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CHAPTER 1: DISSERTATION OVERVIEW
Introduction
This dissertation is composed of three essays that build upon established literature
to illuminate further the role of entrepreneurship in the attainment of sustainable
development. Though both entrepreneurship and sustainable development have received
much scholarly attention, research at their intersection – herein referred to as the
Sustainability-Entrepreneurship Nexus – remains ripe with opportunities for impactful
theoretical and practical contributions. This introductory chapter expands on the latter
point while providing some background on the main concepts of sustainable development
and entrepreneurship. It then outlines the related gaps in the current literature on
entrepreneurship for sustainable development, and the resultant research questions that
form the basis for each study in this research. The chapter concludes with an overview of
each study.
Sustainability and Sustainable Development
Sustainability in the traditional sense refers to an ability to continue a defined
behavior indefinitely. In the past two decades the term has become synonymous with
sustainable development – a staple concept in debates on the environment, development
and governance (Sneddon, Howarth, & Norgaard, 2006; Zaccai, 2012). Sustainable
development, as commonly understood, refers to development that meets the needs of the
present generation without compromising the ability of future generations to meet their
own needs (World Commission on Environment and Development [WCED], 1987).
Sustainable development is generally posited to comprise of three representative and
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overlapping pillars – namely economic sustainability, ecological sustainability, and social
sustainability (Atkinson, Dietz, Neumayer, & Agarwala, 2014).
The concept of economic sustainability is most associated with development as a
process focused growth and/or change, and for objectives such as the provision of
individual basic needs (Lele, 1991). It prioritizes political rights, basic human needs, and
economic opportunities and equity over aggregate economic output (Sneddon et al., 2006).
This pillar of sustainable development emphasizes promotion of a reasonable quality of life
through the productive capacity of various actors (Bansal, 2005). For economic
sustainability, it is the creation and distribution of goods and services that will help to raise
the standard of living around the world that must be sustained in order to ensure the
wellbeing of future generations.
The concept ecological/environmental sustainability has its origins in the context of
renewable resources (e.g. forests and fisheries). Here, ecological and environmental
resource economics researchers focus on the ecological conditions necessary for
supporting human life at some specified level of well-being through future generations
(Lele, 1991). In general, environmental economists are concerned with the existence of
negative externalities such as pollution and wastes – e.g. atmospheric/climate change;
air/marine/inland waterway/land pollution. Natural resource economists, on the other
hand, are concerned with externalities related to the depletion and degradation of common
property, common pool, or open-access resources (Fullerton & Stavins, 1998). These
include for example land/water/mineral/energy resources, forests/timber, fisheries, and
biological/genetic diversity. For ecological sustainability, the ability of the natural
environment to provide important resources and services for life that must be sustained.
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Regarding the concept of social sustainability, researchers are mainly concerned
with society and the human condition. It emphasizes meeting the needs of both present and
future generation in light of factors such as population growth and rapid urbanization; food
and energy security; health and disease; poverty; and education and empowerment. Social
sustainability also requires that all actors, both present and future, in society have an equal
access to resources and opportunities (Bansal, 2005). For social sustainability, the social
basis for human life and welfare must be sustained.
Sustainability and sustainable development have been defined, interpreted, and
analyzed in various ways. As a result extant literature on the concepts has evolved into
opposing views between the concepts of weak and strong sustainability (Atkinson et al.,
2014). The notion of weak sustainability assumes that human welfare is not normally
dependent on natural capital and can be maintained by substituting other manufactured
capitals such as technology (Ekins, 2014). Weak sustainability is defined as maintaining
total capital – i.e. the sum of natural capital (e.g. environmental resources) and economic
capital (e.g. knowledge and labor). Sustainable development, according to the weak
sustainability criteria, essentially requires that there be no decrease in total economic
welfare (van den Bergh, 2014).
Strong sustainability, in contrast, assumes that human welfare is critically
dependent on natural capital. It also assumes that substitutability of economic or
manufactured capital for natural capital is limited by the uncertainties associated with
components of natural capital that make a unique contribution to welfare (Ekins, 2014).
Thus, the strong sustainability approach can be defined simply as maintaining natural and
economic capital in a separate but balanced manner. Sustainable development, according
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to the strong sustainability camp, is most associated with safeguarding the life support
functions of nature and the environment (van den Bergh, 2014).
The distinction between weak and strong sustainability comes down to the
following. First, the degree of substitutability between products and services of the market
economy (i.e. economic capital) and the environment (i.e. natural capital). Second, the
degree of difference between different forms of capital and the welfare that they generate.
Third, the degree to which theoretical arguments are based primarily on perspectives from
environmental or ecological economics. Stated simply, weak sustainability analyses assume
that there can be substitution between the three pillars of sustainable development
outlined above. Conversely, strong sustainability recognizes that there are some ‘critical’
forms of natural capital required for ecological sustainability that cannot be substituted for
by economic or social sustainability (Ekins, 2014). One can thus expect the theoretical and
practical implications of sustainable development to differ significantly depending on
whether a weak or strong sustainability approach is applied.
Within this dissertation, I conceptualize sustainability and sustainable development
in line with the strong sustainability paradigm and its focus on preservation of critical
natural capital and environmental functions. As such, I define sustainability as the ability of
a human, natural, or mixed system to withstand or adapt to endogenous or exogenous change
indefinitely. Sustainable development, thus, is a pathway of deliberate change and
improvement that maintains or enhances this attribute of the system, while answering the
needs of the present population (Dovers & Handmer, 1992; Handmer & Dovers, 1996). In
essence, I conceptualize sustainability as the desired/preferred characteristic of an overall
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system; and sustainable development as the objectives/processes that facilitate
sustainability in that particular system.
The strong sustainability paradigm is preferred as I share the view that basic life
support systems are impossible to substitute with manufactured goods/services (Barbier,
Burgess, & Folk, 1994). These basic life support systems (or functions of critical natural
capital) include: 1) the regulation of essential ecological processes; 2) provision of natural
resources and habitats for refuge, reproduction, conservation, and evolutionary processes;
and 3) provision of possibilities for education and scientific research, recreation, and
aesthetic enjoyment (Ekins, 2011; 2014; Ekins et al., 2003). Moreover, as literature
suggests, the strong sustainability approach is more preferable given the considerable risk,
uncertainty, and ignorance attached to the way in which natural capital (e.g. the global
carbon cycle), affects actors’ ability to predict effectively the effect(s) of its degradation.
Explicit consideration of strong sustainability is also important since some natural capital
may be irreversible once lost; and non-substitutable – i.e. increased future consumption is
not an appropriate substitute for natural capital losses (Dietz & Neumayer, 2007).
Individuals are more averse to losses in utility than they are keen to gains in it
(Kahneman and Tversky, 1979). This suggests that scholars and practitioners alike are
highly, or should at the very least be somewhat, averse to losses in natural capital functions
that directly provide us with utility. However, this aversion is not reflected in
entrepreneurship literature, which tends to favor alignment with the weak sustainability
paradigm and underplays the importance of natural capital (cf. Schaefer, Corner, & Kearins,
2015). Accordingly, I contend that focusing on the strong sustainability paradigm (and its
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emphasis natural capital) allows for a more balanced understanding of the relation
between entrepreneurship and sustainable development.
Entrepreneurship
Entrepreneurship, in the simplest sense, refers to the identification, evaluation, and
exploitation of opportunities (Shane, 2012; Shane & Venkataraman, 2000; Venkataraman,
1997). For the purposes of this chapter, I broadly define entrepreneurship as acts of
organizational creation, renewal or innovation that occur within, or outside, an existing
organization by actors acting independently or as part of a corporate system (Sharma &
Chrismann, 1999; emphasis added). This broad definition acknowledges that
entrepreneurship can be evidenced in different forms and at various levels of analysis
(Davidsson & Wiklund, 2001). Entrepreneurship activity has long been recognized as
playing an important role in economic growth and development (Baumol, 1990; Sobel,
2008). As Schumpeter (1942) suggests, the important role of entrepreneurship can be
linked to the creative destructive processes fueled by enterprising entities who recognize
and subsequently exploit opportunities for generating economic rents (cf. Hart, 2005).
Given that entrepreneurship is related to economic growth (cf. Baumol, 1990), one
can argue that it will similarly be important for sustainable development. This is especially
the case since entrepreneurship can be a means by which pervasive market failures and
imperfections (e.g. poverty or environmental and social disruptions) – sources of
entrepreneurial opportunities – are ameliorated (Alvarez & Barney, 2014; Cohen & Winn,
2007; Dean & McMullen, 2007). Entrepreneurial opportunities being defined as situations
for the formation of new means, ends, or means-ends relationships through which new
products, services, and organizing methods can be introduced (Eckhardt & Shane, 2003).
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Entrepreneurial opportunities represent a central theme within entrepreneurship
research. They are also linked to a number of phenomena within the realm of
entrepreneurship research (Venkataraman, 1997). These include for example
entrepreneurial learning and information asymmetries (Corbett, 2005; 2007; Politis, 2005;
Shane, 2000); organizational learning (Easterby-Smith & Araujo, 1999; Lumpkin &
Lichtenstein, 2005); alertness (Gregoire, Shepherd, & Lambert, 2010; Tang, Kacmar, &
Busenitz, 2012); and informal activity (Robinson, 2006; Webb, Tihanyi, Ireland, & Sirmon,
2009).
In general, there has been a wealth of entrepreneurship research incorporating the
concept of sustainable development (see: Hall, Daneke, & Lenox, 2010; Munoz & Dimov,
2015; Rajasekaran, 2013; Thompson, Kiefer, & York, 2011). This proliferation of research
at the intersection of the sustainable development and entrepreneurship literatures is, in
part, due to the opportunities that sustainable development present for individuals,
businesses, and organizations (Patzelt & Shepherd, 2011). The sizeable nature of the body
of research at this nexus can also be attributed to the various modes through which
entrepreneurial activity has been posited to foster sustainable development. For instance,
various types of entrepreneurship – from social, to eco or environmental, to institutional –
have been linked to sustainable development (Dorado & Ventresca, 2013; McMullen, 2011;
Pacheco Dean, & Payne, 2010; Short, Moss, & Lumpkin, 2009; York & Venkataraman, 2010).
I briefly highlight each of these in the following sections.
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Social Entrepreneurship
Social entrepreneurship refers to innovative activity with a social objective in the
profit or non-profit sectors (Dees, 1998; Dees & Anderson, 2003; Emerson & Twersky,
1996). In a narrow sense, it refers to the phenomenon of applying business logic and
market-based approaches to in the non-profit or third sector (Reis, 1999; Thompson,
2002). For this research, I define social entrepreneurship as innovative, social value
creating activity that can occur within or across the nonprofit, business, or government
sectors. This broad conceptualization allows for better comparison with related forms of
entrepreneurship (Austin Stevenson, & Skillern, 2006).
Social entrepreneurship research is primarily concerned with understanding how:
1) opportunities for creating positive social benefits are exploited; 2) altruistic motivations
drive entrepreneurship; and 3) the implications of actors having dual objectives – i.e. social
and financial (Mair & Marti, 2006; Short et al., 2009; Thompson et al., 2011). Given the
significant and diverse contributions social entrepreneurs make to their communities and
societies by adopting business models to offer creative solutions to complex and persistent
social problems, social entrepreneurship is also of great interest and relevance to scholars.
This can be seen, for instance, in the various studies referring to important social change
agents such as Muhammed Yunus or Bill Drayton (Zahra et al., 2009). Social
entrepreneurship is tied to sustainable development primarily through its impact on social
value creation. Social value creation or the generation of utility from addressing
opportunities inherent in social issues (Amit & Zott, 2001; Tsai & Goshal, 1998), in
particular, is also central to elements of sustainable development such as equity or
community resilience.
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Environmental Entrepreneurship
Environmental entrepreneurship refers to the exploitation of opportunities for
resolving environmental issues while creating economic and ecological value (Dean &
McMullen, 2007; Cohen & Winn, 2007; Meek, Pacheco, & York, 2010; York & Venkataraman,
2010). Environmental entrepreneurship can best be evidenced in the numerous innovative
responses to climate change by entrepreneurial entities. Scholars have also documented
various instances where these ‘ecopreneurs’ address environmental issues through, for
example, renewable energy or supply chain innovations, and other environmentally
responsible action (Meek et al., 2010).
Environmental entrepreneurship research has disciplinary roots in environmental
economics, entrepreneurship, and institutional theory. Scholars within this field are mainly
concerned with understanding 1) how opportunities which stem from environmentally
relevant market failures are exploited; 2) how entrepreneurship processes both influence
and are affected by environmentally relevant institutions and government agencies; and 3)
the implications of incorporating business and environmental specific logics in
entrepreneurship processes (Thompson et al., 2011).
Sustainable development requires that growth of a society/economy be balanced
with conservation of natural ecosystems that provide for said growth (Van den Bergh &
Nijkamp, 1991). Extant literature is ripe with instances where both unchecked economic
development and social issues have contributed to troubling environmental conditions for
natural ecosystems worldwide. Environmental entrepreneurship is therefore tied to
sustainable development as the process incorporates both the opportunities presented by,
and outcomes directed towards environmental conservation.
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Institutional Entrepreneurship
Institutional entrepreneurship refers to the process whereby actors gain support
and acceptance for institutional change projects that contribute to transforming existing, or
creating new, institutions (Battilana, Leca, & Boxenbaum, 2009; DiMaggio, 1988; Dorado,
2005; Pacheco, York, Dean, & Sarasvathy, 2010). Institutions are humanly devised schemas,
norms, and regulations that enable and/or constrain the behavior of social actors, making
life predictable and meaningful (North, 1990; Scott, 1995; 2008). In addition, institutional
change and institutional innovation processes jointly, and in a general sense, refer to a
difference in form, quality, or state over time in an institution (Hargrave & Van de Ven,
2006).
Despite being studied from two related approaches – i.e. institutional economics and
institutional theory – some common traits about institutional entrepreneurship have
emerged from the literature (Pacheco et al., 2010). These include a focus on actors as
innovators and agents of institutional change; and the formation of governance institutions
in organizing for coordination problems. In addition, scholars generally agree on other
aspects of institutional entrepreneurship such as its determinants (e.g. self-interest,
functional pressures, or ideology and culture), and the mechanisms of institutional change
(e.g. political processes or collective action) (p. 980).
Institutional entrepreneurship can be linked to sustainable development as they
both involve institutional change of some kind. Sustainable development, for instance, is
sometimes described as requiring changes in inefficient institutions that allow societal
issues to persist (Bansal, 2005; Gladwin, Kenneley, & Krause, 1995). Further, given their
relative breadth, sustainable development issues are often addressed via complex political
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processes (Giddens, 2009). Institutional entrepreneurs do not only have the agency for
navigating these political processes and recognizing opportunities they present, but also
mobilize resources integral for institutional change (Dorado, 2005).
Sustainable Entrepreneurship
Sustainable entrepreneurship refers to the process whereby actors discover,
evaluate, and exploit economic opportunities present in market failures that detract from
environmental sustainability (Dean & McMullen, 2007). Recent definitions also position
sustainable entrepreneurship as focused on the preservation of nature, life support, and
community in the pursuit of perceived opportunities to bring into existence future
products, processes, and services for gain. Here, gain is broadly construed to include
economic and non-economic benefits to individuals, organizations, society, and the
economy (Shepherd & Patzelt, 2011; 2017). Literature on sustainable entrepreneurship
emphasizes examination of how the 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 (Cohen & Winn, 2007).
Sustainable entrepreneurship shares similarities with the other types of
entrepreneurship mentioned above as it relates to socially or environmentally motivated
actors that capitalize on economic opportunities to reduce uncertainty, provide innovation,
and allocate scarce resources in response to market failures (Dean & McMullen, 2007;
Short et al., 2009; York & Venkataraman, 2010). For instance, other accepted definitions of
sustainable entrepreneurship point to market imperfections and failures as the origin of
such activity (Cohen & Winn, 2007; Dean & McMullen, 2007). Also, while not always
explicit in definitions, the motivations for social, environmental, institutional, and
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sustainable entrepreneurship are posited as being inherently more normative (Thompson
et al., 2011). Where actors with a utilitarian identity are said to be governed by economic
rationality, revenue maximization, and cost minimization, those with normative identities
are governed by a higher commitment to self and purpose – which often centers on
creating social and environmental value for the public good (Moss, Short, Payne, &
Lumpkin, 2011; pg.: 3-4). Various studies document how the existence of these ‘dual
identities’ affects venture performance (Moss, Neubaum, & Meyskens, 2015); management
of social business tensions and conflict (Smith, Gonin, & Besharov, 2013); and the existence
of hybrid organizational forms (Battliana & Dorado, 2010).
Similar to social, environmental, and institutional entrepreneurship, sustainable
entrepreneurship is also posited as an important phenomenon in the quest to achieve
sustainable development (Shepherd & Patzelt, 2011; Spence et al., 2011). For instance,
outcomes integral to environmental sustainability such as the establishment of low-carbon
cities, environmentally friendly institutions, and sustainability innovations have all been
associated with sustainable entrepreneurship (Parrish & Foxon, 2006; Schalteger &
Wagner, 2011; Shepherd & Patzelt, 2011; Spence, Gherib, & Biwole, 2011; Whiteman et al.,
2011). A key distinction to note, however, is that sustainable entrepreneurship
concentrates on the simultaneous achievement of three objectives (economic, social, and
environmental), whereas social, environmental entrepreneurship tends to focus on two
objectives (see: Thompson et al., 2011). Sustainable entrepreneurship research represents
not only a valid and exciting new area of study with thought-provoking theoretical
implications, but also an informative field with serious practical implications. The
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challenge, however, lies in further advancement of the field beyond its current nascent
state of development (Shepherd & Patzelt, 2011).
Problem Statement and Research Questions
The concepts of environmental sustainability and sustainable development have
received a considerable amount of attention from scholarly management research in
general (see: Anderson, Potocnik, & Zhou, 2014; Bebbington, 2001; Etzion, 2007; Lulfs &
Hahn, 2014; Montiel, 2008; Montiel & Delgado-Ceballos, 2014). Conversely, the same
cannot be said for entrepreneurship literature, where scholarly engagement with these
concepts is described as being in a developmental stage (Munoz & Dimov, 2015). This
developmental nature of entrepreneurship for sustainable development research is
primarily due to the lack of quantitative empirical research within the field. In addition,
there remains a paucity of empirical research examining the actual/practical outcomes of
entrepreneurship activity meant to address issues of sustainable development.
Given the still emergent nature of research at the intersection of entrepreneurship
and sustainable development literature, there exist few quantitative empirical studies
aimed at testing established and/or proposed theories. This is, of course, with the
exception of increased empirical efforts regarding social entrepreneurship (Gras, Moss, &
Lumpkin, 2014), and to a lesser degree environmental entrepreneurship (King & Lenox,
2001; Koo, Ching, & Ryoo, 2014; Meek et al., 2010; York & Lenox, 2014). As Short, Payne, &
Ketchen (2008) suggest, an absence of empirical studies hampers the development of any
new field as a distinct area of study. Thus, the absence of quantitative empirical studies
regarding entrepreneurship for sustainable development, I maintain, similarly hampers
development of the entrepreneurship research field as a whole.
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Extant research regarding entrepreneurship for sustainable development has also
been mainly conceptual in nature (e.g. Dean & McMullen, 2007) – relying more on
qualitative empirical studies. The literature shows few quantitatively driven empirical
studies of entrepreneurship, and these have been focused on one of two stages – namely
the opportunity recognition/exploitation or venture development stages (e.g. Munoz &
Dimov, 2015). Notably, this comes at the expense of research devoted to examining the
actual outcomes and impacts of entrepreneurship for sustainable development. Here,
outcomes and impacts refers to tangible and intangible results that foster one or more of
social, economic, or environmental value creation. Focusing on the actual
outcomes/impacts entrepreneurship for sustainable development is important as scholars
can build new theory, and extend existing ones – with more weight given to the natural
environment and developing economy contexts (McMullen, 2011; Spence, et al., 2011;
Waring, 2010). Such theorizing enhances scholars understanding of the means through
which entrepreneurship sustains nature, utilitarian sources of life support for humans, and
communities (Shepherd & Patzelt, 2011). Furthermore, empirically validated outcomes
associated with entrepreneurship for sustainable development can spawn effective policy
and practical responses to sustainability issues.
From a practical perspective, the past of two decades have seen many
advancements regarding sustainable development. These advancements are especially
evident in the various policies, organizational responses, and achievements made with
respect to the United Nation’s Millennium Development Goals. The UN’s Millennium
Development Goals are the world's prior time-bound and quantified targets for addressing
extreme poverty and its many dimensions, while promoting gender equality, education,
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and environmental sustainability. They also include basic human rights, the rights of each
person on the planet to health, education, shelter, and security (United Nations [UN],
2015). Notably however, while there has been some progress, many pervasive societal
issues persist – with worsening consequences (UN, 2015). The persistence of these societal
issues, I contend, suggests that, entrepreneurship for sustainable development research
has not been effective at examining the root causes for societal issues as opposed to their
symptoms. It also suggests the presence of a widening gap between scholarly
entrepreneurship for sustainable development research and the actual practice of
entrepreneurship meant to effect environmental sustainability.
Such a gap is troubling since it represents a potential knowledge transfer problem
where academics and practitioners alike encounter problems translating and diffusing
research knowledge into practice (Van de Ven & Johnson, 2006). Moreover, in light of
worsening environmental conditions and climate change an absence of empirically
validated outcomes associated with entrepreneurship for sustainable development limits
effective policy and practice responses to sustainability issues. Such limitations can be
especially troublesome for developing economy contexts that are already constrained for
resources (Bruton, Ahlstron, & Li, 2010). Notably also the outcomes of entrepreneurship
for sustainable development are of importance to human survivability (Ferraro et al.,
2015).Overall, one can make the claim that extant literature still lacks a clear
understanding of the determinants and resultant outcomes associated with
entrepreneurship for sustainable development.
This dissertation addresses the research gap stated above with the following
research questions. First, what is the state of development of entrepreneurship for
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sustainable development scholarship, and what have been the outcomes of interest
researched? Second, how does countries’ national and cultural contexts affect
entrepreneurial activity for sustainable development amongst institutional actors? Finally,
how does planned and autonomous climate change adaptation, and the interaction of the
two, affect entrepreneurship in the form of individual new venture creation; and, what is the
role of countries’ level of corruption in the climate change adaptation-new venture creation
relationship? The following sections provide an overview of the respective chapters that
address these questions.
Overview of Chapter 2 – Literature Review
The purpose of Chapter 2 is to both examine the development of the body of work
centered at the intersection of entrepreneurship and sustainable development concepts,
and to identify the outcomes/impacts of sustainability-oriented entrepreneurial activity
that have been of interest to scholars. Examination of this body of work is warranted given
that despite the sizeable nature it remains difficult to distinguish between types of
entrepreneurship that have been posited to affect attainment of sustainable development
(Thompson et al., 2011). In addition, in spite of greater attention to environmental
sustainability among individuals, organizations, and governments there remains a paucity
of evidence of and/or empirical support for sustainable development (Ferraro et al., 2015,
Shepherd & Patzelt, 2017).
For the review, I employed tailored search criteria across Business Source Premier,
ProQuest, JSTOR, and Science Direct, and Wiley Online databases to obtain a sample of
articles strongly representative of work at the intersection of entrepreneurship and
sustainable development – i.e. the Sustainability-Entrepreneurship Nexus. I then coded the
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sampled articles for the overall research methodology and design, use of
propositions/hypotheses, geographic focus, level of analysis, incorporation of the time
concept, and the outcomes of interest. Subsequently, I code for the sustainable
development outcome(s) of interest in each article in order to generate several categories
of outcomes. The review concludes with discussions of the main findings, their
implications, and a presentation of future research opportunities that builds on emergent
themes in management research.
Table 1.1: Prior Reviews of Sustainable-Entrepreneurship Nexus Scholarship
Related Reviews
Journal*
Focus of Related Review Articles
Interdisciplinary
Focus on
Outcomes
What is
the state
of the
field?
How is
extant
literature
related?
What are
future
research
opportunities?
What are the
views of other
academic
disciplines?
What have
been the
outcomes
researched?
Cohen, Smith, &
Mitchell, 2008
BSE
X
X
Hall, Daneke, &
Lenox, 2010
JBV
X
X
Thompson, Keifer, &
York, 2011
n/a
X
X
Rajasekaran, 2013
JOEM
X
X
Munoz & Dimov, 2015
JBV
X
X
Schaefer, Corner, &
Kearins, 2008
OE
X
X
My Review
n/a
X
X
X
X
X
*Note: BSE- Business Strategy and the Environment; JBV-Journal of Business Venturing; JOEM-Journal of
Entrepreneurship and Management; OE-Organization and Environment
The literature review provides scholars with a better understanding of the
development of the Sustainability-Entrepreneurship Nexus (S-E Nexus) as a field of study.
As demonstrated in Table 1.1, this review is more comprehensive in nature when
compared to previous reviews of entrepreneurship for sustainable development research
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(Hall et al., 2010; Munoz & Dimov, 2015; Rajasekaran, 2013; Thompson et al., 2011). The
importance of a more comprehensive review of S-E Nexus scholarship being that it
provides a more informed picture regarding what is known, unknown, and still to be
clarified about the field. A comprehensive review also recognizes the breadth of
entrepreneurship for sustainable development scholarship, and allows for better
comparison of studies and their respective contributions. This review can thus help
scholars to direct more effectively their research efforts. Additionally, by focusing on the
outcomes previously examined within the S-E Nexus this review allows better scholarly
assessment of the theoretical and practical contributions to be garnered from
entrepreneurship for sustainable development research.
Overview of Chapter 3 – Empirical Study 1
The purpose of chapter 3 is to provide quantitative evidence regarding the effect of
countries’ national and cultural contexts on the emergence of entrepreneurship for
sustainable development amongst actors such as politicians and other influential country
representatives. As such, the empirical study within this chapter develops and
subsequently tests a model relating three dimensions of countries’ national context and
one aspect of their cultural context to instances of institutional entrepreneurship. This
empirical study emerged in direct response to gaps identified by the literature review, and
calls for more impactful entrepreneurship research – especially at the institutional level
and with respect to climate change (Howard-Grenville, Buckle, Hoskins, & George, 2014;
Shepherd, 2015).
The arguments within this study utilize institutional theory (Scott, 1995) to
delineate three dimensions of the national context (i.e. contexts) which are posited to relate
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significantly to acts of institutional entrepreneurship. In addition, by incorporating insights
from research on the social construction of time (Huy, 2001; Lawrence, Winn, & Jenkins,
2001; Navis & Glynn, 2010) the long-term orientation of countries’ cultural context is also
posited to have a direct and indirect effect on instances of institutional entrepreneurship.
Hypotheses developed are tested within the context of the global carbon-offset market.
Specifically, I analyze data obtained from United Nation’s Reducing Emissions from
Deforestation and Forest Degradation (REDD) Program – a globally recognizable and
accepted approach to address climate change. Event history analysis was used to examine
the likelihood of engagement in the UN’s REDD+ Program for 38 countries given their
prevailing regulatory, normative, cognitive, and cultural contextual factors over the period
2006-2015.
The findings of this study mainly suggest that regulatory contexts favoring
entrepreneurship and a long-term oriented culture can influence institutional
entrepreneurship for sustainable development – both directly and indirectly for the latter.
By looking at the interaction between regulatory, normative, cognitive, and cultural
contexts this study responds to calls for greater examination of the interaction between
formal and informal institutions (Pacheco et al., 2010). In addition, it provides one of the
first quantitative empirical tests of the relation between institutions and the emergence of
institutional entrepreneurship for sustainable development. Furthermore, it highlights the
importance of accounting for temporality when theorizing/researching sustainability-
oriented entrepreneurship activity.
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Overview of Chapter 4 – Empirical Study 2
The purpose of Chapter 4, and the second empirical study within this dissertation, is
to address further the need for more quantitative empirical research regarding
entrepreneurship for sustainable development. Building on the findings of Chapter 3, this
study examines the effect of two types of climate change adaptation on individual
entrepreneurship. Specifically it examines 1) how countries’ autonomous and planned
climate change adaptations affect the likelihood of individual new venture creation; and 2)
the role of countries’ level of corruption in the climate change adaptation-new venture
creation relationship. Autonomous and planned climate change adaptation generally refers
to ‘top-down’ and ‘bottom-up’ approaches to addressing climate change.
For this study, I drew on prior institutional entrepreneurship literature (Battilana,
Leca, & Boxenbaum, 2009; DiMaggio, 1988; Dorado, 2005; Pacheco et al., 2010) –
essentially working on the assumption that instances of climate change adaptation may
also be considered acts of institutional entrepreneurship. I complement the initial
institutional theory perspective with an institutional economic perspective since scholars
suggest this enables for theorizing about the actual outcomes of institutional
entrepreneurship (Pacheco et al., 2010). Based on the extant literature, both types of
climate change adaptation and corruption are posited to have a positive and negative effect
on individual new venture creation respectively. The hypotheses developed in this study
were also tested within the context of the global voluntary carbon-offset market.
The findings of this study contribute to extant entrepreneurship literature in several
ways. First, integration of institutional theory and institutional economic perspectives
provides for a quantitative test regarding the impact of climate change adaptation on
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entrepreneurship. Second, it addresses calls for greater examination of the relation
between entrepreneurial action and climate change (Howard-Grenville et al., 2014; George,
Schillebeeckx, & Liak, 2015). Third, it addresses calls for more multi-level
entrepreneurship research in general, and for quantitative empirical research regarding
sustainability-oriented entrepreneurship in particular.
22
CHAPTER 2: THE SUSTAINABILITY-ENTREPRENEURSHIP NEXUS: A REVIEW AND
RESEARCH AGENDA
INTRODUCTION
Since introduction of the term sustainable development by the World Commission
on Environment and Development (WCED), scholars have generated a large body of
literature exploring entrepreneurship’s role in achieving the goal of environmental
sustainability. Environmental sustainability, in this sense, refers to the commonly
understood triple bottom line concept of balancing economic, environmental, and social
goals. For almost two decades research at the confluence of the environmental
sustainability and entrepreneurship literatures – i.e. the sustainability-entrepreneurship
nexus – has shed light onto how such entrepreneurial activity emerges, and on the
resultant outcomes (e.g. Belz & Binder, 2015; Parrish & Foxon, 2006; Schalteger & Wagner,
2011; Shepherd & Patzelt, 2011; Spence, Gherib, & Biwole, 2011). In general, research
within the sustainability-entrepreneurship nexus (S-E Nexus) suggests that
entrepreneurship in pursuit of sustainable development is usually value-based – i.e. more
focused on generating social and environmental as opposed to economic value (Shepherd &
Patzelt, 2011; 2017). In addition, entrepreneurship for sustainable development is
premised on actors’ recognition of opportunities inherent in sustainable development
issues (Pacheco, Dean, & Patne, 2010; Patzelt & Shepherd, 2011) – the result of both prior
knowledge and a greater normative identity.
Despite the sizeable body of literature on entrepreneurship for sustainable
development, issues persist. For instance, it remains difficult to distinguish between effects
of the different types of entrepreneurship on sustainable development (Thompson, Keifer,
23
& York, 2011). Previous research has shown that traditional business, institutional, social,
and environmental categories of entrepreneurship matter for attainment of sustainable
development (Baumol, 1990; McMullen, 2011; Pacheco et al., 2010; Short, Moss, &
Lumpkin, 2009; York & Venkataraman, 2010). Yet, theoretical and empirical puzzles
remain regarding exactly ‘how’ each category of entrepreneurship impacts sustainable
development. Solving such puzzles is an important challenge as distinguishing between
categories of entrepreneurial activity and their effects on sustainable development builds
legitimacy for the field (Short, Payne, & Ketchen, 2008).
Thus, the goal of this review is to survey the body of research at the intersection of
sustainable development and entrepreneurship literatures to address the following two
questions. What is the state of development of extant scholarship on entrepreneurship for
sustainable development? What outcomes have been examined in entrepreneurship for
sustainable development research? Notably, there have been attempts to integrate the
body of research within the S-E Nexus (e.g. Hall, Daneke, & Lenox, 2010; Munoz & Dimov,
2015; Rajasekaran, 2013; Thompson et al., 2011). The review by Hall et al. (2010) focuses
more on providing an overview of both the conceptual roots for, and emergent research on,
entrepreneurship for sustainable development. Conversely, Thompson et al. (2011), focus
more on distinguishing between the three types of entrepreneurship most associated with
sustainable development – namely social, environmental, and sustainable. Rajasekaran
(2013) provides a brief review of the field with some areas for future research. Finally,
Munoz & Dimov (2015) simply summarize a handful of articles in their examination of the
sustainable venture development process. Overall, these reviews have been more geared
towards organizing scholarly arguments regarding the definition, determinants, and
24
implications (for both research and practice) of entrepreneurship for sustainable
development. Consequently, these prior reviews both fail in spanning the breadth of the S-
E Nexus and in directing attention towards to actual outcomes of entrepreneurship for
sustainable development.
Through this extensive review, scholars are provided with a better understanding of
the development of the sustainability-entrepreneurship nexus as a field of study, and of the
outcomes that have been examined by scholars within the field. The latter, in particular,
being important as it enables an assessment of the theoretical and practical contributions
to be garnered from S-E Nexus research – especially given the static or worsening state of
many issues inherent to attaining sustainable development.
METHODS
The objective of the methodology for this part of the literature review was to obtain
a sample of articles centered on the nexus of sustainability and entrepreneurship. I define
the sustainability-entrepreneurship nexus (hereafter: S-E Nexus) as the body of research
centered on explicating the relationships between concepts of environmental sustainability
and entrepreneurship. Articles of this nature add both to understandings of how
entrepreneurs contribute to environmental sustainability, and how principles of
environmental sustainability (e.g. intergenerational equity) affect entrepreneurship. For
this study, I use the terms sustainability and sustainable development interchangeably to
mean environmental sustainability—the process of sustaining economic wealth, while also
maintaining and enhancing the natural and social forms of capital (Atkinson et al., 2014;
Hamilton & Naikal, 2014). Entrepreneurship, I define broadly as acts of organizational
creation, renewal or innovation that occur within or outside an existing organization by
25
individuals or groups of individuals, acting independently or as part of a corporate system
(Sharma & Chrismann, 1999).
I follow a process similar to that used in notable entrepreneurship review articles
(Ireland & Webb, 2007; Jones, Coviello, & Tang, 2011; Short et al., 2009; Terjesen, Hessels,
& Li, 2013). Before sourcing articles I established criteria for defining sustainable
entrepreneurship as a field of study and identifying articles to review, and for excluding
articles. Next, I searched for peer reviewed journal articles that directly and explicitly
integrated concepts associated with sustainability and entrepreneurship as defined above.
I primarily sought to identify articles that addressed entrepreneurial behavior – i.e.
opportunistic, value-driven, value-adding, creative activity (Bird, 1989) – resulting from, or
directed towards, environmental sustainability.
With the scope of articles for this study identified, I then set several exclusion
criteria. Articles were excluded if they had no theoretical relevance to the concepts of
sustainable development and entrepreneurship. Specifically this refers to: 1) studies that
do not focus on sustainable development – e.g. studies examining ‘sustainable’ competitive
advantage; 2) research published in edited books and conference proceedings – mainly due
to different review processes as opposed to peer-reviewed journals; 3) case studies for
teaching purposes. Thus, articles of interest were those published in peer-reviewed
journals with specific relevance to this reviews’ topic of entrepreneurship for sustainable
development – i.e. aspects of sustainability and entrepreneurship should be central of their
arguments.
26
Narrow Search
I began by first conducting a keyword search of the EBSCO host, ProQuest, JSTOR,
and Science Direct databases. Each database was searched for articles that contained the
following root keywords: sustainab* and entrepreneur*. I restricted the keyword search to
article abstracts, and refined each search for full text articles from scholarly reviewed
academic journals. The rationale for searching within article abstracts was that I wanted to
identify articles that have the concepts sustainability and entrepreneurship at the core of
their arguments as opposed to those that make casual references to the concepts. It should
be noted that the JSTOR database cautions that some of the articles available do not have
abstracts. I do not envision this to be a problem, based on the assumption that such articles
may be outside the parameters of this study’s defined search criteria. Also, the journals
selected to refine search results were based both on 1) their relevance to this study’s focus
– i.e. they discussed a sustainability antecedent or outcome related to entrepreneurial
activity; and 2) their inclusion on the social science citation index journal list.
This search resulted in 193 articles – all of which were exported into the citation
manager RefWorks. I then removed close and exact duplicates of articles. As a next step, I
removed irrelevant articles based on reading the abstracts, and in some cases the
introductions, for each article. Removal of duplicates and non-fitting articles reduced the
sample to 87 articles.
To complement this sample of articles, I performed several additional steps. First, I
searched the Wiley Online database using the same criteria as above for any articles that
might have been missed/overlooked. Second, I searched the reference section of recent S-
pE Nexus related review articles (Hall et al., 2010; Munoz & Dimov, 2015) to identify any
27
articles that were initially missed. Fifty-seven (57) additional articles were obtained from
the references of the previously mentioned journals; and were assessed for any duplicates,
and fit with the research topic. Together, the narrow search yielded 126 articles.
Broad Search
Having identified a core set of articles, I then performed a refined, yet broad search
for additional articles. Essentially, I sought to obtain a cross disciplinary sample of articles
to get a better understanding of the body of sustainable entrepreneurship literature (see:
Ireland & Webb, 2007; Short et al., 2009). Specifically, I searched each of the above-
mentioned databases, but with minor adaptations given limitations within the individual
search engines. In particular, variations in the search criteria for the JSTOR and Science
Direct databases were the result of restrictions within the individual databases regarding
the allowed length of the search term(s) and the searchable fields of the articles. Table 2.1
provides a summary of the search terms used.
This broad search resulted in 518 articles. Again, all articles obtained were exported
to RefWorks where exact and close duplicates were removed. Similar to the narrow search
procedure, the abstract and introduction of the remaining 346 articles were reviewed to
assess their relevance to this review’s topic based on the criteria outlined above. Following
this process, 127 articles remained.
Thus, the final sample of 253 articles obtained from both searches and screenings
served as the basis for the review. I recognize that this sample of articles may not be
representative of the entire population of articles mentioning the sustainable development
and entrepreneurship. Despite potential omissions, which I acknowledge as a limitation, I
28
expect that the tailored search criteria yielded a strongly representative sample of articles
on sustainable entrepreneurship.
Articles in the sample suggest a consistent increase in S-E Nexus research over the
period 1987-2015 (see: Figure 1). Notably, less than 1% of the sampled articles were from
the 7-year period 1987-1994. Publications were found to increase with each subsequent
period as follows 1995-1999 (5%), 2000-2004 (10%), and 2005-2009 (20%). The majority
of sampled articles were from 2010-2015 (65%) – influenced, perhaps, by the Journal of
Business Venturing Special Issue on sustainable entrepreneurship in 2010. Overall, the
average rate of increase in publications over the five 4-year periods 1990-2015 was
1620%. Thus, there is preliminary support for a claim that the topic of sustainable
entrepreneurship has amassed a sizeable body of literature. Moreover, one can also argue
that the field has gained credibility as an area of inquiry.
Figure 2.1: Sustainability-Entrepreneurship Nexus Publications 1987-2015
0
20
40
60
80
100
120
1987-1989 1990-1994 1995-1999 2000-2004 2005-2009 2010-2015
01916
38
115
0 0 4912
49
Count of Articles
Publication Year
Sustainability-Entrepreneurship Nexus
Publications
Ranked (SSCI) Not Ranked (SSCI)
29
Table 2.1: Broad Search Summary
Database(s)
Boolean Search Terms/Criteria
-Business Source
Premier
(EBSCOhost)
-ProQuest
-Wiley Online
Library
1) green OR social OR sustainab* OR ecol* OR environment* OR
entrepreneur* OR enterprise OR innovat* in the Title; AND 2) green
OR social OR sustainab* OR ecol* OR environment* OR
entrepreneur* OR enterprise OR innovat* in the Abstract; AND 3)
sustainab* AND entrepreneur* OR sustainab* AND innovat* OR
sustainab* AND enterprise in the Subject/Keywords.
-JSTOR
1) green OR social OR sustainab* OR environment* OR innovat* in
the Title; OR 2) sustainab* AND entrepreneur* OR enterprise in the
Abstract.
-Science Direct
1) green OR social OR sustainab* OR ecol* OR environment* OR
entrepreneur* OR enterprise OR innovat* in the Title; AND 2)
sustainab* AND entrepreneur* OR sustainab* AND innovat* OR
sustainab* AND enterprise in the Title/Abstract/Keywords.
STATUS OF SUSTAINABILITY-ENTREPRENEURHSIP NEXUS SCHOLARSHIP
Many scholars would agree that given the broad nature and applicability of the
concept, sustainability is a truly interdisciplinary phenomenon. This was made evident
from the sampled articles as publications stemmed from a variety of academic disciplines.
In order to highlight the sources of sustainable entrepreneurship research I follow extant
frameworks used in identifying links between entrepreneurship and other disciplines (e.g.
Ireland & Webb, 2007; Short et al., 2009). Specifically, I identify the academic domain from
which a publication emanates, and whether or not said publication is featured on the
Thomson Reuters Social Citation Index. These results are presented in Table 2.2 below.
Also, see Appendix A for a list of the articles used in the review.
As the sampled articles show, sustainable entrepreneurship publications appear
most frequently in journals related to the management discipline (39%). Following that are
the entrepreneurship (17%), and management-related (17%) categories – the latter being
mostly comprised of journals related to corporate social responsibility. In addition, a
30
number of articles in the sample were published in the operations management discipline
(9%). Notably, there was a negligible number of articles in the sample from related
business fields such as accounting, marketing, economics, finance, law, and marketing –
each of which comprised 2% or less in the sample. The same can also be said for the
anthropology (0%), education (0.4%), political science (2%), psychology (1%), and
sociology disciplines (2%).
Of the sampled articles, 179 (71%) were from journals ranked on the Social Sciences
Citation Index (SSCI). For the management discipline, 73% of the articles were from SSCI
ranked journals. The same trend in terms of number of SSCI publications was observed for
the entrepreneurship (69%); operations management (95%); and other business (81%)
categories. Over the 4-year periods from 2000-2015, sustainable entrepreneurship
publications from SSCI ranked journals increased by an average of 139%, compared to an
average of 156% for unranked journal publications for the same period. This difference can
be associated more with variations in publishing criteria for SSCI ranked journals as
opposed to unranked journals. Altogether, the findings above suggest that the S-E Nexus is
indeed growing – with much of the growth driven by the management and
entrepreneurship fields.
31
Table 2.2: Academic Discipline and Journals of Articles in Sample
Academic Domains/ Journals
Total
in
Sample
%
SSCI
Ranked
%
Accounting
5
2%
3
60%
Accounting Auditing & Accountability Journal (1); Accounting Review (1);
European Accounting Review (1); International Journal of Accounting &
Information Management (1); Journal of Accounting & Organizational
Change (1)
Anthropology
-
0%
-
-
Economics
3
1%
1
33%
International Journal of Economics & Finance (2); Journal of Economic Issues
(1)
Education
1
0.4%
1
100%
Education & Information Technologies (1)
Entrepreneurship
42
17%
29
69%
Academy of Entrepreneurship Journal (1); Entrepreneurship Theory &
Practice (6); Entrepreneurship & Regional Development (5); International
Entrepreneurship & Management Journal (1); International Journal of
Entrepreneurship (2); International Small Business Journal (1); Journal of
Business Venturing (10); Journal of Development Entrepreneurship (5);
Journal of Entrepreneurship & Management (1); Journal of Small Business &
Entrepreneurship (6); Journal of Small Business & Enterprise Development
(3); Journal of Small Business Management (1)
Finance
0
0%
-
-
Geography
4
2%
2
50%
Journal of Place Management & Development (1); Journal of Urban Affairs
(1); People & Environment (1); The Geographical Journal (1)
Law
0
0%
-
-
Management
98
39%
72
73%
Academy of Management Executive (1); Academy of Management Journal (2);
Academy of Management Perspectives (1); Academy of Management Review
(4); Asian Business & Management (1); Business Strategy & the Environment
(32); California Management Review (3); European Business Review (1);
European Journal of Innovation Management (1); Family Business Review (1);
Greener Management International (11); Innovation: The European Journal
of Social Science Research (1); International Business Research (4);
International Journal of Business & Management (2); International Journal of
Business & Society (1); International Journal of Organizational Analysis (1);
Journal of Applied Business Research (1); Journal of Business Research (2);
Journal of General Management (1); Journal of International Business
Research (1); Journal of Management (1); Journal of Management Studies (3);
Journal of Organizational Change Management (4); Management Decision
(1); Management International (1); Management Research Review (1); MIT
Sloan Management Review (3); Organization Science (2); R&D Management
(1); Research Policy (3); Strategic Management Journal (6)
32
Academic Domains/ Journals
Total
in
Sample
%
SSCI
Ranked
%
Marketing
4
2%
2
50%
Journal of Marketing Management (2); Journal of the Academy of Marketing
Science (2)
Operations Management
22
9%
21
95%
Journal of Cleaner Production (19); Production & Operations Management
(1); Total Quality Management (2)
Political Science
5
2%
3
60%
Governance: An International Journal of Policy, Administration, and
Institutions (1); Journal of Public Affairs (1); Journal of Public Policy &
Marketing (1); Public Administration Quarterly (1); Public Administration
Review (1)
Psychology
2
1%
2
100%
Journal of Economic Psychology (1); The Journal of Applied Behavioral
Science (1)
Sociology
5
2%
-
International Journal of Social Economics (4); International Journal of
Sociology & Social Policy (1)
Other Business
43
17%
35
81%
Business Ethics: A European Review (2); Corporate Governance (5); Corporate
Social Responsibility & Environmental Management (2); Journal of Business
Ethics (31); Journal of Corporate Citizenship (2); Social Responsibility Journal
(1)
Other
19
8%
8
42%
American Journal of Agricultural Economics (1); Ecological Applications (1);
Energy Policy (1); International Journal of Agricultural Sustainability (1);
International Journal of Innovation Management (3); Journal of
Environmental Protection (1); Journal of Health Organization & Management
(1); Journal of Management & Sustainability (2); Journal of Strategic
Innovation & Sustainability (1); Management Research News (1); Studies in
Comparative International Development (1); Sustainable Development (5)
TOTAL
253
100%
179
71%
Conceptual Articles
For the 83 (33%) conceptual articles in the sample, I coded for the primary
theoretical contribution – whether descriptive, explanatory, or predictive in nature (Snow
& Thomas, 1994). Following Short et al. (2009), I coded articles as descriptive if definitions
were provided for key terms or concepts in line with entrepreneurship for sustainable
development. Articles were coded as explanatory if they provided explanations regarding
33
the relationships between key constructs entrepreneurship and sustainable development.
Finally, predictive articles refers to those where explicit propositions are made regarding
the antecedents or outcomes of entrepreneurship for sustainable development.
For the sampled conceptual articles, roughly half (49%) were classified as
descriptive based on coding. On the one hand, descriptive articles sought to clarify ‘what’
the concept of sustainability meant to their respective fields of study; and, how it informed
current thinking. This was especially the case with management journal articles (e.g.
Gladwin, Kennelly, & Krause, 1995; Hart & Milstein 1999). On the other, descriptive
articles also sought to outline the qualities of entrepreneurs who recognize and
subsequently exploit sustainable development opportunities. Linnanen (2002), for
example, concluded that one of the key distinguishing features between environmentally
driven entrepreneurs and traditional entrepreneurs was the inherent value-based ideology
of the former.
Explanatory articles (30%) sought to expand on how various factors affect, and are
affected by sustainability related entrepreneurship activity. Studies, for instance, were
keen on explaining how entrepreneurs come to realize and exploit sustainability-driven
opportunities (Hockertz & Wustenhagen, 2010; Keogh & Polonsky, 1998; Pacheco, Dean &
Payne, 2010). Explanatory articles in the sample also introduced frameworks for the
advancement of S-E Nexus scholarship by outlining means of integrating sustainable
development principles into broader theoretical perspectives (e.g. Gibb & Ahikary, 2000;
Gibson, 2012; Schalteger & Wagner, 2012). Schaltegger & Wagner (2011), for example,
build on sustainable development and entrepreneurship literature to elaborate on how
34
sustainable entrepreneurship differs from other ‘sustainability-oriented’ entrepreneurial
activities.
Predictive articles that featured explicit propositions regarding sustainable
entrepreneurship comprised 22% of the sample. All but one of the predictive conceptual
articles sampled was from an SSCI ranked journal. These articles essentially help to
advance contemporary understandings of the entrepreneurs who pursue sustainable
development outcomes. Predictive articles emphasize that entrepreneurs that address
climate change are adept at recognizing and subsequently exploiting opportunities that
result from market failures (Azmat & Samaratunge, 2009; Cohen & Winn, 2007; Dean&
McMullen, 2007). The awareness of actors to sustainability-driven opportunities is posited
to be the result of their prior knowledge, entrepreneurial experience, and pro-social
motivations (Patzelt & Shepherd, 2011; Santos, 2012). Incidentally, these same human
capital factors also play a role in the subsequent evaluation and exploitation of these
opportunities (c.f. Davidsson & Honig, 2003). Altogether, the predictive articles sampled
provide fertile ground for empirical testing that can help advance research in the S-E
Nexus.
Overall, the sampled conceptual articles suggest that scholarship at the S-E Nexus is
still within its early or developmental stages. Evidently, research has been primarily
preoccupied with accurately identifying traits of entrepreneurs who recognize and exploit
sustainable development opportunities at the expense of tracking or predicting what
he/she does. Thus, the pillars required for building predictive models such as boundary
conditions, clearly defined concepts, or antecedent factors are lacking. This is similar to
findings concerning social entrepreneurship literature (Short et al., 2009), and is
35
suggestive that more attention be paid to building predictive conceptual models within the
S-E Nexus.
Table 2.3: Characteristics of Sampled Articles
Article Characteristics
Number
of
Articles
%
Conceptual Articles
83
33%
Purpose
Descriptive
40
48%
Explanatory
25
30%
Predictive
18
22%
Formal Propositions
15
18%
Empirical Articles
162
64%
Formal Propositions/Hypotheses
62
38%
Qualitative Methods
Case study
66
41%
Grounded theory
7
4%
Discourse analysis
22
14%
Other
11
7%
Quantitative Methods
Ranking
1
1%
Descriptive statistics
10
6%
Regression
46
28%
SEM
4
2%
Factor analysis
13
8%
Correlations
3
2%
T-tests
4
2%
Other
4
2%
Data Collection
Observations
12
7%
Interviews
75
46%
Surveys
42
26%
Secondary data
98
60%
Not specified
12
7%
Review Articles
8
3%
36
Empirical Articles
For coding empirical articles in the sample, I was primarily concerned with
identifying how empirical research on sustainable entrepreneurship has developed over
the years. Thus, I coded articles for the overall research methodology and design, use of
hypotheses, geographic focus, level of analysis, and incorporation of the time concept.
Articles were also coded to identify the outcome researched, however, given that I discuss
outcomes in terms of both conceptual and empirical articles I elaborate further on the
coding for outcomes later.
Research Design/Method. One hundred and sixty-two articles (64%) of the
sampled articles were empirical in nature. Of these, 106 articles (65%) featured a
qualitative methodological approach. It was observed that the qualitative empirical studies
sampled relied heavily on case study analysis as sixty-six articles used this approach.
Grounded theory (7 articles) and discourse analysis (22 articles) were also used to
facilitate qualitative research. The remaining eleven qualitative articles sampled used a mix
of ethnography and action research.
Roughly eighty-five (52%) of the sampled empirical articles featured a quantitative
method. The most favored analytical method was regression analysis – featured in forty-six
articles. This was followed by factor analysis (13 articles), and descriptive statistics (10
articles). Four articles featured structural equation modelling and t-tests, while three used
correlations. Only one article reported use of rankings, while the remaining four articles
used other analytical methods such as event analysis, quasi-experiments, or fuzzy set
comparative analysis.
37
Use of Hypotheses. The use of formal hypotheses are important as they 1) are the
basic tools of theory; 2) can be used to validate relationships between key variables; and 3)
can be distinguished from the opinion or value of the author (Kerlinger, 1986). Formal
hypotheses were used for 38% of the sampled empirical articles. Again, it was noticed that
SSCI ranked publications were leading in terms of formal hypothesis use. Thus, it is evident
that scholarship on sustainable entrepreneurship is building around validated hypotheses.
Research Context. Entrepreneurship, like sustainable development, is of concern
for many nations around the world given the pervasiveness of many environmental and
social problems. As such, it can be expected that the research settings used to examine
sustainable entrepreneurship will vary. This was evident in the sampled articles as
research settings spanned several countries. Based on the coding employed, it was
observed that the United States was the most used research setting – being used in thirty
articles (19%) within the sample. With the addition of Canada (eight articles) and Mexico
(one article), North America was featured as a research setting for 25% of sampled
empirical articles. The second most cited setting was Germany (twelve articles), followed
by The Netherlands (eleven articles). Canada, Sweden, and England/Great Britain/UK
(eight articles each), and Finland (seven articles). Each of Brazil, Denmark, Italy, and Spain
were featured in four articles. Bangladesh, Mexico, Norway, New Zealand, and South Africa
were each used in two articles. Other countries observed include Bosnia & Herzegovina,
Cameroon, Costa Rica, Ghana, Israel, Indonesia, Jamaica, South Korea, Nigeria, Philippines,
Russia, Rwanda, Samoa, and Tunisia, Taiwan, and Thailand (one article each). Regarding
multi-country studies, seventeen articles (10%) used data from across various countries,
while four articles (2%) focused on the EU/European countries, and one article (<1%)
38
focused on Asian countries. It can be concluded that scholarship on entrepreneurship for
sustainable development is becoming increasingly contextualized. This is beneficial since
more local and contextualized understandings with respect to sustainable development
across the globe are required for a full understanding of sustainable development.
Levels of Analysis. Multilevel theorizing and empirical analysis represent
important, but under researched areas for management scholars in general, and
entrepreneurship scholarship in particular (Hitt et al., 2007; Shepherd, 2011). It
acknowledges the influence that context can have on individual phenomena, such as
entrepreneurship, and vice versa (Klein, Tosi, Canella. Jr., 1999). Moreover, as scholarship
on entrepreneurship spans many disciplines and contexts, it presents many opportunities
for multilevel research (Shepherd, 2011). I thus coded the empirical articles sampled for
the level of analysis emphasized and whether they employed some degree of multi-level
theorizing in their analysis. Regarding the former, I coded the focal level for each article as
stated by the author into one of six possible levels – namely environmental,
interorganizational networks, organizations, subunits, groups, and individuals (Hitt et al.,
2007). Regarding the latter, I coded for whether contextual concepts and factors were
central to the theoretical framework being developed or tested.
As shown in Table 2.4, empirical studies in the sample were predominantly focused
at the organizational level – used in 107 articles (63%) out of the total count of 169. This is
followed by studies at the interorganizational network level (14%) – inclusive of studies
incorporating, for example, industry level considerations. Individual and environmental
(e.g. institutions) were the focal levels in 19 articles (11%) each. Notably, although the
organizational level was most prominent, only 7% of these articles could be said as having
39
multilevel considerations in their theoretical model. The empirical studies at the
environment (42%), inter-organizational network (26%), and individual (21%) levels were
also identified as having multilevel considerations.
As an extension, I also compared the multilevel considerations between conceptual
and empirical articles. This was to elucidate further the development of sustainable
entrepreneurship scholarship concerning multilevel theorizing. In total 250 articles were
coded as indicating their level of analysis. Although the majority of sampled articles were
empirical in nature, only twenty-six (15%) were coded as having multi-level
considerations. This is in comparison to the twenty-two conceptual articles (27%) found as
having multi-level considerations. This is similar to what was found by Hitt et al. (2007),
who in their review of multilevel research in management, concluded that multilevel
theorizing was more likely to be found in conceptual articles.
Table 2.4: Levels of Interest in S-E Nexus Articles
Paper Type
Conceptual
Empirical
Levels of Analysis*
Total
Count
ML**
Count
ML
Environment
35
15
43%
6
40%
20
57%
9
45%
Inter-organizational
Networks
34
10
29%
5
50%
24
71%
7
29%
Organizations
150
42
28%
8
19%
108
72%
8
7%
Sub-unit
1
0
0%
0
-
1
100%
1
100%
Group
0
0
-
0
-
0
-
0
-
Individual
35
16
46%
5
31%
19
54%
4
21%
TOTAL
255
83
33%
24
29%
172
67%
29
17%
*Note: Articles were coded into more than one category if applicable, thus total is greater than 253.
**ML – Multi-level
Time. As proposed by Whetten (1989) and reiterated by George & Jones (2000),
time represents an important part of theorizing within management studies – being a
boundary condition that specifies when a particular construct may be relevant. It is
therefore worth considering the concept of time in relation to studies of entrepreneurship
40
(Das & Teng, 1997; Slevin & Covin, 1997). In addition, time has also been indicated as
integral concept to S-E Nexus research (Bansal & DesJardine, 2014; Bansal & Knox-Hayes,
2013; Slawinski & Bansal, 2012; 2015). In particular, because sustainable outcomes often
endeavor to account for ‘future’ generations, actors who seek to exploit sustainable
development opportunities must acknowledge the time component in some form
(Slawinski & Bansal, 2012; 2015). For example, actors can have different conceptions of
time, map activities to time, or relate with time (Ancona et al., 2001) differently in response
to the long-term requirements of environmental sustainability.
As such, I applied a simple coding procedure to identify whether the concept of time
was incorporated in an article in any form. Specifically, I distinguished between articles
that were cross-sectional or dynamic in nature as described by the author in their
methodology. As an example, I coded articles as being dynamic if data was collected over
time (qualitative studies) or if a longitudinal dataset was used (quantitative studies).
In the subset of empirical articles only seventeen (10%) acknowledged time as a
central concept in their arguments/analysis. Notably, however, each categorization of time
as proposed by Ancona et al. (2001) were seen used within this small subset of articles. The
concept of time was for instance incorporated latently as many of these studies were
concerned with documenting of assessing the effects of innovation diffusion through
longitudinal studies. This was evident in the case of Etzion & Ferraro (2010) and their
analysis of the institutionalization of the Global Reporting Initiative (GRI). Empirical
studies within the S-E Nexus also showed some consideration of how actors map activities
to time with respect to achieving sustainable development (Feola & Butt, 2015). Within this
41
subset of articles, how actors relate to time (e.g. temporal orientation) within a
sustainability-oriented context was also considered (Wang & Bansal, 2012).
DOMAIN ORIGINS AND OUTCOMES OF INTEREST AT THE SUSTAINABILITY-
ENTREPRENEURHSIP NEXUS
To review further S-E Nexus scholarship I also coded articles (both conceptual and
empirical) based on 1) the domain of origin to which it could be assigned and 2) the
outcomes examined. More specifically, domain of origin refers to the main type of
entrepreneurship referenced within the article – i.e. whether business/economic,
environmental, social, institutional, or sustainable. I focus on these types of
entrepreneurship since research suggests that entrepreneurial activity occurring at the
intersection of these domains is likely to be geared towards the realization of sustainable
development (McMullen, 2011). Moreover, identifying and delineating the relevant
domains for S-E Nexus literature helps scholars to better understand the boundary and
exchange conditions of the field (Short et al., 2009). Thus, consideration of the domain of
origin, I maintain, can help illuminate the foundations and theoretical bases upon which the
literature rests.
To code the domain of origin, I use a triple bottom line framework. This framework
has been utilized by various scholars to better identify domains of scholarship on social
entrepreneurship – Short et al. (2009) in the case of social entrepreneurship, and McMullen
(2011) in delineating the field of development entrepreneurship. As an example of the
coding process, Linnanen (2002) who focuses exclusively on the ecopreneur was coded as
originating from the environmental entrepreneurship, whereas Rapp & Eklund (2002) who
focus on quality improvement within corporations was coded as business entrepreneurship.
42
I also contrast the domain of origin with the main outcomes of interest, made
explicit or implicit, in the arguments for each article. Coupling the outcomes of interest
with the domain of origin in this way, I maintain, helps to both highlight further boundary
differences and gaps in the literature. Further, observation of the outcomes of dependent
variables of interest in scholarly articles helps in understanding the scope and
distinctiveness of a field (Yu et al., 2011).
With respect to coding of the outcomes of interest. I first noted the outcome or
dependent construct used by the author explicitly or implicitly. For example, while Alvarez
& Barney (2014) do not provide a visible theoretical framework, it is evident that they are
focused on poverty alleviation as an outcome of entrepreneurial action. I use the typology
for entrepreneurship value creation advanced by Cohen, Smith, & Mitchell (2008). This
typology builds on the triple bottom line perspective and thus suits this review’s purposes
well – especially given that I organize the domain of origin in a similar framework.
According to the Cohen et al. (2008) framework, entrepreneurial value creation can be
classified as one of either seven categories. The first three – performance, promise, and
perpetuity – are representative of outcomes that are primarily economic, social, and
environmental in nature respectively. The fourth is socio-efficiency where outcomes reflect
a focus on social and economic objectives; fifth is stewardship category where outcomes
serve a primarily social and environmental objective. The sixth is eco-efficiency where, like
the previous two, outcomes serve dual objectives – i.e. environmental and economic.
Finally, there is the sustainability category where outcomes are simultaneously economic,
environmental, and social in nature encompassing the holistic view of sustainable
development (Cohen et al., 2008; pg. 111). Note that the sustainability category serves as a
43
catchall for articles that broadly reference outcomes such as ‘sustainable development’ or
‘sustainability innovation’ but do not provide specific examples or measures.
Business Entrepreneurship and S-E Nexus Outcomes
I coded articles as belonging to this domain when they focused on inherently profit
seeking ventures (McMullen, 2011). Of the sampled articles, one hundred and eight (43%)
were coded as being from this domain. Articles within the business entrepreneurship
domain were focused mainly on factors related to incorporating social and environmental
concerns into new and existing firms. Articles within this domain also appeared reliant on
strategy based theories such as the resource-based view (Chakrabarty & Wang, 2012;
Chang, 2014; Kappor & Furr, 2015), or stakeholder management and stewardship theory
(Craig & Dibrell, 2006; Husser; & Evraert-Bardinet, 2014).
Within the business entrepreneurship domain, outcomes related to economic
performance (31%) and sustainable development (33%) were most prominent. Economic
performance outcomes researched include for example sales growth, profit margin, and
return on assets (Ameer & Othman, 2012; Gray et al., 2006; Hart & Milstein, 1999; Wang &
Bansal, 2012); or competitive advantage (Marchi, Mari, Micelli, 2013). In terms of
sustainable development outcomes, business entrepreneurship studies have examined
dependent variables that can be described as broad and multi-dimensional. These include,
for example, sustainability co-creation—the generation and ongoing realization of shared
value between firms and customers (Arnold, 2015). Relatedly, Hart & Milstein (2003) fuse
sustainable development principles with a stakeholder value framework in their
conceptualization of the multi-dimensional outcome sustainable value creation. Economic
performance and sustainable development outcomes in this domain were followed by
44
outcomes focused on socio- (17%) and eco-efficiency (13%). Notably, dependent variables
specific to promise (6%), perpetuity (5%), or stewardship (6%) – i.e. those with less
emphasis on economic objectives – were least researched from the economic domain.
S-E Nexus research from the business entrepreneurship domain can help provide
valuable insight regarding research on corporate sustainability or sustainable
intrapreneurship (see: Salzmann et al., 2005). This is mainly due to the domain’s
preoccupation with determining the financial implications of pursuing environmental goals
(Aargaon-Correa, Marcus, & Hurtado-Torres, 2016). In essence, S-E Nexus research
emanating from this domain can prove instrumental in resolving the issue of whether the
exploitation of sustainability-driven opportunities bodes well for organizational
performance.
Environmental Entrepreneurship and S-E Nexus Outcomes
Articles were coded to this domain when focal entities under investigation were
depicted as mainly responding to environmental market failures or engaged in
environmental-specific ethics (Thompson, Kiefer, & York, 2011). Like the business
entrepreneurship domain, strategy based perspectives appear to be the primary theorizing
vehicles. Notably, studies within the environmental entrepreneurship domain used
theories that were more applicable to consideration of context. Various authors for
instance use institutional theory (Linder, Bjorkdahl, Ljungberg, 2014; Meek, Pacheco, &
York, 2010; Pacheco; York, & Hargrave, 2014) as a means of explicating the role of
institutions in entrepreneurship for sustainable development. Possibly the result of
sustainable development’s traditional emphasis on the natural environment, articles from
within the environmental entrepreneurship domain were second most within the articles
45
sampled. Seventy-nine (31%) articles focused on outcomes related to entrepreneurs with a
primarily environmental focus.
Within this subset of articles, holistic conceptions of sustainability were again the
dominant outcome of interest (30%). However, compared to the economic domain,
performance outcomes ranked third (23%) behind socio-efficiency (25%) and was only
slightly higher than eco-efficiency (22%). Again, outcomes related to promise (1%),
perpetuity (8%), or stewardship (6%) appeared to be understudied within sustainable
entrepreneurship literature.
Social Entrepreneurship and S-E Nexus Outcomes
Articles in the sample were coded as belonging to this domain when sustainable
entrepreneurship stemmed from actors with a predominantly social focus. Similar to the
findings of Thompson et al. (2011), the coding suggests that S-E Nexus research within the
social domain hails from primarily disciplinary roots grounded in non-profit and the public
sector, political science and economics, and management entrepreneurship. In comparison,
I observe a similar trend within S-E Nexus research from the social domain. Hall et al.
(2012) for instance use an Austrian economics perspective to examine how economic and
socially driven policies differentially affect productive entrepreneurial outcomes. Other
scholars take a more ethics approach to examine the individual and organizational
implications influences for sustainability action (e.g. Clausen & Gyimothy, 2015; Hahn,
2009; Kim, Brodhag, & Mebratu, 2014; Santos, 2012; Simola, 2007). Notably, however, is
an absence of any dynamic theories.
S-E Nexus scholarship from the social domain was identified in 20% (fifty articles)
of the coded sample. Similar to articles from the economic and environmental domains,
46
sustainability (46%) and performance related outcomes (34%) were most evident within
the sample. With the exception of stewardship (4%), socially oriented outcomes were also
well represented within this subset of articles – socio-efficiency (16%) and promise (12%).
The point of few dynamic theories noted above is also underscored by only two studies out
of the thirty-one empirical articles in this subset being identified as acknowledging time.
Institutional Entrepreneurship and S-E Nexus Outcomes
Articles were coded as belonging to this domain if they reflected arguments
involving agents or entities focused on creating new, or changing existing, institutional
frameworks to ones that integrate principles of environmental sustainability (Pacheco,
York, & Dean, 2010). Along with the expected use of institutional theory, institutional
economics and neo-institutional theory are also observed as being utilized in this domain
of S-E Nexus research. I draw attention to Woolthius et al (2013) who synthesize
institutional theory and institutional economics to examine how institutional
entrepreneurs create favorable contexts for sustainable development by influencing formal
and informal institutions.
There were nineteen articles (8%) from this domain within the sample. While
sustainability outcomes were predominantly researched – used in nine articles (47%) –
there was a more balanced distribution for the remaining outcomes researched in this
subset of articles. This is due to the remaining six outcome categories being equally ranked
in some cases. Socio-efficiency and performance ranked second with three articles each
(16%), while stewardship and eco-efficiency were both featured in two articles apiece
(11%). Promise and perpetuity, both with one article each (5%) round out the outcomes
researched in this domain.
47
Sustainable Entrepreneurship and S-E Nexus Outcomes
Sixty-seven articles (26%) within the sample were coded as being from the
sustainable entrepreneurship domain. Articles coded to this domain were explicit in stating
that the individuals/entities upon which they focused sought to maximize simultaneously
economic, environmental, and social goals. There was a variety of disciplinary roots
observed within this subset of articles – inclusive of, for example, market theory or neo-
classical and ecological economics (Dean & McMullen, 2007; Cohen & Will, 2007; Rees,
2002). Game theory also emerged as a perspective used for examining how individuals
create (Pacheco, Dean & Payne, 2010), or managers exploit (Lampioski et al., 2014),
opportunities for sustainable development.
Similar to the other domains, holistic sustainability outcomes (48%) were observed
as the dominant outcomes researched. The outcomes variables ranged from the
antecedents affecting individuals’ sustainability orientation (Kuckertz & Wagner, 2010;
Lans, Blok, & Wesselink, 2014; Munoz & Dimov, 2015), to sustainability innovation (both
incremental and radical) and its diffusion (Heiskanen, Lovio, & Jalas, 2011; Hansen &
Schaltegger, 2013; Pastakia, 1998). Socio-efficiency (22%) and performance (18%)
outcome variables were observed as the next most prevalent categories of outcomes
examined. The least researched outcome variable categories within this domain observed
were eco-efficiency (10%), perpetuity and stewardship (6% each), and promise (4%).
48
Figure 2.2: Domain Origins and Outcomes of Interest in S-E Nexus Scholarship
Figure 2.3: Outcomes of Interest in S-E Nexus Research by Domain of Origin
0
20
40
60
80
100
120
140
Count of Articles
Types of Outcomes
Sustainable
Social
Environmental
Economic
Institutional
49
DISCUSSION AND CONCLUSION
Conceptual and Empirical S-E Nexus Research: Implications
Based on the review of S-E Nexus research above, I outline some observations
regarding the development of the field. First, the development of S-E Nexus scholarship
over the past two decades can be described as being focused almost exclusively on two
areas. These are: 1) determining the antecedents of sustainability-oriented entrepreneurial
action, and 2) understanding the role of sustainability principles in relation to the
entrepreneurial pursuits of various entities. Key factors include the existence of pervasive
market imperfections and the opportunities they induce (Alvarez & Barney, 2014; Cohen &
Winn, 2007; Dean & McMullen, 2007). However, it should also be noted that individual
motivation plays a role in awareness to and subsequent exploitation of these opportunities
(Munoz & Dimov, 2015).
The review of S-E Nexus research also suggests that more clarity is needed
regarding what, other than the simultaneous pursuit of triple-bottom line objectives,
distinguishes entrepreneurship for sustainable development. In light of this, I maintain that
for S-E Nexus scholarship to progress, attention should be paid to the other boundary
conditions of theory – namely where and when (Whetten, 1989). Perhaps, it is the case that
distinguishing entrepreneurship for sustainable development depends on some aspect of
the contexts within which actors emerge and/or operate; or rather, how they conceive of
and use time in their decision making.
Second, the relatively low number of articles featuring formal propositions suggests
that there exist few theoretical models to guide the empirical testing necessary to develop
S-E Nexus scholarship. A point not highlighted above is that only four of the articles
50
featuring formal propositions are multi-level in nature. This is a worrying trend as the
sustainable development concept is one that necessitates a multilevel and dynamic
approach (Geels 2010; 2011). Although few articles provide formal propositions to guide
empirical tests, it is good to note the considerable empirical efforts within the field.
Together this is suggestive of the influence that external fields have on providing
theoretical guidance to empiricists within the sustainable entrepreneurship literature.
Third, despite the considerable empirical efforts outlined above, sustainable
entrepreneurship scholarship is still dependent on case based research. This is similar to
the related field of social entrepreneurship (Short et al., 2009) where case based research
was found to be most prevalent. On the one hand, it can be argued that the reliance on case
based research is linked to difficulty in collecting the data required for quantitative
empirical research. On the other, it is also suggestive of the need for more empirical efforts
based on quantitative analyses (Gras, Moss & Lumpkin, 2014).
Additionally, this review’s findings regarding sustainable entrepreneurship
scholarship shows an orientation towards organizational level research. This may, no
doubt, be tied to the prevalence of research on corporate sustainability (see: Montiel, 2008;
Salzmann, Ionescu-Somers, & Steger, 2005). Although such research may be instrumental
in advancing knowledge on how entrepreneurship for sustainable development takes place
within an established organization. However, as recent empirical evidence points to the
influence of individuals and new entrants on subsequent incumbent action (York & Lennox,
2014), future research may find benefit in exploring alternative or multiple levels of
analysis.
51
Further, empirical efforts should take care to incorporate context and time, as these
can help further distinguish the phenomenon from related forms of entrepreneurship. For
instance, consider microfinance studies that have shown how the provision of basic
infrastructural resources in the form of financial capital can facilitate the emergence of low-
cost and innovative business models (Ault & Spicer, 2014). Future empirical efforts could
use this as motivation to explore alternative research contexts beyond the US and UK. Or
rather, studies within developed economy contexts may also seek to focus on more
impoverished geographic areas or industry settings where sustainability is a primary
organizing objective.
Concerning time, I draw attention to the study by Perego & Kolk (2012), which
though qualitative still acknowledged the importance of time to organizations’ responses to
sustainable isomorphic pressures in the form of sustainability assurance use. Studies such
as Wesseling et al (2015) also show how time can be incorporated from a quantitative
methodological approach. As their analysis of the evolution of the electric vehicle industry
revealed, the opportunity and incentive for sustainability innovation was dependent on
incumbents’ financial performance. In other words, what may be preventing the radical
innovations required for sustainable development is the inability of sustainability-oriented
firms to acquire the necessary resources for action.
Domains and Outcomes of S-E Nexus Research: Implications
Based on the stated origins and outcomes researched in sustainable
entrepreneurship scholarship, as outlined above, I provide some additional observations.
First, findings suggest that S-E Nexus scholarship remains highly fragmented. The main
reason being that many types of entrepreneurial activity – as identified by actors’ main
52
goals/objectives and their degree of substitutability – have been shown to foster outcomes
in line with sustainable development. Second, although sustainability outcomes are
extensively researched within the identified domains, much of this research is static or
cross-sectional in nature with little attention given to dynamic research methods. Further,
it could also be observed that authors tend to use the term sustainable development as an
outcome with little specification as to how the term is conceptualized or what type of
‘sustainable development’ outcome is being pursued. Szekely & Strebel (2013) for example,
by distinguishing between innovation types were able to show that the type of
sustainability innovation pursued by an entity - whether incremental, radical, or systemic –
should be tailored to the particular context.
Additionally, the preceding review suggests that much of S-E Nexus research to date
aligns with proponents of weak- as opposed to strong sustainability arguments. This
current alignment of the literature is mainly due to the limited number of articles focused
on examining environmentally relevant outcomes. If maintaining and increasing human
welfare is the defining characteristic of sustainable development, and human welfare in
turn is derived from the combination of different forms of capital, then sustainable
development requires that these capital stocks, which produce human welfare, be
maintained or increased over time (Ekins, 2014; pg. 59)
1
. As weak sustainability
proponents argue, welfare is not dependent on a specific form of capital and as such can be
maintained with substitution – e.g. by replacing natural environmental functions with
1
‘Forms of Capital’ refers to—physical or manufactured capital (e.g. infrastructure); social capital (networks);
human capital (knowledge); and natural capital (e.g. ecosystem services)—(Scoones, 1998)
53
technological fixes. Strong sustainability proponents, in contrast, argue that such
substitution of manufactured or physical capital for natural capital elements is limited by
critical natural capital factors that make unique contributions to human welfare (Ekins,
2014). The weak vs. strong sustainability debate is relevant to S-E Nexus research as it
creates for distinctiveness within the field. Moreover, as strong sustainability arguments
emphasize the measurement of critical elements of natural capital, they can aid in the
development of measurement and empirical models needed in S-E Nexus scholarship
(Ekins, 2014).
Areas for Future S-E Nexus Research
As this review of the literature suggests, S-E Nexus scholarship, over the past two
decades, remains in a nascent stage of development. Extant research has focused more on
distinguishing the sustainable entrepreneur from related forms of entrepreneurial activity
and explaining the emergence of sustainable ventures. In addition, reliance on case based
research methods has contributed to an absence of more generalizable quantitative
studies. Moreover, both conceptual and empirical studies of sustainable entrepreneurship
show an emphasis on static as opposed to dynamic analysis. Notably, the difficulty in
measuring sustainability and sustainable outcomes can be one reason to blame for these
issues (Schalteger & Wagner, 2006). Another is the paucity of research seeking to exploit
emergent research methods and novel datasets to tackle pressing issues in the
entrepreneurship, and greater management domain.
In order to help address the issues stated above and spur future research within the
S-E Nexus, I offer several possible research questions based on the Academy of
Management Journal editorial team’s ‘grand challenges’ (George, Howard-Grenville, Joshi, &
54
Tihanyi, 2016). These grand challenges specifically refer to issues surrounding big data,
climate change, aging populations, purposeful organizations, digital money, risk and
resilience, and natural resources (George et al., 2016). Each grand challenge holds
implications for management research in general and entrepreneurship research in
particular. Table 2.6 (Appendix A) outlines the seven grand challenges on which I focus
along with some potential research questions.
Big Data
Big data typically refers to content generated from a plurality of sources – such as
internet clicks or mobile transactions. This data is typically high volume and requires
powerful computational techniques in order for trends and patterns to emerge (George,
Haas, & Pentland, 2014). In addition to the rich information that the granularity of this data
provides organizations, it can also illuminate the richness of individual behavior that is yet
to be tapped by management scholars. Big data thus offers immense opportunities for
management research in general, and for entrepreneurship research in particular to focus
on, for instance, the micro-foundations of organizational strategies or behaviors (p. 325).
Concerning entrepreneurship for sustainable, development I see big data as being
influential for research in several ways. First, as George et al. (2014) suggest these
‘information goods’ will impact how entrepreneurs and innovators create new
products/services and transform industries. However, it is still unclear as to how
sustainable economic models emerge from the use of such data. Further, I ask, what
differences are there, if any, in the way sustainable entrepreneurs perceive and use
information goods in comparison to less sustainability-oriented entrepreneurs? A second
potential area of inquiry as indicated by George et al (2014) is the balance between value
55
creation and value capture. Given the number of stakeholders involved in the generation,
amalgamation, storage, and use of big data, how is the value created by its usage
apportioned? Further, emergent techniques in textual and content analysis can also help
generate insight into important aspects of sustainable entrepreneurship. For example,
while detailed data on new ventures are generally unavailable in large datasets, the data
held within unstructured formats such as daily tweets or social media posts can provide
rich textual data for qualitative and quantitative studies.
Climate Change
It is understood that climate change represents one of the greatest challenges faced
by the human species in the 21st century. In the general sense, climate change refers to
changes in the earth’s energy balance because of both natural processes and human
activity, which can have profound geographical and environmental implications (Howard-
Grenville et al., 2014). Interestingly, climate change can also be seen as one the main
reasons for the emergence of entrepreneurship for sustainable development – i.e. as
individuals and organizations work either to safeguard the environment from further
harm, or to reverse damage that has already been done. Further, the proliferation of
regulations at both national and regional levels serves only to create more opportunities,
and risks, for sustainability-oriented individuals and organizations to exploit.
As various scientists and scholars agree, the effects of climate change are already
being felt. From low lying developing coastlines at risk from increased flooding, to
developed nations such as those in Europe forced to deal with increased migration from
social and environmental disturbances, climate change will require many adaptations by
individuals and organizations. Howard-Grenville et al. (2014) outline four key areas where
56
climate change implications are sure to be evidenced – value chains, organizational
resilience, and in work-life and societal shifts. Shifting the focus from organizations to
sustainable entrepreneurship in particular, I outline some other research questions for
future research in Table 2.6.
Aging Populations
Driven by positive trends in life expectancy and fertility rates the human population
is aging at rate without comparison in recent history. This presents a number of new
challenges and opportunities to management, and entrepreneurship, research and practice
(Kulik et al., 2014). This is especially as it relates to whom organizations manage; what
needs managing; and how people are managed (p. 929). Entrepreneurship scholarship even
points toward a relation between aging and entrepreneurial behavior (see: Levesque &
Minniti, 2006). Given that the implications of an aging population can be evidenced at a
societal, organizational, or individual level, there are also opportunities for multi-level
theorizing.
Notable implications at the societal level include longer retirement ages, increased
life expectancy, and immigration. Researchers can thus examine, for instance, how such
factors affect individual or employee orientations towards sustainability principles. At the
organizational level policy changes may necessitate adaptations to work and job design in
light of more elderly employees. Will such changes encourage organizations to take a more
proactive as opposed to reactive stance on sustainability issues? At the individual level,
societal and organizational policies are likely to influence individuals to change their views
regarding work, careers, and retirement (Kulik et al., 2014). Especially regarding later-in-
life careers and career changes, entrepreneurship becomes a factor given the extensive
57
network and resources of older individuals. This begs questions such as whether
individuals that start ventures later in their careers are more open to sustainability
principles as opposed to individuals who start ventures earlier in life. Additionally, are
younger or older individuals more likely to invest in sustainable ventures?
Purposeful Organizations
Another area that can spawn fruitful research on sustainable entrepreneurship
involves focusing on the purpose of organizations. Purpose, in this sense, refers to both
whether an organization’s actions are profitable or legal, and questions the underlying
logic of the action (Hollensbe et al., 2014). A focus on purpose is especially integral to the
development of sustainable entrepreneurship research given that purpose acknowledges
the interdependence of business, society, and the environment (pp. 1228, emphasis added).
Notably, extant research related to the founding principles of organizations can provide a
good foundation for such research.
Digital Money
Digital money essentially refers to a medium of exchange, or a measure and store of
value in electronic form (Dodgson et al., 2015). Influenced by increased globalization and
technological advancement, digital money has emerged as a potent new means of
facilitating commercial transactions. As Dodgson et al. (2015) note, digital money has two
particular effects. One, it dematerializes – by moving economic transactions from the
physical to digital world. Two, it disintermediates – connecting people and money more
closely and removing the need for intermediaries such as banks (p. 325). Additionally,
digital money affords disenfranchised individuals easier access to finance – with
implications for both the formal and informal economies. Digital money thus presents
58
another fruitful grand challenge for groundbreaking research on sustainable
entrepreneurship. As Dodgson et al. ask, what opportunities does digital money offer
entrepreneurship and new models of innovation? I extend this line of questioning by
offering several questions directed to sustainable entrepreneurship.
Risk and Resilience
How, and why, do some individuals and organizations adapt and thrive amid
adversity while others fail to do so? This question presents management, and
entrepreneurship, scholars with the challenge of studying the role and functioning of
organizations during adverse natural and social events (Van der Vegt et al., 2015). This
challenge becomes greater when considering that the likelihood and impact of such
adverse events is predicted to increase given greater density in global networks of people,
organizations, and countries (p. 971). Risks and adverse events, in this case, referring to
disasters or organizational crises. Disasters refers to potentially traumatic events that are
collectively experienced, have an acute onset, and are time delimited to either natural,
technological, or human causes (McFarlane & Norris, 2006). Crises refers to low-
probability, high-impact events which threatens the viability of a system, and is
characterized by ambiguity as to cause, effect, and means of resolution (Pearson & Clair,
1998). Sustainable entrepreneurship presents novel opportunities to contribute in this
area given that resilience has emerged as a fruitful concept linked to sustainability and
sustainable development (Dovers & Handmer, 1992; Handmer & Dovers, 1996).
Natural Resources
Natural resources underpin the foundations of human and economic activity. As
such, their increased exploitation has led to discussions of sustainability in policy and
59
executive decision-making (George et al., 2015). Natural resource considerations span both
countries and industries as food, energy, and water concerns present many sustainability
issues. Sustainability issues surrounding natural resources essentially challenge
management and entrepreneurship researchers to provide greater strategic and
managerial insight into conversations traditionally held within policy, scientific, and
engineering circles (p. 1596). As such, I provide several examples of questions on how
natural resource scarcity can be used to advance sustainable entrepreneurship research.
Conclusion
If the main goal of individual and organizational actors the world over is sustainable
development, then it is entrepreneurship for sustainable development that should be
emphasized in extant entrepreneurship research. With this in mind, I surveyed the extant
body of literature found at the nexus of sustainability and entrepreneurship to help guide
the further development of this important research stream. As the review findings suggest,
the previous two decades of research within the S-E Nexus have been limited by studies
that failed to embrace the inherent multilevel and dynamic nature of sustainability-
entrepreneurship relationship. Thus, in an effort to spawn more research within the S-E
Nexus literature I outline several areas for future research. Each of these areas, once
incorporated into S-E Nexus scholarship, can help to advance scholars’ understanding of
exactly what interactions at the nexus of sustainability and entrepreneurship mean for a
collective future where human life flourishes – both in theory and in practice (Schaefer et
al., 2015).
60
CHAPTER 3: STARTING THE FIGHT AGAINST CLIMATE CHANGE: HOW CONTEXT AND
CULTURE AFFECT INSTITUTIONAL ENTREPRENEURSHIP FOR SUSTAINABLE
DEVELOPMENT
INTRODUCTION
The issues that must be addressed to enhance the environmental sustainability of
human socio-economic systems also present opportunities for entrepreneurship (Hall,
Danele, & Lenox, 2010). Some individual and organizational actors who recognize and act
on these opportunities to effect environmental sustainability will create products and
services aimed at alleviating environmental or social issues (Thompson, Kiefer, & York,
2011). Other actors, particularly those involved in governance of socio-technical systems
(Manning & Reinecke, 2016), enact the opportunities presented by environmental
sustainability issues to either create new- or alter existing institutional frameworks (Dacin,
Goodstein, Scott, 2002; Pacheco, York, Dean, & Sarasvathy, 2010). These institutional
entrepreneurs utilize acquired resources to initiate, and actively participate in the
implementation of divergent changes to established institutionalized templates for
organizing within a given context (Aldrich, 2011; Battilana, Leca, & Boxenbaum, 2009;
Dorado, 2005; Greenwood & Suddaby, 2006). In addition to their individual agency and
motivation, institutional entrepreneurs can be influenced to act by the characteristics of the
national context – i.e. widespread social understandings that define rational behavior –
within which they are embedded (Greenwood, Oliver, Sahlin, & Suddaby, 2008; Hardy &
Maguire, 2008).
While scholars have acknowledged the role of different institutional contexts in
driving entrepreneurship in general (for reviews see: Bruton, Ahlstron, & Li, 2010;
61
Suddaby, 2010; Tolbert, David, & Sine, 2011; Welter, 2011), avenues remain to improve our
understanding of context’s influence on institutional entrepreneurship. Extant studies, for
instance, have been mainly preoccupied with explaining the role of context on micro- and
meso-level entrepreneurial behaviors (e.g. Acs, Desai, & Hessels, 2008). While adding to
our knowledge of how actors come to establish new ventures, or how organizations
expand products/services to new countries, these studies overlook the fact that
governance actors – i.e. those who actively work to manage institutional frameworks
(Manning & Reinecke, 2015) – are also influenced by the contexts they work in and create
(Giddens, 1984). This is an important shortcoming as entrepreneurship for sustainable
development – particularly at the national level – is integral in the transformation of
institutions towards those that support sustainable development (e.g. Brown et al., 2009;
Child, Lu, & Tsai, 2007). Moreover, institutional entrepreneurs, because of their position
and influence, can significantly affect countries’ pursuit of sustainable development
(Brown, DeJong & Lessidrenska, 2009).
To address the stated gap in research, this study utilizes institutional theory to
examine whether and how countries’ national and cultural contexts influence
entrepreneurial activity for sustainable development amongst institutional actors. First,
drawing on institutional theory (Scott, 1995) I argue that regulatory, normative, and
cognitive contexts, when favoring entrepreneurship, can influence national actors to
engage in institutional entrepreneurship for sustainable development. Second,
incorporating insights from work on the social construction of time (Huy, 2001; Lawrence,
Winn, & Jenkins, 2001; Navis & Glynn, 2010) I argue that countries’ cultural context, when
more long-term oriented, positively influences actors’ motivation to address the temporal
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and spatial distortion between natural/physical systems and socio-economic systems
(Bansal & Knox-Haynes, 2013). In other words, I contend that degree of long-term
orientation held culturally will significantly moderate the effect of regulatory, normative,
and cognitive contexts favoring entrepreneurship on institutional entrepreneurship for
sustainable development.
As the findings suggest, regulatory contexts favoring entrepreneurship and a long-
term oriented culture can influence institutional entrepreneurship for sustainable
development. In addition, the degree to which actors within a country hold a long-term
orientation positively moderates the effect of regulatory and cognitive institutional
contexts favoring entrepreneurship in influencing institutional entrepreneurship for
sustainable development. Based on these findings, this study contributes to extant
literature in several ways. First, by looking at the interaction between regulatory,
normative, cognitive, and cultural contexts this study responds to calls for greater
examination of the interaction between formal and informal institutions (Pacheco et al.,
2010). Second, it compliments studies which have suggested an integral role played by
time as it relates to institutional change (Huy, 2001; Lawrence, Winn, & Jenkins, 2001) by
looking at how culturally held beliefs regarding time affect institutional entrepreneurship.
Third, it contributes to the entrepreneurship literature by improving our understanding of
the antecedent factors to institutional entrepreneurship for sustainable development
(Dorado & Ventresca, 2013). Finally, this study also responds to calls for more quantitative
studies of entrepreneurship for sustainable development (Thompson et al., 2011).
63
THEORY AND HYPOTHESES
Institutional Theory and Entrepreneurship
According to institutional theory, entrepreneurship is contextually embedded
within social, cultural, and political contexts that influence individual and organizational
values, norms, motives, and behaviors (Bruton et al., 2010). This is effectively encapsulated
by North (1990) who defined institutions as the formal or informal rules of the game that
serve to constrain the choices of individuals and organizations. As extant research suggests,
institutions can influence both the rate and type of entrepreneurial activity within a
country (Bruton et al., 2010; Stenholm, Acs, & Wuebker, 2013). Thus, institutional theory
serves as a suitable lens for explaining how national level contexts influence institutional
entrepreneurship for sustainable development.
For this study, I draw on Scott’s (1995) conceptualization of the institutional context
as being comprised of regulatory, normative, and cognitive institutions that provide the
stability and incentives that can promote or inhibit social behavior in an economy. The
institutional pillars introduced by Scott (1995) have been well utilized in entrepreneurship
and management literature. For instance, studies have adapted Scott’s (1995)
conceptualization of distinct institutions, both validating their distinct nature and
demonstrating their influences on levels of entrepreneurship across countries (Alvarez,
Amoros, & Urbano, 2014; Busenitz, Gomez, & Spencer, 2000; Manolova, Eunni, & Gyoshev,
2008). This approach has also been used to examine the influence of institutions on the
engagement of women in entrepreneurship (Baughn, Chua, & Neupert, 2006; Yousafzai,
Saeed, & Muffatto, 2015). Other studies have incorporated these institutional pillars to
examine their direct effects on international entrepreneurial activities (Xu, Pan, & Beamish,
64
2004); and their moderated effects of the emergence of new businesses (De Clerq, Danis, &
Dakhli, 2010).
In contrast, this research is concerned with how these individual pillars influence
institutional entrepreneurship activity amongst national actors that work and operate at an
‘institutional’ level – i.e. those that establish the rules and norms regarding economic
activity within a country. Essentially, it is assumed that once present and in support of
entrepreneurship, each institutional pillar provides national actors with symbolic systems
– i.e. rules/laws, values, and categories – which serve to reduce uncertainty regarding
institutional entrepreneurial activity (Scott, 1995, pg. 77-78). Before turning to the
theoretical arguments, I next conceptualize institutional entrepreneurship for sustainable
development.
Institutional Entrepreneurship for Sustainable Development (SD)
Entrepreneurship for sustainable development is focused on the preservation of
nature, life support, and community in the pursuit of perceived opportunities to bring into
existence future products, processes, and services for gain, where gain is broadly construed
to include economic and non-economic gains to individuals, the economy, and society
(Shepherd & Patzelt, 2011; Shepherd & Patzelt, 2017). It is made possible due to the
presence of entrepreneurial opportunities inherent to sustainable development issues,
which threaten the functioning of human socio-economic systems (Cohen & Winn, 2007;
Dean & McMullen, 2007). In addition to the presence of these opportunities,
entrepreneurship for sustainable development is made possible due to the existence of
enterprising actors who are able to recognize and subsequently exploit these
entrepreneurial opportunities for sustainable development (Patzelt & Shepherd, 2011).
65
Parrish (2010) suggests that entrepreneurship favoring sustainable development is based
on a ‘perpetual’ as opposed to ‘exploitative’ reasoning. In other words, when exploiting
opportunities, actors employ an interpretive scheme whereby humans and the natural
environment are not viewed purely as means, but as means and ends in their own right (p.
516).
As prior literature suggests, entrepreneurship for sustainable development can be
evidenced at the individual, organizational, or national levels of analysis (McMullen, 2011;
Spence, Gherib, & Biwole, 2011). Here, I focus on the national level, where entrepreneurial
activity for sustainable development will resemble institutional entrepreneurship.
Institutional entrepreneurship refers to the process whereby actors leverage resources to
create or transform institutions (Battliana, Leca, & Boxenbaum, 2009; Garud, Hardy, &
Maguire, 2007; Lawrence & Phillips, 2004). Actors can be influential individuals,
organizations, or a collective of individuals and organizations (Wijen & Ansari, 2007).
Actors who engage in institutional entrepreneurship are embedded within a prevailing
institutional environment and are subjected to an institutionalized logic. They also possess
the agency necessary to exercise their divergent views (Dorado, 2005). To be considered
institutional entrepreneurship, actors must initiate and participate in the implementation
of divergent changes to institutions (Battliana et al., 2009). These changes can be either
within the confines of an organizations or the wider institutional context. Taken together,
current literature suggests that the emergence of institutional entrepreneurship is a factor
of both governing field characteristics, and the social position of actors’ influences its
emergence (Battliana et al., 2009; Dorado, 2005).
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Scholars have offered various accounts of institutional entrepreneurship in relation
to sustainable development issues (e.g. Ansari, Wijen, Gray, 2013; Child, Lu, Tsai, 2007;
Dorado & Ventresca, 2013; Schussler, Ruling, Wittneben, 2014; Wijen, 2014; Wijen &
Ansari, 2007). Dorado & Ventresca (2013), for instance, argue that actors often lack the
motivation to engage and decision making capacity for entrepreneurial engagement in
relation to complex social problems. Entrepreneurial engagement – i.e. institutional
entrepreneurship – is possible however given conditions such as increased public
awareness, dissonant loyalty to collective interests, establishment of arbitrary time setters,
and a ‘hiding hand’ effect where actors underestimate their own creativity and the
difficulty of resolving complex social problems (p. 76). Child, Lu, & Tsai (2007), also, in
their description of the evolution of China’s Environmental Protection System suggest that
interactions between the country’s prevailing institutional context and enterprising actors
affected how that evolution took place. Further, Wijen (2014), in his study of sustainability
standard adoption within institutional fields, also shows how the institutional context can
affect both if a sustainability standard is adopted by actors, and the degree to which that
adoption leads to the institutional actor’s desired outcome. Institutional entrepreneurship
thus provides a valid conceptualization of entrepreneurial action at the national level that
favors sustainable development.
Building on the above, I conceptualize institutional entrepreneurship for sustainable
development as a process whereby actors mobilize resources to either create new
sustainability-driven institutions or transform existing institutions so that they align more
with the principles of environmental sustainability. Extant scholarship suggests that three
conditions must be satisfied in order for the institutional context to influence
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entrepreneurship for sustainable development at the national level. First, the proposed
institutional change must be perceived as legitimate – i.e. desirable or appropriate –
according to institutional actors (Lenox, 2006; Suchman, 1995). Second, institutional actors
must have agency and a social position that enables them to act entrepreneurially if
necessary (Battliana, Leca, & Boxenbaum, 2009; Lawrence & Phillips, 2004). Third, the
institutional context enables entrepreneurial action by providing opportunities and
incentives that influence actors’ motivation to engage with, or decision making capacity
regarding, complex socioeconomic issues (Battliana et al., 2009; Dorado, 2005; Dorado &
Ventresca, 2013). In the arguments that follow, the former two conditions remain implicit,
leaving the latter condition as the primary focus.
Regulatory Context and Institutional Entrepreneurship for SD
The regulatory context are representative of rational actor models of behavior – i.e.
the formal imposition, enforcement, and acceptance of policies, rules, laws, and sanctions
that affect actors’ behavior (Manolova, Eunni, & Gyoshev, 2008; Yousafzai et al., 2015). The
regulatory component of countries institutional context involves factors such as the
efficiency and predictability of taxes; government policies in support of new business
activity; and ease of new business licensing and certification (Busenitz et al., 2000;
Reynolds et al., 2005). In general, the regulatory institutional context influences the
legitimacy and acceptance of entrepreneurship through legally sanctioned rules (Scott,
1995). The regulatory context is coercive in its influence on actors. Further, actors subject
to a strong regulatory context will value expedience concerning the governed actions
(Scott, 1995).
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A strong regulatory context with respect to entrepreneurship gives actors the
capacity to better establish rules, inspect conformity to those rules, and manipulate
sanctions in order to regulate behavior with respect to starting and governing businesses.
Conversely, a weak regulatory context will increase the opportunity cost of actions
regarding entrepreneurship for individuals due to the uncertainty of the regulatory
framework (Aidis, Estrin, & Mickiewicz, 2012). Further, the regulatory context can facilitate
the acquisition of resources that can be leveraged by entrepreneurs (Busenitz et al., 2000).
Given the complexity of sustainability issues, having a stronger regulatory context
gives institutional entrepreneurs a better foundation to build upon in the pursuit of
institutional change for sustainable development (cf. Dorado & Ventresca, 2013; Ferraro et
al., 2015). In other words, when the regulatory context favors entrepreneurship, national
actors advocating regulatory change in support of sustainable development benefit from
less uncertainty regarding transaction costs involved in acting entrepreneurially. National
actors, as I suggest, can avoid costly transactional and adaptation costs associated with
enacting institutional change in the presence of a strong regulatory context for
entrepreneurship. As one study by Wijen (2014) further suggests regulatory contexts
favoring entrepreneurship also increase the performance of adoption of sustainability
driven policies. Altogether, I hypothesize that:
H1a – The more countries’ regulatory context favors entrepreneurship, the greater the
likelihood of institutional entrepreneurship for sustainable development amongst national
actors.
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Normative Context and Institutional Entrepreneurship for SD
The regulatory context places emphasis on rules that introduce prescriptive,
evaluative, and obligatory dimensions to social life (Scott, 1995). Normative institutions
emphasize social obligation as the basis for encouraging or constraining human interaction
(Scott, 1995; 2008). In addition, while regulatory institutions are driven by conformity to
laws, the logic underlying the normative institutional context is that of appropriateness
(Scott, 1995). Scholars have also regarded normative institutions as reflective of actors’
orientation towards ensuring an ongoing relationship with a common set of standards and
value patterns (see: Baughn et al., 2006). Though varied depending on the level of analysis,
the presence and strength of the normative context can be identified by the certifications,
accreditations, and trade associations that govern socially acceptable behavior (Scott,
1995; pg. 56).
Regarding entrepreneurship, normative institutions refer to the degree to which
enterprising activity, and creative or innovative thinking are considered legitimate means
of pursuing valued ends (Busenitz et al., 2000; De Clerq et al., 2010; Scott, 2008). For
instance the normative context can be identified as a factor in why entrepreneurship
activity is encouraged and supported in some countries, whereas within others it is
discouraged and made difficult to pursue (see: Baumol, Litan, & Schramm, 2009). A
normative context encouraging of entrepreneurship, in addition to encouraging
entrepreneurial action amongst actors, facilitates the breakdown of barriers to such action
(Stenholm et al., 2013).
The greater the normative context for entrepreneurship, the more national actors’
prescriptive, evaluative, and obligatory frames of reference will condone entrepreneurial
70
action. This is likely given that strong normative contexts towards entrepreneurship will
encourage the application of perpetual reasoning to value systems and norms, by
influencing the prescriptive, evaluative, and obligatory dimensions of social life (Scott,
1995). Perpetual reasoning refers to the logic of using human and natural resources in a
way that enhances and maintains the quality of their functioning for the longest time
possible (Parrish, 2010). As Dorado & Ventresca (2013) suggest, a strong normative
context makes institutional entrepreneurs more aware of any disconnect between how
things should be and how they presently are with respect to sustainable development
issues. Further, in order to reduce the unpleasantness of this ‘dissonance’ they are more
likely to engage in sustainability-oriented enterprising activity such as voluntary carbon-
offset adoption practices. In essence, the pursuit of institutional entrepreneurship for
sustainable development is the result of actors’ quests to attain the moral legitimacy that
accompanies a strong normative institutional context. Altogether, I hypothesize that:
H1b – The more countries’ normative context favors entrepreneurship, the greater the
likelihood of institutional entrepreneurship for sustainable development amongst national
actors.
Cognitive Context and Institutional Entrepreneurship for SD
Cognitive institutions constitute the nature of reality and the frameworks through
which actors interpret information (Stenholm et al., 2013). The cognitive context therefore
refers to the widely shared knowledge and schemas that actors use to interpret
phenomena (Kostova & Roth, 2002). According to scholars the cognitive context act as a
71
medium between the external world of stimuli and the response of the individual organism
(Scott, 1995). Given strong cognitive contexts, actions occur because the routines
governing them are ‘taken-for-granted’ (pg. 57).
For entrepreneurial activity, the cognitive context reflects issues such as prior
experience with start-up activity; identification and exploitation of profitable
opportunities; perceived resource orchestration abilities; and confidence in management
and growth of new businesses (Busenitz et al., 2000; De Clerq et al., 2010). These skills and
knowledge are likely to vary in terms of their dispersion within and across countries thus
impacting actors’ abilities to act entrepreneurially (Manolova et al., 2008; Stenholm et al.,
2013). A stronger cognitive context towards entrepreneurship places less burden on actors
regarding enterprising activity (De Clerq et al., 2010). As such, one can expect countries
with strong cognitive contexts toward entrepreneurship to exhibit a vibrant
entrepreneurial culture at all levels of analysis (Stenholm et al., 2013, emphasis added).
When favoring entrepreneurship, the cognitive context influences institutional
entrepreneurship for sustainable development by providing actors with the knowledge and
capabilities to recognize and exploit sustainable development opportunities. Actors
embedded within a cognitive institutional contexts favoring entrepreneurship will be more
aware of entrepreneurial opportunities as they benefit from the shared experiences and
knowledge of others (Manolova et al., 2008). They are also more likely to recognize
shortfalls in that knowledge – again, given the complexities surrounding sustainable
development issues. As Dorado & Ventresca (2013) suggest, the cognitive dissonance that
this recognition creates necessitates initial engagement, where actors use outcomes as
reference points to redefine and improve upon the initial plan. Institutional entrepreneurs
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will engage in sustainability-oriented institutional change both to reduce this cognitive
dissonance, and to generate common frames of reference for addressing sustainable
development issues (p. 76). This engagement by actors is similar to what Ferraro et al.
(2015) refer to as distributed experimentation, or iterative action that generates small
wins, promotes evolutionary learning, and increases engagement. Altogether, I hypothesize
that:
H1c – The more countries’ cognitive context favors entrepreneurship, the greater the
likelihood of institutional entrepreneurship for sustainable development amongst national
actors.
Temporality of Cultural Contexts
Time represents an important element in theorizing and is central to many studies
in management and entrepreneurship (e.g., Ancona, et al., 2001; George & Jones, 2000;
McMullen & Dimov, 2013; Selden & Fletcher, 2015). A temporal perspective, as such, can be
deemed as integral to institutional change and institutional entrepreneurship. Giddens
(1984), for instance, defines institutions as the more enduring features of social life that
give solidity to social systems across ‘time’ and space (p. 24). Accordingly, I employ this
perspective on the role of socially constructed views of time (Gidden, 1984) to elucidate
how culturally held views about time can affect actors’ decision-making.
Culture, can be defined as socially established structures of meaning that guide
behavior (Hofstede, 2001; Scott, 1995). It can be transferred from one generation to
another via teaching and imitation of values, knowledge and related factors (North, 1990).
73
Research shows that countries’ cultural context can be classified along several dimensions
including, for example, uncertainty avoidance, gender egalitarianism, power distance, and
future orientation (House, et al., 2004). In addition, previous research has already
generated evidence regarding how the different dimensions of culture matter in relation to
entrepreneurship activity (Hayton et al., 2002). Within this paper, the focus is on a future
or long-term oriented culture since actors’ consideration of time is inherent to the concept
of sustainable development (Slawinski & Bansal, 2015).
The cultural context can produce a socially constructed view of time, which can be
evidenced in differences between cultures with respect to the dominant constructions of
time (Ancona et al., 2001). This is evidenced by Hofstede (1983) who demonstrates that
cultures can exhibit differences with respect to actors’ temporal orientations. The socially
constructed view of time within countries’ cultural contexts influences actor behaviors – as
evidenced, for example, by their temporal orientation or style (Ancona et al., 2001, p. 522).
Actor’s relation to time is not dichotomous. Scholars generally agree that, with
respect to time, actors’ vary in terms of their prioritization of activities, which support a
past as opposed to a future orientation. Family business research, for instance, has readily
acknowledged how goals, outcomes, and activities of actors’ within family firms can differ
with respect to time (see: Brigham, Lumpkin, Payne, & Zachary, 2014). In other words,
actors’ within a given environment typically fall along a spectrum ranging from a short- to
long-term orientation (Huy, 2001). In addition, actors’ prevailing temporal orientations,
capabilities, and interactions are embedded within, and constitute, the wider institutional
environment which can also be either short- or long-term oriented. Essentially, whereas a
short-term orientation gives more relevance to the past and present, a long-term
74
orientation signals individuals’ attention to the future (Lumpkin & Brigham, 2011;
Lumpkin, Brigham, & Moss, 2010).
Within cultural contexts that favor short-term actions, actors have weak uncertainty
avoidance towards the future. They are socialized into accepting this more short-term
orientation, and are more likely to take actions, which preserves their present state of
security (Hofstede, 1983; 1993). As Parrish (2010) suggests short-term thinking
encourages the exploitation of natural resources in order to obtain profits as ‘quickly’ as
possible and thus runs counter to sustainability-driven principles. For a cultural context
that favors a greater long-term orientation, on the other hand, actors value an extended
time horizon and place greater emphasis on the future (Lumpkin & Brigham, 2011). As
literature would suggest, a cultural context that favors a long-term orientation not only
values the future, but is also concerned with bridging concerns from the past and present
with the future (p. 1152). As the study by Hofstede (1983) suggests, a cultural context that
emphasizes an orientation to the future will seek to use institutions such as technology or
formal rules to reduce the uncertainty of future events. Such contexts, for example, would
have a greater presence of research and development activities.
The cultural context, like regulatory, cognitive, or normative, contexts, will be
present within a given environment due to the interactions of various actors’ schemas. It
also engenders behavioral responses by actors given their perception of what is legitimate
or socially acceptable according to the dominant, though informal, paradigm. Actors
embedded within a given cultural context will have a temporal orientation and undertake
actions that align more with either a short- or long-term orientation. I therefore expect
75
countries’ cultural contexts regarding how actors relate to time, to be significantly related
to the emergence of institutional entrepreneurship for sustainable development.
Long-term Orientation and Institutional Entrepreneurship for SD
Cultural contexts, as the arguments above suggest, refer to shared meanings
between actors that guide behavior (cf. Hofstede, 2001). Within respect to enterprising
activity, cultural contexts can encourage actions that facilitate either short-term goal
attainment (e.g. efficiency gains) or long-term goal attainment (e.g. research and
development). Countries with a cultural context emphasizing short-term oriented actions
are more likely to be appreciative of heritage and traditions; whereas more long-term
oriented societies encourage actions in preparation for the future. I here assume that
countries’ cultural institutional context will vary in terms of the degree to which actors
favor a short- as opposed to long-term orientation.
Ancona et al. (2001) suggest that how actors perceive time is likely to affect how
they map out different activities across time. For example, the extent to which actions such
as allocation of time, synchronization, or the duration of activities favors long as opposed to
short-term outcomes will depend on the dominant social conceptions of time.
Entrepreneurship for sustainable development values the maintenance or enhancement of
human and natural resources—for the longest time possible (Parrish, 2010; emphasis
added). Moreover, the qualitative management and outcomes required for sustainability in
human socio-economic systems requires actions and outcomes that are more open to
change and adaptable (Ferraro, Etzion, & Gehman, 2015; Schaefer, Corner, & Kearins,
2015) – which again favors actors with greater long-term orientation. Along-term oriented
cultural context thus, again, matters as actors may require inducements or prompting from
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their environment in order to engage in entrepreneurial action for sustainable
development. As the study by Dorado & Ventresca (2013) suggests, the cultural context
serves as an ‘arbitrary time setter’ that likely influences entrepreneurial action by defining
temporal processes and markers.
Countries’ degree of long-term orientation, I argue, will both directly affect
engagement in institutional entrepreneurship for sustainable development amongst
national actors, and moderate the effect of regulatory, normative, and cognitive contexts
favoring entrepreneurship on such engagement. Concerning the direct effect, cultural
contexts that are more long-term oriented allow for the alignment of actors’ views of time
with sustainable development’s view of time. This is because actors embedded within such
a context will be more willing to address the uncertainty surrounding complex sustainable
development issues (cf. Strickland, Lewicki, & Katz, 1966). They will also possess temporal
capabilities, which enable them to address said issues (Huy, 2001). Within a more long-
term oriented cultural context, actors’ are also better able to establish a connection
between their individual actions and the collective outcome for sustainable development
(Dorado & Ventresca, 2013). As literature suggests, entrepreneurial action for sustainable
development is more likely to emerge when actors favor long-term oriented actions and
outcomes (Parrish, 2010; Wang & Bansal, 2012). Based on the preceding, I hypothesize
that:
H2 – The more countries’ cultural context favors a long-term orientation, the greater the
likelihood of institutional entrepreneurship for sustainable development amongst national
actors.
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As depictions of the three institutional pillars suggest, regulatory, normative, and
cognitive institutional contexts for entrepreneurship are likely to encourage more short-
term oriented actions. Conformity to each institutional context essentially provides actors
with resources and legitimacy which they seek to acquire in the near to short-term in order
to maintain any power/influence they may possess (Scott, 1995). Regulatory institutions,
for instance, emphasize expedience, which does not encourage long-term actions. Even the
fulfilment of social obligations, the basis of compliance, for normative institutions has been
associated with short-termism (Hofstede, 1993: p.90). The cultural context thus matters, as
actors may be more likely to avoid long-term oriented action, such as those inherent to
entrepreneurship for sustainable development, if they are embedded within an
environment that emphasizes short-term actions.
Regarding the indirect effect, I consider how a greater long-term orientation of the
cultural context moderates the relationship between the three institutional dimensions
(regulatory, normative, cognitive) and institutional entrepreneurship for sustainable
development. First, for regulatory institutions a cultural context that favors long-term
oriented actions encourages the formation of formal regulations that aid in reducing
uncertainty regarding the future. As Fischer et al. (1997) find, actors within an
organizational context tend to enact with time in a manner that best aligns with their
current and future objectives regarding growth. Their enactment of time, I suggest, is tied
to the socially constructed temporal perspective within the organization – i.e. the cultural –
regarding the objective of growth. National actors, however, are also subject to the
influences of the prevailing socially constructed views of time. Moreover, given a long-term
oriented cultural context they can be expected to enact also with time in a manner that best
78
allows for attainment of sustainable development outcomes. This is because both the
complexity of sustainable development issues, and the time required for their resolution
necessitates the establishment of structures that aid in reducing uncertainty and costs
associated with sustainability-oriented entrepreneurial action. A long-term oriented
cultural context will have actors who are more capable of leveraging current regulatory
structures to create ones more ‘temporally’ consistent with sustainable development
outcomes.
Second, for normative institutions a greater long-term orientation of the cultural
context encourages greater moral and pro-social norms regarding enterprising activity.
This is because the distancing of the decision to act and the reward increases honest and
moral behavior (Ruffle & Tobol, 2014). As prior studies suggest, actors’ emotional
responses tend to be more severe for future events than for past events; and because such
emotional reactions often guide moral intuitions, judgments of moral behavior may be
more severe in prospect than in retrospect (Caruso, 2010). As such actors within a long-
term oriented cultural context can be expected to assess future bad deeds more negatively,
and future good deeds more positively, than equivalent behavior in the equidistant past.
This is likely to translate over into enterprising behavior regarding sustainable
development opportunities as actors strive to attain moral legitimacy.
Third, for cognitive institutions a greater long-term orientation of the cultural
context encourages experimentation and risk-taking for sustainable development. A
cultural context that is more long-term oriented encourages actions by actors which favor
delayed as opposed to immediate results (Hofstede, 2001). In essence, actors embedded
within a long-term oriented cultural context can be expected to undertake more actions
79
aimed at reducing the uncertainty around sustainable development issues. This is primarily
because they may be more risk averse regarding the uncertainty of distant future events
(Das & Teng, 1997). Actors embedded within a long-term oriented cultural context value
information that aids in reducing the uncertainty of the future. As argued above, a strong
cognitive institutional context influences institutional entrepreneurship for sustainable
development by national actors because they more readily recognize and subsequently
seek to fill deficits in knowledge regarding future events about the natural environment. A
long-term oriented cultural context, because it encourages future oriented actions, will
therefore heighten actors’ ability and willingness to recognize and address knowledge gaps
regarding resolving sustainable development issues. Altogether, I hypothesize that:
H3 – The more countries’ cultural context favors a long-term orientation, the greater the
effect of a) regulatory, b) normative, and c) cognitive contexts favoring entrepreneurship on
institutional entrepreneurship for sustainable development amongst national actors.
Figure 3.1: Empirical Model 1
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METHODS
Research Context
To test the above hypotheses this study utilizes the context of the global REDD+
Partnership (REDD+), an emerging field for voluntary carbon-offset markets. The REDD+
Partnership involves policies, projects, and interventions meant to combat climate change
by reducing emissions from deforestation and forest degradation (Agrawal, Nepstad, &
Chhatre, 2011; REDD+ Partnership, 2013; Sukhdev et al., 2008). The Partnership, formally
launched in 2008, combines the technical expertise of the Food and Agriculture
Organization of the United Nations (FAO), the United Nations Development Program
(UNDP) and the United Nations Environment Program (UNEP). At its core, REDD+ is a
voluntary incentives-based strategy that compensates national governments and
subnational actors in return for demonstrable reductions in carbon emissions (Agarwal et
al., 2011). In other words, the main idea underlying REDD+ is to pay forest owners and
users to reduce carbon emissions and increase carbon removals. Such payments for
environmental (or ecosystem) services (PES) provides strong incentives directly to forest
owners and users to manage forests better and clear less forestland (Angelsen, 2009;
Wunder, 2005). REDD+ is representative of the most advanced approach to climate change
under the United Nations Framework Convention on Climate Change and, according to
recent reports has seen contributions of over 6 billion US dollars in cash and in-kind
contributions (Agarwal et al., 2011; REDD+ Partnership, 2013).
The REDD+ framework supports nationally led processes and promotes the
informed and meaningful involvement of all stakeholders, including indigenous peoples
and other forest-dependent communities, in national and international implementation of
81
carbon abatement projects and initiatives (UN-REDD, 2008). By providing incentive
payments for countries’ sustainable land use and forest management practices, REDD+
seeks to reduce, and in some instances reverse, the degradation of forests – in the process
providing both economic and non-economic benefits to individuals. REDD+ projects have,
for example, encouraged forest policy reforms with local stakeholder involvement, and
promoted reforestation in several rural areas throughout countries such as Brazil, Costa
Rica, Mexico, Indonesia, Uganda, and Vietnam (Peskett, Schreckenberg, & Brown, 2011;
Sunderlin et al., 2013).
For this study, I am concerned exclusively with REDD+ arrangements – an
agreement to undertake REDD+ related actions, involving a funder, a recipient, and one or
more beneficiaries (REDD+ Partnership, 2013). ‘Funders’ provide financing for REDD+
projects associated with a particular arrangement, and tend to favor developed countries
bent on using REDD+ as a cost containing measure for achieving emissions reductions
targets (Agrawal et al., 2011). ‘Recipients’ refers to the country or Non-Governmental
Organizations (NGOs) that receive and manage REDD+ funds. Recipient countries tend to
favor developing countries that see REDD+ as both a viable means of participating in
international climate negotiations, and a source of revenue (Agrawal et al., 2011).
‘Beneficiaries’ to a REDD+ arrangement are the countries to which funds are dispersed
pending evidenced achievement of goals specified in the arrangement. It should be noted
that countries cannot merely self-select into REDD+ arrangements. Rather, engagement in
REDD+ is based both on developed (developing) countries 1) having the financial (natural)
resources pertinent to a particular arrangement; and 2) committing those resources to
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specific performance criteria for that arrangement (Agrawal et al., 2011; REDD+
Partnership, 2013).
The emerging field surrounding the REDD+ Partnership provides a unique context
within which to examine the drivers of institutional entrepreneurship for sustainable
development for several reasons. First, the data provides the opportunity to both
quantitatively examine the emergence of institutional entrepreneurship, and build the
scholarly field of entrepreneurship through the generation of empirical findings. This is
because the compilation of REDD+ financing data represents one of the few existent cross-
country datasets on activity that matches institutional entrepreneurship favoring
sustainable development, as all REDD+ activities have an explicit goal of simultaneously
addressing economic, environmental, and social concerns. Moreover, national and sub-
national actors agreeing to a particular REDD+ arrangement make an explicit commitment
to development in favor of a green economy. In other words, parties to REDD+
arrangements explicitly acknowledge that there are limits to the use of the natural
environment, and actively seek to transform the importance of evaluating the true social
and environmental costs of economic development (Sukhdev et al., 2011).
Second, because REDD+ arrangements have an explicit timeframe within which the
activities of each are confined, institutional actors can be said to have enacted with time as
evidenced by the mapping of activities across time (Ancona et al., 2001). The REDD+
Partnership therefore provides for a research context where the effect of long-term
orientation should be relatively salient on the emergence of institutional entrepreneurship
for sustainable development from amongst institutional actors. Previous studies have also
cited similar reasons in support of novel research contexts (cf. Madsen & Desai, 2010: 459).
83
Further, while scholars have researched temporality with respect to institutions and
institutional change, and institutional entrepreneurship (cf. Lawrence et al., 2001),
regarding entrepreneurship for sustainable development these studies have been mainly
conceptual or qualitative in nature. Quantitative studies on the temporality of institutions
offers both opportunities for validation of theoretical postulations, and greater
generalizability. Additionally, the salience of long-term orientation within the REDD+
context aside, actors’ simultaneous embeddedness in local geographic communities as well
as broader global environments influences the likelihood that they will act as institutional
entrepreneurs.
Data & Sample
The sample used in this study consists of cross-country data obtained from several
sources. To obtain the dependent variable(s), I used the Voluntary REDD+ Database (VRD)
which provides information on REDD+ financing, actions and results that have been
reported to the REDD+ Partnership. The VRD aims to improve effectiveness, efficiency,
transparency and coordination of REDD+ initiatives; and to support efforts to identify and
analyze gaps and overlaps in REDD+ financing (REDD+ Partnership, 2013). For the
independent variables, I used the Global Entrepreneurship Monitor (GEM) dataset, which
provides comparable national entrepreneurship indicators and measures (Reynolds et al.,
2005). To obtain country and control variables, I used the World Bank’s World
Development Indicators (WDI), which provides cross-country measures of relevant
economic indicators; and the Heritage Foundation’s Index of Economic Freedom, which
provides country level data on institutions.
84
Data from both the GEM and World Bank databases have been extensively used in
studies examining entrepreneurship (e.g. Anokhin & Schulze, 2009; De Clercq, Lim, & Oh,
2013; Estrin, Mickiewicz, & Stephan, 2013). The Heritage Foundation’s Index of Economic
Freedom has also been used in entrepreneurship studies to provide valid measures of the
institutional environment (e.g. Aidis et al., 2012; Estrin, Korosteleva, & Mickiewicz, 2013).
The VRD dataset utilized has yet to be applied in entrepreneurship studies, and, thus
provides a unique opportunity to understand institutional entrepreneurship that promotes
sustainable development. To build the dataset I followed several steps as outlined below.
First, I collected REDD+ Partnership data from the VRD, which is based on reports
from funders and recipients of REDD+ finance. All data submitted to the database on behalf
of a country or institution is always submitted and formally approved by a designated VRD
country or institution focal point, before it is publicly viewable on the database (REDD+
Partnership, 2013). In its entirety, the dataset is comprised of a total of 1685 REDD+
arrangement reports based on reports from 73% of the REDD+ Partnership countries.
Second, I collected data from the GEM National Expert Survey. The GEM National
Expert Survey (NES) is a standard yet important aspect of the GEM framework. The NES
essentially captures Entrepreneurial Framework Conditions – i.e. conditions which
enhance (or hinder) new business creation (Kelley, Singer, & Herrington, 2012). The NES is
based on an annual survey of 36 experts in each participating country, which is
subsequently harmonized to ensure comparability across countries. Each framework
condition is constructed using a block of six five-point Likert scale items meant to assess
different aspects of each condition. Importantly, entrepreneurial framework conditions
measured by the NES suit the purposes of this study as they are described as accounting for
85
the different rules of the game that directly affect entrepreneurial activity’s inputs and
outputs (GEM).
Third, I collected data from the Global Leadership & Organizational Behavior
Effectiveness project (GLOBE) (House et al., 2004). The GLOBE study facilitates a deeper
understanding of how culture and leadership vary by national culture. It provides different
measures of societal culture that been employed in a number of management studies (see:
Smith, 2006).
Finally, I collected data from the World Bank Group’s Development and Governance
Indicators, Heritage Foundation, and Yale’s Environmental Performance Index for all
countries for the period 2000-2015. I then merged these datasets once the dependent
variable was constructed from the original VRD data for 134 countries listed on the REDD+
website. I assume that each country in being exposed to the REDD+ framework has an
opportunity to become an explicit funder or recipient should an enterprising entity within
the national government pursue this opportunity. I use the beginning year for each
arrangement as the frame of reference, which meant that construction of the dependent
variable restricted the period of analysis to 2006-2015.
Figure 3.2: Global REDD+ Adoptions
0
100
200
300
400
500
Count of REDD+ Arrangements
Annual Global Adoption of REDD+
2006 2007 2008 2009 2010 2011 2012 2013
86
Dependent Variable
REDD+ Adoption. The dependent variable tracks whether or not a country enacted
REDD+ arrangements in a given year. This variable was constructed by coding for the
annual count of REDD+ arrangements adopted by nations. Countries reporting REDD+
arrangements can do so in a capacity of either a funder or recipient (but not both for the
same arrangement), or a beneficiary (REDD+, 2015). In coding the data, I considered
countries identified as either a funder, recipient, or beneficiary to a particular REDD+
arrangement countries as having enacted REDD+. Enactment of REDD+ means that
countries have undertaken some activities, or have demonstrable institutional changes and
evidenced impacts supportive of promoting low-carbon development (Sukhdev et al.,
2011). As an example, consider the REDD+ arrangement Norway’s Contribution to the
Forest Investment Program. This arrangement, beginning in 2010, is reported by Norway
(who is also the funder), and is with the Forest Investment Program (the recipient). There
are also eight beneficiary countries to this arrangement - Brazil, Burkina Faso, Democratic
Republic of the Congo, Ghana, Indonesia, Lao People's Democratic Republic, Mexico, and
Peru. In coding this particular arrangement, Norway was marked as adopting REDD+ as a
funder, while the remaining countries were each marked as having adopted REDD+ as
beneficiaries. For this particular arrangement, the recipient, Forest Investment Program, is
not coded since it is an organization and not a country. I coded each arrangement in this
way and used the sum of each category – i.e. funder, recipient, and beneficiary – for each
year as the measure for countries’ REDD+ adoption. Thus, if a country were marked once as
a funder, recipient, and beneficiary in a given year the dependent variable would show that
country as having enacted REDD+ three times for that year.
87
Independent Variables
Regulatory Context. I measure countries regulatory context using the Government
Policy Framework Condition provided by the GEM NES. This measure provides an
assessment of the extent to which public policies support entrepreneurship. I use the sum
of the Government Policy Framework Condition’s two main components (summarized in
table 1). A larger number indicates a stronger and more developed regulatory context
towards entrepreneurship.
Normative Context. I measure countries normative context using the Cultural and
Social Norms framework condition from the GEM NES. This measure captures the extent to
which social and cultural norms encourage or allow actions leading to new business
methods or activities that can potentially increase personal wealth and income. A larger
number indicates a stronger normative context towards entrepreneurship.
Cognitive Context. I measure countries cognitive context using the Government
Entrepreneurship Programs framework condition provided by the GEM NES. This
composite measure captures the presence and quality of programs directly assisting
entrepreneurship at all levels of government. A larger number is a proxy for a stronger
cognitive context towards entrepreneurship.
Measures of the institutional context based on the GEM NES measures have been
found to be positively related to other measures of countries’ regulatory, normative, and
cognitive institutional context (see: Stenholm et al., 2013). In addition, the GEM NES
measures, in being based on expert judgments of national conditions, captures variations in
the actions of institutional actors. This is because the experts interviewed as part of the
survey may in and of themselves be institutional actors – e.g. a local policy maker or
88
member of a development agency. Altogether, use of the GEM-NES (cf. Yousafzai, Saeed, &
Muffatto, 2015) and GLOBE (cf. Gupta, Hanges, & Dorfman, 2002) data to obtain relevant
measures of countries’ institutional and cultural environments is suitable for the purpose
of this research.
Long-term Orientation. I measure countries’ long-term orientation using the Future
Orientation measure provided by the GLOBE Culture and Leadership Study 2004 (GLOBE,
2016, House et al., 2004). This measure captures the extent to which individuals engage in
future oriented actions such as planning, investing in the future, and delaying gratification.
I factor analyze the two future orientation measures – values and practices – provided by
GLOBE and use the predicted value for the analyses.
Control Variables
I also include controls variables for additional factors likely to influence institutional
entrepreneurship for sustainable development at the national level – i.e. whether a country
adopts REDD+. The first, gross domestic product per capita (GDP per capita), accounts for
the economic context of and the level of economic development for countries (Van Stel &
Carree, 2010). Developed countries can be expected to have more financial, and other,
resources readily available and at their disposal to engage in REDD+ financing
arrangements as opposed to less developed nations. Thus, I include a developed country
dummy variable that identifies developed countries based on World Bank classifications –
i.e. countries classified as high-income based on gross national income per capita. I also
include the Index of Economic Freedom to account for any stable aspect of the institutional
environment not captured by the regulatory, normative, and cognitive institutional context
variables used.
89
Countries with higher rates of depletion for critical resources such as rainforest and
minerals can be expected to have a greater interest in adopting REDD+ as opposed to
countries with lower resource depletion. Hence, I include a control for natural resource
depletion. Energy efficiency and conservation serve as integral aspects of REDD+. Thus,
countries that face large or looming energy demands can be expected to seek out solutions
in REDD+ projects. Similarly, I controlled for electricity production as energy may also
represent a significant factor in the adoption of REDD+.
Population effects are also expected to influence countries’ adoption of REDD+ as a
growing population can place a burden on natural resources (George, Schillebeeckx, & Liak,
2015). Accordingly, I include three controls to account for possible effects of countries’
populations. Specifically, I control for both urban and rural population growth. These
measures account for the year over year rate of growth for countries’ urban and rural
populations respectively. Essentially, national actors presiding over urban and rural
constituencies will be more aware of the resource requirement needs of their growing
populations. As such, the adoption of REDD+ becomes a favorable option as it provides a
means of safeguarding resources for the growing populations.
To account for geographic effects I include two additional controls. The first, land
area under cereal production, measures the total harvested land area (in hectares) for each
country because countries with a larger area of arable land face a larger risk from climate
change. REDD+ adoption would thus serve as a means to reduce that risk. The second,
landlocked, is a dummy variable for if a country is almost or entirely surrounded by land.
The landlocked dummy variable is included since countries confined in this manner face
greater challenges to acquire resources for their development. The representatives of such
90
countries may thus be more opened to REDD+ adoption given the resources that can be
obtained.
Another control variable included is environmental performance – measured using
Yale’s Environmental Performance Index. Countries with a low score regarding
environmental performance run the risk of chastisement from the global community. This
is primarily due to the increased transparency and accountability imposed by
supranational actors (Wijen, Zoeteman, Pieters, & Van Seters, 2012: p. 17) regarding
sustainable development. Accordingly, I expect that low performing countries are more
likely to favor adoption of REDD+ since it would serve as a positive signal to the global
community of their commitment to the natural environment. To account for any experience
a country has in REDD+ adoption I also include the control REDD growth. This variable is
measured using the year over year rate of growth in global REDD+ adoptions for each
country. In addition to these controls, I also include dummy variables to account for the
region to which each country belongs.
Variable definitions and data sources are summarized in Table 3.0 in Appendix B.
Analysis
To test the hypotheses I estimate several event history models - using Cox
proportional hazard regressions (see: Allison, 1984). Cox proportional hazard regressions
are used to estimate the probability of an event occurring given the values of the
independent variables (Allison, 1984; Blosfeld, Golsch, & Rohwer, 2012). It is therefore an
appropriate approach for describing how the likelihood of enacting REDD+ (the event in
this case) varies in response to the other covariates of interest. The use of Cox proportional
hazards model was also deemed appropriate since it better controls for any bias from
91
right-censoring of the data as opposed to ordinary least squares regressions (Moss,
Neubaum, & Meyskens, 2015). Right censoring is a possibility since countries could have
enacted REDD+ after the final year of the data used in this study (2015). Event history
models such as the Cox regressions have been utilized in numerous instances in the
entrepreneurship and management literature (see: Bird & Wennberg, 2016; Gimeno,
Hoskisson, Beal, & Wan, 2005; Iyer & Miller, 2008).
Table 3.1: Multicollinearity Tests
REDD+
Adoption
VARIABLES
VIF
Regulatory Context
3.27
Normative Context
2.04
Cognitive Context
3.64
Long-term Orientation
2.41
GDP per capita (log)
7.36
Natural Resource Use
2.49
Electricity Production (log)
1.57
Population Growth
1.84
Index of Economic Freedom
3.97
Environmental Performance Index
6.91
Land Area for Cereal (log)
1.61
Landlocked
1.87
Previous REDD+ Adoptions
1.14
Developed Country
2.48
Mean VIF for model
3.04
Condition index statistic for model
8.27
Note: VIF = Variance inflation
factors.
The data are set up such that every year in which a country enacts REDD+ is a spell.
The 134 country-year event histories yielded 1206 spells. Note that successful enactment
of REDD+ within a given year does not lead to exclusion of that country for subsequent
years in the regression. This is because the enactment of REDD+ by a country in one year
should not preclude them from enacting it in a subsequent year. In general, for survival
92
analysis the subject (i.e. country) would be removed after the event occurs. However, to
account for the repeated nature of the events in the analysis I follow the suggestions of
Allison (1984) and Blosfeld, Golsch, & Rohwer (2007), and specify exit time as the final
year of the analysis so that countries are still included in the analysis risk pool after an
event.
Before testing the hypotheses, the following steps were taken. First, given that the
variables REDD+ adoption, GDP per capita, natural resource depletion, electricity
production, and land area under cereal production were skewed, I used the natural log for
each. Second, I standardized independent and control variables to reduce the potential for
multicollinearity between the main and interaction effects (Stephan et al., 2015); and
better illustrate the interaction effects graphically (cf. Dawson, 2014; Hox, 2010) Third, I
checked the variance inflation factors (VIF) of the full model (i.e. main and interaction
effects) for the presence of multicollinearity (Wooldridge, 2012). As shown in Table 3.1 the
VIFs for the specified variables were all less than 10. Additionally, I also checked the
condition index statistic for each of the models. The condition index statistic serves as
another means to assess models for the presence of multicollinearity (cf. Stephan et al.,
2015). Also shown in Table 3.1, the condition index statistic was well below the limit of 30
(7.98). Together these results suggest that multicollinearity may not pose a threat to the
analyses (Hair, Anderson, Tatham, & Black, 1998). Fourth, following Mossholder, Settoon, &
Henagan (2005), I verify that the proportional-hazards assumption is not violated by
checking the Schoenfeld residuals after fitting separate models of each independent
variable. The results based on Stata’s ‘estat phtest’ estimation command suggest that this
assumption may be violated for the control variables GDP per capita, environmental
93
performance, and total previous adoptions. As suggested by Allison (1984) such violations
can be expected in discrete samples such the cross-country dataset used in this study. I do
account, however, for any violation of the proportionality assumption stratifying the data
by the Region of country. Additionally, to account for any tied events within a given year, I
specify that the Efron method (see: Kapoor & Lee, 2013) be used to handle ties. According
to Cleves, Gould, and Gutierrez (2008) the Efron method is computationally more intensive
than the Breslow method but performs a more accurate approximation.
Table 3.2: Variable Comparison by Countries’ Level of Development
Variables
Developing
N=167
Developed
N=159
Difference
REDD+ Adoption
0.51
0.49
0.02
Regulatory Context
4.92
5.69
-0.77***
Normative Context
3.09
2.99
0.1
Cognitive Context
2.56
3.09
-0.53***
Long-term Orientation
-0.26
0.32
-0.58***
GDP per capita
7253.81
43923.04
-36669.23***
Natural Resource Use
7.25
0.51
6.74***
Electricity Production
8.84
2.87
5.97***
Population Growth
1.28
0.49
0.79***
Index of Economic Freedom
57.14
71.6
-14.46***
Environmental Performance Index
50.25
73.9
-23.65***
Land Area for Cereal (million hectares)
17.72
6.12
11.60***
Landlocked
0.14
0.14
-0.01
Previous REDD+ Adoptions
3.75
5.99
-2.24*
Note: Developing Countries-Argentina (8); Bolivia (8); Brazil (9); China (9); Colombia
(8); Costa Rica (6); Ecuador (8); El Salvador (4); Georgia (2); Guatemala (7); India (9);
Indonesia (3); Iran (8); Kazakhstan (9); Malaysia (7); Mexico (8); Morocco (1); Namibia
(4); Philippines (3); Russian (9); South Africa (8); Thailand (5); Turkey (9); Venezuela (9);
Zambia (6). Developed Countries- Australia (5); Austria(9); Canada(3); Czech Republic
(5); Denmark (9); Finland (9); France (6); Germany (8); Greece (9); Ireland (9); Italy (9);
Japan (6); Korea (8); Netherlands (7); Portugal (6); Slovenia (9); Spain (9); Sweden (6);
Switzerland (9); United Kingdom (9); United States (9)
Following the preliminary tests above, I test for the main effects (hypotheses 1 and
2) in separate models that include the control variables, long-term orientation, and one of
94
the institutional context variables. Note that as an additional precaution, I test the
hypotheses with models excluding the developed country dummy variable. This is due to it
being highly correlated with and captured by the variable GDP per capita. To test for the
interaction effects (Hypotheses 3a-c) I add an interaction term to each of the respective
models. To establish the goodness of fit for each model I report the log-likelihood and
Akaike information criterion (AIC) – where a higher number for the former and a lower for
the latter indicates a better-fitted model.
RESULTS
Table 3.2 provides a comparison of several variables between the developed and
developing countries in the sample. I also perform a simple t-test of the means for each
sample in order to allow for better comparison between the groups. As the figures show,
REDD+ adoption, on average, is higher amongst the developing countries in the sample –
though the difference is not significant. Table 3.2 also shows that developed countries, on
average, have better institutional contexts, long-term orientation, GDP per capita, and
environmental performance, and previous REDD+ adoptions in comparison to the
developing countries in the sample. Developing countries in the sample do exhibit
significantly higher levels of resource depletion, electricity production from oil sources,
population growth, and land area under cereal production.
Table 3.3 outlines the summary statistics and correlation matrix for the main
variables. The highest correlations of concern were between GDP per capita,
environmental performance, and the developed country dummy variable – which ranged
from |0.65| – |0.88|. Concerning the hypotheses, Table 3.4 summarizes the results of the
regression analyses. Specifically, Model 1 contains the control variables only and serves as
95
the baseline against which I compare subsequent models. Models 2-5 are the main effect
models and are used to assess hypotheses 1 and 2. Models 6-8 represent the full (i.e.
interaction) models and include an interaction term between the institutional context
variables and future orientation. Tables 3.5-3.8 (Appendix B) contain the results from the
robustness tests to the main results.
Hypothesis 1a states that there exists a positive relationship between a regulatory
context favoring entrepreneurship and institutional entrepreneurship for sustainable
development. Based on the results in Table 3.4 I find support for this hypothesis. The direct
effect for regulatory institutional context, as shown in Model 2, is positive and significant
(β= 0.56, p < 0.01).
Hypothesis 1b states that there will be a positive relationship between a normative
context favoring entrepreneurship and institutional entrepreneurship for sustainable
development. The results in Table 3.4, do not provide support for this hypothesis as the
coefficient for countries normative institutional context is negative and not significant (𝛽 =
−0.19, n.s.) as shown in Model 3.
Hypothesis 1c states that a cognitive institutional context favoring entrepreneurship
will be positively related to institutional entrepreneurship for sustainable development.
Again, the results of Table 3.4 (Model 4) do not provide support for the hypothesis. As
shown, the coefficient for cognitive context is positive but not significant (𝛽 = 0.19, n.s.).
Hypothesis 2 states that countries’ degree of long-term orientation will be positively
related to institutional entrepreneurship for sustainable development, and was supported.
As Table 3.4 (Model 5) demonstrates, long-term orientation is significantly positive in
relation to REDD+ adoption (𝛽 = 0.33, p < 0.01).
96
Table 3.3: Variable & Correlation Matrix
Variables
Mean
S.D.
1
2
3
4
5
6
7
1.REDD+ Adoption
4.84
11.88
2.Regulatory Context
5.30
1.47
-0.07
3.Normative Context
3.04
0.80
-0.05
0.74
4.Cognitive Context
2.82
0.76
-0.02
0.88
0.71
5.Long-term Orientation
0.02
0.52
0.02
0.38
0.08
0.38
6.GDP per capita (log)
9.64
1.10
0.10
0.27
0.01
0.39
0.54
7.Natural Resource Use
-0.10
2.20
-0.08
-0.25
0.02
-0.30
-0.37
-0.52
8.Electricity Production (log)
5.93
8.73
0.02
-0.28
-0.02
-0.19
-0.49
-0.21
0.19
9.Population Growth
0.89
0.72
-0.08
-0.12
0.13
-0.19
-0.26
-0.51
0.42
10.Index of Economic Freedom
64.19
10.61
0.14
0.43
0.18
0.49
0.65
0.67
-0.58
11.Environmental Performance
Index
61.78
13.67
0.07
0.22
-0.11
0.34
0.52
0.88
-0.52
12.Land Area for Cereal (log)
14.80
1.84
0.17
-0.07
0.17
-0.11
-0.15
-0.25
0.25
13.Landlocked
0.14
0.35
-0.11
0.02
-0.07
0.06
0.27
-0.05
0.29
14.Previous REDD+ Adoptions
4.84
11.88
1.00
-0.07
-0.05
-0.02
0.02
0.10
-0.08
15.Developed Country
0.49
0.50
0.09
0.26
-0.06
0.35
0.56
0.87
-0.64
Variables
8
9
10
11
12
13
14
15
9.Population Growth
0.10
10.Index of Economic Freedom
-0.38
-0.23
11.Environmental Performance
Index
-0.20
-0.45
0.64
12.Land Area for Cereal (log)
0.08
0.03
-0.26
-0.44
13.Landlocked
-0.32
0.22
0.07
0.08
-0.17
14.Previous REDD+ Adoptions
0.02
-0.08
0.14
0.07
0.17
-0.11
15.Developed Country
-0.25
-0.55
0.68
0.87
-0.30
0.01
0.09
*Note: N=326. Correlations above |0.14|significant at p=0.05.
97
Table 3.4: Results for Cox Model of REDD+ Adoption
Hazard of REDD+ Adoption
VARIABLES
1
2
3
4
5
6
7
8
GDP per capita
-0.69*
-0.75*
-0.61*
-0.77**
-0.87**
-1.11**
-0.83**
-0.98***
(0.30)
(0.33)
(0.29)
(0.29)
(0.32)
(0.35)
(0.30)
(0.28)
Natural Resource Use
0.02
-0.03
0.11
-0.00
0.02
0.03
0.14
-0.03
(0.25)
(0.23)
(0.29)
(0.25)
(0.22)
(0.19)
(0.24)
(0.19)
Electricity Production
-0.17
-0.09
-0.19
-0.16
-0.11
-0.09
-0.12
-0.16
(0.16)
(0.14)
(0.17)
(0.16)
(0.14)
(0.12)
(0.15)
(0.13)
Population Growth
0.15
0.14
0.19
0.15
0.20
0.17
0.16
0.21
(0.16)
(0.15)
(0.16)
(0.15)
(0.15)
(0.14)
(0.17)
(0.15)
Index of Economic Freedom
0.36**
0.20
0.40**
0.30+
0.25*
0.24*
0.32**
0.26*
(0.14)
(0.13)
(0.13)
(0.15)
(0.11)
(0.12)
(0.11)
(0.12)
Environmental Protection Index
0.72*
0.81*
0.64*
0.77*
0.68*
0.84*
0.58*
0.72*
(0.32)
(0.32)
(0.29)
(0.31)
(0.32)
(0.33)
(0.29)
(0.32)
Land Area for Cereal
0.35+
0.43*
0.36+
0.36+
0.34+
0.46*
0.36+
0.39*
(0.20)
(0.19)
(0.20)
(0.19)
(0.18)
(0.19)
(0.19)
(0.19)
Landlocked
-0.47
-0.52
-0.50
-0.51
-0.76*
-0.84*
-0.78*
-0.86*
(0.37)
(0.40)
(0.38)
(0.40)
(0.38)
(0.36)
(0.31)
(0.35)
Previous REDD+ Adoptions
0.13*
0.11*
0.12*
0.12*
0.16**
0.15**
0.15*
0.16**
(0.06)
(0.05)
(0.06)
(0.05)
(0.06)
(0.06)
(0.06)
(0.05)
Regulatory Context
0.56**
0.37+
(0.19)
(0.20)
Normative Context
-0.19
-0.26
(0.24)
(0.23)
Cognitive Context
0.19
0.11
(0.16)
(0.16)
Long-term Orientation
0.33**
0.31**
0.48***
0.34**
(0.13)
(0.10)
(0.13)
(0.11)
Regulatory Context X Long-term
Orientation
0.30*
(0.13)
Normative Context X Long-term
Orientation
0.33
(0.21)
Cognitive Context X Long-term
Orientation
0.27**
(0.10)
Observations
280
280
280
280
280
280
280
280
Region
YES
YES
YES
YES
YES
YES
YES
YES
Log-likelihood
-225.89
-222.57
-225.68
-225.47
-223.59
-219.65
-222.33
-221.94
Chi-square
64.66
83.47
76.67
81.25
84.77
130.69
78.06
149.73
AIC
469.78
465.15
471.36
470.93
467.18
463.95
468.67
467.87
Note: Robust standard errors in parentheses. Significance: *** p<0.001, ** p<0.01, * p<0.05, + p<0.10
98
Hypothesis 3 states that countries’ long-term orientation will positively moderate
the effect of a) regulatory, b) normative, and c) cognitive contexts favoring
entrepreneurship on institutional entrepreneurship for sustainable development. Table 3.4
provides support for two of the three hypotheses. Specifically, the coefficients for the
interactions between long-term orientation and regulatory (𝛽 = 0.30, p < 0.05), and
cognitive (𝛽 = 0.27, p < 0.01) contexts are each positive and significant – supporting
hypotheses 3a, and 3c respectively. The results do not provide support for hypothesis 3b
regarding the interaction of long-term orientation and normative contexts (𝛽 = 0.33, n.s.).
Figure 3.3 provides a graphical representation of interaction effects obtained from the
analyses – with 95% confidence intervals.
Log-likelihood and AIC statistics are used to assess each model’s fit to the data. A
higher number for the former and a lower number for the latter statistics is indicative of a
better-fitted model. According to the fit statistics in Table 3.4, the main effect models (2 and
5) provide a better fit over the control only model (1). In addition, the interaction models
(6 and 8) provide a better fit over both the controls only, and main effect models.
Robustness Checks
In addition to the main analysis reported above, I also conduct several supplemental
analyses to assess the robustness of the results. First, I factor analyze the regulatory,
normative, and cognitive context variables to construct a single measure of countries’
institutional context for entrepreneurship. The principal-factor solution with orthogonal
varimax rotation showed that all of the variables used loaded onto a single factor. Factor 1
had an eigenvalue of 2.89 and explained roughly 99% of the variance observed. Each of the
institutional context variables had high factor loadings - regulatory (.99), normative (.96),
99
and cognitive (.99). Models 9 and 10 in Table 3.5 presents the results from this analysis. As
shown, the coefficient for institutional context is positive and significant in the main effect
model (𝛽 = 0.45, p < 0.05). As shown in Model 10 the coefficient of the interaction term
between institutional context and long-term orientation is also positive and significant
(𝛽 = 0.34, p < 0.01).
Second, I test the direct and moderation effect of research and development (R&D)
expenses. Countries with a long-term oriented cultural context are likely to be engaged in
more research and development activities compared to more short-term oriented nations.
As prior studies suggest, greater investment in research and development is an indication
of a greater long-term orientation since these investments do not typically yield payoffs
immediately (Chrisman, Fang, Kotlar, & DeMassis, 2015; Chrisman & Patel, 2012; Chrisman,
Sharma, Steier, & Chua, 2013). Consequently, greater spending on research and
development is indicative a greater long-term orientation amongst national actors.
Preliminary analysis served to confirm this assumption as the Research and Development
measure correlated positively with Hofstede’s country measure for long-term orientation
(ρ = .449, p < .01). As shown in models 11-14 in Table 3.5 the hypothesized effects for
hypotheses 2 (𝛽 = 0.52, p < 0.05); 3a (𝛽 = 0.42, p < 0.05); 3b (𝛽 = 0.37, p < 0.05); 3c (𝛽 =
0.36, p < 0.01) remain robust to these specifications. The results of model 15, which
features the interaction of R&D and the factor-analyzed institutional context variable, also
provide support for the moderation effect of long-term orientation (𝛽 = 0.46, p < 0.01).
Third, I re-run models from the main analyses and previous robustness tests where
the dependent variable is based on countries adopting REDD+ arrangements that are
expected to provide ‘Social and Environmental Benefits’ specifically. Tables 3.6 and 3.7,
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respectively, present the results from these regressions, which favor significantly the direct
and indirect influence of long-term orientation on institutional entrepreneurship for
sustainable development.
Fourth, I split the samples between developed and developing economies using
current classifications provided by the World Bank. Table 3.8 presents the results from
these regressions, where although not as strong as previous models, there is still evidenced
support in favor of the moderating effect of long-term oriented culture on institutional
entrepreneurship for sustainable development.
The results from these additional models also provide support for the direct and
moderating effect of long-term orientation on institutional entrepreneurship for
sustainable development (hypotheses 2, and 3a-3c) identified in the main analyses.
Figure 3.3: Interaction Graphs of Countries’ Institutional Context for Entrepreneurship
and Long-term orientation on REDD+ adoption.
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DISCUSSION AND CONCLUSION
This study investigates the interrelationships among regulatory, normative,
cognitive contexts favoring entrepreneurship, long-term oriented national culture, and
institutional entrepreneurship for sustainable development. The findings show that
regulatory contexts when favoring entrepreneurship can influence national actors to
engage in institutional entrepreneurship for sustainable development in the form of
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adoption of REDD+. The results also show that countries’ national culture when favoring a
long-term orientation both encourages institutional entrepreneurship for sustainable
development, and moderates the effect of regulatory, normative, and cognitive contexts on
the same.
The absence of significant effects for normative and cognitive contexts favoring
entrepreneurship suggests that countries seeking to encourage institutional change in
favor of sustainable development would be well served in placing emphasis on
development of the regulatory institutions that encourage innovation and risk-taking. This,
it appears, fosters a regulatory context favorable to entrepreneurship, and thereby
institutional entrepreneurship for sustainable development. Countries should also seek to
cultivate national cultures that maintain an orientation towards the future as these both
directly and indirectly encourages institutional entrepreneurship for sustainable
development. This is particularly the case for developed countries, where as demonstrated
through a post-hoc analysis, long-term oriented culture appears to have a more
pronounced effect (see Table 3.9).
The findings of this study compliment previous research highlighting the
relationship between institutions and entrepreneurship. Herein, however, I deepen and
extend understandings of this relationship by demonstrating that actors at the national
level themselves can be influenced to create or change institutions given regulatory,
normative, and cognitive contexts favoring entrepreneurship. I confirm the conjecture of
scholars such as (Dorado & Ventresca, 2013) who posit that institutional factors
themselves can influence actors in their decisions regarding engagement in institutional
entrepreneurship. In addition, this study compliments research on institutional work
103
(Zietsma & Lawrence, 2010). In particular I confirm that context-specific norms regarding
time do play a role in the establishment of new- or the changing of existing institutions (e.g.
Granqvist & Gustafsson, 2016). In contrast to previous studies (e.g. Estrin et al., 2013;
Stenholm et al., 2013; Youfsazi, Saeed, & Muffatto, 2015), the result of this study suggest
that entrepreneurial activity, at least at the national level, may not be influenced directly by
normative and regulatory contexts favoring entrepreneurship. In other words, it does not
matter for institutional entrepreneurship that national contexts view entrepreneurship as
acceptable, or that cognitive scripts exist regarding entrepreneurial behavior.
Contributions
The findings of this study contribute to extant literature in the following ways. First,
similar to Stephan et al. (2015), this study provides support for the configurations
perspective of institutional theory. Specifically, the findings regarding the moderation
effect of countries’ degree of long-term orientation on regulatory and cognitive contexts
favoring entrepreneurship adds to the limited number of entrepreneurship studies that
address the interaction of formal and informal institutions (Bruton et al., 2010; Jones,
Coviello, & Tang, 2011). Second, the support found for the direct effect of regulatory
contexts favoring entrepreneurship on national actors’ adoption of REDD+ supports the
position that variance in institutional environments can affect entrepreneurial activity
within a country. Third, the findings regarding the effect of countries’ degree of long-term
orientation indicate that actors’ relation to time does matter for institutional
entrepreneurship. The results thus provide some empirical support for prior studies that
have emphasized the importance of temporal perspective with respect to institutional
entrepreneurship (e.g. Buhr, 2012; Granqvist & Gustafsson, 2016).
104
This study also adds to the limited number of quantitative studies of national level
institutional entrepreneurship – especially as it relates to sustainable development. Prior
studies on institutional entrepreneurship for sustainable development have been mainly
qualitative in nature (e.g. Child, Lu, & Tsai, 2007; Henfridsson & Yoo, 2014; Lawrence &
Phillips, 2004; Prasad, Prasad, & Baker, 2016; Wright & Zammuto, 2013). While these
studies do provide noteworthy contributions, they are less generalizable when compared
to quantitative studies. The results herein are more generalizable, but also provide a basis
of comparison for future empirical analyses of institutional entrepreneurship for
sustainable development.
In addition, this study contributes to entrepreneurship literature by responding to
calls for greater examination of entrepreneurship in relation to climate change (Howard-
Grenville, et al., 2014). As the results suggest institutional actors are more likely to mobilize
efforts to combat climate change when subjected to institutional regulatory, normative, and
cognitive institutional contexts that favor entrepreneurship. This, I maintain, underscores
the importance of the national context for entrepreneurial activity addressing climate
change. In particular, institutional actors by participating in the creation of regulatory,
normative, and cognitive institutions for entrepreneurship are themselves better able to
address the complexity inherent to sustainable development opportunities (Dorado &
Ventresca, 2013).
Implications
One of the hurdles to the adoption of sustainability-oriented innovations lies in the
wicked and complex nature of sustainable development issues (Dorado & Ventresca, 2013).
As the findings of this study suggest, an important factor in explaining the emergence of
105
institutional entrepreneurship amongst national actors could be the presence of
regulations favoring entrepreneurship. Stenholm et al. (2013) suggest, through their
findings, that policy-makers keen on increasing rates of entrepreneurial activity focus on
establishing supportive regulative institutional arrangements. I find that such
environments may have the dual effect of influencing both individual- and national level
actors. In essence, national actors, who themselves create regulatory contexts that
encourage entrepreneurship amongst their constituents may themselves be influenced to
act entrepreneurially as they have more regulatory frameworks to help reduce uncertainty
regarding sustainable development issues.
Sustainability and sustainable development contain an inherent temporal element,
and within organizational studies, these concepts bring to the foreground the tension of
balancing short-term and long-term needs (Bansal & Desjardine, 2014; Bansal & Knox-
Haynes, 2013; Slawinski & Bansal, 2015). Thus, another implication of this research is its
illustration of the impact of a long-term oriented culture on institutional entrepreneurship.
As extant research suggests, actors’ inclination for entrepreneurship can vary depending
on the characteristics of national culture (Mueller & Thomas, 2000). National level actors
seeking to encourage institutional change in favor of sustainable development should
therefore focus on fostering cultures that are more open to addressing the issues regarding
the future. This, for example, could be pursued with workshops centered on future-
oriented actions such as planning or saving.
Directions for Future Work and Conclusion
While this research did provide insight into institutional entrepreneurship, it is also
subject to some limitations. I outline these along with some avenues for future research
106
below. First, although unique, the use of REDD+ data may limit the generalizability of our
results to sustainability-oriented organizational fields. As the characteristics, and therefore
influence, of organizational fields can vary, one possible area for future research is an
examination of how regulatory, normative, and cognitive contexts favoring
entrepreneurship impact institutional entrepreneurship in other fields. Further insight
may be gleaned in comparing the results of such research to this study.
Second, given limitations in the completeness of data submitted to the United
Nations regarding REDD+ project implementation, I was unable to examine the
effectiveness of specific REDD+ policies or projects within and across countries. Although
engagement with REDD+ is already a step in the right direction for most countries, the
effectiveness of REDD+ policies implemented is likely to vary given local factors and
conditions. Another area for future research could thus be an examination of specific
REDD+ policies and projects. Future research could also examine whether and to what
extent countries engage in decoupling of REDD+ - i.e. adopt REDD+ in ‘word’ and not ‘deed’.
In addition to the areas mentioned above, future research can examine other cross-
country factors that may affect institutional entrepreneurship for sustainable development.
These factors include, for example, individual regulatory, normative, and cognitive
institutions such as specific laws/regulations or attitudes towards entrepreneurship. The
institutional or geographic distance between funder and recipient countries may also be
another factor that influences the decision to engage in institutional entrepreneurship.
Moreover, other national factors such as individualist vs. collectivistic cultures represent
another promising area for future research.
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In totality, this study demonstrates that regulatory contexts favorable to
entrepreneurship drive institutional entrepreneurship for sustainable development
amongst national actors. It also shows the effect of regulatory contexts, in addition to
normative and cognitive contexts, favoring entrepreneurship will be contingent on
countries’ degree of long-term orientation. Collectively, the study’s findings suggest the
need to explore, further, factors associated with institutional entrepreneurship at the
national level – particularly as it pertains to sustainable development – and to determine
the outcomes of the associated institutional changes.
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CHAPTER 4: ENTREPRENEURSHIP IN THE ANTHROPOCENE: HOW NATIONAL
RESPONSES TO CLIMATE CHANGE AND CORRUPTION AFFECT NEW VENTURE
CREATION
INTRODUCTION
Following Hurricane Katrina in 2005, individual, organizational, and political actors
in Louisiana were required to make adjustments in their behaviors regarding both current
vulnerabilities to disasters like Katrina, and future disasters, tied to climate change
(Feldman, 2005). Similarly, following Superstorm Sandy in 2010 actors at all levels were
again required to make adjustments in their behaviors regarding their vulnerability to and
readiness to face climate change risks (Force, 2013). In another case, this time in Haiti,
actors also adjusted to a climate change related disaster both in an attempt to reduce their
current vulnerabilities and reduce future risks they faced (Williams & Shepherd, 2016).
The adjustments made by actors in each of the cases above all represent some form of
climate change adaptation (Nelson, Adger, & Brown, 2007). Climate change adaptation, as
described by scholars and practitioners, represents one the most important challenges
faced by society today (George et al., 2016; Howard-Grenville, et al, 2014). This is because
climate change adaptation has the potential to guarantee a sustained, flourishing life for
human beings on this planet (Ferraro, Etzion, & Gehman, 2015).
With the increasing relevance of climate change, the concept of climate change
adaptation has received notable attention from management and entrepreneurship
scholars alike (for a review see: Linnenluecke, Griffiths, & Winn, 2013). Climate change
adaptation broadly refers to decision-making process and the set of actions undertaken to
maintain capacity to deal with current or future predicted change in climatic stimuli
109
(Linnenluecke et al., 2013; McLaughlin, 2011). Through climate change adaptation research
management scholars, for instance, have garnered a better understanding of how firms and
organizations increase both their and the surrounding communities’ resilience (McKnight
& Linnenluecke, 2016); or how new organizational forms emerge in response to climate
related stimuli (e.g. Wittneben, Okereke, Banerjee, & Levy, 2012). Entrepreneurship
scholars, on the other hand, have also advanced knowledge regarding climate change
adaptation. This is especially as it relates to how and why individual and institutional
actors or social movements choose to exploit identified opportunities for sustainable
development – such as addressing climate change (Dorado & Ventresca, 2013; Thompson,
Kiefer, & York, 2010). In sum, literature on climate change adaptation within the
management and entrepreneurship fields has fostered better understandings of two basic
forms of climate change adaptation – namely planned and autonomous adaptation. A
problem, however, is that extant adaptation literature within the management and
entrepreneurship literature has seldom examined the interaction between these two types
of climate change adaptation. In addition, extant management and entrepreneurship
studies of climate change adaptation are mainly preoccupied with the question: “does it
pay to be green?” (Ferraro et al., 2015; Shepherd & Patzelt, 2017; Wittneben et al., 2012).
As a result, current literature paints an incomplete picture regarding climate change
adaptation and its resultant outcomes – especially those outcomes that are not finance or
performance related (c.f. Shepherd, 2015; Shepherd & Patzelt, 2017).
Addressing the above research gap is important as the absence of empirical
evidence regarding climate change adaptation both hinders the development of
management and organizational theory, and prevents the identification of appropriate
110
policy responses regarding climate change (Howard-Grenville et al., 2014). Thus, the
purpose of the present study is to fill this gap by examining two related questions. First, to
what extent, if any, does planned and autonomous climate change adaptation, and the
interaction of the two, affect entrepreneurship in the form of individual new venture
creation? Second, what is the role of countries’ level of corruption in the climate change
adaptation-new venture creation relationship? In essence, I attempt to determine whether
planned and autonomous climate change adaptation, through their effects on
environmental uncertainty, significantly affect new venture creation – both individually
and jointly. Also, because of inherent ties between climate change and influential
stakeholders in the political economy (Giddens, 2009), I seek to determine whether
corruption, which also affects environmental uncertainty, is relevant to the climate change
adaptation-entrepreneurship debate.
I answer the above questions through an integration of institutional theory and
institutional economics perspectives of institutional entrepreneurship. Integrating these
perspectives was favored since the former, mainly concerned with the process of
institutional entrepreneurship, offers little insight regarding the actual outcomes – as in the
case of the latter (Pacheco, York, Dean, & Sarasvathy, 2010). Subsequent to the theoretical
development, I generate empirical evidence based on multi-level and cross-country
analysis of a sustainability-oriented organizational field. The findings of this analysis
confirm that 1) both planned and autonomous adaptation and their interaction relate
positively to individual new venture creation; and 2) that countries’ level of corruption
does play a significant role in these relationships.
111
Through the findings, this study contributes to extant entrepreneurship literature in
several ways. First, it makes strides towards an integration of institutional theory and
institutional economics perspectives regarding institutional entrepreneurship. Specifically,
we provide a better understanding of the individual benefits associated with institutional
entrepreneurship that favor sustainable development (Pacheco et al., 2010); and how
informal institutions (i.e. corruption) can affect the outcomes of institutional
entrepreneurship (Misangyi, Weaver, & Elms, 2008). Second, it complements previous
institutional entrepreneurship studies by providing additional quantitative evidence
regarding the ability of political and public policy action to influence individual
engagement in entrepreneurship (e.g. Sine & David, 2003). Where qualitative research has
been the default methodology for institutional entrepreneurship research (cf. Pacheco et
al., 2010), this study provides generalizable empirical findings across many countries.
Additionally, this study addresses concerns for greater multilevel theorizing in
entrepreneurship research in general (Davidsson & Wiklund, 2001; Zahra, Wright, &
Abdelgawad, 2014), and for the advancement of sustainable entrepreneurship research
through quantitative methods in particular (Schaefer, Corner, & Kearins, 2015; Thompson
et al., 2011). Third, and more broadly, this study answers recent calls for greater
examinations of the relationship between entrepreneurship and climate change (Howard-
Grenville et al., 2014; George, Schillebeeckx, & Liak, 2015).
THEORY AND HYPOTHESES
An Institutional Entrepreneurship Perspective of Climate Change Adaptation
Climate change refers to variations brought about in the Earth’s atmosphere due to
the presence and concentration of greenhouse gases such as carbon dioxide and methane
112
(Howard-Grenville et al., 2014). Climate change adaptation can thus be defined as
adjustments in ecological, social or economic systems in response to observed or expected
changes in climatic stimuli and their effects and impacts in order to alleviate adverse
impacts of change or take advantage of new opportunities (Adger, Arnell, & Tompkins,
2005; cf. (IPCC 2001: 982). Climate change adaptation must occur in something (i.e. who or
what adapts? – countries in this case) and is meant to stabilize greenhouse gas
concentrations at levels that reduce the adverse effects on societal health and well-being
(Smit et al., 2000).
Climate change adaptation can take many forms. According to literature, different
types (i.e. how adaptation occurs) can be identified depending on the overall attributes of
interest. Common distinctions used include, for instance, purposefulness, timing, and
temporal or spatial scope (Smit & Pilifisova, 2003). Within this paper, I specifically look at
climate change adaptation in terms of purposefulness. With respect to this differentiating
attribute, climate change adaptation can be either planned or autonomous in nature (Smit &
Pilifisova, 2003). Planned adaptations to climate change are purposeful or intentional
means of addressing climatic stimuli (e.g. new pollution abatement or carbon tax policies).
In comparison, autonomous adaptation to climate change represents more spontaneous
and reactive responses to climate change – usually occurring after initial impacts are
manifest (Smit & Pilifisova, 2003). Autonomous adaptation, notably, takes place without
the intervention of a public or government agency (e.g. changes in energy practices or
insurance premiums).
Climate change adaptation – whether planned or autonomous - results in new
means for improving the adaptive capacity of actors or systems with respect to adverse
113
environmental events. Adaptive capacity refers to the potential or ability of an actor or
system to adjust to the effects of climate change (Nelson et al., 2007). Individuals,
organizations, and nations can have specific adaptive capacities for well-understood
challenges, or generic adaptive capacities for dealing with a wide range of uncertainty. An
actor or system’s adaptive capacity, for the purposes of this study, includes resources such
as time, money, technology, knowledge and skills, information, social and institutional
support (Grothmann & Patt, 2005; Haddad, 2005).
If beneficial to an actor or systems’ adaptive capacity, new means of addressing
climate change can spread from one actor or system to another (cf. Etzion, Gehman,
Ferraro, & Avidan, 2015). For instance, an effective environmental policy in response to
climate change from one region/country may be subsequently adopted throughout various
other regions/countries. In addition, one firms’ successful response(s) to adverse weather
events and stimuli, may be copied (or institutionalized) by their competitors and partners.
In this sense, climate change adaptation can be likened to institutional entrepreneurship.
Defined, institutional entrepreneurship refers to the process whereby actors leverage
resources to create or transform institutions (Battliana, Leca, & Boxenbaum, 2009; Garud,
Hardy, & Maguire, 2007; Lawrence & Phillips, 2004). In the case of climate change
adaptation, it is institutionalized processes and practices regarding how actors and systems
respond to adverse climate events (e.g. type of warning system used) that are created or
transformed.
Conceptualizing climate change adaptation as institutional entrepreneurship allows
for application of two commonly used perspectives in theorizing. The first, institutional
theory has mainly been used by scholars to examine determinants and processes of
114
institutional entrepreneurship (see: Bruton, Ahlstrom, & Li, 2010). As the institutional
theory perspective suggests, change agents within a country can recognize the
obsolescence of beliefs and practices regarding environmental sustainability. Subsequent
to this recognition, the change agents can design new processes and practices for
responding to changing climate conditions, and engage in strategies to foster greater
adoption of these practices and beliefs. Though appropriate for theorizing about
determinants and processes of institutional entrepreneurship, the institutional theory
perspective does not suffice for hypothesizing about the actual outcomes. Hence, in line
with suggestions by Pacheco et al. (2010), I complement the institutional theory arguments
with the institutional economics perspective of institutional entrepreneurship.
The institutional economics perspective of institutional entrepreneurship focuses
attention on the intended and/or unintended consequences of institutionalization (e.g.
Mair & Marti, 2006; Wright & Zamuto, 2013). Essentially, using the institutional economics
perspective, enables elaboration on how climate change adaptation (both planned and
autonomous), and corruption affect countries’ adaptive capacity. The crux of the argument
being that new processes and practices for handling climatic stimuli – i.e. climate change
adaptation – serve to increase actors’ adaptive capacity; whereas, corruption – the use of
public office for private benefit – reduces said capacity. Improvement in actors’ adaptive
capacity enables adjustments to environmental changes and implementation adaptation
decisions given an increased willingness to transform capacity into action (Nelson et al.,
2007). In other words, it is assumed that increased (reduced) adaptive capacity regarding
climate change translates to less (greater) perceived environmental uncertainty as actors
consider themselves better (worse) able to handle future events. As perceived uncertainty
115
regarding future events and the availability of resources influences entrepreneurial activity
(Minniti & Levesque, 2008, York & Venkataraman, 2010), both climate change adaptation
and corruption should therefore relate significantly to individual new venture creation.
In the following sections, I build on current institutional entrepreneurship,
corruption, and new venture creation literatures to theorize about how planned and
autonomous climate change adaptation, and corruption, affect actors’ adaptive capacity,
thereby influencing the willingness to engage in new venture creation.
Planned Climate Change Adaptation and New Venture Creation
Planned adaptation to climate change refers to deliberate actions or policy decisions
on behalf of a public agency meant to reduce the impacts of adverse environmental events.
Planned adaptation is based on institutional actors’ awareness of: 1) current or impending
changes; and 2) that action is required to minimize losses or benefit that result from
climate change (Smit & Pilifosova, 2003). Planned climate change is pursued insofar as
countries perceive that net positive benefits will stem from such actions (Stavins, 1997).
Prior research suggests that planned climate change adaptation can increase actors’
adaptive capacity by facilitating collaborations, which encourage realization of projects to
address climate change (Woolthius et al., 2013). Collaboration essentially enhances
adaptive capacity through the forging of new relations around climate change, which allow
for the pooling of scarce resources, task specialization, and the development of trust
between actors (Thompson, Herrmann, & Hekkert, 2015).
Planned climate change adaptation also increases actors’ adaptive capacity by
providing basic frames of reference, which can be used to identify and remove maladaptive
policies and practices regarding the natural environment (Burton, 1996; Pielke, 1998). For
116
instance, consider farmers who possess no previous knowledge regarding risks they face
from flooding because of climate change. The adaptive capacity of these same farmers is
likely to benefit positively from climate change related training programs by the state
aimed at sensitizing citizens to the flooding risks and possible solutions. In support of this
point, Dhanda & Hartman (2011) found that some voluntary carbon policies provided
individual stakeholders with access to consulting services as well as other resources
related to addressing climate change. Further, planned adaptations can serve to benefit
adaptive capacity by mitigating the effects of uncooperative behavior in the face of
collective action problems such as climate change (Pacheco, Dean, & Payne, 2010).
The complexity of climate change is such that it presents individuals and firms with
severe uncertainty in terms of how to best cope with its effects (Dorado & Ventresca, 2013;
York & Venkataraman, 2010). Successful responses to climate change effects made through
planned adaptation, by improving adaptive capacity, contribute to reducing this
uncertainty (Ferraro et al., 2015). Given that reduced environmental uncertainty provides
individuals with more confidence in starting a new venture since they are more willing to
forego the safety of working within an established firm (Baumol, 1990). Planned
adaptation, I contend, thus serves to encourage individual new venture creation by
improving actors’ adaptive capacity, and providing a context within which individuals feel
more confident in starting a new business despite experienced and potential effects of
climate change. Altogether, I hypothesize that:
H1a: Planned climate change adaptation is positively related to the likelihood of individual
new venture creation.
117
Autonomous Climate Change Adaptation and New Venture Creation
Autonomous adaptation to climate change refers to reactive responses by individual
actors and organizations that occur after initial climate change effects, and without the
intervention of public or governance agencies (Smit & Pilifosova, 2003). Autonomous
climate change adaptation represents initiatives by private actors, rather than
governments, which can be catalyzed by market or welfare changes that are in response to
actual or anticipated climate change (Leary, 1999). Within the macro or national-level
context, autonomous adaptation to climate change is the net result of individuals,
organizations, and collectives adopting pro-environmental normative prescriptions –
especially under conditions of uncertainty (DiMaggio & Powell, 1983).
Research suggests that individuals and organizations adapt to climate change by
promoting pro-environmental behavior (Linnenluecke et al., 2013). For individuals, such
behavior includes patronizing environmentally friendly products and services (Hockerts &
Wustenhagen, 2010). Organizations and industries, on the other hand, adapt to climate
change by altering their competences and processes in order to, 1) achieve better
performance and efficiency from their use of natural resources; and, 2) reduce their
negative impact on the environment (Wittneben et al., 2012). The collective effects of
individual, firm, and industry adaptations to climate change helps to improve actors’
adaptive capacity by establishing norms of pro-environmental behavior (Meek, Pacheco, &
York, 2010; Pacheco et al., 2010). Scholars have, for example, highlighted the importance of
self-regulatory norms regarding environmental performance and management in
improving industry responsiveness to natural environment concerns (see: Barnett & King,
2008; King & Lenox, 2000).
118
Autonomous adaptations to climate change also improves actors’ adaptive capacity
through their cognitive abilities. Previous studies, for example, have shown that
autonomous adaptations such as implementation and use of climate forecasts provide
farmers with enough information to improve their harvests (cf. Grothmann & Patt, 2005).
Similar to planned adaptation, enhancement of actors’ adaptive capacity because of
autonomous adaptation is expected to reduce their perceived environmental uncertainty.
Moreover, because of this reduced uncertainty actors should be more willing to engage in
actions such as new venture creation. Altogether, I hypothesize that:
H1b: Autonomous climate change adaptation is positively related to the likelihood of
individual new venture creation.
The Effect of Autonomous and Planned Adaptation on New Venture Creation
Given the predicted positive effects of planned and autonomous adaptations to
climate change on actors’ adaptive capacity and therefore likelihood to engage in new
venture creation, I further argue for the presence of a positive interactive effect. This is the
case as planned and autonomous adaptations to climate change can be mutually reinforcing
with respect to their effect on actors’ adaptive capacity. When in sync, planned and
autonomous adaptations can increase adaptive capacity by fostering greater cooperation
between public and private actors with regards to addressing climate change (Ansari,
Wijen, & Gray, 2013; Wijen & Ansari, 2007). In New York, public planners working to
identify and implement effective climate change policies helped private stakeholders
develop adaptation strategies in the process. As outlined by Yohe (2014), an important
119
outcome of these partnerships was the risk-management information regarding climate
change that fed directly into subsequent iterations of the same process. This example
demonstrates how the interaction of planned and autonomous adaptations can serve to
generate information that actors’ subsequently use to improve their adaptive capacity.
In addition to allowing for more cooperation between public and private entities,
research suggests that the interaction of planned and autonomous climate change
adaptation fosters societal acceptance of pro-environmental actions (Giddens, 2009). Such
acceptance of pro-environmental actions ensures that resources for addressing climate
change are equitably distributed throughout the community, nation, or region (Meek et al.,
2010). Actors’ adaptive capacity may also be improved in the presence of planned and
autonomous adaptations as performance is enhanced within the respective organizational
field as a whole. Research shows that in China the degree to which newly introduced
environmental laws by government agencies were effective depended on the
embeddedness of individual institutional actors (Child, Lu, & Tsai, 2007). Consider also,
that autonomous adaptations, by individual and organizational actors, often serve as a
baseline for the development and evaluation of planned adaptations (Stavins, 1997; Smit &
Pilifosova, 2003). In this way, autonomous adaptations serves to enhance actors’ adaptive
capacity both at an individual and institutional level. Altogether, I hypothesize that:
H1c: The interaction between autonomous and planned climate change adaptation is
positively related to the likelihood of individual new venture creation.
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Corruption, Adaptation, and New Venture Creation
Corruption refers to the abuse of public power or authority for private benefit
(Rodriguez, Siegel, Hillman, & Eden, 2006). Corruption, as an informal institution, is
evidenced in traditions, customs, societal norms, shared mental models, unwritten codes of
conduct, ideologies, and templates that have never been consciously designed but are still
in everyone’s interest to keep (Baumol, 1990; North, 1990). Corruption reflects a poor
institutional environment within a country. As such, it can influence both how actors
evaluate entrepreneurial opportunities and actors’ ability to appropriate the returns
accruing from enterprising activity (Acs, Autio, & Szerb, 2014).
Regarding entrepreneurship, corruption can reduce the availability of valuable
resources required by individuals to engage in new venture creation (Anokhin & Schulze,
2008; Cuervo-Cazurra, 2006; Habib & Zurawicki, 2002). In addition, high levels of
corruption can turn existing regulations into de facto unofficial taxes (Wunder, 2005, p.6).
Such taxes place an undue burden on existing entrepreneurs, and can dissuade potential
ones from committing to new venture creation. Consider also that countries with higher
levels of corruption are likely to exhibit higher entry costs for potential entrepreneurs
(Djankov et al., 2002; Klapper, Laeven, & Rajan, 2006).
Corruption can also increase ambiguousness and uncertainty surrounding climate
change adaptation (Wijen, 2014). As stated by Soreide (2009), the extent of corruption
indicates the probability of public officials actually engaging in fair and ethical actions.
Considering, that actors engaged in climate change adaptation on behalf of a country are
usually from the public sphere (Manning & Reineke, 2016). The presence of corruption
would therefore represent a significant obstacle to their effective functioning. Moreover,
121
with a high level of corruption there is likely to be less credibility in the actions of public
officials. This suggests that given high degrees of corruption, adaptations such as adoption
of particular climate change policies may be merely symbolic in nature. This can be
evidenced in some voluntary markets where actors misappropriate resources allocated for
carbon-offset initiatives (Wijen & van Tulder, 2011).
Corruption can also affect actors’ adaptive capacity negatively by encouraging
unethical behavior amongst actors seeking to avoid environmental compliance. As costs
associated with environmental management increase, actors are more likely to shirk in
their responsibility to the environment (Sharfman & Fernando, 2008). Such avoidance of
adaptation by actors, I contend, serves to perpetuate further environmental degradation,
thereby reducing countries’ overall ability to address climate change. Altogether, I
hypothesize that:
H2: Corruption is negatively related to the likelihood of individual new venture creation.
H3: Corruption negatively moderates the effect of a) planned adaptation; b) autonomous
adaptation; and c) their interaction, on the likelihood of individual new venture creation.
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Figure 4.1: Empirical Model 2
METHODS
Research Context
I test the above hypotheses in the context of the global voluntary carbon-offset
market – an emerging and sustainability-oriented field. Voluntary carbon-offset markets
represent a type of Payment for Ecosystem Services (PES) mechanism where a service
buyer buys a well-defined environmental service from a service provider (Benessaiah,
2012; Farley & Costanza, 2010; Wunder, 2005). Voluntary carbon mitigation approaches
are regarded as a potent means of addressing global climate change as they incentivize the
reduction of emissions associated with forest use; conservation and enhancement of forest
carbon stocks; and the sustainable management of forests (REDD+ Partnership, 2013;
2015). Since 2008, there has been more than US $7.2 billion pledged for the support of
emissions reductions programs related to forest use (Williams, 2013).
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The global sector for climate change mitigation is suitable for the purposes of this
research since it is associated with both planned and autonomous forms of climate change
adaptation. In general, most of the actions regarding climate change, such as adoption of a
voluntary policy, happen at the national or institutional level (Giddens, 2009). In addition,
global climate change policy often builds upon and informs the actions of individual and
organizational actors (Smit & Pilifosova, 2003). Additionally, global climate change policies
and initiatives explicitly consider economic, environmental, and social concerns of
livelihood attainment by individuals (Agrawal, Nepstad, & Chhatre, 2011). The context is
therefore one in which the effects of climate change adaptation and corruption in relation
to new venture creation should be salient.
Data and Sample
The data used in this study come from several sources. To obtain the independent
variable for planned adaptation, I used data from the United Nation’s Voluntary REDD+
Database (VRD). The VRD contains data regarding countries engagement in the Reducing
Emissions from Deforestation and Degradation Program (REDD+). The database essentially
provides information on REDD+ financing, actions, and results that have been reported to
the REDD+ Partnership. It also aims to improve transparency around REDD+, support
efforts to identify and analyze gaps and overlaps in REDD+ financing, and help share
experiences on REDD+ (REDD+ Partnership, 2013).
For the independent variable measure of autonomous adaptation, I used data
provided by the Notre Dame Global Adaptation Index (ND-GAIN). The ND-GAIN is a free,
open-source index, which assess countries exposure to climate change along two
dimensions – vulnerability and readiness. Vulnerability assesses countries’ exposure,
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sensitivity, and adaptive capacity to impacts of climate change, while readiness accounts
for countries’ ability to apply economic investments to economic, governance, and social
components (Chen et al., 2015). The ND-GAIN data spans 192 countries from 1995 to
present. Corporations, NGOs, governments, and development decision-makers use the ND-
GAIN to make informed strategic operational and reputational decisions regarding supply
chains, capital projects, policy changes and community engagements (Chen et al., 2015).
The corruption variable was measured using data from the Heritage Foundation’s Index of
Economic Freedom. Additionally, for the individual-level dependent variable and several
controls I used the Global Entrepreneurship Monitor Adult Population Survey (GEM APS)
dataset. This dataset provides comparable national entrepreneurship indicators (Reynolds
et al., 2005). Finally, to obtain country control variables, I used the World Bank’s
Development Indicators (WDI), which provides cross-country measures of relevant
economic indicators.
Regarding these above sources, data from both the GEM APS and World Bank
databases have been extensively used in studies examining entrepreneurship (e.g. Anokhin
& Schulze, 2009; De Clercq, Lim, & Oh, 2013; Estrin, Mickiewicz, & Stephan, 2013). The
Heritage Foundation’s Index of Economic Freedom is used in entrepreneurship research to
provide valid measures of the institutional environment (e.g. Aidis, Estrin & Mickiewicz,
2012; Estrin, Korosteleva, & Mickiewicz, 2013). The VRD dataset which I utilize has not yet,
to my knowledge been used in entrepreneurship studies, and thus provides a unique
opportunity to better understand sustainable-oriented entrepreneurship activity.
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Dependent Variables
New Venture Creation. The dependent variable used in this study is new venture
creation. New venture creation is defined as those individuals between ages 18-64 years
who have taken action towards creating a business in the past year, and expect to own a
share of said business, which must not have paid any wages or salaries for more than three
months (Reynolds et al., 2005; Kelley et al., 2016). I measure new venture creation using
individual-level data provided by the GEM APS. The APS is based on a comprehensive
questionnaire, administered to a minimum of 2000 adults in each GEM country, and
designed to collect detailed information on the entrepreneurial activity, attitudes and
aspirations of respondents (Kelley et al., 2016). The data captures both entrepreneurs and
non-entrepreneurs as it draws from the entire working-age population in each
participating country (Aidis et al., 2012).
Independent Variables
REDD+ Adoption. I measure planned adaptation using the annual count of REDD+
arrangements enacted by nations – whether as funder, recipient, or beneficiary. Each
arrangement in the VRD dataset indicates the funder, recipient, and beneficiary countries
that are party to that agreement; and the beginning and end years of the arrangement. A
country may be listed as either a funder (i.e. provides funding for REDD+ objectives as part
of the arrangement), recipient (i.e. receives and manages distribution of funds), or
beneficiary (i.e. receives access to funds to complete stated objectives) to a REDD+
arrangement. However, a country cannot be listed as more than one for the same
arrangement – i.e. for example, the United States cannot be the funder of ‘arrangement A’,
and still directly ‘benefit’ or ‘receive’ funds from ‘arrangement A’. I coded a country as
126
having adopted REDD+ if it was indicated as one of either a funder, recipient, or beneficiary
to an arrangement for a particular year.
Climate Change Adaptability. I measure autonomous adaptation using the climate
change adaptability measure provided by the Notre Dame Global Adaptation Index (ND-
GAIN). This ND-GAIN measure quantifies countries’ vulnerability to sustainable
development challenges in relation to their readiness to address said challenges (Chen et
al., 2015). The ND-GAIN measure was deemed suitable for this study since it is captures the
sum of individual and organizational responses to climate change effects at a national level.
This represents one of the first time, to my knowledge, that the ND-GAIN index has been
applied in an entrepreneurship study.
Corruption. The third independent variable, corruption, is measured using a sub-
index from the Index of Economic Freedom. Specifically, I use Freedom from Corruption
which captures the extent of countries perceived level of corruption (i.e. misuse of public
power for private benefit) based on expert opinions and surveys. The original Freedom
from Corruption measure gives a lower score to countries with higher levels of corruption.
Thus for this study I reverse code the measure such that higher scores are indicative of
more corruption.
Control Variables.
Following prior studies (Estrin et al., 2013; Horisch, Kollat, & Brieger, 2016; Stephan
et al., 2013), I include several control variables – both at the individual and country-levels –
to account for factors other than institutional entrepreneurship for sustainable
development that can impact individuals’ likelihood of new venture creation. Regarding
individual-level direct effects, I control for tertiary education. Prior research shows that
127
persons with higher educational attainment are more likely to direct their efforts towards
new venture creation (Koellinger, Minniti, & Schade, 2007). In addition, I control for age
and age squared – both of which has also been shown to influence the likelihood of
individuals’ entrepreneurial activities (Levesque & Minniti, 2006; Stephan et al., 2013).
Gender has also been shown to influence new venture creation (Langowitz & Minniti,
2007). Thus, I include a dummy variable for gender. Following Estrin et al. (2013), I also
include controls for potential entrepreneurial experience of individuals. Specifically, I
control for individual experience being a business angel, or experience owning another
established business; and if they personally know other entrepreneurs.
Regarding country-level effects, entrepreneurship is shown to be systematically and
consistently related to Gross Domestic Product (GDP) per capita, unemployment, income
tax, and annual inflation (Arin et al., 2014). Thus, I include controls for each. Gross domestic
product per capita (GDP per capita) accounts for the economic context of and the level of
economic development for countries (Van Stel & Carree, 2010). Unemployment, accounts
for country labor effects and has been found to influence entrepreneurial activity (Evans &
Leighton, 1990; Thurik et al., 2008). Income tax is used to account for overall regulatory
environment regarding entrepreneurship; and inflation accounts for the riskiness of
countries’ business environment (c.f.: Parker, 2009). Prior empirical studies have shown
inflation rates, and their volatility, to influence small business employment negatively (e.g.
Robbins, Pantuosco, Parker, & Fuller, 2000). In addition, I follow Estrin et al. (2013) and
include controls for 1) countries’ prevalence rate of new venture creation; and 2) the
country means for the individual-level control variables. Finally, I also control for each
year. The variable definitions and data sources are summarized in Table 4.1 (Appendix C).
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Analysis
I test the hypotheses of this study using a series of multilevel logistic regression
models. This approach is suitable given that the binary nature of the dependent variable
(Wooldridge, 2015). All models are estimated using the Stata’s ‘xtmelogit’ command, and
utilize the laplacian approximation. As suggested by Stephan et al. (2013), the multilevel
approach used is advantageous for the following reasons. First, it reduces the potential for
Type 1 errors that can occur if the hierarchical nature of the data is ignored. Second, it
presents a more favorable option to aggregating the data to the country level since this
carries the risk for aggregation bias – the generalization of individual-level constructs to
the country-level. Third, multilevel analysis allows for the clustering, or the non-
independence of individual level observations within the same country. To provide
evidence of such clustering, I follow Stephan et al. (2013) and determine the Type 1 intra-
class correlations (ICC) (c.f.: Hox, Mooerbeek, & van de Schoot, 2010). Specifically, I obtain
the ICC for each of model used in hypothesis testing. The ICCs obtained were all within the
range of 0.100 – 0.109 – indicating that roughly 10% of the total variance for individuals’
likelihood of new venture creation resided at the country level.
Before testing the hypotheses, I standardized all independent variables. Similar to
the Stephan et al. (2013) study, country level variables were standardized according to
their country-level mean and standard deviation; while individual level variables were
standardized according to their individual-level mean and standard deviation across the
sample. Additionally, I check the variance inflation factor (VIF) and condition index statistic
(CIS) for variables in order to test for multicollinearity. As shown in the left column of
Table 4.2 the VIF for variables are well below 10 – with the exception of the age and age
129
squared, and the CIS is below 30 at 25.01. Given that the VIF for age and age-squared are
greater than 10, I take a conservative approach and obtain VIFs and CISs for a models
excluding the country prevalence rate for tertiary education, age, age squared, and gender
in the effort to reduce any biased results due to multicollinearity. As shown in the right
column of Table 4.2, although the VIF for age and age squared remain relatively similar, the
mean VIF (4.11) and CIS (12.13) are both reduced by more than 50%. Thus, the main
models used to test the hypotheses exclude the country prevalence rate for tertiary
education, age, age squared, and gender.
I test for direct effects (Hypotheses 1a, 1b, and 2) in three separate models and
simultaneously in one model – where all models also include the control variables. To test
for the interaction effects (Hypotheses 1c, 3a, 3b, and 3c) each interaction term was
assessed in a separate model. Note that all country level variables are lagged such that they
are observed in time (t) while the dependent variable is observed in time (t+1). To
establish goodness of fit, I report the log-likelihood and Akaike information criterion (AIC)
for each model.
RESULTS
Table 4.3 provides a comparison of the main variables used in this study between
developed and developing countries in the final sample. A simple t-test between the
variable means across the samples are used to determine if the difference is significant.
Both REDD+ adoption and climate change adaptability are higher for developed countries
in the sample. Developed countries in the sample also have older and more tertiary-level
educated entrepreneurs, in addition to higher GDP per capita, unemployment rate, and
inflation. Conversely, the developing countries in the sample have, on average, higher rates
130
of corruption, new venture creation, and income tax. Additionally developing countries in
the sample have higher rates of individuals: 1) with prior business experience; 2) that
know an entrepreneur; and, 3) that were informal investors to another venture. Note that
both developed and developing countries in the sample show a balance between male and
female individuals engaged in entrepreneurial activity.
Table 4.3: Variable Comparison by Countries' Level of Development
Variables
Developing
(N=131,323)
Developed
(N=352,261)
Mean Difference
REDD+ Adoption
10.14
15.13
-4.99***
Climate Change Adaptability
53.35
71.96
-18.61***
Corruption Freedom
58.54
25.16
33.39***
New Venture Creation
0.19
0.05
0.14***
Tertiary Education
0.25
0.43
-0.19***
Age
37.63
44.36
-6.74***
Age squared
1597.66
2176.18
-578.52***
Gender
0.51
0.52
-0.00**
Business Angel
0.08
0.03
0.04***
Established Business Owner
0.25
0.14
0.11***
Knows an Entrepreneur
0.43
0.31
0.12***
Tertiary Education (country rate)
0.24
0.43
-0.19***
Age (country rate)
37.66
44.52
-6.86***
Age squared (country rate)
1601.22
2192.93
-591.70***
Gender (country rate)
0.51
0.52
-0.01***
Knows an Entrepreneur Rate
43.81
32.29
11.52***
Early-stage Entrepreneurial Activity Rate
18.04
6.2
11.84***
Established Business Ownership Rate
10.53
6.97
3.56***
Business Angel Investor Rate
7.86
3.27
4.59***
Gross Domestic Product per capita
8.66
10.56
-1.90***
Unemployment
7.78
11.08
-3.30***
Income Tax
4.96
2.01
2.94***
Inflation
38.02
54.12
-16.10***
*Note: Developing Countries – Brazil; Chile; China; Colombia; Costa Rica; Dominican Republic;
Guatemala; India; Iran; Jamaica; Malaysia; Pakistan; Peru; Thailand; Tunisia; Turkey; Uganda;
Zambia. Developed Countries – Australia; Belgium; Chile; Denmark; Finland; France; Germany;
Greece; Ireland; Italy; Japan; Netherlands; Norway; Portugal; Slovenia; south Korea; Spain;
Sweden; Switzerland; United Kingdom; United States.
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Table 4.4: Variable & Correlation Matrix (Individual Level)
Variables
Mean
S.D.
1
2
3
4
5
6
7
1.New Venture Creation
0.09
0.28
2.Tertiary Education
0.38
0.49
0.00
3.Age
42.53
14.50
-0.09
-0.01
4.Age Squared
2019.08
1308.71
-0.10
-0.03
0.98
5.Gender
0.52
0.50
-0.06
-0.02
0.03
0.03
6.Business Angel
0.05
0.21
0.12
0.03
-0.02
-0.02
-0.05
7.Established Business Owner
0.17
0.37
0.22
0.00
0.02
0.00
-0.11
0.10
8.Knows an Entrepreneur
0.35
0.48
0.16
0.05
-0.15
-0.16
-0.10
0.15
0.16
*Note: N=483,584. All correlations above |0.00| significant at p=0.05.
Table 4.5: Variable & Correlation Matrix (Country Level)
Variables
Mean
S.D.
1
2
3
4
5
6
7
1.REDD+ Adoption
13.78
21.05
2.Climate Change Adaptability
66.90
10.19
0.08
3. Corruption Freedom
34.22
19.15
0.00
-0.93
4.Tertiary Education
0.38
0.14
0.29
0.59
-0.48
5.Age
42.66
4.71
0.16
0.76
-0.74
0.40
6.Age Squared
2032.24
454.22
0.15
0.71
-0.70
0.35
0.99
7.Gender
0.52
0.04
-0.17
0.21
-0.26
-0.10
0.31
0.33
8.Knows an Entrepreneur Rate
35.42
9.97
-0.23
-0.51
0.40
-0.46
-0.40
-0.35
-0.15
9.Early-stage Entrepreneurial Activity Rate
9.42
6.64
-0.01
-0.69
0.63
-0.44
-0.50
-0.42
0.10
10.Established Business Ownership Rate
7.94
4.26
-0.02
-0.43
0.44
-0.15
-0.31
-0.29
0.01
11.Business Angel Investor Rate
4.52
4.12
-0.04
-0.43
0.33
-0.22
-0.28
-0.22
-0.04
12.Gross Domestic Product per capita (log)
10.05
0.98
0.12
0.93
-0.87
0.58
0.73
0.67
0.14
13.Unemployment
10.18
6.15
0.26
-0.07
0.11
0.34
-0.06
-0.11
-0.24
14.Inflation
2.81
2.40
-0.26
-0.59
0.56
-0.45
-0.51
-0.45
-0.05
15.Income Tax
49.75
16.09
0.40
0.30
-0.24
0.43
0.37
0.34
-0.17
16.Developed Country
0.73
0.44
0.11
0.81
-0.78
0.58
0.65
0.58
0.09
Variables
8
9
10
11
12
13
14
15
9.Early-stage Entrepreneurial Activity Rate
0.52
10.Established Business Ownership Rate
0.26
0.54
11.Business Angel Investor Rate
0.59
0.69
0.33
12.Gross Domestic Product per capita (log)
-0.59
-0.76
-0.45
-0.53
13.Unemployment
-0.22
-0.26
-0.05
-0.11
0.09
14.Inflation
0.39
0.46
0.32
0.31
-0.64
-0.15
15.Income Tax
-0.38
-0.35
-0.13
-0.28
0.40
0.26
-0.22
16.Developed Country
-0.51
-0.79
-0.37
-0.50
0.87
0.24
-0.55
0.45
*Note: N=483,584. All correlations above |0.00| significant at p=0.05.
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Tables 4.4 and 4.5 provides the summary statistics and correlations for the
individual- and country-level variables respectively. For the individual-level variables the
highest correlation was between age and age squared (0.99). For the country-level
variables correlations greater than 0.70 were observed between GDP per capita and the
developed country dummy, and several other variables. However, based on the VIF and
condition index statistics calculated, and removal of highly correlated variables, I do not
believe multicollinearity poses a major threat to the analyses.
With respect to the hypotheses, Table 4.6 (Models 1-5) provides the results for the
main effects. Model 1 includes the controls only, while Models 2-4 test the effects of REDD+
adoption, climate change adaptability, and corruption respectively, and Model 5 test the
effects on the individual variables simultaneously. In addition, Table 4.7 (Models 6-9)
provides the results for the interaction effects. Models 6, 7, and 8 are used to assess the
effect of the two-way interactions; and Model 9, the effect of three-way interaction between
REDD+ adoption, climate change adaptability, and corruption.
Hypothesis 1a states that planned adaptation is positively related to individuals’ likelihood
of new venture creation. Model 2 of Table 4.6 shows a positive effect for REDD+ adoption
(β= 0.03, p < 0.001), thus supporting hypothesis 1a.
Hypothesis 1b states that autonomous adaptation is positively related to
individuals’ likelihood of new venture creation. Model 3 of Table 4.6 provides support for
this hypothesis as it shows a positive effect for climate change adaptability (β= 0.10, p <
0.001).
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Table 4.6: Climate Change Adaptation & New Venture Creation
DV
New Venture Creation
VARIABLES
1
2
3
4
5
Tertiary Education
0.06***
0.06***
0.06***
0.06***
0.06***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Age
0.77***
0.77***
0.77***
0.77***
0.77***
(0.04)
(0.04)
(0.04)
(0.04)
(0.04)
Age Squared
-1.10***
-1.10***
-1.10***
-1.10***
-1.10***
(0.04)
(0.04)
(0.04)
(0.04)
(0.04)
Gender
-0.13***
-0.13***
-0.13***
-0.13***
-0.13***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Business Angel
0.10***
0.10***
0.10***
0.10***
0.10***
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
Established Business Owner
0.44***
0.44***
0.44***
0.44***
0.44***
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
Knows an Entrepreneur
0.37***
0.37***
0.37***
0.37***
0.37***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Knows an Entrepreneur (Country)
0.01
0.01
0.00
0.01
0.00
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Total Early-stage Entrepreneurship (Country)
0.04***
0.04***
0.03**
0.04***
0.03***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Established Business Ownership (Country)
-0.03***
-0.02**
-0.03***
-0.03***
-0.03***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Business Angel (Country)
0.04***
0.04***
0.03***
0.03***
0.02**
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Gross Domestic Product per capita
-0.10***
-0.11***
-0.13***
-0.09***
-0.13***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Unemployment
-0.17***
-0.16***
-0.17***
-0.18***
-0.16***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Inflation
0.03**
0.03***
0.03***
0.02*
0.04***
(0.01)
(0.01)
(0.01)
(0.01)
(0.01)
Income Tax
-0.00**
-0.00**
-0.00**
-0.00**
-0.00**
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
REDD+ Adoption
0.03***
0.03***
(0.01)
(0.01)
Climate Change Adaptability
0.09***
0.09***
(0.01)
(0.01)
Corruption Freedom
0.04***
0.03***
(0.01)
(0.01)
Constant (Individual)
-2.74***
-2.68***
-2.68***
-2.70***
-2.60***
(0.11)
(0.12)
(0.12)
(0.11)
(0.12)
Constant (Country)
-0.38**
-0.37**
-0.37**
-0.38**
-0.36**
(0.12)
(0.12)
(0.12)
(0.12)
(0.12)
Observations
483,584
483,584
483,584
483,584
483,584
Number of Countries
38
38
38
38
38
Year Effects
YES
YES
YES
YES
YES
Log-likelihood
-117,728
-117,720
-117,687
-117,710
-117,666
AIC
235,499
235,485
235,420
235,466
235,382
Note: Standard errors in parentheses. Significance levels: *** p<0.001, ** p<0.01, * p<0.05, + p<0.10
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Table 4.7: Climate Change Adaptation & New Venture Creation
DV
New Venture Creation
VARIABLES
6
7
8
9
**ALL CONTROLS INCLUDED**
REDD+ Adoption
0.03***
0.02**
0.03***
0.03**
(0.01)
(0.01)
(0.01)
(0.01)
Climate Change Adaptability
0.09***
0.09***
0.09***
0.09***
(0.01)
(0.01)
(0.01)
(0.01)
Corruption Freedom
0.03***
0.03***
0.04***
0.07***
(0.01)
(0.01)
(0.01)
(0.01)
REDD+ Adoption X Climate Change Adaptability
0.02+
0.00
(0.01)
(0.01)
REDD+ Adoption X Corruption Freedom
0.03***
0.07***
(0.01)
(0.01)
Climate Change Adaptability X Corruption Freedom
-0.00
-0.02*
(0.01)
(0.01)
REDD+ Adoption X Climate Change Adaptability X Corruption
Freedom
-0.06***
(0.01)
Constant (Individual)
-2.62***
-2.62***
-2.60***
-2.66***
(0.12)
(0.12)
(0.12)
(0.12)
Constant (Country)
-0.37**
-0.37**
-0.36**
-0.37**
(0.12)
(0.12)
(0.12)
(0.12)
Observations
483,584
483,584
483,584
483,584
Number of Countries
38
38
38
38
Year Effects
YES
YES
YES
YES
Log-likelihood
-117,664
-117,660
-117,666
-117,629
AIC
235,381
235,373
235,384
235,315
Note: Standard errors in parentheses. Significance levels: *** p<0.001, ** p<0.01, * p<0.05, + p<0.10
Hypothesis 1c states that the effect of planned adaptation on individuals’ likelihood
of new venture creation is stronger in the presence of autonomous adaptation. I find mild
support for this hypothesis. As shown in Model 8 of Table 4.7, the interaction term between
REDD+ adoption and climate change adaptability is positive, but weakly significant (β=
0.02, p < 0.10).
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Hypothesis 2 states that corruption is negatively related to individuals’ likelihood of
new venture creation. Model 4 of Table 4.6 does not provide support for this hypothesis as
the effect of corruption appears to be significantly positive (β= 0.04, p < 0.001).
Hypothesis 3a states that corruption will negatively moderate the effect of
institutional entrepreneurship for sustainable development on individuals’ likelihood of
new venture creation. Model 7 of Table 4.7 shows that the interaction term for REDD+
adoption and corruption is significantly positive (β= 0.03, p < 0.001) and thus does not
support the hypothesized effect.
Hypothesis 3b states that corruption will negatively moderate the effect of climate
change adaptability on individuals’ likelihood of new venture creation. Model 7 of Table 4.7
shows that the interaction term for climate change adaptability and corruption is negative
(β= 0.03), but not significant. Note however, that the effect is negative in the Model 9 (β=
0.02, p < 0.05). Thus, I conclude that partial support was found for this hypothesized effect.
Finally, hypothesis 3c states that corruption will negatively moderate the effect of
the interaction between planned and autonomous climate change adaptation on
individuals’ likelihood of new venture creation. As shown in Model 9 of Table 4.7, the three-
way interaction between REDD+ adoption, climate change adaptability, and corruption is
significantly negative (β= −0.06, p < 0.001). I therefore find support for this hypothesized
effect.
With respect to the goodness of fit for the models, a higher log-likelihood and lower
AIC is indicative of a better-fitted model. As the results show, each subsequent model
provides a better fit of the data in comparison to the control only model (Model 1). This is
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especially evident for Models 5 and 9 of Tables 4.6 and 4.7 respectively. Further, the Wald
Chi2 statistics (not reported) are significant for all models at p < 0.001.
Additional Analyses
In addition to the main analyses reported in Tables 4.6 and 4.7, I also conduct
several supplemental analyses to determine the robustness of the results. First, I test the
hypothesized effects on models featuring alternative dependent variables, which capture
necessity- and opportunity-based individual new venture creation. The former refers to
individuals who engage in new venture creation for lack of better employment options; the
latter captures individuals who are driven by an opportunity or want to increase (and not
maintain) their income. Both measures were obtained from GEM APS data. Tables 4.8
through 4.11 present the results from these analyses. As shown, the results are
qualitatively similar to the main findings. This was with the exception of the model
featuring necessity-based new venture creation as the dependent variable where the sign is
reversed for REDD+ adoption (see: Table 4.8).
Second, I assess models featuring an alternative measure of each individual variable.
I use, 1) the total financial resources pledged by countries as part of REDD+ arrangements
– i.e. REDD+ Resources in lieu of REDD+ adoption; 2) the ND-GAIN sub-index measure for
countries’ climate change readiness in lieu of climate change adaptability; and, 3) control of
corruption from the World Bank’s World Governance Indicators in lieu of Freedom from
Corruption (reverse coded). Tables 4.12 and 4.13 present the results from these analyses,
which also provide qualitative support to the main findings.
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DISCUSSION AND CONCLUSION
The relationship between entrepreneurship and sustainable development issues
such as climate change remains an emergent topic in entrepreneurship research. While
scholars have advanced knowledge regarding the management and business implications
of addressing climate change, limited generalizable evidence exists as it relates to
entrepreneurship. This is especially the case for the creation of new ventures by
individuals – which, in the context of sustainable development, represents an important
mechanism for addressing climate change (Hoffman & Jennings, 2015). This study is thus
one of the first to test empirically the effect of climate change adaptation on new venture
creation.
The Impact of Climate Change Adaptation on Entrepreneurship
The findings of this study indicate that both planned and autonomous climate
change adaptation do have an impact on individual engagement in new venture creation. In
the case of the former, findings support existing theory regarding how acts of institutional
entrepreneurship can positively affect the identification and exploitation of
entrepreneurial opportunities by individuals (Sine & David, 2003). Similar to previous
studies (Stephan et al., 2013), I include additional individual and country-level factors used
to explain individual engagement in entrepreneurship. Thus, forms of planned climate
change adaptation may be considered complementary to other factors in partially
explaining acts of entrepreneurship.
Regarding autonomous adaptation, this research supports extant theory that
environments characterized by more individual or organizational instances of pro-
environmental behavior stimulates individual new venture creation (Meek et al., 2010).
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The positive effect of climate change adaptability suggests that actors can gain confidence
to pursue entrepreneurial ends from the reduced environmental uncertainty generated by
autonomous adaptations amongst their individual and organizational peers. Consider, for
example, social movement organizations and similar individual and organizational
responses that emerge in response to climate change issues. These and related forms of
autonomous adaptations can influence industry emergence and growth by engendering
greater confidence in addressing uncertainty amongst actors (Pacheco, York, & Hargrave,
2014; c.f. York, Hargrave, & Pacheco, 2016). Thus, in line with such research, the findings of
this study could be indicative of a micro-foundational effect regarding industry emergence
and growth – especially within a sustainability-oriented context.
In addition, the findings of this study suggest that prioritization in terms of climate
change action should be towards fostering greater autonomous adaptation strategies.
According to the results in Table 4.6, there appears to be a larger effect from climate
change adaptability in comparison to REDD+ adoption on individual new venture creation.
Computed odds ratios of 1.09 and 1.03 respectively, and the results from the additional
analyses (see: Table 4.12) also serving to confirm this suspicion. This is not to say that
planned or ‘top-down’ approaches to climate change are not of relevance. Rather, there
may indeed be a structured or timed approach to climate change adaptation (Bhur, 2012).
In other words, planned climate change adaptation may foster greater individual benefits
when they both inform current autonomous adaptations, as well as encourage future ones.
Accounting for Corruption
With respect to corruption, findings indicate that within the context of global
climate policy, self-interested actions by institutional actors significantly influences
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entrepreneurship outcomes associated with climate change adaptation. First, I found that
there was a direct positive effect of countries level of corruption on the likelihood of
individual new venture creation. Although not hypothesized, this finding was still in line
with the ‘greasing-the-wheel’ hypothesis (Dreher & Gassebner, 2013). Given that some
levels of corruption are required in order for new ventures to be created, it is
understandable that the same might be required in order for planned or autonomous
adaptations to take place.
Second, I also found evidence of a significant indirect effect of corruption.
Specifically, countries’ level of corruption was found to reduce the positive relationship
between planned and autonomous climate change adaptation and new venture creation.
This finding suggests that informal policies and practices (e.g. bribery for non-compliance)
can limit the beneficial effects of planned and autonomous climate change adaptations.
From a theoretical perspective, the negative moderation of countries’ level of corruption
supports calls for greater examination of the sociological outcomes associated with
institutional entrepreneurial actions (Pacheco et al., 2010). In addition, it adds weight to
contemporary claims by scholars and practitioners alike regarding the susceptibility of
actors engaged in global climate action to corruption (Williams, 2013).
Limitations and Future Research
This research is subject to some limitations. Based on these limitations and the
implications above, I also outline some potential areas for future research.
The main limitations of this study are with respect to the adaptation measures used,
the outcome examined, and the research context. In the first case, despite being relevant for
examining the effects of planned and autonomous climate change adaptation (on a national
