Sustainable entrepreneurship: Entrepreneurial orientation and sustainability decision tradeoffs: The case of sustainable fashion firms
Findings from researchers at Amsterdam School of International Business and Católica Lisbon School of Business & Economics show that the entrepreneurial orientation (innovativeness, proactiveness, risk taking) of a firm/manager effects its sustainability orientation (economic, social, environmental or a combination thereof) and its related tradeoff decision making.
Amsterdam, Netherlands and Lisbon, Portugal, November 1, 2017 – More and more managers are faced with decision making tradeoffs between sustainability and entrepreneurial/firm growth. However, very little is known about sustainable entrepreneurs, the dual orientation that drives them and the logics they use in deciding between competing priorities. Two researchers at leading international business schools, Amsterdam School of International Business and Católica Lisbon School of Business & Economics, explored the paradox of sustainable entrepreneurs that are oriented on one side towards entrepreneurial growth and on the other side towards sustainable development. Furthermore, they give an insight into sustainability decision making and how entrepreneurial orientation effects sustainability decision tradeoffs.
With the fashion/apparel industry a critical industry was chosen because it faces sustainability issues in all three sustainability dimensions. Economically, the competitive pressure to reduce prices is particularly strong. Ecologically, textile production has various impacts on the environment. And also socially, it is difficult for firms to manage working conditions of suppliers due to the fragmentation of the supply chain and widespread use of subcontracting. Furthermore, trends have shortened product life cycles, which led to increasing consumption and excess waste. These conditions have supported the emergence of many niche “sustainable fashion” firms, providing an excellent setting for this study. Scholars suggest that if fashion consumption grows at its current rate, it poses threats to the quality of life for future generations. For sustainable fashion firms, sustainability is a strategic asset but at the same time might inhibit them from growth.
From the data, three types of profiles of sustainability decision making were derived: singular, flexible and holistic.
The singular profile suggests that in making sustainability decision tradeoffs there is a conviction to prioritizing one sustainability dimension above the others. Firms using this kind of singular sustainability decision making are bound by their values and strictly adhere to their principles. Further, they are mission-driven rather than profit-driven and extend theory by showing that sustainable entrepreneurs are more risk taking and proactive individuals and firms. They for example accepted lower profitability or growth compromising the economic dimension. According to the data the focus was on the social dimension like in the following example.