This summary covers all the obligated journal articles, lecture material and contains additional notes for the course Sustainable Entrepreneurship for the Master Strategic Management.
My exam result: 9,2 / 10
,Greening Goliaths versus Emerging Davids – Theorizing about the role of incumbents
and new entrants in sustainable entrepreneurship, Hockerts & Wustenhagen 2010
Interplay between greening goliaths and emerging Davids and how they can create impact
together (compounded impact), that promotes the sustainable transformation of industries.
The world is not well aligned with the concept of sustainable development.
Incremental solutions will not be enough to maintain critical levels of natural and social
capital.
è More interest in Sustainable entrepreneurship
“Emerging Davids” & “Greening Goliaths” à a conceptual framework to determine the
contributions of small and large firms to the transformation of industries towards sustainable
development.
Rather than short-term profits, stakeholders expect firms to meet a triple-bottom line of
economic, environmental, and social value creation.
Both the Greening Goliaths and the Emerging Davids are moving towards the sustainability
transformation of an industry.
Together - The interplay between them, and their compounded impact promote the
sustainable transformation of industries.
Firms are divided into:
• Greening Goliaths à represent larger incumbent firms using incremental innovation
to bring about sustainable development. The big global brands.
• Emerging Davids à startups and young companies introducing disruptive
innovations.
,Both play a role in contributing towards sustainable transformation. For future success, the
interaction of the 2 types is needed.
*QUIZ* Innovations, disruptive or incremental:
• Process innovation à incremental
• Innovation that requires new suppliers à disruptive
• Innovation that is easy to implement à incremental
• Introducing a new model of an existing product à incremental
• Copying an improvement from a competitor à incremental
• Innovation that replaces the main input for a product (ex. from petrochemical to plant-
based) à disruptive
*See objectives* Goliaths à for the money and shareholders; Davids à the owner
determines what is important, completely different ways of doing business.
Innovations can be:
• Disruptive à sustainable entrepreneurship for Davids; Sustainable corporate
entrepreneurship for Goliaths.
• Incremental à Goliaths do CSR because they must (Goliaths often do incremental
innovations in this field).
Sustainable entrepreneurship = activities by small or large firms that represent disruptive,
rather than incremental innovations (not all activities by Davids or Goliaths to improve
environmental/social performance can be characterized as sustainable entrepreneurship).
Co-evolution of these companies: Both start-ups and incumbents influence each other in the
market towards sustainability transformation of an industry. Sustainability transformation of
an industry is necessary because incremental solutions to our current social and
environmental problems will not be enough to maintain critical levels of natural and social
capital. Incremental solutions will not be enough to maintain critical levels of natural and
social capitals. Also, sustainable entrepreneurship has an important role. There is a need
for transformational change.
, Sustainable entrepreneurship = the discovery and exploitation of economic opportunities
through the generation of market disequilibria that initiate the transformation of a sector
towards an environmentally and socially more sustainable state.
How do Emerging Davids behave in the market?
They are new à not limited by previous (tech) mindsets, they have nothing to lose à they
are more innovative. They are part of the solution, not the problem. They have a value-
based approach (= they want to deliver different types of value: economic, social,
environmental value …) and they externalize costs (à they ask customers a premium price
for socially and environmentally superior products/services).
Drawbacks
They tend to have a single-issue focus à not too good at addressing a broader range of
sustainability issues, also due to limited resources. They may limit themselves because they
are idealistic à they want to do things their own way à possible little or no attention to
growth strategies (the smaller à the more control they may have).
è Founder/owner can decide whatever he wants!
They may prefer to keep their niche market small and exclusive, to avoid incumbents moving
into their markets.
How do Greening Goliaths behave in the market?
Incumbents may not be disruptive in their innovations, but even if they are slow to react,
they often catch up quickly once they decided to follow an innovation. (thanks to their large
manufacturing capabilities). They respond to pressure from stakeholders concerned with
sustainability (through incremental process innovation). They may benefit from being able
to charge premium prices, following the price level set up by the Davids. They have funds
that they can use to monitor innovating Davids (as Venture Capitals).
Drawbacks
They may be able to influence the setting or reduction of environmental standards in their
favor (ex. car industry with the legal requirements of emissions). They may try to keep
standards fixed rather than encourage continuous improvement. à self-interests to keep
things the way they are.
Old assets à reflect their past investments (don’t want to change)
So Emerging Davids claimed a sustainability niche (they are high on environmental and
social performance), but they need to scale up operations (because they are low in market
share). The Greening Goliaths, instead, have high market share, but they need to find ways
to become greener, so use process innovation to reduce the costs due to greening. Their
strength is process innovation. They can address multiple environmental and social issues
at a time.
è Nevertheless, Co-evolution takes a long time!
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