Exploring Environmental Entrepreneurship: Identity Coupling, Venture Goals, and Stakeholder Incentives

• Published date: 01 July 2016
• Author: Isobel O'Neil,Jeffrey G. York,Saras D. Sarasvathy
• Date: 01 July 2016
• DOI: http://doi.org/10.1111/joms.12198

Exploring Environmental Entrepreneurship: Identity

Coupling, Venture Goals, and Stakeholder Incentives

Jeffrey G. York, Isobel O’Neil and Saras D. Sarasvathy

University of Colorado; University of Nottingham; University of Virginia

ABSTRACT On the basis of a qualitative study of 25 renewable energy firms, we theorize why

and how individuals engage in environmental entrepreneurship, inductively defined as: the use

of both commercial and ecological logics to address environmental degradation through the creation of financially

profitable organizations, products, services, and markets. Our findings suggest that environmental

entrepreneurs: (1) are motivated by identities based in both commercial and ecological logics,

(2) prioritize commercial and/or ecological venture goals dependent on the strength and

priority of coupling between these two identity types, and (3) approach stakeholders in a

broadly inclusive, exclusive, or co-created manner based on identity coupling and goals. These

findings contribute to literature streams on hybrid organizing, entrepreneurial identity, and

entrepreneurship’s potential for resolving environmental degradation.

Keywords: effectuation, entrepreneurial identity, environmental entrepreneurship, hybrid

organizations, institutional logics, social enterprise, sustainability

‘What the research on social dilemmas demonstrates is a world of possibility rather than necessity.

We are neither trapped in inexorable tragedies nor free of moral responsibility for creating and sus-

taining incentives that facilitate our own achievement of mutually productive outcomes’.

Elinor Ostrom, 1997, p. 16

Scholars have argued that entrepreneurial action can address a broad array of societal

issues (Dacin et al., 2010; Mair and Martı, 2006; Russo, 2010; Short et al., 2009),

including degradation of the natural environment (Dean and McMullen, 2007; Hall

et al., 2010; Mu~noz and Dimov, 2015; Patzelt and Shepherd, 2011; Shepherd and Pat-

zelt, 2011; York and Venkataraman, 2010). Recent organizational theory work has

turned attention to hybrid organizations (Battilana and Dorado, 2010; Battilana et al.,

2015; Hockerts, 2015; Jay, 2013), and specifically, social enterprises (Battiliana et al.,

Address for reprints: Jeffrey G. York, University of Colorado – Boulder, Leeds School of Business, Boulder,

CO, USA (Jeffrey.york@colorado.edu).

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Journal of Management Studies 53:5 July 2016

doi: 10.1111/joms.12198

2012; Smith et al., 2013), as unique organizational forms for addressing social and envi-

ronmental problems. Such organizations are posited to differ from traditional ventures

because the entrepreneurs who initiate them are motivated by compassion, rather than

wealth creation (Grimes et al., 2013; Miller et al., 2012) and the ventures combine social

welfare and commercial institutional logics within the organization (Battilana and Lee,

2014; Besharov and Smith, 2014; Haigh and Hoffman, 2012; Smith et al., 2013).

The literature on hybrid organizations and social enterprise offers important insights

into how entrepreneurs tackle social issues, but it has paid relatively little attention to

explicating how hybrid organizations may address environmental sustainability (but see

Haigh and Hoffman, 2012). For example, scholars suggest that addressing human-

induced climate change will require massive shifts across economic, organizational, and

transnational boundaries (Ansari et al., 2011, 2013; Hiatt et al., 2015; Howard-

Grenville et al., 2014; IPCC, 2014), but the role of entrepreneurs in such change has

received little investigation. Interestingly, political economists have suggested that small-

scale enterprises are necessary complements to political change in addressing climate

change (Ostrom, 2010, 2012), but make no link to entrepreneurial action. While the

concept of environmental entrepreneurs, who create hybrid organizations fostering

simultaneous ‘economic and ecological benefits’ has been theoretically discussed (Dean

and McMullen, 2007; Lenox and York, 2012, p. 70), little is known about the creation

of such ventures.

In this study we sought to understand two interrelated research questions:Whyand

how do individuals engage in environmental entrepreneurship? These questions are criti-

cal, because as Tracey and Phillips (2007, p. 267) assert, ‘conflict between social and

commercial priorities’ is a central challenge of hybrid organizations; environmental

entrepreneurs often face specific challenges (Ebrahim et al., 2014; Pacheco et al., 2010;

Russo, 2001), linked to a broader conflict between commercial and ecological logics

(Frederick, 1999; Jay, 2013; Lee and Lounsbury, 2015; Mars and Lounsbury, 2009;

York et al., 2016). While the literature has posited that environmental entrepreneurs are

driven by a desire to address degradation of the natural environment (Kuckertz and

Wagner, 2010; Patzelt and Shepherd, 2011; Shepherd and Patzelt, 2011), little explana-

tion has been given as to the source and consequences of such motivations. To address

our research questions, we engaged in an inductive field study of 25 environmental

entrepreneurs who were establishing, or had established, ventures primarily in renew-

able energy, but also in green building and energy efficiency. These ventures help to

reduce reliance on pollution-intensive forms of energy production (Russo, 2003), and

thus address human-induced climate change (Ansari et al., 2011; IPCC, 2011, 2014).

Yet, these sectors also demand economic profitability, necessitating the creation of

hybrid organizations. Following the tenets of grounded theory (Glaser and Strauss,

1967; Locke, 2001) to gather and analyse our data, we came to recognize the impor-

tance of the founder’s identity for motivating environmental entrepreneurship.

It has been suggested that an entrepreneur’s ‘passion’ for a particular entrepreneurial

role, such as founder, developer or inventor, gives coherence to the emerging venture

(Cardon et al., 2009; Murnieks et al., 2012). Fauchart and Gruber (2011) explicated a

typology of founder social identities (i.e., Darwinians, Communitarians, and Mission-

aries) and explored the organizational imprinting implications of each identity. While

696 J. G. York et al.

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the idea that multiple identities can play a role in driving entrepreneurship has been dis-

cussed (see Wry and York, 2015), empirical research has yet to provide much insight

into hybrid founder identities. Fauchart and Gruber briefly state that a hybrid identity

pertains to ‘founders who combine elements of the Communitarian and Darwinian identity’ and sug-

gest that it will foster ‘strategic decisions based on meanings associated with one of the identities, or

that a particular decision combines the meanings of both identities’ (2011, p. 949). Extending

beyond this, our findings begin to specifically explain how identity is implicated in moti-

vating individuals to engage in environmental entrepreneurship. Specifically, our induc-

tive research suggests that environmental entrepreneurs are motivated not only by a

‘pro-social identity’ (e.g., Austin et al., 2006; Fauchart and Gruber, 2011), but also by

the opportunity to couple competing identities aligned with commercial and ecological

logics. Our findings suggest this coupling between salient identities associated with each

logic is a critical explanation of why individuals become environmental entrepreneurs.

As we advanced our data analysis, we discovered that the strength and priority of cou-

pling between identities within individual entrepreneurs raised new questions. Given the

widely perceived tension between commercial and ecological logics, how do such envi-

ronmental entrepreneurs delineate goals and recruit stakeholders? This inductively

derived link between identity, goals and stakeholders became the focus of our ongoing

analysis. Stakeholders, defined as individuals who dedicate their own resources to co-

create new ventures with entrepreneurs (Sarasvathy, 2001, 2008; Venkataraman, 2002),

are central to the development of all new ventures (Aldrich, 1999; Aldrich and Fiol,

1994; Suchman, 1995). However, the hybrid organization literature has largely focused

on conflict between stakeholders resulting from their subscription to conflicting logics

(Pache and Santos, 2010, 2013). In contrast, we found that environmental entrepre-

neurs, dependent on their identity coupling, did (or did not) find ways to bring stake-

holders from both commercial and ecological perspectives on board (Pacheco et al.,

2010; Schlange, 2009).

Surprisingly, environmental entrepreneurs with an ecological dominant identity took

a more exclusionary approach towards stakeholders. In contrast, those with a commer-

cial dominant identity were open to stakeholders associated with either commercial or

ecological logics. However, entrepreneurs with a blended identity – who attributed

equal weight to ecological and commercial goals – created ventures that enabled self-

selection by all stakeholders. These findings suggest links between hybrid organizations,

entrepreneurial identity, and small-scale approaches to addressing environmental

problems.

THEORETICAL BACKGROUND

Scholars have become increasingly interested in how entrepreneurship can foster non-

economic value. For example, social entrepreneurship is a growing phenomenon that

has captured the attention of organizational scholars (Dacin et al., 2010, 2011; Grimes

et al., 2013; Mair and Martı, 2006; Short et al., 2009; Waldron et al., 2016). Social

entrepreneurs are posited to differ from traditional entrepreneurs as they address social

problems through economically sustainable business models (Battilana and Dorado,

2010; Mair and Martı, 2006; Miller et al., 2012; Moss et al., 2011; Tracey et al., 2011).

697Exploring Environmental Entrepreneurship

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