An Asia-Pacific approach to teaching sustainability entrepreneurship
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Two entrepreneurs (Henry Ford and Thomas Edison) 'caused' part of Earth’s precarious climate today by accelerating our dependence on fossil fuels. Our hope is that it will be an en-trepreneur – perhaps one that develops the hydrogen-powered automobile – who will save it. Business educators have the opportunity to create a cohort of moral, ethical and sustainable entrepreneurs who can solve the world’s major problems. Gifford Pinchot once rightly pointed out, 'Business is the dominant institution of our time. It’s also the biggest leverage point.' Another way of saying this is that without business, we cannot save the planet, and without saving the planet there can be no business. It is time to create a cohort of gaiapreneurs (after the Greek goddess of Earth, Gaia), whom I define as 'marked by imagination, initiative and readiness to undertake projects to save the planet'. Ours is an Asia-Pacific approach to teaching sustainability entrepreneurship based on the inter-disciplinarity of entrepreneurship. There are many 'entrepreneurships' (with an emphasis on the plural). Business entrepreneurship is well known. Science and engineering entre-preneurship probably rank second in student popularity behind business entrepreneurship. But we can also mention arts, music, biomedical, sports, nursing and humanities entrepre-neurship. The big difference is that the fate of an entire planet is at stake, and they have contributions to make. That’s what leads us to sustainability entrepreneurship. The process of transforming creative ideas into commercially viable businesses in support of healing the earth is a major challenge for entrepreneurs. Education is key for many entre-preneurs to commercialise their ideas. Drawing upon the theory of experiential, entre-preneurs, in their unique teachable moments, require active and concrete pedagogical interventions that can be enhanced through a blended learning environment of online and face-to-face modalities leading them step-by-step through deepening learning in the theory, process and practice of entrepreneurship on behalf of people, profits and planet. That about sums it up.
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An Asia-Pacific approach to teaching sustainability entrepreneurship
- 1. An Asia-Pacific approach to teaching sustainability entrepreneurship Howard Frederick Deakin University, Melbourne
- 2. Silent Spring by Carson (1962) Spaceship Earth by Boulding (1966) Tragedy of the Commons by Hardin (1968) Earth Day (1970)/Zero Population Growth (1971) Limits to Growth by Club of Rome (1972) Our Common Future by Brundtland (1987) Changing Course by WBCSD (1992) Ecology of Commerce by Hawkin (1993) Green and Competitive by Porter (1995) Love Canal, Acid Rain, Chernobyl, Bhopal, Three Mile Island, Climate Change, Global Warming Influences on my climate change pedagogy
- 7. Sustainable entrepreneurship curriculum This is the first entrepreneurship textbook of the 21st century with people, planet and profits (3Ps) at its base. Every chapter – from performance measures to marketing, from strategy to start- up, from ethics to family business – is related the 3Ps. This is a course in “entrepreneurship as if the planet mattered”. All of this is linked to entrepreneurship through the Pathways in a person’s life.
- 9. Entrepreneurs contribute to the planetary crisis Negative Entrepreneurs are continuously disturbing the Earth’s balance.
- 10. Increasing demand Demand for resources and eco-system services Declining supply Resources and ecosystem services Sustainable supply Sustainable demand Entrepreneurs must help us travel through the ‘funnel’ Sustainable future Margin for action is narrowing The present The future
- 11. Industrial entrepreneurship 1800-2000 • Did not consider environment in planning and design. • Focused on extraction of resources • Did not prevent negative effects • Entrepreneurs had a negative impact on the environment and society. Principles of „entrepreneurial ecology‟ Sustainable entrepreneurship from 2000+ • Focus on biosphere and limiting waste embodied in products. • Take into account the living dimension of the products and services that we produce. • Create net positive entrepreneurial impact loops
- 12. Industrial entrepreneurship 1800-2000 • Did not consider environment in planning and design. • Focused on extraction of resources • Did not prevent negative effects • Entrepreneurs had a negative impact on the environment and society. Principles of „entrepreneurial ecology‟ The study of the interactions of living organisms (including businesses) with each other and with their environment. Sum of all living matter on Earth Every product after its useful life will be waste A proportion of an entrepreneur’s product or service is returned (looped back) to nature. It can have positive or negative impacts. Doing something with the long term in mind Sustainable entrepreneurship from 2000+ • Focus on biosphere and limiting waste embodied in products. • Take into account the living dimension of the products and services that we produce. • Create net positive entrepreneurial impact loops
- 13. Econosphere Sociosphere Biosphere . . . located in the econosphere and surrounded by the biosphere Entrepreneurs are . . .
- 14. Biosphere Sociosphere Econosphere • Planet • Climate & energy • Water, soil, flora & fauna • Atmosphere & topography • People • Human enterprise • Knowledge, labour & capital • Opportunity and value • Profit • Entrepreneurs operate here • Business environment • Entrepreneurial factor conditions (+) Negative entrepre- neurship Positive entrepre- neurship (0)(-)
- 15. Negative entrepreneurship Entrepreneurs undervalue biodiversity, energy, water, and materials. Rather than adding value to living materials we only aim to reduce (e.g. through recycling) the quantity of dead resources. In the end, society penalises entrepreneurs through regulation.
- 16. Positive entrepreneurship • Generates positive value-adding impacts • Eliminate waste, duplication, and planned obsolescence. • Creates net positive-impact loop systems and innovations that create levers for biophysical improvements and social transformation.
- 17. What are disvalue and disinnovation? Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders.
- 18. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. Innovation has a sibling named disinnovation. You disinnovate by making something looking innovative when it merely reframes exploitative processes, economic dominance, or both either without adding value or by extracting value.
- 19. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. The word inventive has its dark sibling called disinventive. We disinvent when we erode the narrow niche of temperature, oxygen, sunlight that sustain life.
- 20. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. Is it positive or negative? Entrepreneurs can disvalue nature as a living ecosystem.
- 21. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. Hindle definition is limited to financial capital without considering the other forms of capital, which may lose value due to innovation and invention, e.g. Human Capital, Social Capital, or Natural capital
- 22. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. Innovation can devalue, or create disvalue. It can deform. Negative ecological footprint could be called the “devalue chain”
- 23. Disvalue and disinnovation in negative entrepreneurship Hindle (2009): Innovation is the combination of an inventive process and an entrepreneurial process to create new economic value for defined stakeholders. Be sure we define stakeholder to include cultures, animals and earth features who are influenced, either directly or indirectly, by the actions of the firm.
- 24. Entrepreneurship Theory And Process Practice for the Environment‟ Romance root „etappe‟, which means „a step in a journey or a competition‟ pathway Etappe™ Approach to Entrepreneurial Learning
- 25. Experiential, learner-centred and practical Allows students to teach themselves Support for the educator Learning through active behaviour „Reasonable adventurer‟ Pathways approach Pedagogy matches the content Learning for sustainability, not learning about sustainability Hallmarks of approach
- 26. Student thought exercise: Can you give the business case for removing human life on Earth? Student thought exercise: Can you give the business case for removing human life on Earth?
- 27. Stern Report has made the case for the “business of climate change” Why not simply remove humans and make Earth into a protein factory? First species capable of effectively eliminating life on Earth. The planet would prefer that we leave so that it can recover. We seem like an alien come from space with the mission of eliminating life on earth. Entrepreneurs too if they are not careful. Can you give the business case for removing human life on Earth?
Editor's Notes
- This is quite in contrast to universities and development authorities in other country. A 2008 European Commission report on Entrepreneurship in Higher Education (2008) recommends that ‘entrepreneurial thinking should be fostered . . . through all levels of education’. The World Economic Forum’s Educating the Next Wave of Entrepreneurs states that ‘entrepreneurship education can be a societal change agent, a great enabler in all sectors. . . . Entrepreneurship education is essential for developing the human capital necessary for the society of the future’ (Volkmann et al., 2009).Even OECD’s Higher Education in Regional and City Development: The State of Victoria, Australia (OECD, 2010) states that ‘Malaysian universities should look to match global levels of excellence in supporting entrepreneurship in the curriculum, and build comprehensive support programmes encompassing entrepreneurship training’ . . . there is a need to aggressively increase and improve entrepreneurship education’… The Malaysian universities should look to match global levels of excellence in supporting entrepreneurship in the curriculum, and build comprehensive support programmes encompassing entrepreneurship training, practical experience of creating new businesses for groups of students, and incubation and hatchery facilities together with seed funds for new graduate ventures.
- By some counts, eighty percent of leading new industries derive their knowledge base from university-based research (Atkinson & Pelfrey, 2010). This contribution to economic and social development lies at the core of the concept of the entrepreneurial university. Universities around the world are increasingly adding a new role to their traditional primary roles as teachers and researchers. This third role is one that that consciously contributes to the development of the economy. Around the world, more than sixty universities (own count) have adopted this ‘university-wide entrepreneurship education’ approach. The literature on the entrepreneurial university has grown to be a broad and deep body of knowledge in the last twenty years.A well-known early work is Burton Clark’s (1998) effort to categorise what is meant by entrepreneurial university as well as to outline the internal and external processes through which it came to being. Clark undertook a series of case studies on what were regarded as exemplar institutions. These cases were used to derive inductively what are described as five ‘pathways of transformation’ to create entrepreneurial universities. They are a strengthened steering core; an expanded developmental periphery; a diversified funding base; a stimulated academic heartland; and an integrated entrepreneurial culture. His main finding was that in order for a university to be entrepreneurial, the organisational culture must facilitate entrepreneurship in a combined top-down bottom-up fashion, including a high tolerance for risk-taking and high threshold for failure. In his subsequent book, Clark (2004) stressed that transforming into an entrepreneurial university requires the simultaneous presence of a number of (sometimes contradictory) factors that taken together signify that the status quo is to change continuously.Notable among them are: Babson College; Bergische University Wuppertal ; EM Lyon Business School; Jönköping University, Sweden ; Leon Kozminski Academy of Entrepreneurship and Management, Poland; National University of Singapore (NUS), Singapore ; Pontifical Catholic University of Rio de Janeiro ; Stanford University; Strossmayer University of Osijek, Croatia ; Technical University of Munich (TUM), Germany ; Technologico de Monterrey, Mexico; University of Cambridge; University of Cape Town, South Africa ; University of North Carolina; University of Southern California; University of Texas at AustinSee for example (Armbruster, 2008; Atkinson & Pelfrey, 2010; Barsony, 2003; Berggren, 2011; Blenker, Dreisler, Faergemann, & Kjeldsen, 2008; Charney & Libecap, 2000; Clark, 1998; Conway, 2010; Culkin, 2009; Culkin & Mallick, 2011; Currie, 2002; H. Etzkowitz, 2003; Henry Etzkowitz, 2003; Etzkowitz, 2004, 2010; Etzkowitz et al., 2000; Etzkowitz & Chunyan, 2006; Etzkowitz et al., 2008; Etzkowitz & Viale, 2010; Etzkowitz & Zhou, 2008; Feldman et al., 2009; Fetters, Greene, Rice, & Butler, 2010; Allan Gibb, 2007; A. Gibb & Hannon, 2006; A. Gibb, Haskins, Education, & Robertson, 2009; Gjerding, Wilderom, Cameron, Taylor, & Scheunert, 2006; Guerrero-Cano, Kirby, & Urbano, 2006; Guerrero & Urbano, 2011; Hakala, 2009; Hancock, 2011; Harrison & Leitch, 2010; Hellstrom, 2007; K. Hindle, 2007; Jacob, Lundqvist, & Hellsmark, 2003; Kirby, 2006; Kyro & Ristimaki, 2008; Lam, 2010; Lazzeroni & Piccaluga, 2003; Lehrer, Nell, & Gärber, 2009; Lüthje & Franke, 2002; Mets, 2010; Mohrman, Ma, & Baker, 2008; Nelles & Vorley, 2010; O'Shea, Allen, Morse, O'Gorman, & Roche, 2007; Philpott, Dooley, O'Reilly, & Lupton, 2011; Rae, Gee, & Moon, 2009; Rice, Fetters, & Greene, 2010; Michael Shattock, 2010; Siegel, Wright, & Lockett, 2007; Thorp & Goldstein, 2010; University of North Carolina, 2010; Vestergaard, 2007; Walsh-Covarrubias, 2010; Wasser, 1990; Weaver, D'Intino, Miller, & Schoen, 2009; West, Gatewood, & Shaver, 2009; William Todorovic, McNaughton, & Guild, 2011; Wong, Ho, & Singh, 2007; Woollard, 2010; Woollard, Zhang, & Jones, 2007)
- It is no exaggeration to say that an entrepreneur (Henry Ford) played a major role in contributing to our current dilemma and an entrepreneur (perhaps one who commercialises hydrogen autos) can help ease the problem. And it’s not just large companies that are to blame. Small-scale entrepreneurs have made their contribution to the planetary crisis by helping to destroy areas of rainforest. This alone is a significant contributor to climate change since tropical forests sequester (take out and store) carbon from the atmosphere. In an attempt to better themselves by increasing their standards of living, entrepreneurial families as well as large companies have cleared vast stretches of rainforest, releasing megatons of CO2 and it will take decades to restore these ‘lungs of the Earth’.
- Imagine looking at a giant funnel from the side. The upper wall of CLICK DECLINING AND SUSTAINABLE SUPPLY, the availability of resources and the ability of the ecosystem to continue to provide them. The lower wall is CLICK INCREASING AND SUSTAINABLE DEMAND, our demand for these resources which we need to make clothes, shelter, food, transportation and other items and the ecosystems that create them. The things we need to survive food, clean air and water, productive topsoil and others are in decline. So is nature’s ability to regenerate them. But at the same time, our demand for these resources is growing. CLICK EARTH. CLICK MARGIN NARROWING There are more than six billion people on the planet and the population is increasing. Our level of consumption is increasing. As our demand increases and the capacity to meet this demand declines, society moves into a narrower portion of the funnel. CLICK BUMPING ARROW. As the funnel narrows there are fewer options and less room to manoeuvre. Organisations that continue business-as-usual are likely to YOU CAN SEE THE HITS hit the walls of the funnel, and fail. Every one of us lives and works in this funnel and every one of us has the opportunity to be more strategic about our choices and long-term plans. How do we find a path through this ever narrowing funnel of our future life on earth? CLICK ARROWS THROUGH Through innovation, creativity and the unlimited potential for change, we can shift toward sustainability and begin to open up the walls of the funnel. Forward looking organisations can position themselves to avoid the squeeze of the funnel and invest toward opening the walls and creating a truly sustainable and rewarding future.
- Let’s start looking at this new field, entrepreneurial CLICK ecology. CLICK In the era of industrial entrepreneurship, from the 19th century through to the new millennium, entrepreneurs were not obligated to consider the environment in their planning and design. They focused on extraction of scarce resources with little regard to their replenishment, on global distribution without regard to distance, on rampant construction without regard to environmental consequences, and on supply-chain shortcuts without regard to equity. Entrepreneurs were not normally oriented towards the prevention of negative effects, to the reversal of degradation, or to net improvement in the physical and social universes. In the age of industrial entrepreneurs, waste was not a design consideration. In the end these entrepreneurs had a negative impact on the environment and society. CLICK Now, in the age of sustainable CLICK entrepreneurship, we need to think ecologically about the biosphere CLICK and to consider the waste CLICK embodied in products. We need to move beyond simplistic input–output analysis without regard to the consequences and to apply new concepts that take into account the living dimension of the products and services that we produce. In essence, we need to create net positive entrepreneurial impact loops CLICK because the biosphere is linked to the sociosphere and the econosphere. These entrepreneurial impact loops can trigger effects that can amplify the degradation or the restoration in the biosphere.
- Let’s start looking at this new field, entrepreneurial CLICK ecology. CLICK In the era of industrial entrepreneurship, from the 19th century through to the new millennium, entrepreneurs were not obligated to consider the environment in their planning and design. They focused on extraction of scarce resources with little regard to their replenishment, on global distribution without regard to distance, on rampant construction without regard to environmental consequences, and on supply-chain shortcuts without regard to equity. Entrepreneurs were not normally oriented towards the prevention of negative effects, to the reversal of degradation, or to net improvement in the physical and social universes. In the age of industrial entrepreneurs, waste was not a design consideration. In the end these entrepreneurs had a negative impact on the environment and society. CLICK Now, in the age of sustainable CLICK entrepreneurship, we need to think ecologically about the biosphere CLICK and to consider the waste CLICK embodied in products. We need to move beyond simplistic input–output analysis without regard to the consequences and to apply new concepts that take into account the living dimension of the products and services that we produce. In essence, we need to create net positive entrepreneurial impact loops CLICK because the biosphere is linked to the sociosphere and the econosphere. These entrepreneurial impact loops can trigger effects that can amplify the degradation or the restoration in the biosphere.
- sustainable entrepreneurship is the intersection of the sociosphere, the econosphere with the biosphere. Let’s examine these more closely
- CLICK The biosphere consists of all of the living and non-living things on Earth. CLICK The sociosphere consists of all the people in a social system, all the roles they occupy, and all their patterns of behaviour, all their inputs and outputs relevant to other human beings, and all the organisations and groups they belong to. CLICK The econosphere consists primarily of the segment of the sociosphere that is organised through exchange, especially commodity exchange, where the exchange is mediated through prices. CLICK From a material point of view, we see objects passing from the biosphere through the sociosphere into the econosphere in the process of production. This means we extract from nature the raw materials and energy that we might need for the creation of entrepreneurial products and services. Nature is diminished and the value of the biosphere declines. Next, after entrepreneurs are done with these resources, CLICK they pass out of the econosphere as waste as their value becomes unusable or zero or even damaging to the environment, or negative. This is unsustainable or what I call negative entrepreneurship. That means the value of nature diminishes in the entrepreneurial process. For the most part, throughout the history of entrepreneurship has been an uneven exchange: Entrepreneurs extract a resource from the Earth and return it in devalued form, hence the plus and minus arrows in the diagram. However, this could be different. It could be CLICK positive entrepreneurship. Positive entrepreneurship can generate positive impacts through value adding and eliminating designed waste, duplication, disposability, planned obsolescence and wasteful end purposes. Positive entrepreneurs create net positive-impact loop systems and innovations that create levers for biophysical improvements and social transformation.
- Up until the present, some entrepreneurs have greatly undervalued the biodiversity, ecosystems and means of survival that nature provides, including resources such as energy, water, free space and materials. We have not valued nature as a living ecosystem. Rather than adding value to living materials we only aim to reduce (e.g. through recycling) the quantity of dead resources. In the end, society has to implement complex regulations, incentives and tools to penalise entrepreneurs or to encourage them to reduce waste and mitigate the effects of negative entrepreneurship. What positive entrepreneurship can do is generate positive impacts through value adding and eliminating designed waste, duplication, disposability, planned obsolescence and wasteful end purposes. Positive entrepreneurs create net positive-impact loop systems and innovations that create levers for biophysical improvements and social transformation.
- What positive entrepreneurship can do is generate positive impacts through value adding and eliminating designed waste, duplication, disposability, planned obsolescence and wasteful end purposes. Positive entrepreneurs create net positive-impact loop systems and innovations that create levers for biophysical improvements and social transformation.
- This definition reflects the triumphalism of the Industrial Age. On the face of it parsimonious, there are assumptions in this definition that embody the industrial age characterised by negative entrepreneurship. Let us take them in turn.Innovation has a sibling named disinnovation. You disinnovate by making something look innovative when it merely reframes exploitative processes, economic dominance, or both either without adding value or by extracting value. The word inventive has its dark sibling called disinventive, which means rescind or make useless the invention of something, for example, “to disinvent the atomic bomb. Though its usage is almost entirely restricted to the realm of arms control, disinvent quite aptly can refer to woeful undoing of positive inventions by the forces of negative entrepreneurship.Finally we come to economic value. The ‘value’ school of thought maintains that innovation transforms the potential of an idea or an invention (latent in new knowledge) into measurable economic value. The reason is, Hindle says, ‘innovation is the combination of the creative process of invention and the entrepreneurial process of creating economic value’. But innovation can also devalue, or create disvalue. It can deform. A. DeVolpi, V.E. Minkov, G.S. Stanford, and V.A. Simonenko, VadimSimonenko, George Stanford, Nuclear Shadowboxing: Contemporary Threats from Cold War Weaponry, Vol 2. Legacies and Challenges, p. VII-5. ISBN: 0-9777734-1-8Hindle, 2009.
- This definition reflects the triumphalism of the Industrial Age. On the face of it parsimonious, there are assumptions in this definition that embody the industrial age characterised by negative entrepreneurship. Let us take them in turn.Innovation has a sibling named disinnovation. You disinnovate by making something look innovative when it merely reframes exploitative processes, economic dominance, or both either without adding value or by extracting value. The word inventive has its dark sibling called disinventive, which means rescind or make useless the invention of something, for example, “to disinvent the atomic bomb. Though its usage is almost entirely restricted to the realm of arms control, disinvent quite aptly can refer to woeful undoing of positive inventions by the forces of negative entrepreneurship.Finally we come to economic value. The ‘value’ school of thought maintains that innovation transforms the potential of an idea or an invention (latent in new knowledge) into measurable economic value. The reason is, Hindle says, ‘innovation is the combination of the creative process of invention and the entrepreneurial process of creating economic value’. But innovation can also devalue, or create disvalue. It can deform. A. DeVolpi, V.E. Minkov, G.S. Stanford, and V.A. Simonenko, VadimSimonenko, George Stanford, Nuclear Shadowboxing: Contemporary Threats from Cold War Weaponry, Vol 2. Legacies and Challenges, p. VII-5. ISBN: 0-9777734-1-8Hindle, 2009.
- This definition reflects the triumphalism of the Industrial Age. On the face of it parsimonious, there are assumptions in this definition that embody the industrial age characterised by negative entrepreneurship. Let us take them in turn.Innovation has a sibling named disinnovation. You disinnovate by making something look innovative when it merely reframes exploitative processes, economic dominance, or both either without adding value or by extracting value. The word inventive has its dark sibling called disinventive, which means rescind or make useless the invention of something, for example, “to disinvent the atomic bomb. Though its usage is almost entirely restricted to the realm of arms control, disinvent quite aptly can refer to woeful undoing of positive inventions by the forces of negative entrepreneurship.Finally we come to economic value. The ‘value’ school of thought maintains that innovation transforms the potential of an idea or an invention (latent in new knowledge) into measurable economic value. The reason is, Hindle says, ‘innovation is the combination of the creative process of invention and the entrepreneurial process of creating economic value’. But innovation can also devalue, or create disvalue. It can deform. A. DeVolpi, V.E. Minkov, G.S. Stanford, and V.A. Simonenko, VadimSimonenko, George Stanford, Nuclear Shadowboxing: Contemporary Threats from Cold War Weaponry, Vol 2. Legacies and Challenges, p. VII-5. ISBN: 0-9777734-1-8Hindle, 2009.
- This definition reflects the triumphalism of the Industrial Age. On the face of it parsimonious, there are assumptions in this definition that embody the industrial age characterised by negative entrepreneurship. Let us take them in turn.Innovation has a sibling named disinnovation. You disinnovate by making something look innovative when it merely reframes exploitative processes, economic dominance, or both either without adding value or by extracting value. The word inventive has its dark sibling called disinventive, which means rescind or make useless the invention of something, for example, “to disinvent the atomic bomb. Though its usage is almost entirely restricted to the realm of arms control, disinvent quite aptly can refer to woeful undoing of positive inventions by the forces of negative entrepreneurship.Finally we come to economic value. The ‘value’ school of thought maintains that innovation transforms the potential of an idea or an invention (latent in new knowledge) into measurable economic value. The reason is, Hindle says, ‘innovation is the combination of the creative process of invention and the entrepreneurial process of creating economic value’. But innovation can also devalue, or create disvalue. It can deform. A. DeVolpi, V.E. Minkov, G.S. Stanford, and V.A. Simonenko, VadimSimonenko, George Stanford, Nuclear Shadowboxing: Contemporary Threats from Cold War Weaponry, Vol 2. Legacies and Challenges, p. VII-5. ISBN: 0-9777734-1-8Hindle, 2009.
- The problem emerges because Hindle conflates economic value with financial and manufacturing capital without considering the other forms of capital, which may lose value due to innovation and invention. At its base, capital is any resource (human-made or natural) that is used to create other goods or services. We call them all factors of production, or simply the ‘Five Capitals’. The Five Capitals Model of sustainable development was developed by the organisation Forum for the Future. Two of them (financial and manufactured capital) are what we might call classical capital and are at the core of the entrepreneurial economy (see Figure 8.1). But there are three others kinds of capital that are just as important for start-up venturers in the new millennium. Financial capital, sometimes just called ‘money’, is the core of what entrepreneurs use to leverage other resources in the process of making products and services for the marketplace. Manufactured capital is made up of physical goods (ironically known as ‘the plant’) such as machinery for manufacturing, boats for fishing, computers for telecommunications and so forth. These are the material goods or fixed assets that contribute to production rather than being the output itself.Human capital incorporates the health, knowledge, skills, intellectual outputs, motivation and capacity for relationships of real human indivdiuals. People trade this talent for money, trust, or equity. We call this human resources or labour. Social capital is the value of a person’s network. It consists of trusting relationships between individuals through families, communities, businesses, schools, and voluntary organisations. Social capital ‘refers to the collective value of all “social networks” and the inclinations that arise from these networks to do things for each other’. Natural capital is the stock of natural ecosystems that entrepreneurs use to create goods or services for their markets. Natural capital is different from other forms of capital in that it cannot be produced by human activity. Well managed, natural capital can be indefinitely sustainable; for example, the ocean can provide a constant flow of fish for human consumption. Natural Entrepreneurs must take care: (1) not to exceed the Earth’s carrying capacity to disperse, absorb, recycle or otherwise neutralise their harmful effects; and (2) protect (even increase) the Earth’s biological diversity and productivity. See Arthur Sullivan and Steven M. Sheffrin, Economics: Principles in action, Upper Saddle River, New Jersey: Pearson Prentice Hall, 2003: 4. These authors do not include natural capital. Forum for the Future, ‘The Five Capitals Model – A Framework for Sustainability’, www.forumforthefuture.org/files/The%20five%20capitals%20model.pdf; see also Jonathon Porritt and Amory B. Lovins, Capitalism As If The World Matters, rev. edn, London: Earthscan Publications Ltd., 2007: 138–142.Robert Putnam, Bowling Alone: The Collapse and Revival of American Community, New York: Simon and Schuster, 2000.Paul Hawken, Amory Lovins, L. Hunter Lovins, Natural Capitalism, New York: Bay Back Books, 1999: 151.
- The Triple Bottom Line (or ‘TBL’, ‘3BL’, or ‘People, Planet, Profit’) goes beyond financial accounting to measure the performance of a variety of values and criteria for organisational ecological and social success. One of the most important differences with financial accounting is that TBL looks at a company’s stakeholders, not just its shareholders. A stakeholder is broadly defined as someone who is influenced, either directly or indirectly, by the actions of the firm. (Some advocate that it should be any living being, including animals.) The Triple Bottom Line concept is made up of three intersecting circles: People, Planet, Profit. Compare this to the ‘Five Capitals Model’ of sustainable development (see Figure 8.1).The phrase was coined by John Elkington in 1994. It was later expanded and articulated in his 1998 book Cannibals with Forks: The Triple Bottom Line of 21st Century Business. See also J. Elkington, ‘Towards the Sustainable Corporation: Win-Win-Win Business Strategies For Sustainable Development’, California Management Review, 36(2), 1994: 90–100; D. Brown, J. Dillard and R.S. Marshall, Triple Bottom Line: A Business Metaphor For A Social Construct, Portland State University, School of Business Administration, 2006. ‘Shell by Sustainability. Harvard Business Review on Corporate Responsibility’, Harvard Business School Press; see also Tom Chappell, The Soul of a Business: Managing for Profit and the Common Good, New York: Bantam, 1993; Stuart L. Hart, Capitalism at the Crossroads: The Unlimited Business Opportunities in Solving the World’s Most Difficult Problems, Upper Saddle River, NJ: Wharton School Publishing, 2005; Andrew W. Savitz and Karl Weber, The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social and Environmental Success – and How You Can Too, San Francisco: John Wiley & Sons, 2006; Bob Willard, The Sustainability Advantage: Seven Business Case Benefits of a Triple Bottom Line (Conscientious Commerce), Gabriola Island, BC: New Society Publishers, 2002.