What Is Sustainable Entrepreneurship?

I have been wrestling with the emerging field of sustainable entrepreneurship, which has its roots in the concept of sustainable development that grew out of the conservation and environmental movement of the 1970’s, so I undertook a short analysis to try to understand the concept further. A Google Search of sustainable development yields 30,600,000 web sites, references and/or citations posted on the internet suggesting significant interest in all aspects of what constitutes ‘sustainable’. The Merriam-Webster on-line dictionary defines ‘sustainable’ as “…relating to, or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged; … or relating to a lifestyle involving the use of sustainable methods…” The key phrase is ‘not depleted’ which I have indicated in bold type. This was and continues to be the essence of sustainability which has produced a plethora of social economic movements, none as more popular as sustainable development. Wikipedia [I’m not a fan of this web site, however it does serve a purpose in providing quick accounting of a subject] explains that sustainable development ties together concern for the carrying capacity of natural systems; that is the load capability of nature to support all life, i.e., natural capital, and human challenges of economic growth.

Dating from the 1970’s when the concept emerged in reference to establishing limits on developed growth, the term “sustainability” was and is used to blend ecology and economic growth, with terms such as ‘limits to growth’ and ‘steady state economy’ contributing to the environmental movement that caused wholesale changes in building and zoning codes across the nation relating to economic development, particularly land development. The idea that we have unlimited resources to be developed was challenged by the newer idea of limited resources that must be wisely developed in concert with nature has resulted in competing forces which have shaped our economic development over the last forty years. Practitioners of sustainable development consider it to have three elements: environmental sustainability, economic sustainability and sociopolitical sustainability. Special interests groups on both sides of the spectrum have laid claim to this concept to perpetuate their own agendas. However, a common sense approach, in my mind, has always been the preferred, particularly when we almost unanimously agree in today’s world that there is a natural limit to resources which must be recognized. With that said, I firmly believe that the free market has and will continue to be the best place in which to allow the blend of economic development with sustainable development to occur.

An example of how the free market is used to accomplish sustainability is the work pioneered by the Santa Fe Institute’s Dr. Brian Arthur who applied natural principles of biology to the study of economics, in particular economic growth; which has become known as ‘The Santa Fe Approach’. Arthur was very interested in explaining how economic markets work, how business forms, in terms the natural world, and how the human organization, in order to grow, must adapt and assimilate to its environment, constantly adjusting to changes. The ‘The Santa Fe Approach’ was a leading concept that helped to pave the way for a new field in economics called ‘ecological economics’. The concept of sustainable development has been furthered enriched by the new field of ecological economics popularized by Dr. Robert Costanza who founded the International Society for Ecological Economics (ISEE) and carried out much of the founding research at the University of Maryland.

The objective of ecological economics is to ground economic thinking and practice in physical reality, especially in the laws of thermodynamics and biological systems. It accepts as a goal the improvement of human wellbeing through economic development, and seeks to ensure achievement of this through planning for the sustainable development of ecosystems and societies. Ecological economics distinguishes itself from neoclassical economics primarily by the assertion that economics is a subfield of ecology, in that ecology deals with the energy and matter transactions of life and the Earth, and the human economy is by definition contained within this system. This system is defined as natural capital, which consists of all non-renewable resources such as oil, coal, gas, and minerals, and renewable resources such as ecosystems that comprise the planet, in both quantitative and qualitative terms. It involves such terms as ‘carrying capacity’ which refers to the ability of nature to support human activities, and goes to the center of what sustainable development is, and from which emerged sustainable entrepreneurship.

A recent white paper entitled “Sustainable Entrepreneurship in SMEs. Theory and Practice” by Evy Crals and Lode Vereeck, defined sustainable development as the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, local communities, the society and the world at large as well as future generations. From sustainable development, according to this white paper, came sustainable entrepreneurship defined as the continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life of the workforce, their families, the local and global community as well as future generations. All right then; sustainable entrepreneurship can be considering a more holistic approach to undertaking a business venture. But how does this relate to the true essence of entrepreneurship?

The Merriam Webster Dictionary defines an entrepreneur as one who organizes, manages and assumes the risk of a business or enterprise. Often we use business and enterprise interchangeable to refer to the same thing. The word ‘entrepreneur’ comes from the French word ‘entreprendre’, which means “to undertake”. In a business context it means to undertake a business venture. Entrepreneurship and small business are typically used synonymously, interchangeably and presented as one in the same. Actually, entrepreneurship differs from small business in four critical ways: amount of wealth creation, speed of wealth accumulation, risk and innovation. [Reference: See the Green$: Achieving Your Entrepreneurial Dream, LOGOS Press, January 2011.]

In the case of acceptable definitions of sustainable entrepreneurship, where reference is made to the common good, I would like to clarify that sustainable entrepreneurship cannot and should not be about establishing some kind of social common good, as in a communal framework associated with planned economies such as the former Soviet Union, East Germany, Cuba, Venezuela and Socialists African counties. It is an oxymoron to do so. In contrast, the common good in a free market context, is about job creation which produces disposal income which begets increased demand for goods and services. This then is accompanied by a multiplier effect that allows a dollar to flow through the economy something like 2 times or more, which further begets additional demand for goods and services, which further increases disposal income, resulting in increased corporate revenue for re-investment, capital accumulation, and business growth. This compound economic activity produces increased state and federal corporate and personal income tax revenue, which allows for infrastructure investment in public works such as roads, bridges, railways, dams, and national lands like parks, wetlands, mountain ranges, and the like.

Rather, in my view, sustainable entrepreneurship is the process of sustaining a level of entrepreneurial development as to create a paradigm shift in economic activity such that national GDP, job growth, capital investment, technology advancement, and quality of life is unmatched, unsurpassed and unequalled. I realize this seems a bit altruistic and sounds like I am talking about Utopia. But I am not. We can and should strive through local, state and national efforts to seek to establish an economic mentality that is strategically focused on entrepreneurship and authentic organic economic growth at the community level across America. We can and should incorporate the concept of sustainability into the free market consciousness and allow the consummate entrepreneur, who seeks wealth creation within a tremendous risk-reward environment, through sustained invention and innovation, to achieve success. We can least forget that it was, has and will be entrepreneurial development that made our country great. We need so more of that now.

Source by Sandy Graham

Diana McCalpin is an accountant who manages a Certified Public Accounting Practice in Laurel, Maryland which performs audit, accounting and tax services to customers. She loves to share information with clients to help them grow their businesses and be profitable.

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