Frontiers in Eco-Entrepreneurship Research: Volume 20

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Table of contents

(13 chapters)

Is eco-entrepreneurship (the provision of new products, processes, services with environmental benefits) different from standard entrepreneurship, where the emphasis is on the provision of private goods, processes, and services? In some sense, it must be because of the nature of the public goods outcome. There will be measurement and enforcement problems in eco-entrepreneurship that exceed those found for more standard new ventures. It is for these reasons government is normally associated with the provision of public goods. At the same time, however, society is increasingly turning to private individuals to respond to growing demands for environmental improvement. Private entrepreneurs are seen as reacting more quickly, more completely, and more precisely to environmental concerns. New technology, on which many environmental benefits are linked, typically requires private entrepreneurs to engage in discovery, development, and delivery. Business plans are prepared and presented to venture capitalists and other investors seeking to capture the private returns from these new ventures that also provide critical public goods. Yet, eco-entrepreneurship is not well understood regarding its motives, returns, products, services, organization, and property rights.

Klaus Reichardt grew up in Germany and moved to the United States in 1978 to study. He attended Pepperdine University in California, where he received his Bachelor's and Master's degrees in Business and Management. After completing his academic career, Reichardt was interested in working for himself, and therefore, he imported a line of fashion jewelry from Germany to sell in the United States. This was an attractive venture, because the product was of high quality and the U.S. dollar was low, and therefore, it could be purchased inexpensively. He set up a network of about 25 representatives across the country to help him sell the product to department stores as well as small boutiques. Reichardt sold the jewelry for five years. However, in the late 1980s, the value of the dollar fell and the product he was purchasing became very expensive. The dollar dropped so fast that Reichardt could not adjust his pricing for the market and eventually lost his business. At this point in his life, Reichardt had a family to support and therefore needed to find another form of income quickly.

The publicly listed company, Sea Breeze Power Corp., had its origin in 1990 through a private company called Powerhouse Developments. This company eventually went public through a reverse takeover (RTO), and the new name for the public company was Powerhouse Energy Inc. Powerhouse Developments became a wholly owned subsidiary of the parent company and was purely devoted to developing run-of-river hydroelectric projects. Paul Manson personally became involved through helping the company with the RTO. The original private company, Powerhouse Developments, had been a partnership between a California Investor out of the Central Valley, named Chase Hoffman, and a local man from British Columbia. They had met each other through the real estate business in Hawaii. During this time, Manson was working with the company as a consultant. However, in 2000, there was a falling out between Hoffman and his partner, so Manson was asked to move from purely being a consultant with the company to taking on the title of Corporate Secretary. He was effectively the General Manager, and along with a hydroelectric engineer (Bill Harmond) who had been hired, took over management of the company. Hoffman remained an investor, and Harmond and Manson formed the new management team.

A growing academic literature seeks to define corporate environmental management (CEM) and understand its implications for corporate behavior and environmental outcomes. However, the research questions are of more than just academic interest, as the answers have immediate consequences for business strategy, environmental quality, and the relationship between CEM and public policy. How does CEM differ from more general notions of corporate management? Are there incentives for CEM that go beyond improving the bottom line? Does CEM produce genuine improvements in environmental performance, or is it simply a public relations form of “green-washing”? To what extent, if any, does CEM serve as a complement or substitute for more centralized forms of environmental policy? Questions such as these are the focus of theoretical and applied research in a variety of disciplines, including, but not limited to, economics, sociology, psychology, political science, management, and industrial ecology.

Nobel laureate Ronald Coase (1937) was one of the first modern economists to focus attention on the ways in which firms reduce transaction costs by supplanting market contracts with hierarchical, internal management decisions. Coase and later Cheung (1983) explain that firms save on the costs of discovering prices and on the costs of measuring and monitoring the contribution of inputs to the production process. Still, however, their explanations of why a firm exists beg the question of where the entrepreneur fits into the firm.

In the 1930s, chlorofluorocarbons (CFCs) were developed as safe, non-reactive alternatives to toxic and explosive refrigerants and propellants such as ammonia, chloromethane, and sulfur dioxide. American engineer Thomas Midgley famously demonstrated these properties by inhaling Freon (CFC-12) and blowing out a candle with it. He was presented with many awards for his discoveries, such as the Perkin, Priestley, and William Gibbs medals. In today's jargon, CFCs might have been called an eco-innovation, because they provided solutions to several environmental issues. However, CFCs solved environmental problems by creating others. In 1974, Sherwood Rowland and Mario Molina published their pathbreaking research that demonstrated CFCs were depleting the ozone layer. In 1989, the Montreal Protocol, which regulates a global phaseout of CFCs, entered into force. A few years later, in 1995, Rowland and Molina received the Nobel Price in Chemistry. The new substitutes for CFCs, hydrofluorocarbons (HFCs), have no known effects on the ozone layer but are extremely potent greenhouse gases (GHGs) and thus subject to the Kyoto Protocol.

We studied two eco-entrepreneurial companies to determine whether they had an internal focus on environmental protection. To answer this question, we surveyed employees to understand their predisposition toward the natural environment as well as their willingness to propose eco-initiatives aimed at improving the company's environmental performance and/or reducing its environmental impacts. We report our findings for these two case studies, and using our small sample of employee data, develop a conceptual model for the eco-entrepreneurial context. We suggest future research.

Eco-entrepreneurship has emerged as an intensively debated topic over the last few years with a recent upsurge of writing in the field. At the same time, the debate on this topic has moved increasingly from journals focused on environmental management (Schaltegger, 2002) to mainstream business journals (Cohen & Winn, 2007; Dean & McMullen, 2007). The topic of eco-entrepreneurship lies at the nexus of innovation, concern for the environment, and entrepreneurship. Yet, most contributions to date remain conceptual or focus on reporting case studies (Schaltegger, 2002; Schaltegger & Petersen, 2001). Rarely found are results and analyses of larger-scale empirical surveys on the topic, and it is this gap in the literature that this chapter addresses.

Research universities are recognized as primary sources of the knowledge essential to the development of innovative solutions to a wide range of economic, social, and ecological problems that affect humankind. This utilitarian function of American higher education dates back to the creation of land grant institutions with the passing of the Morrill Act of 1862 (Lucas, 1994; Veysey, 1965). The prominent higher education historian John R. Thelin (2004) described the importance of this land grant legislation by stating, “Its institutional legacy was the accessible state college and university, characterized by a curriculum that was broad and utilitarian” (p. 76). Shifts in the research paradigm that followed the World War II placed further emphasis on applied research that was to be “directed toward some individual or group or societal need or use” (Stokes, 1997, p. 8). Most recently, the utilitarian function of higher education has become closely linked to the commercialization of knowledge and discovery. Specifically, the passing of the Bayh-Dole Act of 1980, which allowed colleges and universities to take ownership of intellectual properties created in part or in full through federal funding, allowed the transfer of knowledge from higher education to society through market channels to become standard practice.

Cover of Frontiers in Eco-Entrepreneurship Research
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Advances in the Study of Entrepreneurship, Innovation and Economic Growth
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Emerald Publishing Limited
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