ORIGINAL PAPER
Sustainable Entrepreneurship: The Role of Perceived Barriers
and Risk
Brigitte Hoogendoorn
1
•
Peter van der Zwan
1,2
•
Roy Thurik
1,3
Received: 18 July 2016 / Accepted: 13 July 2017 / Published online: 8 August 2017
The Author(s) 2017. This article is an open access publication
Abstract Entrepreneurs who start a business to serve both
self-interests and collective interests by addressing unmet
social and environmental needs are usually referred to as
sustainable entrepreneurs. Compared with regular entre-
preneurs, we argue that sustainable entrepreneurs face
specific challenges when establishing their businesses
owing to the discrepancy between the creation and appro-
priation of private value and social value. We hypothesize
that when starting a business, sustainable entrepreneurs (1)
feel more hampered by perceived barriers, such as the
institutional environment and (2) have a different risk
attitude and perception than regular entrepreneurs. We use
two waves of the Flash Eurobarometer survey on
entrepreneurship (2009 and 2012), which contains inf or-
mation on start-up motivations, start-up barriers, and risk
perceptions of approximately 3000 (prospective) business
owners across 33 countries. We find that sustainable
entrepreneurs indeed perceive more institutional barriers in
terms of a lack of financial, administrative, and informa-
tional support at business start-up than regular entrepre-
neurs. Further, no significant differences between
sustainable and regular entrepreneurs are found in terms of
their risk attitudes or perceived financial risks. However,
sustainable entrepreneurs are more likely to fear personal
failure than regular entrepreneurs, which is explained by
their varied and complex stakeholder relations. These
insights may serve as an important signal for both gov-
ernments and private capital providers in enhancing the
institutional climate.
Keywords Barriers Flash Eurobarometer Institutional
environment Market failures Risk Sustainable
entrepreneurship
Introduction
Entrepreneurship and ethical behaviour are closely related.
For instance, entrepreneurial qualities such as creativity,
novelty, and sensitivity are consider ed to be similar to the
qualities required for moral decision making (Buchholz
and Rosenthal 2005). In addition, entrepreneurs face myr-
iad ethical dilemmas when running their ventures (Han-
nafey 2003), and they increasingly address ethical issues
when starting ventures (Quinn 1997). Entrepreneurs who
address ethical issues challenge our assumptions about self-
interests and collective interests—or the pursuit of eco-
nomic gains and the drive to cater to the needs of others.
Although the mainstream entrepreneurship literature shows
a strong bias towards rational self-interest and the pursuit
of private economic gains (Dacin et al. 2010; Van de Ven
et al. 2007), the occurrence of other-regarding behaviour
has a long tradition in ethics research (Jones et al. 2007;
Santos 2012). This paper focuses on so-called sustainable
entrepreneurs, i.e. entrepreneurs who start a business to
serve self-interests and collective interests by addressing
unmet social and environmental needs.
Sustainable entrepreneurs are increasingly acknowl-
edged for addressing current social and environment al
& Brigitte Hoogendoorn
bhoogendoorn@ese.eur.nl
1
Erasmus School of Economics, Erasmus University
Rotterdam, P.O. Box 1738, 3000 DR Rotterdam,
The Netherlands
2
Department of Business Studies, Leiden Law School, Leiden
University, 2311 ES Leiden, The Netherlands
3
Montpellier Business School, 2300 Avenue des Moulins,
34185 Montpellier-Cedex 4, France
123
J Bus Ethics (2019) 157:1133–1154
DOI 10.1007/s10551-017-3646-8
problems (Hockerts and Wu
¨
stenhagen 2010; York and
Venkataraman 2010; Zahra et al. 2009). These socially and
environmentally conscious individuals fulfil a vital role in
society because they offer solutions to complex societal
problems that are overlooked, ignored, or unsuccessfully
addressed by governments, incumbent businesses, or civil
society organizations (Elkington and Hartigan 2008; Kerlin
2009; Nicholls 2006; Nyssens 2006; Zahra et al. 2008).
However, the understanding of sustainable entrepr eneurs is
lacking. For instance, the way in which sustainable entre-
preneurs establish their businesses and experience diffi-
culties during the start-up process is far from completely
understood.
In comparison with regular entrepreneurs, sustainable
entrepreneurs are considered to face specific challenges
when establishing their businesses. These challenges may
arise because of the discrepancy between the creation of
private value and the creation of social value (Dean and
McMullen 2007; Groot and Pinkse 2015; Mair and Martı
´
2006; Pacheco et al. 2010; Santos 2012). Th e present paper
focuses on these presumed challenges and analyses whe-
ther sustainable entrepreneurs perceiv e more barriers and
risks than regular entrepreneurs when they set up a busi-
ness. The present study thus focuses on the creation of new
ventures. The creation of new ventures—in addition to
their growth and survival—is considered by policymakers
to be a key element in economic development (Audretsch
and Thurik 2001, 2004).
Regarding barriers, we analyse the degree to which
sustainable entrepreneurs feel supported or hampered by the
institutional environment when starting their businesses.
The dimensions of the institutional environment comprise
the perceived lack of financial resources, the perceived
degree of complexity of administrative procedures, and the
perceived lack of start-up information. Because sustainable
entrepreneurs need to challenge existing rules, public pol-
icy, norms, and legislation (Dean and McMullen 2007;
Hockerts and Wu
¨
stenhagen 2010; Meek et al. 2010;
Pacheco et al. 2010), we expect them to have more negative
perceptions about financial, administrative, and informa-
tional support than regular entrepreneurs.
Concerning the risks, we examine the different types of
risk that sustainable and regular entrepreneurs may fear.
Entrepreneurs are risk takers; however, researchers have
argued that different types of entrepreneurs face different
types of risks (Block et al. 2015; Shaw and Carter 2007).
For example, Shaw and Carter (2007) suggest that social
entrepreneurs fear personal risks of a non-financial type,
such as the risk of losing local credibility or their network
of personal relationships. However, evidence on the dif-
ferences between sustainable and regular entrepreneurs
regarding the types of risk that they fear is lacking. The
present paper distinguishes between finance-related risk in
terms of possible income loss and bankruptcy and non-
finance-related risk in terms of personal failure. In addition,
we compare sustainable and regular entrepreneurs in terms
of their willingness to take risks.
In sum, the present study addresses the call to explore
the additional complexities of sustainable entrepreneurship
(Cohen and Winn 2007). To do so, we focus on the per-
ceived barriers and risks of individuals who have recently
made the decision to start a business, i.e. those who are
actively taking steps to start a business and those who have
been owning-managing a business for fewer than three
years. The novelty of the present rese arch is expressed in
terms of a few important contributions. First, we add to
research focusing exclusively on sustainable entrepre-
neurial activity by drawing a comparison between sus-
tainable entrepreneurs and regular entrepreneurs in terms
of the perceived complexities at business start-up. Differ-
ences in perceived barriers and risk corroborate the
importance of developing different support programmes for
entrepreneurs who are driven to cater to the needs of others
compared with entrepreneurs who focus on the pursuit of
self-interests. Second, we address heterogeneity in different
types of barriers and risks. Our findings provide further
evidence that different types of entrepreneurs perceive
certain types of risk differently. In particular, the percep-
tion of the risk of personal failure seems to be important in
the context of sustainable entrepreneurship. Third,we
extend current knowledge on sustainable entrepreneurship
by using large-scale and internationally comparable data.
The use of such data decreases the void in existing rese arch
in the area of sustainable entrepreneurship where empirical
studies are scarce.
The data that are used for this research were obtained
from two waves of the Flash Eurobarometer survey on
entrepreneurship (2009 and 2012). This dataset contains
information on the start-up motivations, perceived entre-
preneurial barriers, and risk attitude s of approximately
3000 individuals across 32 European countries and the
USA who are in the process of starting a business or who
have just started a business.
The results of this research support the hypothesis that
sustainable entrepreneurs have more negative perceptions
of financial, administrative, and informational support at
business start-up. Moreover, we do not find any noteworthy
differences between regular and sustainable entrepreneurs
in terms of their risk attitudes and the financial risks that
they perceive when running their businesses. Finally, the
evidence shows that sustainable entrepreneurs have a
greater fear of personal failure than regular entrepreneurs.
The paper is structured as follows. The next section
focuses on the background literature and formulates the
hypotheses. Next, the data and method are discussed, and
the regression results are then presented and discussed. The
1134 B. Hoogendoorn et al.
123
paper ends with a conclusion and avenues for further
research.
Background and Hypotheses
This section starts with a conceptualization of sustainable
entrepreneurship and argues why sustainable entrepreneurs
face additional challenges when starting a business com-
pared with regular entrepreneurs. Subsequently, hypotheses
are formulated in terms of perceived barriers and perceived
risk.
Sustainable Entrepreneurship
Entrepreneurship without the adjective ‘sustainable’ is
already a complex concept. It refers simultaneously to a
type of behavi our concentrating on the perception and
creation of new economic opportunities (behavioural
notion of entrepreneurship) and to the ownership and
management of individuals with respect to a business on
their own account and risk (occupational notion of
entrepreneurship). Entrepreneurial behaviour may concern
new business creation, but it can also occur in an existing
firm, which is referred to as intrapreneurship or corporate
entrepreneurship. Individuals or entrepreneurs may con-
cern the self-employed, the (managerial) business owner in
an occupational sense, the independent entrepreneur, and
the intrapreneur. Capturing all these aspects, Shane and
Venkataraman (2000) define entrepreneurship as ‘‘… the
scholarly examination of how, by whom and with what
effects opportunities to create future goods and services are
discovered, evaluated and exploited’’ (p. 218). By inves-
tigating the perceived barriers and risk of business owners,
this research can be positioned within the occupa tional
notion of entrepreneurship.
In line with the definition of Shane and Venkataraman
(2000) as provided above, the nascent field of sustainable
entrepreneurship refers to ‘‘the discovery, creation, and
exploitation of entrepreneurial opportunities that contribute
to sustainability by generating social and environmental
gains for others in society’’ (Groot and Pinkse 2015, p. 634).
Sustainable entrepreneurs are motivated to have a positive
impact on complex and often intertwined social and eco-
logical problems, such as climate change, nuclear radiation ,
unequal access to healthcare and education, poverty, and
long-term unem ployment. More broadly, they are moti-
vated to contribute to sustainable development, which refers
to development that ‘‘meets the needs of current generations
without compromising the ability of future generations to
meet their own needs’’ ((WCED) 1987, p. 43).
Sustainable entrepreneurship is closely related to the
fields of social, environmental, and institutional
entrepreneurship (Hockerts and Wu
¨
stenhagen 2010;
Schaltegger and Wagner 2011). To define the concept of
sustainable entrepreneurship, we first explore the com-
monalities and distinctions between social, environmental,
and sustainable entrepreneurship. Then, we address the
relation between sustainable entrepreneurship and institu-
tional entrepreneurship within the context of this paper.
First, what the fields of social, environmental,
1
and
sustainable entrepreneurship share is the drive of entre-
preneurs to create value for others by identifying and
seizing upon opportunities arising from problems in soci ety
that have been neglected or unsuccessfully addressed by
public, private, or civil society organizations (Schaltegger
and Wagner 2011; York et al. 2016). In this context, value
creation can be understood as an increase in the aggregate
utility for society’s members owing to entrepreneurial
activity (Santos 2012). Regardless of the type of
entrepreneurship, value creation at the societal level is a
necessary condition for the appropriation of value at the
firm level. Santos (2012) nevertheless argues that entre-
preneurs differ in the ultimate aim of value creation. In
contrast to regular entrepreneurs, the aim of social, envi-
ronmental, and sustainable entrepreneurs is not limited to
and not primarily focussed on the pursuit of value creation
for private gains; rather, it includes the pursuit to increase
quality of life to the benefit of others (Groot and Pinkse
2015; Santos 2012; Schaltegger and Wagner 2011). Hence,
the motivation of social, environmental, and sustainable
entrepreneurs deviates from the one-sided pursuit of profit
that tends to characterize the regular entrepreneur (Van de
Ven et al. 2007; Dacin et al. 2010).
Second, despite this commonality, the fields of social,
environmental, and sustainable entrepreneurship differ in a
number of aspects, including the relative importance of
objectives pursued and the disciplinary roots.
2
Social
entrepreneurs aim to create social benefits by addressing
societal problems such as increasing access to healthcare,
sanitation, and water in slum areas and revitalizing
deprived communities. The creation of soci al benefits tends
to dominate the generation of economic benefits, often in a
not-for-profit context (Thompson et al. 2011). According to
Thompson et al. (2011), the not-for-profit context can be
explained by the fact that the main disciplinary root of
social entrepreneurship is the non-profit and public sector.
Environmental entrepreneurs aim to protect our natural
environment or to recover our ecosystems (York and
1
‘‘Environmental entrepreneurship’’ is also referred to in the literature
as ‘‘ecopreneurship’’, ‘‘eco-entrepreneurship’’, or ‘‘green entrepreneur-
ship’’. We consider these concepts to be synonyms. To avoid any
confusion, we consistently use ‘‘environmental entrepreneurship’’
throughout this paper.
2
See, for an overview, Schaltegger and Wagner (2011) and
Thompson et al. (2011).
Sustainable Entrepreneurship: The Role of Perceived Barriers and Risk 1135
123
Venkataraman 2010 ). They do so in a for-profit context that
combines environmental and economic value creation
(York et al. 2016), with its disciplinary root being envi-
ronmental economi cs (Thompson et al. 2011). Sustainable
entrepreneurs explicitly focus on a combination of social,
environmental, and economic goals (Elkington 1997).
Shepherd and Patzelt (2011, p. 137) formulate this so-
called multiple bottom line as ‘‘the preservation of nature,
life support, and commun ity in the pursuit of perceived
opportunities to bring into existence future products, pro-
cesses, and services for gain , where gain is broadly con-
strued to include economic and non-economic gains to
individuals, the economy, and society’’. According to
Hockerts and Wu
¨
stenhagen (2010), sustainable
entrepreneurship emerged from the fields of social and
environmental entrepreneurship. Hence, sustainable
entrepreneurship is sometimes considered to also cover
social and environmental entrepreneurship. In the context
of this paper, as will be clarified in more detail in ‘‘Data’’
section, we consider entrepreneurs to be sustainable
entrepreneurs where the individual—at business start-up—
is driven by the social and envi ronmental needs of society.
Although we distinguish sustainable entrepreneurs from
social and environmental entrepreneur s, we draw on the
academic literature on these three relat ed fields to arrive at
our hypotheses.
Sustainable entrepreneurship and institutional
entrepreneurship are also related (Groot and Pinkse 2015;
Schaltegger and Wagner 2011; Shepherd and Patzelt 2011).
Actors who initiate change s by mobilizing resources
directed towards transforming institutional rules, who
support or destroy an existing institution, or who establish a
new one (DiMaggio 1988) are discussed as institutional
entrepreneurs (Battilana et al. 2009; Dacin et al. 2010;
DiMaggio 1988). The needs or ambition of sustainable
entrepreneurs to change prevailing rules, norms, and mar-
ket arrangements constitutes a link to institutional
entrepreneurship. As we elabo rate in the next subsections,
sustainable entrepreneurs typically operate in contexts in
which markets are characterized by imperfections and
failure that serve as a source of opportunities (Cohen and
Winn 2007; Dean and McMullen 2007) and that concur-
rently need to be overcome or changed (Groot and Pinkse
2015; Mair and Martı
´
2006). Su ccessful sustainable
entrepreneurs are able to exert significant influence on their
institutional environment and realize social, economic, or
political reforms. However, we argue that although they are
closely related, not all sustainable entrepreneurs can be
considered institutional entrepreneurs in the sense of
intentionally initiating and implementing divergent chan-
ges. Only entrepreneurs who initiate and actively imple-
ment changes in the institutional context as a direct or
structural goal of their activit ies are considered institutional
entrepreneurs (Battilana et al. 2009; DiMaggio 1988). In
addition, a more recent stream of business-related literature
on the sustainability-oriented transformation of society
investigates the co-evolutionary processes and contribu-
tions of multiple actors in the transformation of entire
industries, markets, and economies (Alvord et al. 2004;
Hansen and Schaltegger 2013; Hockerts and Wu
¨
stenhagen
2010). This stream of literature combines the emergence
and development of new entrants or so-called ‘‘bioneers’’
(Schaltegger and Wagner 2011
) and the change processes
of incumbent firms in becoming more sustainable. In
contrast to the more conventional approach of institutional
entrepreneurship, the sustainability-oriented transformation
perspective has a strong focus on the interplay of actors
(Burch et al. 2016; Schaltegger et al. 2016). The focus of
the present paper is nevertheless solely on new entrants,
who are actors of particular importance because they tend
to ‘‘kick off sustainability transformation’’ (Hockerts and
Wu
¨
stenhagen 2010, p. 488).
The next subsection provides a review of the current
understanding of the additional challenges faced by sustain-
able entrepreneurs compared with regular entrepreneurs.
Because sustainable entrepreneurship is an emerging research
field and because it is related to the fields of social, environ-
mental, and institutional entrepreneurship, we also draw on
these three fields to formulate our hypotheses.
Challenges to Sustainable Entrepreneurs
By exploiting opportunities arising from neglected social
and environmental concerns—and by combining the pur-
suit of self-interests and collective interests—the objectives
of sustainable entrepreneurs are broader in scope and more
complex than those of regular entrepreneurs (Groot and
Pinkse 2015; Dean and McMullen 2007). The additional
complexities are related to the discrepancy between the
creation and appropriation of private value and social value
(Santos 2012). In response to this disc repancy, we present
three arguments regarding why sustainable entrepreneurs
experience additional challenges during the start-up pro-
cess of their business than regular entrepreneurs.
First, sustainable entrepreneu rs typically expl oit
opportunities in markets that are characterized by imper-
fection and failure (Cohen and Winn 2007; Dean and
McMullen 2007; Groot and Pinkse 2015; Mair and Martı
´
2006; Pacheco et al. 2010). These market failures relate to
public goods, externalities, monopoly power, inappropriate
government intervention, and imperfect information.
Although the pursuit of these opportunities may serve
collective and private value creation (Cohen and Winn
2007; Dean and McMullen 2007), operating under cir-
cumstances of market failures in the context of environ-
mental and societal challenges poses additional challenges.
1136 B. Hoogendoorn et al.
123
On the one hand, such market failures relate to the char-
acteristics of natural resources and environmental issues
(Folke 1999), such as a lack of or unclear property rights,
the absence of prices for certain natural resources, and
exhaustibility, where use today has consequences for future
availability (Cornes and Sandler 1996; Dasgupta 1990). In
contrast, for example, well-defined property rights are
considered a prerequisite for value appropriation and thus
for entrepreneurial activity to occur (Van Stel et al. 2005).
Indeed, protecting the natural environment concerns a non-
excludable public good, resulting in low potential for value
capture. On the other hand, serving unmet social needs,
such as providing sanitation to slum areas and revitalizing
deprived communities, clearly limits the capacity in value
capture because beneficiaries tend to lack the means to pay
for the value creation (DiDomenico et al. 2010; Mair and
Martı
´
2006). In both cases, operating under circumstances
of imperfect markets poses additional challenges that need
to be overcom e by sustainable entrepreneurs at the incep-
tion and more established stages of their business.
Second, sustainable entrepreneurs need to initiate insti-
tutional change in order to realize changes to existing rules,
public policy, norms, and legislation (Dean and McMullen
2007; Hockerts and Wu
¨
stenhagen 2010; Meek et al. 2010;
Pacheco et al. 2010). The need to change existing institu-
tions in the realm of sustainable entrepreneurship is illus-
trated by Groot and Pinkse (2015) for clean-energy
technologies. Groot and Pinkse (2015) describe the devel-
opment of electric vehicles under circumstances of insuf-
ficient infrastructure and the introduction of renewable
energy facing competition from incorrectly priced regular
energy sources that are subject to subsidization. Groot and
Pinkse (2015) highlight the need for sustainable entrepre-
neurs to become active in the political arena to create
institutional change. Other authors also note that institu-
tional entrepreneurship should become part of sustainable
entrepreneurship (Schaltegger and Wagner 2011; Shepherd
and Patzelt 2011; Thompson et al. 2011).
Finally, a broad knowledge base is needed among sus-
tainable entrepreneurs because they work under circum-
stances of market imperfections (see our first point) in an
unfavourable institutional context (see our second point)
(De Marchi 2012; Marin et al. 2015). Sustainable entre-
preneurs must invest their resources in the acquisition of
external knowledge, cooperation, and the creation of
internal knowledge. Consequently, sustainable entrepre-
neurs must cope with more varied and more complex
stakeholder relations when working with private, public,
and civil society sectors (Marin et al. 2015; Nicholls 2006).
These findings stress the importance of strong networking
skills for sustainable entrepreneurs.
Overall, market imperfections, realizing institutional
changes, and a broader knowledge base engender
supplementary challe nges to the start, growth, and success
of sustainable entrepreneurs. We argue that these additional
challenges inherent within the exploitation of sustainable
opportunities affect entrepreneurs’ perceptions of barriers
and risks.
3
Hypothesis Formulation: Perceived Barriers
The section above describes how the drive for value cre-
ation at the societal level over value capture for private
gain complicates sustainable entrepreneurs’ process of
starting and operating their venture. Our second point in
our subsection ‘‘Challenges to sustainable entrepreneurs’’
particularly illustrates the need for sustainable entrepre-
neurs to create institutio nal change in the presence of
barriers. We theref ore expect sustainable entrepreneurs to
have more negative opinions about the entrepreneurial
institutional framework. Specifically, we expect sustainable
entrepreneurs to face more problems than regular entre-
preneurs in terms of financial and non-financial barriers
during start-up. We formulate a separate hypothesis for
each type of barrier below.
Perceived Financial Barriers
Barriers of a financial nature are often mentioned in the
related fields of social entrepreneurship (Dorado 2006;
Purdue 2001; Sharir and Lerner 2006; Zahra et al. 2009)
and environmental entrepreneurship (Groot and Pinkse
2015; Dean and McMullen 2007). Regarding social
entrepreneurship, several studies have stressed the diffi-
culties in attracting financial capital (Dorado 2006; Purdue
2001; Sharir and Lerner 2006; Zahra et al. 2009). For
example, a large-scale UK survey by the Social Enterprise
Coalition shows that access to financing is perceived as a
strong barrier to growth among social entrepreneurs (Leahy
and Villeneuve-Smith 2009). Several reasons explaining
the relative difficulty of obtaining financing that equally
relate to the business practice of sustainable entrepreneurs
to purposely establish activities in areas with limited value
capture potential have been propos ed (DiDomenico et al.
2010; Mair and Martı
´
2006)—an issue akin to our market
imperfection argument in our subsection ‘‘Challenges to
sustainable entrepreneurs’’. Although this is a strategic
choice made by such entrepreneurs, they have to address
other stakeholders in establishing and growing their ven-
tures. Such stakeholders are likely to have different
3
Although we hypothesize negative perceptions of barriers and risk
among sustainable entrepreneurs (see below), we also acknowledge
that sustainable entrepreneurs are dedicated and motivated to
contribute to sustainability. Hence, sustainable entrepreneurs may
be willing to overcome the challenges as indicated above, and hence,
their motivation may balance against the negative perceptions.
Sustainable Entrepreneurship: The Role of Perceived Barriers and Risk 1137
123
