Greening pastures: Ecosystems for sustainable entrepreneurship

Abstract Sustainable entrepreneurs introduce new sustainable technologies and business models to the market. They thereby can help with tackling grand environmental challenges. Regional governments are increasingly implementing policies to develop a supportive ecosystem for sustainable entrepreneurship in their region. For these policies to be effective, policy makers need to understand which regional factors influence the founding of sustainable start-ups by these entrepreneurs. We build on the sustainable entrepreneurial ecosystem and innovation system literatures to develop hypotheses about which factors could influence the presence of sustainable start-ups in a region. We test these hypotheses on data from 273 European NUTS-2 regions containing 46,741 start-ups. We use text analysis to identify which start-ups are environmentally sustainable. We find strong evidence that the quality of an entrepreneurial ecosystem is important for the presence of sustainable start-ups, even more so than for their regular counterparts. Furthermore, we find that the presence of sustainable start-ups is positively influenced by the presence of fellow (regular) start-ups, the presence of sustainability-oriented formal institutions, and to some extend sustainability-oriented resource endowments and sustainability-oriented informal institutions. We make two contributions to the literature. First, our research contributes to structuring the debate on generic versus specific entrepreneurial ecosystems using insights from the innovation systems literature. Second, we apply these insights to propose a novel conceptual framework for sustainable entrepreneurial ecosystems. We show how sustainable entrepreneurship is influenced by both the generic entrepreneurial ecosystem and through a sustainability specification. Policy makers can use our results to establish policies that help improve ecosystems for sustainable entrepreneurship in their region.