Sustainability in Business-How To Look for Opportunities

Recently, research on sustainable business operations has generated significant interest. Businesses aim to identify, evaluate, and exploit opportunities. Nonetheless, entrepreneurship activities cause pollution and risk damaging nature and human health. Recent studies indicate that in the last half-century, the world has experienced climate change and destruction of biodiversity arising from exploitative human activities (Sołoducho-Pelc et al., 2020). However, entrepreneurs can undertake sustainable action to preserve ecosystems, counter climate change, and minimize environmental damage (Bogacki & Letmathe, 2021).

Before creating such opportunities, the entrepreneur must believe an opportunity exists and then determine the opportunity is worth pursuing. Identifying sustainable opportunities is the beginning of entrepreneurship and, therefore, a prerequisite for establishing innovation and contributing to societal transformation (Bogacki & Letmathe, 2021). The discipline of sustainable opportunity is still in its early stages with multiple incoherent and unempirical validated theoretical frameworks. Nonetheless, the paper builds and adapts two theoretical framework models to identify sustainable opportunities better. These frameworks indicate that sustainable opportunity identification consists of the transition from problems to solutions, entrepreneurial knowledge of the natural environment, perceived personal threats, and altruism.

First, identifying business sustainability opportunities will involve a transition from problems to solution identification. With this process, sustainable entrepreneurs begin with the perception of ecological challenges and then identify necessary solutions (Eller et al., 2020). The solutions create the base for identifying sustainable business opportunities. Notably,  all solutions are not opportunities. Under sustainable business, the opportunity must create socially valued products and services. For instance, banning vehicles from reducing the city air pollution does not involve a product or service. By identifying multiple ecological challenges, the higher the probability of getting a solution increases for at least one of the challenges. Problem identification is a stochastic process implying that the probability of identifying a solution increases by increasing the number of identified challenges (Sołoducho-Pelc et al., 2020). Identifying opportunities increases the chances of finding a solution. Increasing the extent of ideas to solve a challenge increases the chances of identifying a more viable business opportunity.

Second, the likelihood of identifying opportunities relies on individual prior knowledge of the natural and communal environment, motivation for personal achievement, and achievement for others (Eller et al., 2020). The likelihood of finding an opportunity increases if the entrepreneur possesses prior entrepreneurial knowledge. Here, the knowledge involves that of the market, ways to serve the market, and customer challenges. Sustainable opportunities differ from other entrepreneurial endeavors since they seek to sustain the natural environment and gain achievements for the entrepreneurs and others other than solely focusing on profits. While factors such as alertness, creativity, extrinsic motivation, financial reward, and labor are necessary, prior knowledge is supreme for a business opportunity (Eller et al., 2020). Prior knowledge involves individual expertise on a given subject, which assists in identifying a particular opportunity in a manner those without the knowledge cannot comprehend. Individuals can gain knowledge from work experience, education, and experiential learning, among other methods (Bogacki & Letmathe, 2021). An individual can accumulate new knowledge with prior knowledge, allowing for better opportunities. Patzelt and Shepherd’s model proposes that knowledge of the natural environment, perception of a threat, and altruism expand the probability of entrepreneurs identifying sustainable opportunities.  

The awareness of the natural environment massively affects opportunities for identification. For instance, expertise in air pollution potential sources in developing nations led to opportunities for technologies to maintain clean air through particle pollutants reduction in households (Sołoducho-Pelc et al., 2020). Additionally, expertise in indigenous culture was a significant influence on identifying sustaining opportunities. The prior knowledge differences highlight the variance in entrepreneurs’ direction on environmental aspects and recognize sustainable development opportunities (Hanohov & Baldacchino, 2017). Hence, the entrepreneurs’ knowledge is positively correlated with identifying opportunities. Second, the perception of threat to the natural or communal environment influences sustainable opportunity identification. Resource degradation, pollution, and biodiversity loss expand vulnerability and minimize species’ well-being.

When individuals feel the environment, including the species, is threatened, they are likely to engage in activities that aim to sustain the environment. Threats forces individuals to take a defensive posture. Hence, an increase in threat perception about the natural environment increases the chances of identifying sustainable opportunities (Eller et al., 2020). Lastly, altruism towards others influences how individuals seek opportunities. Altruism involves the urge to improve other people’s welfare. While the acts of empathy and sympathy might be of self-interest, these actions always include an act of self-sacrifice and the intention to act in a manner beneficial to others. Such a situation triggers the opportunities for identification by focusing on the social aspect. Hence, entrepreneurs’ altruism towards others increases the probability of identifying opportunities.

Business sustainability’s role in the future of business remains indefinite. While all businesses can contribute towards its attainment, the capacity to make a difference depends on sector and organization size. Therefore, it is crucial to understand other business aspects vital to improving the business objectives. Business management involves the coordination and organization of business activities to achieve the organization’s objectives. The management eliminates all wastage through planning to achieve efficiency in all business operations. Business management in modern society is related to business sustainability in a context where organizations continually face efficiency challenges through resource reuse, waste reduction, low costs, and time production.

With the rapid technological and business advances, management must ensure the achievement of business objectives with minimal resources and observes sustainability (Bogacki & Letmathe, 2021). Second, business finance is associated with sustainability. Companies must adopt long-term value creation objectives to transition to a sustainable economy. By doing so, a fundamental question in companies arises about the company’s objective. The shareholder model, which emphasizes maximizing the shareholder value, prevents sustainable business practices (Schoenmaker & Schramade, 2020). The alternative view is to seek opportunities for the company to optimize the integrated value that combines financial, social, and environmental value. By effectively managing sustainable opportunities, financial-oriented firms create a long-term value for the business.

In sum, seeking sustainable opportunity depends on entrepreneurial knowledge of the natural environment, perceived personal threats, and altruism. Additionally, individuals with significant expertise are more likely to transition from problem to identifying solutions. Notably, identifying sustainable opportunities is more complex than those of non-sustainable ones, which depend solely on the entrepreneur’s economic gain. Prior knowledge is vital for identifying opportunities, given it improves all other motivation variables impact. While identifying sustainable opportunity is a new phenomenon with limited literature, it is positively interrelated with other business management and financial factors that aim to achieve the most optimal objective for a company. Future studies can explore other variables that influence recognizing opportunities, such as social networks, ownership, alertness, and work experience. Including other variables can offer additional insight to extend the comprehension of sustainable opportunity identification.

References

Eller, F. J., Gielnik, M. M., Wimmer, H., Thölke, C., Holzapfel, S., Tegtmeier, S., & Halberstadt, J. (2020). Identifying business opportunities for sustainable development: Longitudinal and experimental evidence contributing to the field of sustainable entrepreneurship. Business Strategy and the Environment, 29(3), 1387-1403.

Sołoducho-Pelc, L., & Sulich, A. (2020). Between sustainable and temporary competitive advantages in the unstable business environment. Sustainability, 12(21), 8832.

Bogacki, J., & Letmathe, P. (2021). Representatives of future generations as promoters of sustainability in corporate decision processes. Business Strategy and the Environment, 30(1), 237-251.

Hanohov, R., & Baldacchino, L. (2017). Opportunity recognition in sustainable entrepreneurship: an exploratory study. International Journal of Entrepreneurial Behavior & Research.

Schoenmaker, D., & Schramade, W. (2020). Corporate finance and sustainability: A teaching note. Available at SSRN 3479730.