How environmental awareness and concern affect environmental entrepreneurial intent

Abstract

Environmental awareness and concern are implicit in virtually the entire environmental-entrepreneurship literature but typically not explicitly analyzed. To better understand what makes environmental entrepreneurs start their ventures, we need to understand those omnipresent variables. We therefore deconstruct environmental awareness and concern into different aspects, which we manipulate separately in two experimental studies. Our main finding is that key stakeholders' environmental awareness and concern are drivers of environmental entrepreneurship, as they signal to entrepreneurs that stakeholders are ready to support it. We thus identify a way of increasing environmental entrepreneurial intent in order to transform environmental problems into economic opportunities.

Executive summary

There is a growing belief among scholars and practitioners that environmental entrepreneurs can play a crucial role in addressing global environmental degradation by developing and providing innovative solutions that lead the way toward a more sustainable business world (Dean and McMullen, 2007; Hockerts and Wüstenhagen, 2010; Johnson and Schaltegger, 2019). A growing literature is investigating the drivers of such entrepreneurship (e.g., Muñoz and Cohen, 2018; Schaltegger, 2002; Shepherd et al., 2013; York et al., 2016), but two drivers — environmental awareness and concern — are typically only implicit in this literature, even though they are underlying most drivers that are investigated explicitly (e.g., Cohen and Winn, 2007; Dean and McMullen, 2007; Markman et al., 2019). Explicitly analyzing the role of environmental awareness and concern is crucial to better understand what makes environmental entrepreneurs start their ventures.

In this paper, we deconstruct environmental awareness and concern. The experimental method is ideally suited for that aim (Grégoire et al., 2019; Stevenson et al., 2020; Williams et al., 2019), as it allows us to manipulate several forms of awareness and concern in different experimental groups with slightly different pre-tested articles about an environmental problem. We then measure participants' intent to start a venture that addresses that problem, relative to their intent to start similar ventures that do not address the problem. In this way, we test the effect of the following types of environmental awareness and concern on environmental entrepreneurial intent (EEI): entrepreneurs' personal awareness, awareness of a solution to the problem, and awareness of other entrepreneurs addressing the problem; public awareness; entrepreneurs' own concern; public concern; customers' concern; and investors' concern.

The results indicate that especially customers' and investors' awareness of and concern about environmental problems increase entrepreneurs' intent to start environmental ventures. One explanation is that information about stakeholder concern, customers' willingness to buy from environmental ventures, and investors' willingness to invest in them increases the economic feasibility of such ventures and thus their business potential. This is in line with classic entrepreneurship theory, which postulates that entrepreneurship consists in the exploitation of economic opportunities (Shane and Venkataraman, 2000). Information about the environmental problem intended to raise entrepreneurs' own awareness of and concern about the problem have no effect on EEI in our study, which seemingly is in contrast to previous findings that idealistic motives and personal concern are primary drivers of EEI (Phillips, 2013; Shepherd and Patzelt, 2011; York et al., 2016). The findings can be reconciled by recognizing that our study assesses exclusively the overall effects of the experimental manipulations and controls for the potential entrepreneurs' environmental inclination, which we also find to be an important predictor of EEI. By controlling for it, we show that EEI can also be raised by factors external to the focal entrepreneur, in particular the environmental concern of key stakeholders.

Our findings thus complete the picture of the drivers of EEI by showing that if environmental awareness and concern are experienced not only by potential environmental entrepreneurs but their stakeholders, entrepreneurs' intent to address the relevant environmental problems rises. It also explains why, despite individual environmental awareness and concern, there is still widespread economic inaction in the face of known environmental problems (Heidbreder et al., 2021; York, 2018). According to our study, more EEI could be induced by a more widespread environmental concern, which encompasses both environmental entrepreneurs and their stakeholders.