Young and Tilley’s Sustainable Entrepreneurship Model

Young and Tilley noted that Crals and Vereeck had defined sustainable entrepreneurship as the “continuing commitment by businesses to behave ethically and contribute to economic development while improving the quality of life for the workforce, their families, the local and global community as well as future generations” and then went on to take the position that the definition applied to “existing businesses” and not to entrepreneurs who set out to start up and grow a sustainable enterprise from the very beginning.[1]  Young and Tilley believed that mainstream businesses interested in pursuing social, environmental or sustainable actions encountered difficulties in reconciling economic value, which is relatively easy to measure objectively, and the form of moral value, which is subjective, associated with such actions.[2]  Because of these difficulties, entrepreneurship, specifically sustainable entrepreneurship, may arguably be the preferred form for the pursuit of sustainability because it is unique and allows for incorporation and consolidation of the value perceptions of the individual entrepreneur in ways that reconcile differences between society and mainstream businesses.

Young and Tilley described sustainable entrepreneurs as entrepreneurs who apply their values to generate a sustainable form of wealth, which means contributing a holistic net benefit to the economy, community and the natural environment.[3]  They proposed a model for understanding the concept of “sustainable entrepreneurship”, which they described as an “organization that has sustainability at the center of its structure, operations and management”.[4]  Young and Tilley explained that their goal was to put forward a model for sustainable entrepreneurship that distinguished it from the conventions of economic, social and environmental entrepreneurship.[5]  They were very clear that while it was true that economic, social and environmental entrepreneurs could contribute to sustainable development, they were not going be fully sustainable so long as they maintained a single primacy.[6]

Young and Tilley emphasized that sustainable entrepreneurship is based on moving beyond “efficiency” to seeking and achieving “sustainability”, a path that was consistent with the evolution in the way in which businesses have encompassed changing attitudes toward environmental and social issues.  They explained that when businesses first starting considering environmental issues during the early 1960s their primary concern was controlling pollution and their responses tended to be bolt-on solutions to manage compliance with emerging regulations.  Two decades later, beginning in the mid-1980s and extending through the 1990s, businesses identified opportunities to reduce costs through the implementation of environmental management practices: the so-called “eco-efficiency” strategy that was touted as a “win-win” solution that minimized resource consumption and waste while affording companies a competitive advantage.[7]  By the beginning of the 21st century, however, environmental management theorists and activists had pivoted toward a new approach: businesses should seek “eco-effectiveness” by adopting business practices that went beyond pollution control and eco-efficiency to operating in a manner that restored and enhanced the environment.[8]

The expansive approach to sustainability advocated by Young and Tilley fits within the debate and contrast between “weak”, sometimes referred to as “incremental”, and “strong” sustainability.[9]  Weak sustainability has been described as the expansion of the breadth of what a business considers to be important beyond the traditional financial bottom line focus to include ethical, environmental and community responsibility, as well as being a good employer and an advocate of ethical labor practices among its business partners. The magnitude of expansion, often referred to as the “triple bottom line”, varies from case-to-case and is many businesses begin with, and limit their efforts to, environmental responsibility.  In contrast, strong sustainability has been described as “a whole new approach to doing business, where every consideration is made for the business to contribute toward a sustainable society”.  Applicants of strong sustainability seek to build the capacity to endure within their businesses and continuously ask what they can do to add value to their business within the broader society and eco-systems.

The model suggested by Young and Tilley was based on combining the six criteria of corporate sustainability proposed by Dyllick and Hockerts with concepts that were included in the McDonough-Braungart model of corporate sustainability, all of which have already been described above.  While Young and Tilley noted that each of the aforementioned models had value, they also had several criticisms[10]:

  • While they believed that Dyllick and Hockerts provided a useful insight into new ways of advancing solutions with respect to production, their model did not properly address problems relating to consumption. Specifically, Young and Tilley cautioned that “no matter how environmentally friendly you make a product, if consumer demands are too high there is a potential for imbalance and environmental or social harm”.
  • Companies of all sizes, large and small, have a tendency to concentrate on just one of the business cases, rather than incorporating all element of the model into their core missions. While the tendency among larger companies to place greater weight on the business case is well documented, smaller companies that have gone well beyond eco- and socio-efficiency to produce “green” products and help disadvantaged sections of society often have similar problems.
  • The McDonough-Braungart model did not provide enough detail to translate into values and strategies for companies and was still concentrating on the separate elements of sustainable development and not the whole thing.

Young and Tilley argued that Dyllick and Hockerts and McDonough and Braungart had focused their efforts on established businesses that were approaching sustainable development from the eco- and socio-efficiency end of the models and that their models failed to provide guidance to eco- and socio-entrepreneurs in operationalizing the other elements of the path towards sustainable development.  In order to address these shortcomings, Young and Tilley proposed several changes to the Dyllick-Hockerts model to “focus on entrepreneurship and advance it to sustainable entrepreneurship”[11]:

Young and Tilley began by swapping the labels “ecological equity” and “sufficiency”.  They explained that ecological equity is an environmentally-centered principle that primarily concerns with the equal rights of all peoples and generations to environmental resources and that sufficiency is a more social-centered principle that focuses on individuals and companies living on needs rather than wants.  They also replaced the labels of “business cases”, “natural case” and “societal case” with “economic entrepreneurship”, “environmental entrepreneurship” and “social entrepreneurship”, respectively, and explained that the changes were intended to develop a model for new organizations with strong economic, environmental and social philosophies.  Young and Tilley also emphasized that an effective and comprehensive model of sustainable entrepreneurship had to be an integrated approach that incorporated all three components of sustainable development into the organization in a holistic way and that no single type of entrepreneurship—economic, environmental or social—could have a primacy that would impede the organization’s path to sustainability.

Young and Tilley’s main effort to advance the Dyllick-Hockerts model to a full-fledged framework for sustainable entrepreneurship involved moving the three traditional poles of entrepreneurship (i.e., economic, environmental and social) towards a higher plane.  In order to do this, Young and Tilley introduced three new two-way relationships and six new variables to be added to the six already operating in the Dyllick-Hockerts model[12]:

  • A relationship between economic and sustainable entrepreneurship which involves both “economic equity”, which is the distribution of economic wealth fairly between existing generations as well as future generations, and “inter-generational equity”, which brings consideration of the economic welfare of future generations into the factors that companies consider when making decisions and engaging in operating activities.
  • A relationship between environmental and sustainable entrepreneurship which involves both environmental stability, which is the positive forces being exerted on the environment to stabilize and where necessary restore the various ecosystem functions (e.g., climate change), and environmental sustainability, which brings consideration of the long-term sustainability into the factors that companies consider when making decisions and engaging in operating activities.
  • A relationship between social and sustainable entrepreneurship which involves both social responsibility, which refers to companies and individuals taking responsibility and being accountable for direct and indirect and negative and positive impacts on existing generations, and “futurity”, which brings consideration of the social well-being of future generations into the factors that companies consider when making decisions and engaging in operating activities.

The crux of the argument made by Young and Tilley was that “sustainable entrepreneurship is the sum of all the 12 variables of the model operating in unison” and they cautioned that sustainable entrepreneurship could not be achieved by only subscribing to social or environmental entrepreneurship.[13]  They noted that while the model “does not represent a ‘direct route’ from any of economic, environmental or social entrepreneurship poles to sustainable entrepreneurship” it does illustrate the relationship between the three poles and sustainable entrepreneurship and thus could be used as a way for assessing whether an organization meets the criterion for one of the poles and identifying the steps that the organization should take to move from that pole towards sustainable entrepreneurship.  In other words, the sustainable entrepreneurship model was developed as a framework to guide individuals seeking to start up a sustainable enterprise from the outset and Young and Tilley described the model as detailing the elements required of a sustainable entrepreneur.

According to Tilley and Young, the six initial elements of the model could be seen as the values that build an entrepreneur with social, environmental or economic goals and the additional six elements incorporate what is needed in order for the entrepreneurial activity to be sustainable.  They conceded that the additional elements would be challenging to realize in practice because many of them are at best theoretical; however, they argued that entrepreneurs are well suited to the task given their propensity for innovation, experimentation and risk taking.  Their position with regard to sustainable entrepreneurship has been succinctly explained as follows:

“The sustainable entrepreneur is the only route to fulfilling sustainable development. Firstly, an entrepreneur and their enterprise have to be financially sustainable to survive within the current economic and regulatory systems.  An organization just focusing on the environment as its goal without a means of income beyond government subsidy or philanthropy cannot be an entrepreneur, for example, a change of government or change of heart by the philanthropist could remove the income for that organization and stop the environmental work. In addition, concentrating on environmental values causes social damage, that is to say, creating a nature reserve can exclude the local community from resource traditionally harvested from the land the nature reserve now occupies. Similarly, concentrating on the social values can cause financial failure and environmental damage, take a fair trade organization as an example, it can help bring disadvantaged communities out of poverty but if the organization cannot sell the fair trade products its financial failure stops its good work. In addition, the fair trade organization is damaging the environment through transporting goods across the world (contributing to climate change) and having little regard to the impacts of the production process on the environment (depletion of natural resources, pesticides, hazardous waste).  Hence only those entrepreneurs that balance their efforts in contributing to the three areas of wealth generation can truly be called a sustainable entrepreneur.”[14]

Assessment questions that prospective sustainable entrepreneurs can use as guides on their journey to sustainable entrepreneurship are available here.  Tilley and Young pointed out several challenges that sustainable entrepreneurs will need to overcome, beginning with the fundamental issue of how to measure wealth generation.[15] The traditional primacy of the business case reflects society’s predisposition toward judging success in measurable quantitative, typically financial, terms alone and transition toward sustainable entrepreneurship will require the development of adequate measures of social and environmental value.  Another problem is the lack of incentives and rewards to support sustainable entrepreneurs and allow them to survive in the market-based economy.  Tilley and Young argued, for example, that if the sustainable entrepreneur contributes towards the economy, society and protects the environment, they should be rewarded for taking on roles that are normally funded by the state, perhaps by being given “tax haven” status that would allow them to retain funds that would normally be paid to the state and re-invest them in the sustainable activities that have broader social value.  Finally, Tilley and Young observed that sustainable entrepreneurs need more external support and that sustainable entrepreneurial networks need to be built in order to help those entrepreneurs get their businesses launched and address the challenges associated with the various elements of the sustainable entrepreneurship model.

Case Study: The Day Chocolate Company

In an effort to illustrate the application and utility of their sustainable entrepreneurship model, Young and Tilley provided a case study of the “Day Chocolate Company”.  They explained that the company was set up to access the chocolate market in the United Kingdom by a West African cocoa growers co-operative called Kuapa Kokoo with The Body Shop International and Christian Aid and facilitated by Twin Trading.  Kuapa Kokoo, The Body Shop International and Christian Aid each owned a third of the company, which sold two brands of Fairtrade chocolate carrying the Fairtrade Mark certified by the UK Fairtrade Foundation.  Young and Tilley noted that the overall goal and purpose of the company was to improve the livelihood of smallholder cocoa producers in Ghana.  They went on to first assess whether Day Chocolate Company satisfied the elements of one of the poles of their sustainable entrepreneurship model—social entrepreneurship—and then proceeded to make suggestions as to what the company would need to do in order to move from social entrepreneurship toward sustainable entrepreneurship.

As for social entrepreneurship, Young and Tilley concluded that Day Chocolate Company was a “social entrepreneur” based on its progress with respect to at least four of the elements in their sustainable entrepreneurship model:

         Socio-efficiency: There was evidence of a positive social impact on the cocoa growers and the local community as well as consumers; however, Young and Tilley noted that more information was needed on working conditions in the other parts of the supply chain such as chocolate production and within the company itself.

·         Socio-effectiveness:  As noted above, there was evidence of positive impacts on the cocoa growers and the local community.

·         Social responsibility: The company was taking responsibility for the production of cocoa; however, further information was needed regarding the impacts on other stakeholders.

·         Economic equity:  The unique ownership structure, which included suppliers, a charity and a for-profit company with sustainable aims, coupled with the fair trade scheme that the company was operating under allowed suppliers to receive a guaranteed price for their cocoa.  However, Young and Tilley noted that more evidence needed to be collected on other economic equity issues, such as wage differentials within the company and throughout its entire supply chain.

Young and Tilley cautioned that their conclusion that the Day Chocolate Company was a social entrepreneurship did come with several caveats.  First, as mentioned several times above, more evidence regarding certain of the elements was needed.  Second, Young and Tilley wondered whether selling chocolate was at odds with the “sufficiency” element of their sustainable entrepreneurship model given the potential negative health impacts of consuming products with a high sugar content and the lack of restrictions on the amount of product that could be sold that could potentially have larger and larger environmental impacts.  While it might be impossible to totally overcome these issues when the product in question is chocolate, companies can mitigate some of the potential harms by restricting/rationing sales, reducing the size of servings, educating consumers on the harm of a high sugar diet and providing labelling that goes beyond the minimum disclosures legally required.  At a more basic level, it is also fair to ask whether the sufficiency element can ever be satisfied when the product in question is a luxury item such as chocolates.

As for progress toward achieving sustainable entrepreneurship, Young and Tilley turned to examining the key elements in their model associated with the relationships between economic, environmental and social entrepreneurs and sustainable entrepreneurship that have not already been discussed above and offered the following prescriptions:

·         Inter-generational equity: The future generations in the community need to be taken into account not only by ensuring that cocoa farming is a long-term enterprise but also that the community develops a diversity of enterprise beyond cocoa farming.

·         Environmental stability: Issues with regard to this element center around identifying and mitigating potential harmful environmental impacts of the production of the product, with ideas including shifting to organic production; changes in transport modes within the supply chain (e.g., not using air freight, shifting to rail freight and reducing “food miles”); and addressing the impacts from the production and disposal of packaging (e.g., reducing packaging and shifting to better materials).

·         Environmental sustainability: Starting to move to a “zero impact company” by analyzing whether the production and use of the product can be radically altered or whether another type of product with less of an impact will achieve the fair trade principles of the company.

·         Futurity: Contributing to the wellbeing of future generations in the community through participation in long-term education, health and cultural programs in collaboration with the farming community.

Young and Tilley explained that the case of Day Chocolate Company illustrates how a company can achieve social entrepreneurship status yet still remain far from what they consider to be sustainable entrepreneurship.  In this instance, the company would need to evolve in several ways including changes in its overall objective and changes in many areas of its operational activities to address the other elements of the sustainable entrepreneurship model.  Young and Tilley stressed that “there is nothing wrong with being a social or environmental entrepreneur if that is the aim, but all elements of the model need to be balanced, not just a few, before entrepreneurs can describe themselves as ‘sustainable entrepreneurs’”.

Sources: W. Young and F. Tilley, “Can Businesses move Beyond Efficiency? The Shift towards Effectiveness and Equity in the Corporate Sustainability Debate”, Business Strategy and the Environment, 15 (2006), 402, 412-414; B. Doherty, “A Divine alternative international chocolate business model?”, International Sustainable Development Research Conference (ERP: Shipley, 2003). 

This post is part of the Sustainable Entrepreneurship Project’s extensive materials on  Entrepreneurship and Sustainability and Entrepreneurship.

Notes

[1] F. Tilley and Young, “Sustainability Entrepreneurs — Could they be the True Wealth Generators of the Future?”, Greener Management International, 55 (2009), 79 (citing E. Crals and L. Vereeck, “Sustainable entrepreneurship in SMEs. Theory and Practice” (Copenhagen: 3rd Global Conference in Environmental Justice and Global Citizenship, February 2004), 2).

[2] Id. (citing J. Seiler-Hausmann, C. Liedtke and E. von Weizsacker, “Introduction” in J. Seiler-Hausmann, C. Liedtke and E. von Weizsacker (Eds.), Eco-efficiency and Beyond: Towards the Sustainable Enterprise (Sheffield, UK: Greenleaf Publishing, 2004)).

[3] Id.

[4] W. Young and F. Tilley, “Can Businesses move Beyond Efficiency? The Shift towards Effectiveness and Equity in the Corporate Sustainability Debate”, Business Strategy and the Environment, 15 (2006), 402.

[5] F. Tilley and Young, “Sustainability Entrepreneurs — Could they be the True Wealth Generators of the Future?”, Greener Management International, 55 (2009), 79.

[6] Id.

[7] C. Holliday, S. Schmidheiny and P. Watts, Walking the Talk – the Business Case for Sustainable Development (Sheffield: Greenleaf, 2002).

[8] W. Young and F. Tilley, “Can Businesses move Beyond Efficiency? The Shift towards Effectiveness and Equity in the Corporate Sustainability Debate”, Business Strategy and the Environment, 15 (2006), 402, 403.

[9] The discussion in this paragraph has been adapted from Sustainable Business: A Handbook for Starting a Business (New Zealand Trade and Enterprise).

[10] W. Young and F. Tilley, “Can Businesses move Beyond Efficiency? The Shift towards Effectiveness and Equity in the Corporate Sustainability Debate”, Business Strategy and the Environment, 15 (2006), 402, 407-409.

[11] Id. at 409-412.

[12] Id. at 411-412.

[13] Id. at 412.

[14] F. Tilley and Young, “Sustainability Entrepreneurs — Could they be the True Wealth Generators of the Future?”, Greener Management International, 55 (2009), 79.

[15] Id.

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