environmental problems were
primarily the result of the enormous poverty of the South and the non-sustainable
patterns of consumption and production in the North. It called for a strategy that
united development and the environment, described by the now-common term
‘sustainable development’.
• 2002: Braungart and McDonough – Cradle to Cradle (wieg tot wieg)
o Presented an integration of design and science that provides enduring benefits for
society from safe materials, water and energy in circular economies and eliminates
the concept of waste.
o Cradle to Cradle is a design philosophy in which raw materials are not thrown away
(from cradle to grave), but are reused indefinitely or serve as “food” for new
products. Cradle to Cradle products must therefore be remountable or fully
recyclable and not contain any harmful raw materials.
o Focused on recycling
• 2013: Ellen MacArthur Foundation – Towards the Circular Economy
o Towards the Circular Economy: Economic and Business Rationale for an Accelerated
Transition
o This report details the potential for significant benefits across the EU. It argues that
a subset of the EU manufacturing sector could realise net materials cost savings
worth up to US 630 billion per annum towards 2025—stimulating economic activity
in the areas of product development, remanufacturing, and refurbishment.
• 2015: United Nations – Sustainable Development Goals
o On September 15th. 2015, the UN adopted a set of 17 Sustainable Development
Goals (SDGs) to end poverty, protect the planet, and ensure prosperity for all.
o Unlike previous development goals, which were essentially guidelines, all UN
member states agreed to strive to achieve the SDGs targets within their own
countries.
o 2030 goal with all UN nations
• 2018: Kate Raworth – Doughnut Economics
o Doughnut Economics: Seven Ways to Think Like
a 21-st-Century Economist
o Our growth should be limited but we should also
limit our growth
o We should not be in the position to exploit other
people to take advantage of that
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,Paper: Greening Goliaths versus Emerging Davids (Hockerts &
Wüstenhagen, 2010):
The purpose of the paper
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.
The two categories of the paper
• Greening Goliaths
o Represent larger incumbent firms using incremental (stapsgewijs) innovation to
bring about sustainable development.
• Emerging Davids
Are start-up 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
Incremental and disruptive innovation
Innovations can be disruptive or incremental. However, according to Hockerts and Wüstenhagen
(2010) only Davids introducing disruptive innovations can be classified as demonstrating
sustainable entrepreneurship.
So, only Davids with disruptive innovations can be defined as sustainable entrepreneurship.
Disruptive Goliaths are seen as Sustainable Corporate Entrepreneurship.
Adding disruptive innovation to the characteristics of Emerging Davids (rather new, small and/or
environmental objectives are at least as important as economic objectives).
Co-evaluation
The arguments of Hockerts & Wüstenhagen (2010)
• 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
Definition of 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.
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, Emerging Davids: Business Behaviour
Positives
• They are not limited by previous (technological) mindsets and are more prone to try out
innovative approaches
• Tend to be more credible when claiming they are part of the solution and not seen as
part of the problem
o As a result, new start-ups are initially more likely to engage in sustainable
entrepreneurship than market incumbents
• Sustainability start-ups have a value-based approach and intention to effect social and
environmental change in society. They externalize costs by asking customers to pay a
premium for socially and environmentally superior products (and services)
Negatives
• They tend to have a single issue focus (obsession) and can be less good at addressing a
broader range of sustainability issues (also given their lack of resources)
• Idealistic approach can lead to little or no attention to growth strategies
• They prefer to keep their niche market small and exclusive for idealistic AND economic
reasons
o Idealistic reasons:
▪ They are very doubtful about lowering standards for idealistic reasons even
if that might lead to attracting more customers
o Economics reasons:
▪ To avoid incumbents moving into their market (knowing that incumbents
might easily outspend them on R&D and distribution), sustainability start-
ups might prefer to their niche at a size that is not attracting incumbent
competitors. Over time, these start-ups will try to keep innovating and thus
pushing up requirements for sustainability performance which makes them
dominant in their own small niche market.
Greening Goliaths: Business Behaviour
Although market incumbents react in the beginning stages of industry’s sustainability
transformation (because of pressure from stakeholders) through incremental process innovation,
e.g. by adopting sustainability communication and management systems, they are restricted by
their existing assets from past investments which often makes them less likely to engage in
sustainable entrepreneurship.
Positives
• Incumbents are initially challenged by newcomers and adapting all their product range to
the highest sustainability standards is rarely an option. Incumbents may be slow to react
but are often able to catch up quickly (because of all of their resources) once they have
decided to follow
• Incumbents may copy-cat products that resemble those of the start-ups and benefit from
the premium prices established by the start-up
• They can launch Venture Capital funds to monitor innovating Davids (e.g. Philips, Sabic,
Unilever)
o Corporate venture capital is the investment of corporate funds directly into external
start-up companies.
• Strength of market incumbents is in process innovation which leads them to more broad
sustainability performance.
Negatives
• They may be able to influence the setting (or reduction) of environmental standards in
their favour (e.g. car industry lobby) as the existence of a broadly accepted product
standard or label creates a level playing field between incumbents and start-ups. Research
indicates that such standards are not contributing much to overall performance but rather
form a minimum requirement.
• They may try to keep standards fixed rather than encourage continuous improvement
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