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Entrepreneurs Are Burning Earth: Toward a Theory of Entrepreneurial Ecology

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Entrepreneurs Are Burning Earth: Toward a Theory of Entrepreneurial Ecology AGSE 2010 ENTREPRENEURS ARE BURNING EARTH: TOWARD A THEORY OF ENTREPRENEURIAL ECOLOGY Howard Frederick: Deakin University, Burwood, Australia » Contact: Howard Frederick, Deakin University, Melbourne Campus, 3126 Burwood, Australia, (T) +61 3951 7182, (F) +61 3 9251 7083, Email: [email protected] ABSTRACT This article consists of original musings based upon the sparse literature of ecopreneurship toward the foundation of a general theory of entrepreneurial ecology. Rather than drawing upon empirical research, this paper comes more out of the normative vein. Normative theory comprises hypotheses or other statements about what is right and wrong, desirable or undesirable, just or unjust in society. In addition there are three short cases compiled from the literature that illustrate my thinking. Human-induced climate change is one of the greatest challenges facing the human race in the 21st century. Entrepreneurs have played a major role in contributing to our current dilemma. For example, small-scale entrepreneurs have made their contribution to the planetary crisis by helping to destroy areas of rainforest. Nonetheless, entrepreneurs could actually help save the planet. The article draws upon the literature that attempts to define ecopreneurship. It examines the concept of sustainability and distinguishes between industrial entrepreneurship and sustainable entrepreneurship. It proposes a simple functional equation to describe the interrelationship of the biosphere, sociosphere, and econosphere. The paper proposes a model of entrepreneurial ecology showing how these three spheres, mediated by entrepreneurs, and must extract a constant source of energy and materials to maintain their self-organised state and to process materials. Up until the present, some entrepreneurs have not valued nature as a living ecosystem. This is characterised as negative entrepreneurship. A positive entrepreneurship would generate positive impacts through value adding and eliminating designed waste, duplication, disposability, planned obsolescence and wasteful end purposes. Positive entrepreneurs create net positive-impact loop systems and innovations that create levers for biophysical improvements and social transformation. Finally, the paper reviews some candidate frameworks in entrepreneurial ecology and presents three cases compiled from other sources that illustrate my thinking. INTRODUCTION Every year there is a burning season in Indonesia.1 Across the vast archipelago, swathes of rainforest are cut down and burned off by small-scale entrepreneurs and large corporations to make way for palm oil production. Thousands of Indonesians are employed and many entrepreneurial families are coming out of poverty because of the enterprise. However, the result is an environmental disaster. Human- induced climate change is one of the greatest challenges facing the human race in the 21st century.2 Since the Industrial Revolution in the late 18th and early 19th centuries, many entrepreneurs around the world, like these in Indonesia, have exploited the environment with impunity, without any thought of sustainability. It is no exaggeration to say that an entrepreneur (Henry Ford) played a major role in contributing to our current dilemma and an entrepreneur (perhaps one who commercialises hydrogen autos) can help ease the problem. Business as usual is dead and green growth is the answer to both our climate and economic problems. Who is best positioned to commercialise existing innovations and create new 919 AGSE 2010 technologies? I would argue it is entrepreneurs, because entrepreneurs ‘never waste a good crisis’. It is entrepreneurs who recognise opportunities where others see chaos or confusion. They are the catalysts for change within the marketplace. In the new world of climate change, they could well be the saviours of our planet. Climate change is the great challenge of our time and the stakes could not be higher for entrepreneurs. There are huge rewards for those that embrace innovation to lead the transition to a low- carbon emission economy. Entrepreneurs must be at the forefront of the fight against climate change. ‘We have to start thinking out of the box’, say Rajendra Pachauri, Nobel Prize winner and chair of the Intergovernmental Panel on Climate Change. ‘Entrepreneurs who respond to the challenge will reap commercial success – while businesses which fail to do so face oblivion’.3 Ecopreneurs In the past, some entrepreneurs simply tried to deny the planet’s problems. At worst, they exploited scarce resources even more intensively so that they could get their ‘fair share’ before the resources were completely wiped out. Of course, that just made the problem worse. To counter this behaviour, governments have put in place an increasingly bewildering series of regulations to limit such environmental excesses. This, in turn, increases the compliance costs on entrepreneurial firms, which leads to a vicious downward spiral as business resistance to regulation leads to more government pressure, which in turn creates more resistance. Fortunately for us, in the 21st century a growing cohort of entrepreneurs have realised that an environmentally friendly approach does not necessarily translate into a higher bottom line. In fact, it can even lead to gains in profitability. An entrepreneurial firm can gain competitive leverage by: • reducing costs by cutting back on pollution outputs and decreasing raw materials they use • fostering greater customer loyalty by satisfying the demand for eco-friendly goods • creating a desirable environment in which to work, thereby making recruiting easier and being able to retain trained staff. The literature highlights the role that entrepreneurial individuals and organisations play in the transformation toward sustainability. 4 The term ‘ecopreneurship’ is a combination of two rather dissimilar words: ‘ecological’ and ‘entrepreneurship’. An entrepreneur sometimes strives for success by exploiting market opportunities regardless of the consequences. This may be seen as inconsistent with the need to conserve the planet and prevent environmental damaged cause by market forces. But an ecopreneur combines the unrelenting drive and imagination of the entrepreneur with the stewardship of a conservator. Ecopreneurship has become a concept in business research since the start of the 1990s. Elkington and Burke in their book, The Green Capitalists, argued that environmentalism is in entrepreneurs’ best long-term interests as resource depletion and transportation congestion reduce profits.5 Important to the ‘green capitalist’ argument is that business can adjust its behaviour and that consumers can make environmentally friendly purchase decisions. Steven Bennett’s Ecopreneuring focussed on opportunities for innovative entrepreneurs to create growth-oriented eco-businesses such as waste recycling, reducing air pollution, ‘atmospheric businesses’, fuel for the planet, waterworks, safe foods, enviro-investment, and education on environment. 6 They, together with Berle7 and Blue8, began to use terms like ‘environmental entrepreneur’, ‘green entrepreneur’, ‘eco-entrepreneur’, and ‘ecopreneur’. In the late 1990s, Andersen’s 1998 book, Enviro-Capitalists, investigated what it takes to be a successful entrepreneur in the environmental arena. Most interesting are the entrepreneurial histories of three famous early American environmentalists: James John Audubon (1785–1851), John Muir (1838– 1914), and Aldo Leopoldo (1887–1948). This view is close to that of Josef Schumpeter (1949) who saw entrepreneurial activity as a ‘process of creative destruction’ and saw entrepreneurs as ‘agents of change’. As Schaltegger writes, ‘Ecopreneurs destroy existing conventional production methods, products, market structures and consumption patterns and replace them with superior environmental products and services. They create the market dynamics of environmental progress’.9 Ecopreneurs are driven by both commercial gain and also ethical and moral values. As Australian educator Michael Schaper has said, ‘Entrepreneurship is about harnessing the enthusiasm, initiative and creative energy of individuals. When this dynamism is applied to developing business solutions that help move enterprises into more sustainable pathways, then the results have the potential to be truly fascinating – and rewarding’.10 920 AGSE 2010 Entrepreneurial Ecology In 1987 a commission led by Norwegian Prime Minister Gros Harlem Brundtland was established by the UN’s World Commission on Environment and Development (WCED) to explore the state of the world’s natural systems and provide an outlook for global environmental health. The report, entitled Our Common Future, outlined an ominous situation wherein the world’s population was living well beyond the means of the planet to replenish natural resources, absorb pollution and regulate important climatic conditions such as temperature. The long-term solution would be for human society to become sustainable, a term which the commission defined as: ‘Meeting the needs of the present generation without compromising the ability of future generations to meet their needs’.11 The Brundtland Report led to the idea that markets were both the cause and the potential solution to the sustainability puzzle. It also has led us to rethink the concept of entrepreneurship. While climate change economics may lead us to the conclusion that environmental degradation results from the failure of markets, entrepreneurship literature argues that opportunities
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