Assessing and forecasting the sustainability impact of new ventures

Journal of Cleaner Production – Special Issue

Assessing and forecasting the sustainability impact of new ventures: Theories, methods and empirical evidence

Journal of Cleaner ProductionThe Journal of Cleaner Production has now published a special issue on assessing and forecasting the impact of new ventures on sustainability. Borderstep Director Prof. Klaus Fichter is one of the guest editors.

Edited by Klaus Fichter, Florian Lüdeke-Freund, Stefan Schaltegger, Simon Schillebeeckx

Start-ups are key actors in environmental innovation. Thus, the sustainability impact of young ventures is central to both cleaner production and entrepreneurship research. As such, we should examine “how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited”.

read more

These effects can be both positive and negative, so improving understanding of emerging ventures’ sustainability impact is crucial. Beyond short-term performance, sustainability impact assessment entails medium- and long-term transformative impacts on markets, society, and the environment. It considers the “important role of entrepreneurs in developing non-economic gains to society” and as catalysts to larger socioeconomic transformations at multiple levels. While the sustainability impact of incumbent firms has been studied extensively, start-up impacts are an ignored research area. This neglect is surprising, because start-ups are instrumental in introducing radical environmental innovations. While an extensive portfolio of methods and tools for sustainable business model development and impact investing has been developed, less is known about the (theoretical) foundations of forecasting and assessing potential future sustainability impacts. This is especially true for digital sustainability activities that facilitate impact scaling and thus require strong metrics. Furthermore, little empirical data of the actual sustainability impacts of new ventures exist. Against this backdrop, this Special Issue aims to contribute to a better understanding of how past, present, and potential future sustainability impacts of new ventures can be properly assessed.


Impact of green entrepreneurship on sustainable development: An ex-post empirical analysis

Thomas Neumann
1 December 2022 · Article 134317 · Download pdf

Abstract

This paper contributes to the recent stream of econometric entrepreneurship research by introducing the environmental orientation of new ventures as a key factor for sustainable development. It empirically assesses whether relationships exist between national shares of green entrepreneurial activity (GEA) and economic, social, and environmental development. Theory and first empirical evidence suggest that – compared to conventional new ventures – new green ventures have a more positive economic and social impact and are less harmful or even beneficial to environmental quality. OLS regressions were estimated to empirically test the impact of GEA rates (share of total entrepreneurial activity) on GDP, the modified HDI, and CO2 emissions. For this purpose, Global Entrepreneurship Monitor data for 11,909 early-stage entrepreneurs was aggregated to the macro-level of 53 countries and merged with further international datasets. The results confirmed that higher shares of GEA are positively related to economic and social development but not to environmental development. Additional tests proved the robustness of the results for different economic development levels, time-lag variations, and different measurements of dependent and independent variables. The identified economic and social importance of GEA warrants intensified policy efforts to support the discovery, creation, and exploitation of green business opportunities. Potential explanations for the counterintuitive non-significant environmental impact are discussed, leading to new research avenues.

Gearing-up for purpose: The relationship between entrepreneurs’ usage of incubation support services and sustainable impacts

Marc Karahan, Lubna Rashid, Jan Kratzer
1 December · 2022 · Article 134315 · Purchase pdf

Abstract

Business incubators (BI) are increasingly expected to nurture sustainability-driven start-ups and contribute to the economy’s sustainable transformation. However, while previous (qualitative) research suggested a positive relationship between BI support services and sustainable impacts by entrepreneurs, no study has explored this link statistically, leaving sustainability-driven business incubation (SBI) haphazard and strategically ill-informed. Given the absence of a comprehensible assessment approach, this paper develops a coherent theoretical framework for structuring SBI. Moreover, it quantitatively investigates the relationship between entrepreneurs‘ usage of various BI support services and their self-proclaimed contributions to the UN Sustainable Development Goals (SDGs). Building on a sample of 299 German university spin-off start-ups, we provide empirical evidence that BI support services are generally related to the sustainable impacts of entrepreneurs. However, at a more nuanced level, we show that economic and ecological SDGs are associated with only a few BI services. In contrast, social SDGs are attained by a broad support service portfolio. In conclusion, we advise policymakers and BI managers to recognize the diverse support needs of sustainable entrepreneurs and tailor BI programs towards specific sustainability challenges rather than generalized approaches.

The effect of green startup investments on incumbents’ green innovation output

David Bendig, Lucas Kleine-Stegemann, Colin Schulz, David Eckardt
20 November 2022 · Article 134316 · Download pdf

Abstract

Green innovation is essential to green transformation. Incumbents possess the resources to exploit these green innovations and establish them on the market, while startups typically explore the underlying technology in the first place. Drawing on the notion of absorptive capacity, it is argued that corporate venture capital (CVC) allows incumbents to tap into valuable external knowledge of green startups, thus being a fruitful vehicle to increase their internal green innovation output. To empirically test the model, a panel dataset of 1,568 firm-year observations of U.S. firms from 2000 to 2018 is used. The authors find empirical support that CVC investments in green startups are associated with increased green patent applications of the parent firm, thus allowing researchers and practitioners better to assess startups’ sustainability impact across firm boundaries. The study contributes to the green entrepreneurship literature by enriching the understanding of the distinct roles of incumbents and startups and their joint interplay in the green transformation of markets.

Exploring investment processes between traditional venture capital investors and sustainable start-ups

J. Wöhler, E. Haase
1 December 2022 · Article 134318 · Purchase pdf

Abstract

Venture capital is an important funding source for sustainable entrepreneurship and, thus, drives sustainable development. However, sustainable startups have trouble acquiring venture capital. Hence, existing literature focuses on dedicated impact investors or aims to understand why traditional venture capitalists (tVCs) avoid sustainable investment opportunities. In contrast, this study investigates investment decisions from venture capitalists without a dedicated “green” focus on sustainable startups. We investigate about 80 cases containing business plans and decision documents of sustainable and non-sustainable new ventures. Thereby, we explore whether investors react differently to sustainable business models. Using Natural Language Processing (NLP) and topic modeling, we find that tVCs do not integrate sustainability into their decision justification. However, Linguistic Inquiry and Word Count (LIWC) reveals that tVCs argue more emotionally when writing about a sustainable business case. However, this is not only the result of a stronger emotional connection to sustainability, as it might also be influenced by emotional contagion from entrepreneurs‘ business plans.

Sustainable value propositions and customer perceived value: Clothing library case

Minttu Laukkanen, Nina Tura
10 December 2022 · Article 134321 · Download pdf

Abstract

The core of any sustainable business model is a sustainable value proposition, i.e., the benefits a company aims to deliver to its customers and society through its offering. Thus far, most research on sustainable business model innovations has focused on designing sustainable value propositions, but the value perceived by customers through the value propositions has rarely been addressed. However, in practice, it is not self-evident that the sustainable value propositions intended by companies are perceived by customers as such. The present study proposes value perceived by customers as a means to assess the perceived sustainability of business models. This study combines the concepts of the sustainable business model, sustainable value propositions by a company, and customer perceived value. Furthermore, the study introduces a new approach to assess the matches and mismatches between the intended sustainable value propositions by a company and customer perceived value. This approach combines the triple bottom line (the environmental, social, and economic dimensions of value) perspective on value propositions and the PERVAL (the financial, functional, emotional, social, epistemic, and conditional dimensions of value) perspective on customer perceived value. Applying a multi-case study research strategy, the study explores two Finnish clothing libraries which provide customers with a service for borrowing clothes from a collaborative wardrobe through the proposed approach. According to the study’s findings, the key message is that customer perceived value assists the design of dynamic sustainable value propositions to respond to market changes and builds an understanding of the expected sustainability impacts. This study proposes that sustainable value propositions and customer perceived value should be managed simultaneously to identify areas for environmental and social impacts and sustainable value creation.

Sustainable entrepreneurship impact and entrepreneurial venture life cycle: A systematic literature review

Assunta Di Vaio, Rohail Hassan, Meghna Chhabra, Elisa Arrigo, Rosa Palladino
10 December 2022 · Article 134469 · Purchase pdf

Abstract

This study analyses the sustainable entrepreneurship issues faced during the pre-seed and seed phases of the life cycle of entrepreneurial ventures, which are considered the protagonists of innovative changes towards a cleaner environment. Specifically, it investigates the role innovation plays in the life cycle of entrepreneurial ventures seeking to create sustainable business models and tools for measuring the social impact of such ventures in sustainability assessment systems designed to help achieve the Sustainable Development Goals (SDGs) adopted by the UN 2030 Agenda. The study conducts a rigorous literature review and bibliometric analysis of 166 English-language articles on entrepreneurship and sustainability published between 2001 and 2021, and formulates a map for the knowledge produced and disseminated in previous investigations. The results advance our understanding of how sustainability assessment can be integrated into the life cycle phases of innovative entrepreneurial ventures. This review can aid in the development of a comprehensive framework and of research propositions for sustainable entrepreneurship issues in the pre-seed and seed phases. The study also extends institutional and stakeholder theories to provide decision support for sustainable entrepreneurial ventures in their pre-seed and seed phases. It explains how stakeholders‘ participation and engagement with institutional structures can be invigorated and how this affects the decision consequences for sustainable entrepreneurs. Our results can help practitioners and researchers accurately interpret ‘innovation’ in the life cycle of entrepreneurial ventures and sustainability assessment systems, thus allowing them to formulate policies, strategies, and guidelines for promoting a sustainable development agenda.

Design principles for sustainability assessments in the business model innovation process

Rishi Bhatnagar, Duygu Keskin, Arjan Kirkels, A. Georges L. Romme, J.C.C.M. Huijben
1 December 2022 · Article 134313 · Download pdf

Abstract

Assessing business models’ sustainability impacts has become necessary to help firms transition towards a more sustainable and circular economy. Most firms face multiple challenges in developing sustainable business models. Many of these challenges can be solved by assessing the sustainability impacts of various business model designs. Various sustainability assessment tools and processes have been developed, each fitting different organizational needs in the sustainable business model innovation process. This paper seeks to develop a deeper understanding of this organizational process by analyzing the extant sustainability assessment frameworks and tools for business models and synthesizing the findings into a set of design principles (as meta-artifacts). We draw on a systematic literature review using a qualitative meta-synthesis approach. The proposed design principles can serve as guidelines in helping a company integrate sustainability assessment into its business model innovation process. The paper concludes by presenting a research agenda for future work in this area.

Effectuated sustainability: Responsible Innovation Labs for impact forecasting and assessment

Matthew Coffay, Lars Coenen, Ragnar Tveterås
20 November 2022 · Article 134324 · Download pdf

Abstract

Considering intractable uncertainties and the wicked nature of many sustainability challenges, there is a need to both forecast and assess the potential for improvements in sustainability with new ventures. While it is tempting to think of forecasting in terms of ‘predicting outcomes’, such an interpretation assumes a causal logic, failing to acknowledge the effectuation processes often at work in sustainability-focused innovative and entrepreneurial activity. In this paper, we argue that effectuation theory implies a new way of conceptualizing sustainability impact in such contexts. Leveraging the Responsible Research and Innovation (RRI) concept, we develop an arena in which both impact forecasting and assessment can be achieved in line with effectuation processes via what we term a Responsible Innovation Lab (RIL), understood as a type of living lab. After examining the concept of RRI, we delve into effectuation theory, deriving relevant insights for sustainability impact in new venture contexts. We then present the RIL as a conceptual synthesis of RRI, living labs, and effectuation theory. Further leveraging effectuation theory, we develop two tools (the Responsible Innovation Tool and Responsible Impact Tool) to both guide multi-stakeholder sustainability-focused innovation activity in a RIL, as well as facilitate the development of context-specific methodologies for forecasting and assessing sustainability impacts.

Forward-looking impact assessment – An interdisciplinary systematic review and research agenda

Kiia Strömmer, Jarrod Ormiston
1 December 2022 · Article 134322 · Download pdf

Abstract

New and established ventures are under increasing pressure to consider how their current actions impact our future world. Whilst many practitioners are paying greater attention to their future impact, most impact assessment research focuses on the retrospective measurement of impact. Limited studies have explored how impact assessment is used as a tool to forecast or predict the intended impact of organisational action. This study aims to overcome this gap by exploring forward-looking approaches to impact assessment. An interdisciplinary systematic review of the impact assessment literature was conducted to answer the question: “How and why do organisations utilise forward-looking, future-oriented approaches to impact assessment?“. The findings elaborate on the common research themes, challenges, and gaps in understanding forward-looking impact assessment. An integrated process model is developed to show the relationships between various antecedents, methods, and effects of forward-looking impact assessment. Based on the review, the paper puts forward a research agenda to provoke further inquiry on forward-looking, future-oriented approaches to impact assessments related to four research themes: uncertainty, values and assumptions, stakeholder cooperation, and learning. The study contributes to the impact assessment literature by providing an overview of how the current literature comprehends forward-looking approaches and insights into how a more holistic view of temporality in impact assessment can be developed.

Accentuate the positive? Sustainable entrepreneurs‘ framing of positive and negative impacts

Denise Fischer-Kreer, Malte Brettel
20 November 2022 · Article 134319 · Purchase pdf

Abstract

Through qualitative studies, we examine how sustainable entrepreneurs frame the positive and negative societal as well as environmental impacts created by their entrepreneurial activities. According to framing literature, entrepreneurs use framing as a communicative strategy to guide an audience’s attention on selected features of their ventures. Based on in-depth interviews with ten sustainable ventures in southern India, we found that sustainable entrepreneurs highlight the positive sustainable impacts they strive to create. We show how sustainable entrepreneurs apply a variety of techniques to downplay their ventures‘ negative sustainability impacts. Our empirically grounded model illustrates how the salience of positive sustainability impacts and the downplay of negative sustainability impacts—in combination—leads entrepreneurs to articulate their sustainability impacts strongly biased in favor of positivity. Overall, this study provides new insights for a critical reflection of a positivity tendency in sustainable entrepreneurship. Our study, therefore, sheds light on a much-neglected issue in the sustainable entrepreneurship domain that must be taken into account when developing new methods for the sustainability impact assessments of young ventures.

Trademarks and how they relate to the sustainability and economic outcomes of social startups

Mirko Hirschmann, Joern H. Block
20 November 2022 · Article 134320 · Purchase pdf

Abstract

Prior research shows that trademarks positively relate to startups‘ growth and survival. However, empirical evidence on the impact of intellectual property rights (IPRs), especially trademarks, on the development of social startups‘ hybrid outcomes is limited. Our study aims to fill this gap by investigating how early trademarking relates to the sustainability and economic outcomes of social startups. Based on a sample of 485 social startups from Germany, we find that social startups that register a trademark within the first three years of their existence have both significantly higher sustainability and economic outcomes. Additionally, we identify that the geographical scope of a trademark relates differently to social startups‘ outcomes. Our results contribute to the emerging literature on startups’ role to achieve sustainability outcomes and to IPR research that lacks an understanding of the importance of trademarks for sustainable entrepreneurship. We provide several practical implications for social startups, impact investors, and policy-makers.

Intellectual property strategies for green innovations – An analysis of the European Inventor Awards

Pratheeba Vimalnath, Frank Tietze, Akriti Jain, Anjula Gurtoo, … Maximilian Elsen
1 December 2022 · Article 134325 · Download pdf

Abstract

To drive sustainability on a global scale for a carbon-neutral future, green innovations and a better understanding of how intellectual property (IP) impacts their research, development, and diffusion are needed. In this paper, we identify IP models adopted by green innovators in three innovation process phases, namely: research; development/commercialization; and diffusion phases, contrasting findings across three organization categories: new ventures; universities; and established firms. Our analysis is based on a qualitative content analysis of 57 green innovations recognized by the European Inventor Award, a highly prestigious international prize awarded annually by the European Patent Office. The analysis shows the degree of openness in IP sharing increasing along the innovation process. Unlike established firms who adopt closed IP models predominantly throughout the innovation process phases, new ventures and universities adopt closed IP models in research and development phases to protect inventions and later share the IP, primarily patents, with others via licensing (exclusive or non-exclusive) to accelerate commercialization and diffusion for broader sustainability impact. The findings point towards a need for interventions at managerial and IP policy level that move beyond incentivizing innovations through exclusivity towards facilitating strategic and collaborative approaches to IP sharing that can accelerate sustainability transitions.