Entrepreneurs and Triple Bottom Line
Should Entrepreneurs be Concerned with Triple Bottom Line?
As opined by Ferreira, Fernandes and Ratten (2017), entrepreneurs those who deliver do flourish an economic development as they do not just introduce new companies to the economy but also provide the employability option. According to Onat, Kucukvar and Tatari (2014), the triple bottom line means satisfying three different factors, which affect and are affected by entrepreneurial ventures. Profit does affect the entrepreneurs and the host country. Therefore, Onat, Kucukvar and Tatari (2014) in other way suggest entrepreneurs be careful with the triple bottom line to have not just a successful startup but also a sustainable development of the business. Nugroho et al. (2017) argue that small entrepreneurs in Indonesia, which is a developing country, are affecting their surrounding environment. These entrepreneurs as according to Nugroho et al. (2017) have a misconception that entrepreneurship is just a mean to bring in an innovative business concept and generate good financial capital. On contrary to this belief of small entrepreneurs especially those in Indonesia, Nugroho et al. (2017) argues that the objectives of entrepreneurship are also to protect the surrounding environment and benefit the community where the business operates in.
The escalated misconception suggests that entrepreneurs do not either have a robust plan to satisfy the needs of the triple bottom line or they are not aware of the fact. Indeed, a satisfactory adherence to the triple bottom line is a challenge to entrepreneurs considering that they are structurally unprepared to take up the challenge. The main purpose of this report is also to analyze from a various perspective that an adherence to people, planet and profit is a trending challenge for entrepreneurs.
As opined by Tate and Bals (2016), management theories and practices have largely been considered as being associated with environmental and economic dimensions of the triple bottom line (TBL). There is a very minimal inclination towards the social entrepreneurship, which says that entrepreneurs must positively work towards the social entrepreneurship. The article suggests that entrepreneurs are somehow very minimally focused on social entrepreneurship. These entrepreneurs need to work towards benefitting the community so as to entirely follow the triple bottom line and attain a sustainable business. As believed by Hammer and Pivo (2017), professionals those who make policies and plans for the economic development they consider economic, social and environmental dimensions as integral to it, yet there are a very few who do so. There is an evident gap between the TBL philosophy of entrepreneurs and their practices. This can be due to a number of interrelated factors. First, economic development is practically the point of attraction for entrepreneurs. They are less informed on and have limited supports to look the other part of entrepreneurship, which is to fulfill its objectives of TBL. Second, the environment where the economic developments happen is highly competitive and is also outside the control of the jurisdiction. The success is also narrowly defined. At last, there may be a lack of coordination and integration among several programs and policies and the actualization of economic, social and environmental goals of entrepreneurship. This may affect the overall outcome of an entrepreneurship, which is to attain economic development.
Factors Affecting Adherence to TBL
In the opinion of Soto-Acosta et al. (2016), the entrepreneurial attitude in Romania and in developing nations is positive towards two factors of TBL, which are people and profit. However, SMEs have largely faced issues with the social entrepreneurship. These SMEs are ventured to produce the profits. SMEs are also involved in corporate social responsibility (CSR) works, which they feel is all they are supposed to do to produce a positive impact on the environment where the business operates in. However, CSR alone is not just sufficient to produce a positive impact on the environment. As according to Chan and Cheung (2015), CSR is just the set of programmes with possibly no positive intention towards the betterment of the environment. It is possibly a kind of marketing activity, which is gaining popularity among the SMEs and multinational companies nowadays. These all suggest that SME entrepreneurs in developing nations and specifically in Romania are more focused on building up the financial capital. They are either ignorant towards or they lack a firm governance towards fulfilling the real objectives of TBL.
Ozanne et al. (2016) argue that organizational stakeholders feel them torn between giving priorities to stakeholders and competing objectives. Organizations those that aim to adhere to the triple bottom line principles, they are into ‘belonging tensions’, which means that they are confused about the type of dimension of TBL they are largely aligned with and should give priority to. The article clearly suggests that entrepreneurs though considered being aligned with economic development, they are not sure of their approach and the ways to head to meet the principles of TBL. According to Galpin and Hebard (2015), entrepreneurs do value and emphasis on the sustainable business practices; however, they hardly have the content in their business models, which reflect their adopted importance of sustainable development of businesses. It means that there is a disconnection between the TBL philosophy of entrepreneurs and their management practices. This can be due to many reasons such as that they are not through with the objectives of the triple bottom line or they are aligned mostly with one or few of the objectives of TBL. As stated by Dhahri and Omri (2018), entrepreneurs in developing countries are able to pace up with growing demands of economic and social dimensions of sustainability; however, their environmental impact is largely negative. Business entrepreneurs are motivated towards a degrading environmental behavior because of a divergence between the collective sustainability goals and individual rewards.
As observed by Muñoz and Dimov (2015), entrepreneurship is a complex business process, instead, sustainable entrepreneurship is probably more so due to the presence of challenging dimensions of TBL such as economic, environmental and social. The article has moved a step further from existing academic literature on TBL as previous articles were just aimed at identifying several factors of sustainability; however, the current article provides a descriptive explanation of factors involved in TBL. According to Aguiñaga et al. (2018), entrepreneurs do think of providing benefits to the group of stakeholders; however, they are still less attentive towards environmental issues. It can be because people can claim their rights, not the planet. The article further identifies that it is difficult to maintain a balance between three notions of sustainability, which are the profit, the people and the planet. Entrepreneurs will face the challenge in setting up the objectives as they largely have no clear idea of which one to give the highest priority. Entrepreneurs are not also sure of how to manage a balance between objectives set to meet the needs of the triple bottom line.
Exploring SMEs and TBL
According to Lawal, Worlu and Ayoade (2016), social entrepreneurship, which is a booming concept often affected badly from an unstructured approach towards the ultimate goal of TBL. The challenge is manageable if social entrepreneurs follow a few critical success factors to social entrepreneurship. These factors are firm size, sector, ownership, personality, innovative orientation, motivation, management skills, working capital management, motivation, infrastructure and financial capital. In addition, there are needs for additional supports from governmental agencies and educational institution in the form of supplying adequate information on the needs of a sustainable entrepreneurship. SMEs in particular need to be supported to help them equipped with knowledge and resources, which are needed to effectively fulfill the objectives of the triple bottom line (TBL). If this could happen, entrepreneurs especially the SMEs entrepreneurs will be able to produce their positive organizational reputation, risk control, employees’ motivation, opportunities, market preference and improvement along the internal business dynamics.
The findings of the literature review can be broadly classified into two types. Those are:
- Entrepreneurs lack the knowledge and resources required to become social entrepreneurs. In addition, objectives setting process is confusing to entrepreneurs as they are largely incapable of setting priority limit for each of three notions, the planet, the people and the profit.
- Entrepreneurs, especially in developing countries, lack the institutional and governmental supports needed to counter the scarcity of resources and gain the required knowledge for the social entrepreneurship.
Considering the findings as above, a few theoretical frameworks can be studied to understand and develop the issue. One of such frameworks is EO-P Framework where ‘EO stands for entrepreneurial orientation’ and ‘P for performance’. The framework suggests that entrepreneurship is never possible without the knowledge, which would help to identify the opportunity and the ways to exploit it (Etemad 2015). Nonetheless, this is just similar to one of the findings of the literature review. In this section, finding (1) also advocates the importance to have an in-depth knowledge of how to deal with the growing challenges and opportunities of social entrepreneurship.
A triple bottom line (TBL) approach can itself be used to draw up a theoretical framework to understand the issue of social entrepreneurship. TBL suggests that for social entrepreneurs, it is important to have the institutional and governmental supports as these will help to attain the required knowledge and resources. Knowledge is essentially required to effectively deal with and appropriately prioritize each of the notions of TBL. Entrepreneurs have so far struggled to understand whether to give equal or differentiating importance to each of the notions of TBL. Additionally, scarcity of resources is another issue that affects negatively to social entrepreneurs (Longoni and Cagliano 2018). One of the governmental supports could be a fair competition policy as in highly competing environment entrepreneurs tend to struggle with TBL. In such circumstances, they tend to follow an unorganized structure towards fulfilling the needs of the people, the planet and the profit. Hence, entrepreneurs end up concentrating more on the profit while being just minimally inclined to employees, customers and CSR.
Entrepreneurial ventures do actually reduce the percentage of unemployed people. However, entrepreneurship is not just limited to new ventures and thereby producing an impact on the economy, it is actually more than that. An entrepreneurial venture is, therefore, judged successful when it meets three specific goals of entrepreneurship, which is satisfying the triple bottom line principle. A triple bottom line consists of people, planet and profit. People are the employees, the community where the business operates in and the other stakeholders. A planet is an environment where the business operates in. Profit is the financial capital, which every business irrespective of their size need (Dentchev et al. 2016).
Organizational Stakeholders and TBL
Entrepreneurs especially those who aim to perform at the social level must adopt a mission to be able to satisfy the profit, the planet and the people. The topic of this report has posted a question like whether there is any need for entrepreneurs to be careful about the triple bottom line (TBL). The answer is an absolutely ‘yes’ because of the challenges that TBL create and the inability of entrepreneurs, which prevent them from producing a strong counter to the challenge. Companies do face the challenge can be explained from a number of case studies that failed to deliver on the triple bottom line approach (TBL). One of such examples is of “d.light”, which is a globally recognized social enterprise. The company provides an affordable solution to solar-power needs to the people of developing nations that lack the access to a reliable energy. The company produces environment-friendly products such as solar lamps and home solar-power systems. To the people living in developing countries and using a kerosene lamp, this was a very healthier offer to them. Those people now have lamps that are more environment-friendly. Hence, “d.light” is able to satisfy the needs of the people, the planet and the profit (Ozanne et al. 2016).
However, the achievement was not that easier at all as the company had lacked the governmental and the managerial support, which are required to become involved in social entrepreneurship. It all happened with “d.light” gradually learned ways to foster in social entrepreneurship. The president of “d.light” had admitted that their engineers were more concerned for the people than their economic goals. However, the product is so appealing especially for the people in developing nations that this will also impact positively on the company’s profitability. One of the officials of the World Bank Group has noted that the only way to make bigger impacts on millions of people is that each one of those involved in the value chain makes the money (Ozanne et al. 2016).
The fact that governmental support is utterly required to become involved in social entrepreneurship can be explained by citing an evidence in the example of “d.light” operation in China. The president of the company had found that China prioritizes economic development over social justice and environmental sustainability. The concept of social business is a strange concept to the Chinese people. Employees and potential investors assume that notions of the triple bottom line could not be pursued by one company. They mean that these notions cannot be managed simultaneously by one company, so, those potential investors and employees classed “d.light” as either an unsuccessful business or a charity business (Ozanne et al. 2016).
The findings of this section suggest that to become successful social entrepreneurs, it is important that the organization has adequate resources, knowledge and governmental support. If entrepreneurs lack to have any of these resources, they will struggle and may not be able to sustain the venture. Social entrepreneurship is possible as understood from the example of “d.light”; however, it is not that easier. The example has clearly shown that employees were passionate about social development. Hence, to be able to become a successful social entrepreneur, it is important for the business that its employees are innovative and engaged, management has the positive attitude towards the TBL and that the national government is also optimistic about the concept (Chell et al. 2016).
Disconnection between TBL Philosophy and Management Practices
Conclusion
In summary, this can be said that entrepreneurs should be concerned with the triple bottom line to fulfill needs of stakeholders at three levels of the TBL. Any entrepreneur should know how to cope with challenges of social entrepreneurship to be able to counter challenges and leverage from opportunities. The findings of this report say that social entrepreneurs generally face enormous challenges in terms of each one of notions of the TBL. Entrepreneurs face the challenge in setting and prioritizing objectives for the people, the planet and the profit. Entrepreneurs may be clueless on where to go and which one of notions to give the highest priority. In most cases, entrepreneurs especially belonging to reputed companies effectively manages the economical aspect of the business. However, they are seriously challenged for their responsibilities towards their stakeholders and the environment, the business operates in. This can be said that entrepreneurs find this challenging to separately identify objectives for each one of the dimensions. They commit to meet the needs of their employees and the surrounding environment; however, they by and large struggle to effectively manage those. Entrepreneurs need a governmental support to avail a supportive environment for the social entrepreneurship. Entrepreneurs require adequate knowledge in various forms like the case study example of “d.light” to be able to effectively manage three different dimensions of the TBL. Entrepreneurs need the other resources as well such as financial capital to be able to bear the operational cost of innovation.
References
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