Towards sustainable entrepreneurial ecosystems: examining the effect of contextual factors

What is it about?

------------------------ Research Focus ------------------------ Our inductive study explores how contextual factors facilitate sustainable development within an entrepreneurial ecosystem in the sharing economy. Our specific research setting comprises founders and senior managers of sharing ventures operating in the emerging sharing economy. Our comparative analysis reveals two groups of contextual factors that influence their sustainability orientation. The results help to better understand sustainable entrepreneurial ecosystems by investigating the interrelation between contextual factors and sustainable entrepreneurial activities of sharing ventures.

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Photo by Kyle Glenn on Unsplash

Photo by Kyle Glenn on Unsplash

Why is it important?

------------------------------------------------------- Contribution to Academic Scholarship ------------------------------------------------------- The sharing economy opens a new pathway toward sustainable consumption patterns. It fosters a change in consumer behaviour towards collaborative consumption, that is, sharing assets instead of owning them exclusively. However, entrepreneurial action in the sharing economy predominantly continues to perpetuate profit-oriented business practices, which suppress the identification with and implementation of the more demanding sustainability objectives. This discrepancy between intended goals and realised ones threatens to stifle the development of sustainable entrepreneurial ecosystems in the sharing economy context. Our inductive provides new insights into the contextual factors of the sharing economy and their role in the development of sustainable ventures. Specifically, we asked the following question: How do contextual factors influence the development of sustainable entrepreneurial ecosystems in the sharing economy? More specifically, we investigate how contextual factors affect the sustainable entrepreneurial activities of sharing ventures. Addressing this question is essential since it helps add insights into our general understanding of sustainable entrepreneurial ecosystems and looks further into the specific conditions, as well as contextual factors, involved in sustainable entrepreneurship Our study provides an emerging theoretical framework for the contextual factors of sustainable entrepreneurial ecosystems. We find two distinct sets of contextual factors, which influence the sustainable activities of ventures in the sharing economy. Specifically, our results uncover how contextual factors facilitate or constrain sustainable development within an entrepreneurial ecosystem in the sharing economy. The first set of contextual factors stimulates the sustainable activities of sharing ventures by enforcing the adaptation of behavioural rules and by enabling the development of organizational capabilities. The second set of contextual factors restricts, in contrast, the sustainable activities of sharing ventures by impeding market penetration and suppressing future growth. The conjoint effect of these two distinct sets of contextual factors substantially predetermines the extent and way in which sharing ventures develop and maintain sustainable activities in their organizational evolution. Our study, therefore, adds to our understanding of the theory about sustainable entrepreneurial ecosystems and the sharing economy by providing evidence-based insights into the environmental conditions and dynamics of sustainable entrepreneurship. ------------------------------------------------------- Contribution to Management Practice ------------------------------------------------------- Our results suggest several practical implications, which specifically address the level of government interventions to support sustainable entrepreneurial ecosystems. By focusing on the role of contextual factors, our study complements research that investigates the process and resource-related aspects of sustainable entrepreneurship. Our results indicate that the future development of sustainable ventures depends on a combination of tighter government regulation of collaborative consumption markets and financial support systems that foster sustainable entrepreneurial activities. Without these support systems, the long-term survival of sustainable ventures in competitive conditions, which strongly favour profit-oriented business strategies over sustainable ones, will be a particularly demanding task. Our results also show that the sharing economy is currently primarily self-regulated, which moves many entrepreneurial activities into a grey zone. This unregulated state leads to entrepreneurial flexibility, which does not only open new business opportunities. It also leaves room for exploitative and unsustainable approaches. Our respondents noticed that the sharing economy is divided into two groups: organically growing ventures aiming to promote sustainability and those receiving substantial external capital investments, which oblige them to focus on profits rather than on sustainability. For those ventures seeking to pursue sustainable objectives, the current state of the sharing economy has two central challenges, which cause extensive restrictions to their future growth: It leads to sustainable entrepreneurs becoming anxious about the future regulatory requirements and it also leads to the need to build on organic growth, thereby resulting in a competitive disadvantage against profit-oriented sharing ventures. The current environmental conditions of the sharing economy, therefore, require more regulatory efforts from governments to restrict the ongoing exploitation of the sharing concept and to support sustainable entrepreneurship in collaborative consumption markets. Recognising the limits of self-regulation emphasizes the need for policymakers to set rules for entrepreneurial activities instead of maintaining the dubious status quo that the sharing economy grows “in the shadow of the law”. Policymakers also need to introduce new incentives for restructuring the predominantly profit-guided funding options of sharing ventures into funding for the benefit of society. In sum, our study shows that the current funding structure for sharing ventures reinforces the existing tension between ideology and growth. However, it does not help facilitate sustainable entrepreneurship or bring about the change of the sharing economy’s initial idea about sustainability.

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