Sustainable Entrepreneurship
325089-M-6
2021/2022
Session 1
Hockerts & Wustenhagen (2010), Greening Goliaths vs emerging Davids
● The paper analysis the interplay between “Greening Goliaths” and “Emerging Davids” and
theorizes about how their compounded impact promotes the sustainable transformation of
industries
● In the early stages of an industry’s transformation towards sustainability, new entrants and
small firms (Emerging Davids) are more likely than incumbents to pursue sustainability
related opportunities.
● Incumbents react to the activities of new entrants by engaging in corporate sustainable
entrepreneurship activities. They are also called “Greening Goliaths” and are less ambitious in
their environmental and social goals because of their established market presence.
● Firms are divided in two categories:
○ Emerging Davids: small startups and young companies recently founded and have a
small market share. Their social and environmental objectives have the same weight
as the economic objectives and they introduce disruptive innovations
○ Greening Goliaths: large incumbent firms who tend to be older and have a high
market share. Their economic objectives dominate and the social and environmental
objectives are mostly complementary. They use incremental innovation to bring about
sustainable development. We say that they are involved in sustainable corporate
entrepreneurship if they do incremental innovation.
○ Both can play a role in contributing towards sustainable transformation but they do so
in different ways
○ For future success the interaction of the two types is needed
● Innovations can be disruptive or incremental
○ According to Hockerts and Wustenhagen only Davids introduce disruptive
innovations can be classified as demonstrating sustainable entrepreneurship
● Co-evolution
○ Sustainable
transformation of
an industry when
both start ups and
incuments influence
each other in the
market
1
, ○ The authors argue that:
■ Incremental solutions will not be enough to maintain critical levels of natural
and social capital
■ Sustainable entrepreneurship has a role to play
■ 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
● Emerging Davids business behavior
○ They are not limited by previous technological mindsets and are more innovative
○ They are part of the solution and not seen as part of the problem
○ Sustainability startups have a value based approach and externalize costs by asking
customers to pay a premium for socially and environmentally superior products (and
services)
○ They tend to have a single issue focus and can be less good at addressing a broader
range of sustainability issues
○ Idealistic approach can lead to little or no attention to growth strategies
○ They prefer to keep their niche market small and exclusive, in order to avoid
incumbents moving into their markets
● Greening Goliaths business behavior
○ Incumbents may be slow to react but are often able to catch up quickly once they
have decided to follow
○ They may then benefit from being able to charge premium prices, following the price
level established by the startup
○ They can launch venture capital funds to monitor innovating Davids (ex. Philips,
Sabic, Unilever)
○ They may be able to influence the setting (or reduction) of environmental standards in
their favor (ex. car industry lobby)
○ They may try to keep standards fixed rather than encourage continuous improvement
● Co evolution a maturity model
○ Goliaths and Davids follow different approaches but they can converge
○ Model show that these companies grow together
○ First stage: Davids are idealists and experimenting with a product while Goliaths are
ignorant about what’s happening and just want to grow their market share
○ Second stage: Davids start their businesses and Goliaths catch up on what happens in
the market and introduce a sustainable product line while keeping their corporate
identity
○ Third stage: Some of the Davids will look at different ways to improve their world
and do something else while others position themselves in the market and some are
even acquired by Goliaths.
○ Last stage: some Davids create new niches because they feel comfortable to stay in
small consumer groups while others become Goliaths. For Goliaths, sustainability
becomes a standard
2
,Bocken et al. (2014), A literature and practice review to develop sustainable business model
archetypes
● Context
○ The world is using the equivalent of 1.5 planets to support human activities
○ Business as usual is not an option for a sustainable future
● Sustainable business systems
○ A future sustainable economy requires new goals and priorities and a future business
system that:
■ Encourages minimizing consumption
■ Prioritizes societal and environmental benefits over economic growth
■ Emphasizes the delivery of functionality rather than product ownership
■ Operates on a closed loop where nothing is allowed to be waster
● Sustainable business model requires:
○ A fundamental shift in the purpose of business and how it is conducted
○ Re-conceptualizing of the concept and perception of value (creation logic)
○ Development of Innovative sustainable business models
3
, ■ A triple bottom line approach (people, planet, profit)
■ A wide range of stakeholder interests should be included, economic
performance and environmental and societal performance
○ A better understanding is needed on how sustainable business models can deliver
better social and environmental performance
○ So how can we change and/or innovate business models to deliver sustainable
solutions?
● Business models and innovation
○ A commercial business model describes a way of capturing economic value
○ Innovation usually means changes that increase the economic value
○ Example:
■ Mobile telephony business model
● Access to a mobile telephony and internet service for a monthly fee
■ Business model Innovation
● Sell a smartphone with a monthly fee and a 2 year contract
● New value proposition is to provide access and the means of access
creating more economic value for the mobile telephony business
● Sustainable business models
○ A sustainable business model requires innovation that changes the way you do
business
○ A way of capturing economic value and environmental and social value (benefits)
○ Innovation of the mobile company towards a sustainable business model?
■ Sustainability driven BM innovation:
● Rent the smartphone at the end of the 2 year contract customer
returns the smartphone
● Reuse the old smartphone in a different market for 3 years then
recycle materials
■ Sustainable Business model: what are the benefits?
● Smartphone is used for longer (benefiting the environment and some
social groups)
● Smartphone does not become chemical waste (benefits the
environment)
● Sustainable business model archetypes
○ Goal of their research: how to help stimulate innovation that places environmental
and societal benefits above purely economic benefits by developing alternative
business models
○ Categorize sustainable business models into archetypes
○ The archetypes create insights into the range of possibilities and even how they might
be combined
○ Business model archetypes are useful for:
■ Existing businesses (redesign)
■ Entrepreneurs (creating new business)
■ Research (understanding trends and direction that are creating impact)
4
325089-M-6
2021/2022
Session 1
Hockerts & Wustenhagen (2010), Greening Goliaths vs emerging Davids
● The paper analysis the interplay between “Greening Goliaths” and “Emerging Davids” and
theorizes about how their compounded impact promotes the sustainable transformation of
industries
● In the early stages of an industry’s transformation towards sustainability, new entrants and
small firms (Emerging Davids) are more likely than incumbents to pursue sustainability
related opportunities.
● Incumbents react to the activities of new entrants by engaging in corporate sustainable
entrepreneurship activities. They are also called “Greening Goliaths” and are less ambitious in
their environmental and social goals because of their established market presence.
● Firms are divided in two categories:
○ Emerging Davids: small startups and young companies recently founded and have a
small market share. Their social and environmental objectives have the same weight
as the economic objectives and they introduce disruptive innovations
○ Greening Goliaths: large incumbent firms who tend to be older and have a high
market share. Their economic objectives dominate and the social and environmental
objectives are mostly complementary. They use incremental innovation to bring about
sustainable development. We say that they are involved in sustainable corporate
entrepreneurship if they do incremental innovation.
○ Both can play a role in contributing towards sustainable transformation but they do so
in different ways
○ For future success the interaction of the two types is needed
● Innovations can be disruptive or incremental
○ According to Hockerts and Wustenhagen only Davids introduce disruptive
innovations can be classified as demonstrating sustainable entrepreneurship
● Co-evolution
○ Sustainable
transformation of
an industry when
both start ups and
incuments influence
each other in the
market
1
, ○ The authors argue that:
■ Incremental solutions will not be enough to maintain critical levels of natural
and social capital
■ Sustainable entrepreneurship has a role to play
■ 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
● Emerging Davids business behavior
○ They are not limited by previous technological mindsets and are more innovative
○ They are part of the solution and not seen as part of the problem
○ Sustainability startups have a value based approach and externalize costs by asking
customers to pay a premium for socially and environmentally superior products (and
services)
○ They tend to have a single issue focus and can be less good at addressing a broader
range of sustainability issues
○ Idealistic approach can lead to little or no attention to growth strategies
○ They prefer to keep their niche market small and exclusive, in order to avoid
incumbents moving into their markets
● Greening Goliaths business behavior
○ Incumbents may be slow to react but are often able to catch up quickly once they
have decided to follow
○ They may then benefit from being able to charge premium prices, following the price
level established by the startup
○ They can launch venture capital funds to monitor innovating Davids (ex. Philips,
Sabic, Unilever)
○ They may be able to influence the setting (or reduction) of environmental standards in
their favor (ex. car industry lobby)
○ They may try to keep standards fixed rather than encourage continuous improvement
● Co evolution a maturity model
○ Goliaths and Davids follow different approaches but they can converge
○ Model show that these companies grow together
○ First stage: Davids are idealists and experimenting with a product while Goliaths are
ignorant about what’s happening and just want to grow their market share
○ Second stage: Davids start their businesses and Goliaths catch up on what happens in
the market and introduce a sustainable product line while keeping their corporate
identity
○ Third stage: Some of the Davids will look at different ways to improve their world
and do something else while others position themselves in the market and some are
even acquired by Goliaths.
○ Last stage: some Davids create new niches because they feel comfortable to stay in
small consumer groups while others become Goliaths. For Goliaths, sustainability
becomes a standard
2
,Bocken et al. (2014), A literature and practice review to develop sustainable business model
archetypes
● Context
○ The world is using the equivalent of 1.5 planets to support human activities
○ Business as usual is not an option for a sustainable future
● Sustainable business systems
○ A future sustainable economy requires new goals and priorities and a future business
system that:
■ Encourages minimizing consumption
■ Prioritizes societal and environmental benefits over economic growth
■ Emphasizes the delivery of functionality rather than product ownership
■ Operates on a closed loop where nothing is allowed to be waster
● Sustainable business model requires:
○ A fundamental shift in the purpose of business and how it is conducted
○ Re-conceptualizing of the concept and perception of value (creation logic)
○ Development of Innovative sustainable business models
3
, ■ A triple bottom line approach (people, planet, profit)
■ A wide range of stakeholder interests should be included, economic
performance and environmental and societal performance
○ A better understanding is needed on how sustainable business models can deliver
better social and environmental performance
○ So how can we change and/or innovate business models to deliver sustainable
solutions?
● Business models and innovation
○ A commercial business model describes a way of capturing economic value
○ Innovation usually means changes that increase the economic value
○ Example:
■ Mobile telephony business model
● Access to a mobile telephony and internet service for a monthly fee
■ Business model Innovation
● Sell a smartphone with a monthly fee and a 2 year contract
● New value proposition is to provide access and the means of access
creating more economic value for the mobile telephony business
● Sustainable business models
○ A sustainable business model requires innovation that changes the way you do
business
○ A way of capturing economic value and environmental and social value (benefits)
○ Innovation of the mobile company towards a sustainable business model?
■ Sustainability driven BM innovation:
● Rent the smartphone at the end of the 2 year contract customer
returns the smartphone
● Reuse the old smartphone in a different market for 3 years then
recycle materials
■ Sustainable Business model: what are the benefits?
● Smartphone is used for longer (benefiting the environment and some
social groups)
● Smartphone does not become chemical waste (benefits the
environment)
● Sustainable business model archetypes
○ Goal of their research: how to help stimulate innovation that places environmental
and societal benefits above purely economic benefits by developing alternative
business models
○ Categorize sustainable business models into archetypes
○ The archetypes create insights into the range of possibilities and even how they might
be combined
○ Business model archetypes are useful for:
■ Existing businesses (redesign)
■ Entrepreneurs (creating new business)
■ Research (understanding trends and direction that are creating impact)
4
