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Paradigm changes in the economic system

1. Mainstream model of development: Washington Consensus: growth  World has changed, human
footprint has grown, natural resources are limited. Material consumption beyond need: can reduce
well-being. Reorientation  tasks: 1) identify what contributes to well-being 2) distinguish real
poverty (low quality of life) and merely low monetary income 3) create new vision of what the
economy is, what for, and new model of development.
The WB, IMF and WTO did not contribute to development in a sustainable and equitable way.
New science of happiness: assess the real economy: all things that contribute to real, sustainable
well-being. Basic types of capital support the real well-being economy: 1) built capital: factories,
offices, infrastructure 2) human capital: health, knowledge 3) social capital: formal and informal
networks among people 4) natural capital: the world’s ecosystems and all the services they provide.
Measure progress: GDP problems  GPI: separate positive from negative components of marketed
economic activity, adding in estimates of the value of non-marketed goods and service provided by
natural, human and social capital and adjusting for income-distribution effects.
A better model of development: would be based clearly on the goal of sustainable human well-
being, would use GPI (not GDP), and would acknowledge the importance of: 1) ecological
sustainability: natural and social capital are not infinitely substitutable by built and human capital 2)
social fairness: recognition that the distribution of wealth is an important determinant of social capital
and quality of life 3) economic efficiency: the inclusion of all resources that affect sustainable human
well-being in the allocation system not just marketed goods and services
The model would acknowledge that a complex range of property rights regimes is needed to manage
the full range of resources that contribute to human well-being. Role of gov needs to be reinvented:
has to expand the commons sector in ways that propertize and manage non-marketed natural and
social capital assets. Has to facilitate shared vision of what a sustainable and desirable future.
Lisbon principles: criteria for sustainable governance: responsibility, scale-matching, precaution,
adaptive management, full cost allocation, participation.
To break habits, we must see benefits of breaking the habit and costs of remaining addicted.

2. Propose a framework based on planetary boundaries to maintain stable Holocene state.

Anthropocene: era in which human action have become the main driver of global environmental
change. Boundaries define the safe operating space for humanity with respect to the Earth system and
are associated with the planet’s biophysical subsystems or processes. Earth-system processes (and
thresholds) which are interconnected; if crossed, could generate unacceptable environmental change:
Already crossed: climate change, rate of biodiversity loss, interference with the nitrogen cycle.
Others: phosphorus cycle, stratospheric ozone depletion, ocean acidification, global freshwater use,
change in land use, atmospheric aerosol loading, chemical pollution.  boundaries: interrelated
Quantitative approach rests on branches of scientific inquiry: 1) scale of human action in relation to
capacity of Earth to sustain it 2) understanding essential Earth processes 3) research into resilience

3. Purpose: allow and promote multiple theoretical perspective to the field of sustainable
entrepreneurship and embrace the variation in terminology, data and methods. SE:
To be sustained: nature, source of life support, communities
To be developed: economic gain, non-economic gains to individuals, non-economic gains to society
Related concepts to SE: ecopreneurship (how entrepreneurial action can contribute to preserving the
natural environment including the earth, biodiversity, and ecosystems), social entrepreneurship (the
activities and processes undertaken to discover, define and exploit opportunities in order to enhance
social wealth by creating new ventures or managing existing one innovatively) and corporate social
responsibility (actions that appear to further some social good, beyond the interest of the firm and that
what is required by law). Theoretical perspectives on SE: 1) Economics: about achieving efficiency,
offers approach to enhance understanding of SE at level of the individual, organization and economy.
TBS: markets for the life support provided by the environment; markets for the intrinsic value of the
environment; economics and sustaining communities. TBD: economic development of others; non-
economic development. 2) Institutional: role of institutional entrp. in changing institutions is an
important mechanism for explaining a movement towards more SD. TBS: environmental-friendly
institutions; community-based institutions; institutional trade-offs. TBD: economic benefits; non-
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economic gains for others. 3) Psychological: a psychological perspective offers a host of opportunities
to study SE at the level of the individual and analyse how individuals discover opportunities and their
motivation to exploit such opportunities. It can also explore how individual motivation and the social
environment conjointly trigger the foundation of social movements that relate to sustainable
development. Detecting 3rd person opportunity S+D: feasibility, motivation. Forming 1st person
opportunity S+D: feasibility, desirability.
Overview of the Field of Sustainable entrepreneurship
4. Four market imperfections: contribute to environmental degradation  source of entrepreneurial
opportunity. Views of entrepreneurial opportunity: 1) allocative view: better redistribution of
resources 2) discovery view: opportunity from information asymmetry on true value of resources 3)
creative view: seek to maximize utility functions of stakeholder, opportunities truly identified ex-post.
Triple bottom line view, changes achieved are: 1) incremental 2) necessary but not sufficient 3) does
not fully resolve imperfection 4) miss innovative and profitable opportunities
Focus on the opportunities for achieving entrepreneurial rents through innovations which reserve or
mitigate existing unsustainable conditions. Imperfection  neoclassical assumptions challenged: 1)
firms are perfectly efficient  eco-efficiency to minimize waste  2) negative externalities are
non-existent  create opportunities to reverse negative externalities and generate triple bottom line
results 3) perfect pricing is present  true value exhaustible natural resources, opportunity creation,
create new markets 4) perfect information exists  entrepreneurial opportunity to provide info.

5. Purpose: demonstrate how entrepreneurship can help resolve environmental problems through the
exploitation of opportunities in environmentally relevant market failures (depart from Pareto
efficiency). Environmental entrepreneurship = the process of discovering, evaluating, and exploiting
economic opportunities that are present in environmentally relevant market failures (subset of SE).
Sustainable entrepreneurship = the process of discovering, evaluating, and exploiting economic
opportunities that are present in market failures which detract from sustainability, including those that
are environmentally relevant. Market failure: 1) public goods: The Coasian Entrepreneur translates
public good into excludable private ones, implementing property rights 2) externalities: The
Institutional Entrepreneur reduce transaction costs by establishing or modifying institutions 3)
monopoly power: The Market Appropriating Entrepreneur breaks monopoly positions of existing
firms by appropriating part of the market from the incumbents. 4) inappropriate government
intervention: The Political Entrepreneur motivate changes to government incentives structures in
pursuit of own self-interest (for profit) 5) imperfect information: The Producer-focused Informational
Entrepreneur (Austrian) exploits opportunities that result from the discovery of knowledge regarding
market supply or demand conditions. The Customer-focused informational entrepreneur exploits
opportunities by enhancing customer knowledge of product or service attributes (ex: warranties).
Antecedents of SE
6. Offer a model of how sustainable development opportunities are recognized based on the
individual’s prior knowledge and motivation.  3 primary contributions: 1) investigate knowledge
other than that of business environments, motivation other than personal economic gain and impact on
opportunity recognition 2) investigate why some individuals are more likely to recognize
opportunities 3) distinguish 1st and 3rd person opportunities. Propositions: 1) The greater
entrepreneurs’ knowledge of the natural/communal environment, the more likely they will recognize
an opportunity for sustainable development. 2) The positive relationship between entrepreneurs’
knowledge of the natural/communal environment and the likelihood of recognizing an opportunity for
sustainable development is stronger when their entrepreneurial knowledge is high. 3) The more
entrepreneurs perceive that their natural/communal environment is threatened, the more likely they
will recognize an opportunity for sustainable development. 4) The positive relationship between
entrepreneur’s perception of threat to their natural/communal environment and the likelihood of
recognizing an opportunity for SD is stronger when their entrepreneurial knowledge is high 5) the
greater entrepreneurs’ altruism toward others, the more likely they will recognize an opportunity for
SD. 6) The positive relationship between entrepreneurs’ altruism toward others and the likelihood of
recognizing an opportunity for SD is stronger when their entrepreneurial knowledge is high.
The recognition of opportunities for SD depends on interdependencies between individuals’
entrepreneurial knowledge and their knowledge of the natural/communal environment.
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Empathy: able to think, feel, and experience for themselves similar emotions to those experienced by
others. Sympathy: think and feel themselves into others but experience emotions different to others’
emotions. Altruistic motivation arises when individuals experience empathy and sympathy to others.

7. Examine drivers of entrepreneurial intention in sustainable entrepreneurship. Model links: value 

attitude  intention. Existing theories: 1) theory of planned behaviour: attitude towards behaviour
(determined by individual belief), subjective norm (perception about behaviour), perceived
behavioural control (perception of ability to perform a given behaviour. 2) entrepreneurial event
model: perceived desirability, perceived feasibility, propensity to act  unable to call for
entrepreneurship type specific research. All hypotheses except H4b and H1b were confirmed.
Work value types: 1) intrinsic: connected to
creativity, learning and problem solving, motivated by
solving challenging tasks, opportunities to be create
and learn new skills. 2) Extrinsic: personal gain,
pursue work through which you can achieve monetary
gains, power, prestige, status. 3) Altruism: motivated
by the possibility to help others and the surrounding
society as well as care for the environment. 4)
Security: emphasis a person puts on the stability of the
work as well as on safety and harmony in the work
place. Dual/triple goal setting in SE is reflected in work values. Entrepreneurial intentions models
need to be adapted to context.
Sustainable entrepreneurs vis-à-vis competitors and incumbent firms
8. Gap: how to accomplish SEs being politically active in order to face market barriers. Entrepreneurs
have fewer options larger firms regarding political activities, likely to be pushed into collective action
 issues: 1) balancing individual and collective interests 2) power imbalances incumbent/entp. SE =
the discovery, creation and exploitation of entrepreneurial opportunities that contribute to
sustainability by generating social and environmental gains for others in society. 3 market barriers that
entrepreneurship can help overcome: 1) inefficiency-based market barriers 2) externality-based
market barriers 3) imperfect information-based market barriers. Research in dutch energy sector. The
only barrier where gov was not central was imperfect info. Two main factors spurred
entrepreneurs to become politically active: ambiguity of policy incentives, ambiguity of norms.
Proposition 1: Entrepreneurs who are able to form alternative coalitions and bypass the need to act
collectively through industry associations are more likely to gain political access and influence.
Proposition 2: Entrepreneurs who are able to create legitimacy by building up specialized expertise
and frame their venture as a novel contribution to a collective interest are more likely to gain political
access and influence. Proposition 3: Entrepreneurs who are able to create a relationship of mutual
dependence with industry incumbents are more likely to gain political access and influence.

9. Hybrid organization = organization in which there is a combi of public and private organizing
logics, through mission-driven businesses, social enterprises, cross-sectoral collaboration, and public-
private partnerships of various kinds. Focus on a public-private hybrid organization that combines
logics of government bureaucracies, business firms, and non-profit associations to tackle the complex
challenge of climate change. Institutional complexity can have challenging unintended consequences:
hybrid organizations must contend with competing external demands and internal identities. Central
finding: as members of a hybrid organization take actions to achieve their mission and then interpret
the outcomes of those actions, they discover that some outcomes are ambiguous and paradoxical: they
are successes when viewed through the lens of a public service logic but failures seen through the lens
of a client service business logic. Paradoxes: Phase 1: one-stop shop identity and business logic:
Public service mission vs need to sustain business - new organisational vision vs engagement with
large commercial, industrial and institutional energy users: like residential clients, several key C&I
clients engaged CEA for energy audits and advice but chose a different energy service company for
implementation  sensemaking: shift in business strategy: reconsider approach to engaging servicing
clients, and all aspects of the business model. Recognize and solidify some more structural changes to
the organization Phase 2: Laboratory Identity and Nonprofit Logic (emphasis on grants income and
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personnel changes: shifting emphasis toward grant-funded activity): def. of failure and success:
parasitic opportunities seen as success from public service, failure from private service 
sensemaking: gradually, CEA began more explicit reflection on its definition of success and failure.
Phase 3: Catalyst Identity and Complex Hybrid Logic (new identity which cemented the idea that
energy efficiency accomplishments in Cambridge should be celebrated, whether or not they took
place through direct client engagement)  sensemaking: innovative initiatives and action emerged:
In sensemaking about paradoxical outcomes as one or the other or both, organization members
initially used the lens of the current organizational identity and dominant institutional logic 
reflection: reframed CEA’s outcomes and transformed its organizational logic: 1) shifted from one
dominant logic (client service business) to another (public service non-profit) – form phase 1 to phase
2 )Then they developed a novel synthesis – from phase 2 to phase 3.
Second iteration  key role for external actors  contrast with the models that emphasize external
actors’ role as imposing interests and demands = the service paradox  contradictory yet interrelated
elements that exist simultaneously and persist over time.
Patterns: 1) Stasis or stuckness, a state in which people reflect on their situation and realize that any
action will have contradictory effects. 2) For individuals and groups of people to reframe or escape
the contradiction in such a way that one or the other side is no longer the actor’s responsibility, a
phenomenon called ‘splitting’. 3) Temporal splitting: results in an oscillation behaviour in which the
actor alternates between polarities.
Outcomes of SE
10. SE research has focused on small firms. In the
beginning, small firms and new entrants stimulate
disruptive sustainability innovation. Attracted by the
market success of Davids, Goliaths will follow with
corporate sustainability entrepreneurships of their
own. Davids and Goliaths complement each other 
co-evolution is more likely to result in sustainability.
There is little discussion of the interplay between the
two. Start-ups are more likely to engage in SE than
incumbents: value-based approach. They keep growth
restricted for idealistic and economic reasons. Both
Davids and Goliaths have a role. Incumbents’
strength lies in process innovation. The existence of
product standards creates a level playing field between incumbents and startups.

11. Firms needs different business models to transform the specific characteristics of sustainable
technologies into new ways to create economic value and overcome barriers  fundamental
reconsideration of the 1) value proposition, 2) value network, 3) revenue/cost model.
Gap: little understanding of how incumbent and entrepreneurial firms contribute to business model
innovation and evolution in unique ways. Firms face the challenge of how to develop a business
model that transforms this attribute into sources of economic value creation. 2 main dimensions of
value creation: efficiency and novelty. Incumbents and entrepreneurial firms have very different
abilities to tap into different sources of value creation. Path-dependent behaviour would lead
incumbent firms to fit new technologies into their existing business models. Entrepreneurial firms:
less hindered by path dependencies: do not face the cognitive constraint to fit new technologies into
existing business models, can develop completely new BMs. Are more flexible, but restricted by
resources, if they don’t choose the BM that becomes the standard, they don’t survive. Incumbents can
still switch. 4 business model archetypes: 1) luxury specific-purpose BM 2) luxury multi-purpose
BM 3) economy specific purpose BM 4) economy multi-purpose BM  different types require
different product-service system configurations. Incumbent’s BMs were more resilient in the
occurrence of contingent events. All 3 factors that tend to drive path-dependent behaviour (the
dominant BM logic, complementary assets, contingent events) seemed to work in close alignment,
creating a self-reinforcing mechanisms.
Cognitive dissonance Contradictory beliefs – relevant to the concept of paradox and managing
contradictory aims or goals, for example, social versus economic aims.