The past decades have witnessed a growing interest and attention to the role of business in driving sustainability in general (Bansal and Roth, 2000, Hart, 1995, Porter and van der Linde, 1995 and Shrivastava, 1995), and to the ability of entrepreneurs to promote environmental welfare in particular (Anderson and Leal, 2001, Dean and McMullen, 2007 and Larson, 2000). This interest has brought with it the emergence of a variety of academic and popular areas of research—including the subject of “eco-preneuring” (Bennett, 1991, Blue, 1990 and Kivirist and Ivanko, 2008) and environmental entrepreneurship (Anderson and Huggins, 2008, Cohen and Winn, 2007 and Dean and McMullen, 2007)—which address the pursuance of opportunities for profit that simultaneously deliver environmental benefits. Within this research, the concept of environmental entrepreneurship was introduced and defined as “the process of discovering, evaluating, and exploiting economic opportunities that are present in environmentally relevant market failures” (Dean and McMullen, 2007; 58). This conceptualization points to the important role of entrepreneurs in mitigating market failures and promoting social welfare through the exploitation of environmentally responsible opportunities. To date, this perspective offers a foundation for explaining environmental entrepreneurship primarily from an economic lens. Yet we know little about how social dimensions such as social norms can further explain the emergence of entrepreneurship, and specifically, environmental entrepreneurship.
In this study, we use the concept of social norms, defined as unwritten rules of conduct of a group (Elster, 1989), as a way to study how private, decentralized institutions (Ingram and Silverman, 2002) impact the creation of environmentally responsible new ventures. Social norms could shed light on how group-level values impact the individual-level decision-making of entrepreneurs. In addition, we study how social norms influence the ability of state-sponsored centralized institutions to foster or inhibit entrepreneurial action by means of firm foundings. In conducting this research we make several contributions. First, we apply the concept of social norms to the study of entrepreneurship, its relationship with centralized government institutions, and the implications of such on entrepreneurial activity. Second, we enhance and expand the emerging literature in environmental entrepreneurship by identifying and empirically examining the role of specific social norms that explain the emergence of environmentally responsible firms. While work in environmental entrepreneurship has addressed the impact of social movements in environmentally responsible firm foundings (Sine and Lee, 2009), this literature has been mostly concentrated on the economic factors that drive entrepreneurial action towards environmental welfare ( Anderson and Leal, 2001, Cohen and Winn, 2007 and Dean and McMullen, 2007).
Third, we raise important implications for the study of institutions and the natural environment (Anderson and Leal, 1992, Atkinson and Tietenberg, 1991, Dorfman Dorfman, 1993 and Ostrom, 1990). While research in institutions recognizes both the usefulness of government intervention (Atkinson and Tietenberg, 1991, Bator et al., 1958 and Dorfman Dorfman, 1993) as well as socially determined institutions for the encouragement of environmentally responsible behavior (Ostrom, 1990 and Oses-Eraso and Viladrich-Grau, 2007), we know little about the co-dependencies across these different types of institutions and their collective effect on environmental outcomes. Our approach helps to address this gap by concurrently examining how these different types of institutions influence environmentally relevant economic activity.
In the following section we develop our theoretical motivation. We briefly describe the context of environmental entrepreneurship. We then review the literature on the impact of public, centralized institutions (Ingram and Silverman, 2002) on entrepreneurial action and advance hypotheses regarding the impact of these institutions on environmental entrepreneurship. The literature on social norms is then reviewed. From this basis, we develop and test a model predicting firm foundings in environmental ventures based on the interaction of public, centralized institutions (state-level incentives) with private, decentralized institutions (social norms). We conclude with a discussion of our results and suggestions for future research.
While the influence of traits and situational factors have largely been dismissed as drivers of entrepreneurship, an examination of how norms impact levels of entrepreneurship can help us understand not only why some individuals choose to become entrepreneurs, but why they choose specific businesses to initiate. We may need to start asking not only what predicts entrepreneurship, but what predicts entrepreneurship which creates societal benefits (Baumol, 1990). This study offers a glimpse of the power social norms have to influence not only entrepreneurial action, but also the efficacy of policy decisions which seek to create economic and environmental benefits for society. Our hope is that through our empirical work, we will motivate others to join us in the examination of how the pervasive social norms around us provide guardrails for the entrepreneurial journey.
