Motives for environmental entrepreneurs

The International Journal of Entrepreneurial Behaviour and Research (IJEBR) have just published a new edition (Vol. 16, No. 4).  There are papers on: entrepreneurial competencies and their impact on likely success which is focused on entrepreneurs in Malaysia; on the motives of environmental entrepreneurs; on the role of reflection in innovation; and a focus on the barriers small firms face when trying to raise finance.  The first paper of particular practical interest is the one that focuses on the environmental entrepreneur.  It is written by two professors from the University of Otago in New Zealand.  The authors use a  term the ‘ecopreneur’, which apparently has been around for some time within the academic field.  It is basically defined as businesses and entrepreneurs who are ecologically or environmentally focused in their approach to their businesses.  Such entrepreneurs can still make profits but are interested in new businesses founded on the principle of sustainability.  The example the authors offer is Anita Roddick the founder of the Body Shop but one can find other examples at the organization the Environmental Entrepreneur and a good example would be Telsa founders Martin Eberhard and Marc Tarpenning.

The study then progresses by explaining that ‘ecopreneurs’ may be a subset of entrepreneurs because their motivations for becoming an entrepreneur might differ and be driven somewhat by ecological or environmental values.  Given that one could argue that we are in the midst of a new industrial revolution or indeed environmental industrial revolution the paper takes an important and interesting stance.  The study looks at 14 case studies of companies that have meet the criteria set out of the authors.  They propose looking at the prior research that these entrepreneurs may be driven by: strong ethical reasoning; a desire to make the world a better place; and have a critical role in displacing current social norms, as well as, advancing new economic business concepts.

When looking at their data the researchers found that environmental entrepreneurs have five common motives that may drive their decision-making.  These were: green values; the identification of a gap in the market; making a living; being their own boss; and, a passion for the industry, product or service.  Although these motives do not vary much from those one would expect of mainstream entrepreneurs the authors conclude that green values seem to be driving the reason why these entrepreneurs start businesses rather than other common motives such as profit making and a need for independence. 

So what are the practical conclusions one can draw from this paper?  It seems the main message is a common one in the entrepreneurship field.  If you have a passion for something and believe in something strongly enough (for example having green values) then it can become a very supportive driving force behind your efforts and the necessary tenacity you will require to be successful at your endeavor.  If you lack the passion or interest then perhaps you really shouldn’t try to start a business in the area you are considering.

Trade credit and entrepreneurship

As this blog is dedicated to entrepreneurship and as I read the published journals in the subject it seemed reasonable to start reporting on this research and what it means in practical terms for entrepreneurs.  The first article is published in the most recent edition of the International Small Business Journal (Vol. 28; No. 3) by two professors from the University of Murcia in Spain.  It looks at what influences the availability of trade credit and studies over 47,000 small businesses across Europe (Belgium; Finland; France; Greece; Spain; Sweden; UK). 

The paper runs some rather complex models on a large dataset and certainly seems like a robust piece of work.  We all know that trade credit is important for small firms and this research confirms its value as a means of supporting the viability of businesses.  During recessionary periods trade credit, like other forms of credit, can decline and this can negatively impact entrepreneurial businesses that are already struggling.  They show little variation between different European countries in terms of the availability of trade credit, which contradicts findings of other studies.  It shows that firms who have greater access to capital markets are more likely to grant their customers credit.  This means that larger more solvent firms are more likely to be more generous when working with their counterparts.  It seems that access to external financing is often leveraged on behalf of smaller firms by larger firms so as to help them purchase products and services.  Also firms with higher profit margins and firms facing a reduction in sales are more likely to provide trade credit.  Firms also provide more credit to other firms when they appear to offer the potential to grow and hence purchase more goods and services.

What does this mean though for your typical entrepreneur?  Well it appears it would be wise to choose larger suppliers and check out their ability to borrow, as their creditworthiness may impact on the credit terms they are willing to offer you.  It may also suggest that those great credit terms might in fact betray a supplier who is making wonderful profit on what they sell you.  You might even want to bargain on price a little harder and worry a little less about the credit; ultimately those nice credit terms might be costing you.  Finally, if you’re growing, or can at least make the supplier think you are likely to grow, you will ultimately become a more valuable customer and get better credit.  Frankly, if you are growing rapidly your cash flow challenges may well demand those improved terms.  None of this is rocket science but it is nice to have a large well researched study confirming the logic behind some of these issues.

Veterans and entrepreneurship

At first consideration the contrast between the structured life of the military and the freewheeling life of the entrepreneur do not seem to have much in common.  When looking back in history though, you can find successful entrepreneurs who had military backgrounds. 

The late George Steinbrenner (1930-2010), for example, was a second lieutenant in the US Air Force before leading American Ship Building and then owning the New York Yankees[i].  According to the Brookings Institute[ii] service in the military and the pursuit of economic profit have not always been separate.  In the 1600s, in a corporate sense, war was the biggest industry in Europe.  Prominent entrepreneurs like Louis de Greer, an Amsterdam capitalist, and Count Ernst von Mansfeld raised entire armies and navies that they leased out.  Even today the industrial military complex is a major undertaking accounting for over $500 billion a year in spending and, in a way, we still have private armies for hire (e.g. Xe Services LLC aka Blackwater) or in modern language ‘security contractors’. 

The connection between the military and entrepreneurship has been noticed by those trying to promote entrepreneurial activity. Veteran owned businesses account for around 14.8% of US small businesses, 22% of veterans purchase or start businesses and there are many programs to support their efforts.   

As one example the Entrepreneur magazine recently profiled the Entrepreneurship Bootcamp for Veterans with Disabilities[iii], which is designed to teach veterans how to become entrepreneurs and to help them overcome particular challenges.  Other sources of help include: the Veterans Entrepreneurship Task Force and the Small Business Administration (SBA), which has fast track loans and specific support[iv].  But this leads to an obvious question which is: why do veterans make good entrepreneurs?

It seems there may be some behavioural links between military life and entrepreneurship.  Although the military provides much structure many veterans, particularly combat veterans, make decisions in the face of significant ambiguity and uncertainty.  Dealing with a chaotic situation, knowing that the first plan might not work and being willing to adapt are essential characteristics.  Entrepreneurship is very similar.  You must make the right judgement, at the right time, quickly, with inadequate information and adapt if things are not working.  Likewise military personnel face significant risks and must have some tolerance for risk.  If you are faced with decisions that may lead to yours or somebody else’s death or injury then placing your entire livelihood on the line in a venture may not seem that risky.  Even the military tempo of long periods of boredom followed by sudden periods of frantic effort mimic the tempo of entrepreneurial life, where the next business crisis is just around the corner.  Being in a crisis drives adrenaline and can be exciting.  Following this type of experience with a mundane job may simply lack the adrenaline rush someone is used to.  Military personnel must also make do with the resources available while getting the job done.  Again entrepreneurship is similar.  The entrepreneur must bootstrap; barter, beg and borrow whatever resources she or he can in order to fulfil new orders.  In the military it is not unusual to work and lead small teams; a very similar challenge to leading and managing the typical small business.  So it seems that veterans may be well placed to make good entrepreneurs but before you embark on this road make sure entrepreneurship is right for you because there are also plenty of unsuccessful veteran entrepreneurs.  Being a veteran will not ensure success but it will help you deal or even love the entrepreneurial life.        






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