Goal heterogeneity at start-up: are greener start-ups more innovative?

Brigitte Hoogendoorn,Peter Van Der Zwan,Roy Thurik

doi:10.1016/j.respol.2020.104061

Abstract

Start-ups differ in the extent to which they introduce innovations to markets and, hence, in their potential contribution to society. Understanding the heterogeneous character of start-ups is key to explaining the variability in innovation. In this study, we explore whether start-ups that place more emphasis on environmental value creation versus economic value creation (‘greener start-ups’) are more innovative. We also examine how environmental regulations at the country level affect this relationship. We theorize that the fundamental difference between economic value creation (private wealth generation, i.e., self-regarding interest) and environmental value creation (environmental gains for society, i.e., other-regarding interest) influences entrepreneurial opportunity identification and exploitation. When considering the regulatory context, we draw on the innovation inducement effect of environmental regulations and expect these regulations to be most effective for entrepreneurs with a strong emphasis on economic value creation. Performing multi-level ordered logit regressions with 2,945 start-up entrepreneurs in 31 countries (Global Entrepreneurship Monitor data), we find that ‘greener start-ups’ are more likely to engage in product and process innovations. We find some evidence of a positive moderation effect for environmental regulations. We advance research on innovative entrepreneurship by theorizing and finding evidence that other-regarding goals are relevant in explaining start-up innovativeness.

Highlights

Innovation is a central aspect of entrepreneurship (Schumpeter, 1934) and an important goal for policymakers
We find some evidence of a moderating role for environmental regulations in that greener start-ups are more likely to innovate at the product level in countries with stricter environmental regulations
Multi-level ordered logistic regressions without control variables are performed for three dependent variables: our innovation index, our measure of product innovation, and our measure of process innovation

Summary

Introduction

Innovation is a central aspect of entrepreneurship (Schumpeter, 1934) and an important goal for policymakers. Start-ups have been recognized as the engine behind innovative behaviour, leading to increased competition, employment generation, and, economic growth (Hébert and Link, 1989; Schumpeter, 1934). There is increased interest on the potential contribution of start-ups in bringing solutions to environmental challenges such as climate change and biodiversity loss (Shevchenko, Lévesque, and Pagell, 2016; York and Venkataraman, 2010). Understanding heterogeneity among start-ups is the key to explaining their variability in innovation and, subsequently, their potential contribution to the economy and society (Colombelli, Krafft, and Vivarelli, 2016). The central question of this study is whether the goals pursued by start-ups, in particular their drive to realize environmental gains for society, influence their innovativeness.

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Results

Conclusion