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Opportunities and Difficulties for Entrepreneurs to exploit Sustainability Issues - and required Business Model Innovation

Written by Y. Metz

Paper category

Master Thesis

Subject

Business Administration>Entrepreneurship

Year

2016

Abstract

Master Thesis: Sustainability in the business environment The responsibility of companies to participate in sustainable practices is a topic that has recently been addressed by various researchers. Corporate shared value, social enterprise, social entrepreneurship and corporate social responsibility are themes to address this responsibility (Yunus 2006; Yunus 2007; Porter & Kramer 2011; Beckmann & Zeyen 2015; Crisan & Borza 2012). Sustainability-oriented organizations aim to implement sustainable business practices in their companies instead of fighting them. The following section introduces the basic theory of sustainable business and its different definitions. A comprehensive understanding of sustainable business practices lays the foundation for further research. 2.1.1. The foundation of sustainable business practice In addition to economic goals, sustainable business also includes social and ecological dimensions in its business practice. This is a strategy based on the "triple bottom line" theory (Elkington 2001). According to this model, sustainable economic activities need to address three elements: ecology, society and economy (Slaper, T.F. & Hall 2011). As shown in Figure 1. The bottom line "society" looks at all stakeholders affected by the organization. The bottom line of "ecology" is based on the use of resources in an eco-friendly manner, protection of the climate, and responsible behavior in terms of ecological impact. The bottom line "Economy" starts from a financial perspective to ensure the organization's continued business practices. Companies that meet these requirements are called "social enterprises" (Yunus 2006) or "sustainable enterprises" (Schaltegger et al. 2012). Sustainable companies continue to apply the perspective of sustainable development, but they are different from non-profit organizations because the economic self-protection dimension plays an important role. Sustainable enterprises are based on economic reasoning (Schaltegger et al. 2011), but apply social and ecological perspectives to gain a competitive advantage (Porter et al. 2011). The explicit independence of donations is also part of its business principles (Michelini 2012b). In addition, although the ecological and social dimensions play an important role in business practice, the organization's donation to social or economic plans does not make the organization a social or sustainable enterprise. In some companies, the principles of sustainable business practices have been implemented under the term corporate social responsibility (Dubielzig & Schaltegger 2005). In the field of sustainability research, this approach is sometimes criticized as not a completely sustainable approach (Fauset 2006). 2.2. Entrepreneurship by applying the principles of sustainability Any method of applying entrepreneurship to the principles of sustainability must first define what entrepreneurship is. Then, entrepreneurship can be understood in context, for example in the sense of social entrepreneurship or sustainable entrepreneurship. This chapter explains why entrepreneurs are the unit of analysis in this article. The last section of this chapter explains the important foundation of the importance of business model innovation in the context of sustainability and entrepreneurship. 2.2.1. The basic theory of social entrepreneurship There are many different ways to define what an entrepreneur does or what an entrepreneur is, and there are multiple theories about traits, behavior, risk-taking, and innovation. Can't say whether any method of defining entrepreneurship is right or wrong. For different research goals, different methods are definitely needed to define the analysis unit. In the following, the definition of entrepreneurship is provided, especially the definition of sustainable entrepreneurship. Risk theory Entrepreneurship was initially described as taking risks in order to obtain profitable results. This view is based on the general view that entrepreneurs take risks, not just responsibility for the consequences of business activities (Hawley 1907 in Gedeon 2010). In contrast, the manager is responsible for the profitable results of the business operations performed, but there is no clear risk. Therefore, the entrepreneur is the owner of the new enterprise (Brockhaus 1980). Schumpeter's views on entrepreneurship In his "economic development theory", Joseph Schumpeter developed an understanding of entrepreneurship. Entrepreneurship is related to change, and change is the source of creative destruction. Creative destruction describes a process in which existing market structures are destroyed because they are exchanged for newly developed market structures. For example, a new product or a new production method opens up a new market or source of supply. This new structure contradicts traditional operating methods, and once it succeeds, it will lead to imitations by existing and emerging market participants (Braguinsky 2009). Schumpeter of the Austrian school believes that entrepreneurs come up with new structures to creatively disrupt the market and create imbalances. In contrast, the Austrian Entrepreneurship School defines the entrepreneur as the driving force of the process of actually creating a balanced and dynamic market. Entrepreneurs see the profit opportunities provided by the market. Use them to restore balance to the market. He does this through promotion and speculation, not necessarily through innovation, ownership, or risk (Gedeon 2010; Von Mises 1963). Read Less