Green Entrepreneurship (GE) and Green Value Added (GVA): A Conceptual Framework

Article excerpt

INTRODUCTION

Natural environmental issues are increasingly becoming integral part of business in every passing day without being recognized as such. It has been argued by many scholars that holistic green business solutions that add value to organizations and their stakeholders should be made part of the basic system of business (e.g. Banerjee et. al. 2003; Coddington, 1993; Charter, 1992; Menon & Menon, 1997; Ottman, 1993; Polonsky, 1995; Porter & van der Linde, 1995; Peattie, 1995), so much so that addressing the natural environmental problems has become a matter of 'survival and prosperity' of every business (Baker & Sinkula, 2005). Many organizations view environmental activities as fragmented functions like waste minimization, pollution control, recycling, etc. However, in many instances green business practices do not exist in isolation; rather they thrive as a comprehensive business philosophy and culture leading to superior firm performance (Nair, 2004; Baker & Sinkula, 2005; Nair & Menon, forthcoming) and value addition. This paper is an attempt to develop conceptual models on basic green business culture leading to firm performance and stakeholder value addition. The authors of the article propose to call this concept as Green Value Added (GVA). Porter's (1985) Value Chain framework is used in this article as a basic premise in developing GVA process model. Entrepreneurs are capable of bringing in innovative and revolutionary changes to business (Ndubisi, 2004), hence entrepreneurship is taken as a conduit for introducing Green Value Added (GVA). Those entrepreneurs voluntarily adopting GVA is referred as Green Entrepreneurs (GE) in the article. The article proposes that careful development of GVA by green entrepreneurs will add value to all key stakeholders of the organization and at the same time protect the natural environment. The article discusses two models; GVA system model and GVA process model. GVA systems model is a simple framework that depicts the details of how a GVA is developed and adds value to stakeholders and natural environment. The GVA process model is a detail version of the GVA process.

RELEVANCE OF GREEN ENTREPRENEURSHIP (GE)

Many studies have established a strong relationship between environmental friendly business practices (e.g. environmental marketing) and firm performance (e.g. Miles & Covin, 2000; Backer & Sinkula, 2005). However, not many studies have developed a comprehensive environmental orientation that impacts the entire organizational system and adds value to the organisation and its stakeholders. Porter & van der Linde (1995) have suggested that managers should think 'environmental improvements' in terms of 'economic and competitive opportunity' that adds organizational and customer value. For achieving this end a comprehensive green value chain should be developed that effectively connects the organizations with its stakeholders in a sustainable fashion. Development of such a system calls for incremental and breakthrough innovations (Zheng et al, 2005), risk-taking propensity, persistence and flexibility (Ndubisi, 2004; Ndubisi et al. 2005) that characterize entrepreneurs. The entrepreneurs are capable of creating small and medium sized organizations that will have the necessary flexibility and endurance to embrace such innovative practices. Osukoya (2007) argued that small firms have several advantages over big firm in adopting environmental practices. Consumers tend to see small firms more environment friendly than their bigger counterparts, and small firms are in a position to react actively to the increasing demands of green products and services in almost all segments of markets (Osukoya (2007). Certain studies have also suggested that an entrepreneurial spirit is more important in making green business innovations than regulations (e.g. Martinsons et. al., 1996). Hence, a green entrepreneurial orientation is vital for developing GVA. …