The characteristics of successful sustainability-driven enterprises in the Western Cape. A micro perspective on success factors of sustainability-driven entrepreneurship in the Western Cape of South Africa.

Abstract

Recognition of businesses that are driven by motives alternative to profit-maximization is increasing. Such motives may be aimed at creating social, environmental and/or community value. Sustainability-driven entrepreneurship is celebrated in terms of the potential contribution to a sustainable way of development. However, the phenomenon is as of yet little understood and investigated. There are still only a few successful sustainability-driven enterprises and it is not clear what characterizes them and which factors are tied to their success. Especially in developing nations, where the impact of sustainability-driven entrepreneurship may be essential, more structural research is required. The complex socio-economic situation, rising environmental problems and emerging development status of South Africa make it an interesting country to look at in researching the link between entrepreneurship a sustainable way of development. This thesis presents an empirical study on Sustainability-driven Entrepreneurship (SdE) performed in the Western Cape of South Africa. It is explored how factors on the micro level explain the success of SdE’s. Success is approached through a triple bottom line, integrating positive impact in terms of ‘prosperity’, ‘people’ and ‘planet’. The main focus is on organizational characteristics, more specifically on capabilities. Based on the assumption that SdE’s differ from commercial enterprises in fundamental ways and they need specific capabilities to deal with the challenges they face, the relationship of five SdE-specific capabilities (based on the work of Parrish, 2010) with success is tested. 38 enterprises participated to this study; the majority was interviewed and filled out a questionnaire, some participated in one of those ways. The interviews were conducted to gain additional, qualitative data as to provide context to and aid interpretation of the quantitative data.

The quantitative data was subjected to factor, correlation and regression analysis to point out key factors of success. The regression analysed returned adjusted R square ranging from 20% for ‘profit’ and ‘prosperity’ to 50-60% for ’people’, ‘planet’ and ‘success total’, which implies that the constructed model explains a considerable share of the variation in the outcome. This results in a fairly steady predictive model, showing a set of identified factors influencing the success of the SdE’s. The findings indicate that other factors influence the economic pillars of success compared to the social and environmental pillars. The specific-SdE capabilities are concluded to be key factors to the success of SdE’s, especially ‘strategic satisficing’ and (to a lesser extent) ‘(natural) resource perpetuation’. The stronger the presence of these capabilities, the more success in terms of (at least one) sustainability aspect(s) a sustainability-driven enterprise will have.

Although the methods used had not been used or tested before and were found to be flawed in some ways, their basis is solid and the findings of this research are valuable. As they indicate that the overall impact of these enterprises on the sustainable development of the region is considerable, some recommendations for policy makers are formulated. This and the many recommendations for further research indicate this important topic deserves and needs a lot more attention.