TUM Management Insights

Against all odds: Realizing entrepreneurial solutions for ecological and social problems

Jakob Assmann, a passionate hiker, had a personal awakening while climbing a mountain in the Bavarian Alps. He says:“Climate change is not an abstract problem, which happens somewhere in the Artic. Actually, it is happening here in the South of Munich. You can experience it yourself, and it is really emotional when you see the ice changing and the glaciers retreating … ”. Triggered by this incident, he decided to become active, and make a contribution to the global challenge of climate change by establishing Polarstern, a sustainable energy provider with a global outreach. Realizing social and ecological value while making a profit is a challenging task. Sustainable entrepreneurs, however, seem to have found a way to balance the triple bottom line of ecological, social, and economic goals in a mutually beneficial way. To understand how sustainable enterprises come into existence, Prof. Dr. Frank-Martin Belz and Julia Katharina Binder have investigated how the entrepreneurial process of sustainable enterprises unfolds over time. Based on their process study, they came up with three key findings: First and foremost, ecological and social problems are potential sources of innovation and entrepreneurship. Second, aligning ecological and / or social value with an entrepreneurial opportunity is essential (and far from being an easy proposition). Thus, a key activity in the entrepreneurial journey is the translation of ecological and/or social goals into customer benefit. A case in point is Coffee Circle, an online shop selling fair trade and organic coffee directly from producers to consumers. Despite the motivation to tackle the social problem of unfair wages for coffee farmers, the co-founders of Coffee Circle put the customer at the heart of their business. They write, “In Germany, it is not sufficient to appeal to the bad conscience as a business base. The product has to be right. If the good cause is central, it will not work in the long term.” Besides price, the most important buying criterion for food in general and coffee in particular is taste, which is why Coffee Circle emphasizes the great taste of its various coffee blends. Third, the empirical results indicate that ecological, social, and economic goals are not integrated simultaneously. Instead, they tend to be integrated sequentially over time. The progressive order in the development process reduces the complexity of this challenging task, makes the integration and balancing process easier and more manageable. The findings have implications for students, entrepreneurs, managers and policy-makers alike, who are interested in pursuing entrepreneurial opportunities in the realm of sustainable development.

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