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The Relationship between Entrepreneurship, Innovation and Sustainable

Development. Research on European Union Countries

Article  in  Procedia Economics and Finance · December 2012

DOI: 10.1016/S2212-5671(12)00269-9

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Procedia Economics and Finance 3 (2012) 1030 – 1035

Emerging Markets Queries in Finance and Business

The Relationship between Entrepreneurship, Innovation and

Sustainable Development. Research on European Union
Countries.
Mihaela Kardosa,
a
1, 540 080, Romania

Abstract

The nexus of entrepreneurship, innovation and sustainable development is a subject of great interest nowadays, as
society is looking for solutions leading to sustainable development. Given this context, the paper aims to put in connection
sustainable entrepreneurship and sustainable development from both the perspectives of conceptual reflection in literature
and a research on the European Union countries. The methodology is based on methods of analysis and synthesis, of
interpretation and relevant comparisons. The research results point out that sustainable entrepreneurship, seen through the
perspective of innovative SMEs, as considered in the research, is part of the support system for sustainable development, as
entrepreneurial enterprises are increasingly recognized as a driving force for innovation and competitiveness, as one of the
keys to achieving sustainable development. The research may be particularly important for both researchers and policy
makers and offers opportunities for future studies on the subject.

© 2012 The©Authors.
2012 Published
Published byby Elsevier
Elsevier Ltd. Selection
Ltd. Open access underand peer-review
CC BY-NC-ND under responsibility of the
license. Emerging
Markets
Selection and Queries
peer review in Finance and
under responsibility Business
of Emerging localQueries
Markets organization
in Finance and Business local organization.

Keywords: sustainable entrepreneurship; sustainable development; innovation; innovative SMEs;

1. Introduction

The nexus of entrepreneurship, innovation and sustainable development is particularly relevant given the
focus on the quality of life, requiring that firms reconcile sustainability aspects with profitability, while

Corresponding author. Tel. + 40-720-128-021

Email address: mihaela_kardos@yahoo.com

2212-6716 © 2012 The Authors. Published by Elsevier Ltd. Open access under CC BY-NC-ND license.
Selection and peer review under responsibility of Emerging Markets Queries in Finance and Business local organization.
doi:10.1016/S2212-5671(12)00269-9
 Mihaela Kardos / Procedia Economics and Finance 3 (2012) 1030 – 1035 1031

innovation and entrepreneurship have been identified as key to defuse sustainability demands.In this generous
context of analysis we bring into discussion the reflection of sustainable entrepreneurship into the progress
towards sustainable development. The subject, of great interest for academia, scientific community and policy
makers, is obviously extensive and complex and needs to be approached from different perspectives. The paper
cannot and does not attempt to offer answers to all questions, rather it sets a stage for discussion, exploring
some of the many ways in which sustainable innovative entrepreneurship is used in connection with sustainable
development. The paper is structured in two parts: the first part presents some landmarks from literature
regarding sustainable entrepreneurship in connection to sustainable development and the second part
approaches a research on this topic for the European Union EU countries, using methods of analysis and
synthesis, of interpretation and relevant comparisons. The paper ends with a section of conclusions regarding
the main ideas of the empirical research, with implications for further research.

2. Literature review

e needs of the
present without compromising the ability of future generations to meet their own need
Report, 1987 requires an understanding of the complex interplay of environmental, economic and social
processes at different scales, from local to global. Since its appearance and up to present, the concept of
sustainable development has known a continuous improvement, by adding new coordinates, theoretical,
methodological and practical valences. Yet, a clear, fixed and immutable meaning remains elusive and reality
surely proves that. The overall objective of sustainable development is to find an optimal interaction of
economic, human, environmental and technological systems. Countries, organizations, institutions worldwide
have committed towards its goals, incorporating shared principles, objectives and instruments. Seen as a
mosaical reality, the subject is of great importance, as society is still searching for the right solutions leading to
sustainable development. Regardless of its approach (local, regional, national or global), a wide range of
instruments e.g. education Herman, 2012, communication, participation, etc. indispensable in transforming
goals, objectives and principles into concrete actions, behaviors, and attitudes is needed. In this respect,
researchers around the world are investigating how entrepreneurship can contribute to the transition to a
sustainable economy and to sustainable development more widely, as entrepreneurship has long been
recognized as a vehicle for societal transformation, especially as an economy moves from one technological
epoch to another Schumpeter, 1934, 1942. Both entrepreneurship and sustainable development are considered
solutions to assure the future development of the entire society Stefanescu, Gabor, Contiu, 2011. Still, the
research topic of sustainable entrepreneurship is relatively recent in the area of scientific preoccupations,
developed especially in the last decade, as prior to 2002 there were only a few papers in the area of sustainable
development and entrepreneurship Hall, Daneke, Lenox, 2010. The relationship between entrepreneurship and
sustainable development has been addressed by various streams of thought and literature such as:
ecopreneurship environmentally orientated entrepreneurship; social entrepreneurship - entrepreneurship that
aims to provide innovative solutions to unsolved social problems OECD, 2010; institutional entrepreneurship,
contributing to change regulatory, societal and market institutions, responsible entrepreneurship - a term coined

which joining economic, technological, environmental factors is or must be responsible to society, enhancing
the business positive contribution to society whilst minimizing negative impacts on people and the environment
Responsible entrepreneurship, 2003). The concept is met even under the name of sustainopreneurship - a
concept that has emerged from earlier conceptual development of social entrepreneurship and ecopreneurship,
via sustainability entrepreneurship, meaning to use creative business organizing to solve problems related to the
sustainability agenda to create social and environmental sustainability as a strategic objective and purpose, at
the same time respecting the boundaries set in order to maintain the life support systems in the process
1032 Mihaela Kardos / Procedia Economics and Finance 3 (2012) 1030 – 1035

Schaltegger, 2000, Abrahamsson, 2006. The notion of sustainable entrepreneurship, approached as an all-
inclusive concept for all those mentioned above has been raised to address the contribution of entrepreneurial
activities to solving societal and environmental problems, to sustainable development in a more comprehensive
way. Sustainable entrepreneurship obtains such main features as social responsibility, competitiveness,
progressiveness, knowledge creation and usage, innovativeness, dynamism and seeks for business benefits
creating social value Krisciunas and Greblikaite, 2007. Such an ambitious approach of entrepreneurship which
does not only attempt to contribute to a sustainable development of the organisation itself but also to create an
increasingly large contribution of the organization to sustainable development of the market and society as a
whole requires substantial sustainability innovations Schaltegger and Wagner, 2011. Also Gerlach 2003 speaks
about the necessity of approaching the analysis about the role of sustainable entrepreneurs for implementing
sustainable development from the perspective of innovation. The focus lies on innovations that enhance
sustainability. A successful sustainable innovation is accomplished when entrepreneurial actors achieve
competitive advantages, i.e. economic success by applying innovative environmental and/or social practices.
Small and medium-sized enterprises SMEs are increasingly recognized as a driving force for innovation,
entrepreneurial spirit and competitiveness, therefore are seen as one of the keys to achieving sustainable
development.

3. Research Methodology

Both sustainable entrepreneurship and sustainable development are difficult issues to measure and there is
no method agreed upon, as both are very complex, multi-dimensional concepts. Still, there are different
systems of measuring and evaluating the level of sustainable development or the performance of sustainable
entrepreneurship at country level. The research goal is to determine the role of sustainable entrepreneurship in
supporting sustainable development within The European Union. The research methodology is specific for the
purpose and the nature of the research and includes literature review, comparative analysis and synthesis of
data, followed by a dissemination of the results in order to express a personal opinion regarding the research
results. The literature review is based on bibliographic resources books, studies, articles and official documents
e.g. strategies, reports in order to highlight the importance and the opportunity of the subject. The analysis and
synthesis are based on processed and summarized data. Establishing the sample. In order to establish the
research sample two groups of EU countries: one group of countries appreciated as more sustainable
developed and another group of EU countries considered less sustainable developed, we approach the
following methodology. We take into consideration the country rankings according to two of the most relevant
indicators of sustainable development: Human Development Index 2011 Ranking and Environmental
Performance Index 2010 Ranking. In the research sample of the group including more sustainable developed
countries we choose to include the countries found in both of the rankings, considering the top 10 EU countries
in each ranking. Thus, these countries are: Austria AT, France FR, Germany DE, Netherlands NL and Sweden
SE. Applying the same procedure, but choosing the countries found in both of the rankings among the 10 EU
countries with the lowest scores (at the bottom of the rankings), we establish the research sample of the group
including less sustainable developed countries: Bulgaria BG, Estonia ES, Hungary HU, Malta MT, Portugal PT
and Romania RO. In order to evaluate the performance of sustainable entrepreneurship of the selected
countries and to highlight the type of connection with their level of sustainable development, we take into
consideration the following indicators: some indicators of the Summary Innovation Index 2011, e.g.:
performance scores of dimension, taking into consideration SMEs innovating
in-house as % of SMEs, innovative SMEs collaborating with others as % of SMEs and public-private co-
publications per million population; dimension, taking into consideration
SMEs introducing product or process innovations as % of SMEs, SMEs introducing marketing or
organizational innovations as % of SMEs and High-growth innovative firms. We consider these indicators
 Mihaela Kardos / Procedia Economics and Finance 3 (2012) 1030 – 1035 1033

taking into account the premise that, as considered in literature, SMEs reflect entrepreneurial innovative
dynamism. The merit of this study is to contribute with a relevant research in an area more difficult to
approach, due to its complexity. Although providing a relevant imagine of the research topic, the research
methodology generates some limitations, as it considers only some perspectives referring to sustainable
entrepreneurship and the dimension of the analyzed groups of countries and the research character might not
lead to generalised results. However, the study may be a starting point for further research, by analyzing other
dimensions of the topic, using complementary methodology.

4. Research Results

For the selected countries, performance scores of is presented in

Fig. 1, as follows.

the selected countries (SSI

2011)

In all investigated countries belonging to the group of those more sustainable developed scores are above the
EU average, reflecting a key role of SMEs innovative activity in contributing to their level of sustainable
development. Also, all investigated countries in the group of those less sustainable developed score below EU
average, showing that SMEs are less preoccupied with innovation activities.
The situation, presented in Fig.2, th one exception in each
group Portugal in the group of less sustainable developed countries, scoring above the EU average and The
Netherlands in the group of more sustainable developed countries, scoring below the EU average.

Less sustainable developed countries More sustainable developed countries

0.9
0.8
0 8
0.7
0
0.6
0 6
0.5
0
0.4
0 4
0.3
0 3
0.2
0 2
0.1
0 1
0
BG RO MT HU ES PT EU FR AT NL DE SE

Fig. 2. Performance scores

1034 Mihaela Kardos / Procedia Economics and Finance 3 (2012) 1030 – 1035

The investigation of the selected countries regarding their SMEs innovation performance per sub-indicators
as presented in Fig.3 highlights that all countries in the group of those more sustainable developed prove
relative strengths in all of the four dimensions, demonstrating innovative entrepreneurial initiatives and results.
The investigated countries in the group of those less sustainable developed, for all dimensions score much
lower than those in the group of more developed countries, suggesting weak linkages between the science base
and enterprises, particularly reflected in the very low shares of SMEs introducing product or process
innovations, as well as SMEs introducing marketing and organization innovations.
Our analysis, as presented above, emphasizes that there is a relation between sustainable entrepreneurship
and sustainable development, as one of the engines for sustainability comes from the private sector; therefore, it
is necessary to strengthen innovation capacity of companies by stimulating applied research for innovative
products and services, by improving cooperation between industries and research centres. One of the solutions
is partnerships and scientific collaboration, supported by a creative friendly environment.

5. Conclusions

The emergence and growth of innovative firms is crucial for structural change towards sustainable
development. Our research points out that countries where SMEs associated with entrepreneurship are more
innovative are placed in the top of the rankings for sustainable development, while countries with weaker
performances in terms of innovative entrepreneurship have lower scores of sustainable development. Therefore,
sustainable development needs supporting innovation initiatives and activities in business sectors, working as
engines for change in the new development paradigm, to address both present and future challenges.

Acknowledgements

Research in Communicating Sciences. Institutional building (postdoctoral school) and fellowships program
- POSDRU/89/1.5/S/63663, financed under the Sectoral Operational Programme Human

SMEs innovating in house

45
40
35
30
25
20
15
10
SMEs introducing marketing 5 Innovative SMEs
0
/organizational innovations collaborating with others

Less sustainable developed

SMEs introducing product or countries
process innovations More sustainable developed
countries

Fig. 3. Performance per dimension of the selected countries (own calculations according to SSI 2011)

Resources Development 2007-2013.

 Mihaela Kardos / Procedia Economics and Finance 3 (2012) 1030 – 1035 1035

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