An organizational economics view of antecedents of sustainable entrepreneurship.

1. Scarcity, resource conservation, and
sustainable entrepreneurship:
A multi-level perspective
Olivia Aronson
Texas Tech University
Rawls College of Business
December 5th, 2012

2. Sustainable Entrepreneurship
 Gaining importance (World Scientists’ Warning)
 1992 Rio de Janeiro Earth Summit
 Urgency of environmental issues was emphasized
(Etzion, 2007)
 Increase in volume of sustainability-focused research
literature
 In this process, sustainability, the practice of positively
associating a firm’s financial
performance, environmental resilience, and social
responsibility (Cohen & Winn, 2007), replaced many
previously held, negative assumptions surrounding
the business environment interface (Cohen &
Winn, 2007; Dean & McMullen, 2007).
 Sustainable entrepreneurs, who discover new goods
and services while still conserving resources

3. Sustainable Entrepreneurship (Cont.)
 Sustainable entrepreneurs:
 Depend upon their own knowledge and worldview
 Operate within a competitive environment – a
strategic group – where the conduct of business
within that group strongly bounds and influences
what decisions are economically possible.
 Operate within a community, where cultural norms
also have a high degree of influence on acceptable
business behavior.
 Multiple levels: the individual level, the strategic
group level, and the cultural/society level

4. Definition
 Draws upon Venkat’s (1997) definition of
entrepreneurship
 Sustainable Entrepreneurship as defined by
Cohen & Winn, 2007: “how opportunities to bring
into existence future goods and services are
discovered, created, and exploited, by whom, and
with what economic, psychological, social, and
environmental consequences.”

5. How scarcity drives the model
Narrative 1
 Because the world is not perfect, and scarcity
prevails – many of the business phenomena that
emerge are created within the social world
because groups tend to do better at facing
scarcity than do isolated individuals.

6. Narrative 2
 A real world theory of sustainable
entrepreneurship will align opportunities to
discover new goods and services (which differ
in their discovery, creation and harvest
parameters) with social structures (which differ
across levels in their level of individual
knowledge, strategic group affiliation
influence, and community culture
constraints), in a holistic, mainly resource-
conserving way.

7. Model: Multi-level
Community
Strategic culture
group constraints
Management affiliation
knowledge- influence
aquisition
worldview
Sustainable
entrepreneurship

8. Management knowledge-aquisition
worldview
 Definition - Manager knowledge-acquisition worldview is
the constellations of beliefs, values and concepts that give
shape and meaning to the world a manager experiences
and influences the way in which managers acquire
knowledge (Norton, 1991).
 A manager’s knowledge – acquisition worldview can
influence an organization’s strategy and performance
because organizations are an aggregate of individuals
(Felin & Hesterly, 2007; Madden, 2012).
 Organizational change is driven by the individuals that
make up the organization; this includes their
beliefs, judgments, abilities and overall knowledge (Felin &
Zenger, 2009).
 Managers within the organization may engage in
entrepreneurial theorizing and create new knowledge in
which sustainable entrepreneurship (SE) is utilized to
resolve business problems and create viable strategies

9. Proposition 1
Proposition 1: Manager knowledge-acquisition
worldview is associated with sustainable
entrepreneurship.

10. Strategic group affiliation
influence
 Definition: the level of connection or association of a
collection of firms with similar strategies and key
decision variables (Porter, 1979: 215).
 Strategic group affiliation 
 If a strongly affiliated organization that has already
obtained cognitive and sociopolitical legitimation
(Aldrich & Fiol, 1994) and that is perceived to be
successful engages in SE then other organizations
(depending on their level of affiliation with the
strategic group) may choose to participate in order to
gain legitimacy and ensure they are offering the same
“benefits and services as their competitors” (DiMaggio
& Powell, 1983: 154). 
 May cause an increase in homogenization of the
strategic group and an increase in participation in SE

11. Proposition 2
Strategic group affiliation is associated with
sustainable entrepreneurship.

12. Community culture constraints
 Definition: the transmitted and created content and patterns of
values, ideas, and other symbolic-meaningful systems as
factors in the shaping of human behavior and the artifacts
produced through behavior” (Kroeber & Parsons, 1958: 583)
within communities.
 A community’s culture may call for some level of participation in SE
by businesses 
 Can create an agency relationship (Jenson & Meckling, 1976).
 Agency problems occur when “the desires or goals of the principal
and agent conflict and it is difficult or expensive for the principal to
verify what the agent is actually doing” (Eisenhardt, 1998:58).
 Therefore, contracts have costs associated with them, such as bonding
and monitoring costs.
 Because of these costs, both community standards for sustainability
initiatives and the level of participation in SE by businesses may vary
 Communities should create incentives for businesses to engage in
SE by reducing bonding costs and decreasing overall agency costs.
 By doing this, communities can affect how businesses act.
 Depending upon how communities approach costs, level of
participation in SE may vary

13. Proposition 3
Variability in community culture is associated with
the level of sustainable entrepreneurship.

14. Limitations
 While this paper does propose several theoretical
models it does not attempt to empirically test them
 It is possible that there is a more complex interaction
occurring amongst these three units of analyses.
Scholars could explore the possibility of nesting both
within the realm of the constructs used in this paper
and in future multi-level examinations of participation
in sustainable development
 Our propositions are limited to specific social
structures
 individual, strategic groups, and communities
 A possible future research study could examine how
the outcomes of participation in SE unfold in time
series, and the implications of those outcomes on the
three proposed constructs.

15. Implications for Theory
 Provides a holistic view of SE that is necessary in order to offer a
comprehensive examination and explanation of potential variance in
participation in SE.
 Contributes to the conceptualization of business’ role in society
through multiple dimensions.
 By examining from multiple perspectives we can better
identify, address, and modify behaviors at the
individual, community, and industry levels in order to appropriately
address sustainability problems.
 Attempts to merge the business and natural environment fields under
the umbrella of entrepreneurship.
 Multidisciplinary approach - psychology, biology, and strategy will be
useful supplements
 Generalizable. Not only do these propositions remain distinctly
independent from any affiliation towards an industry, community, or
individual, but they can be applicable to a variety of
countries, industries, and cultures.
 The usefulness of this is that responses to the sustainable
entrepreneurship construct will vary depending on
country, government, industry, culture, and individuals. This paper

16. Implications for Practitioners
 Generation of further avenues for creating
organizational pathways to sustainable
entrepreneurship by practitioners, and scholars, alike.
 Similar to Shrivastava (1995) this paper may aid in
emphasizing the need for a change in the ways in
which government policy is created, businesses
act, and consumers behave.
 These changes could alter the ways in which
organizations conduct business.
 Hope to broaden practitioner mindsets in order to
makes sustainability initiatives more generalizable to
a variety of industries and organizations.