Entrepreneurship and Sustainability: The Need for Innovative and Institutional Solutions

BEN YOUSSEF, Adel and Boubaker, Sabri and Omri, Anis (2017): Entrepreneurship and Sustainability: The Need for Innovative and Institutional Solutions. Forthcoming in: Technological Forecasting and Social Change (1 December 2017)

Abstract

The role of innovation and institutional quality for achieving sustainability are important issues tackled by current sustainable development debates, particularly in developing countries. Using a modified environmental Kuznets curve model, the present study improves our understanding of the critical roles of innovation, institutional quality, and entrepreneurship in structural change toward a sustainable future for Africa. Our empirical results show that formal and informal entrepreneurship are conducive to reduced environmental quality and sustainability in 17 African countries however informal entrepreneurship contributes more than formal entrepreneurship to this environmental degradation. The relationship between entrepreneurship and sustainable development turns strongly positive in the presence of high levels of innovation and institutional quality. This study contributes to this emerging research strand by clarifying the conditions that allow African countries to move toward more sustainable economies. Our results highlight the important roles played by innovation and institutions for achieving sustainability in Africa.

• Item Type: MPRA Paper
• Language: English
• Keywords: Entrepreneurship; Sustainability; Innovation; Institutional quality.
• Subjects: M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M2 - Business Economics > M21 - Business Economics; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth

References

1. Z.J. Acs, How is entrepreneurship good for economic growth?, Innov. Technol. Gov. Global. 1(1) (2006) 97-107.

2. African Development Bank, 2014. Human Capital Strategy 2014-2018. Tunis.

3. C. Almeida, S.H. Bonilla, B.F. Giannetti, D. Huisingh, Cleaner production initiatives and challenges for a sustainable world: an introduction to this special volume, J. Clean. Prod. 47 (2013) 1-10.

4. U. Al-Mulali, B. Saboori, I. Ozturk, Investigating the environmental Kuznets curve hypothesis in Vietnam, Energy Policy 76 (2015) 123-131.

5. S. Anokhin, W.S. Schulze, Entrepreneurship, innovation, and corruption, J. Bus. Ventur. 24(5) (2009) 465-476.

6. J.B. Ang, W.J. Mckibbin, Financial liberalization, financial sector development and growth: Evidence from Malaysia, J. Dev. Econ. 84(1) (2007) 215-233.

7. R. Arvanitis, H. M’henni, Monitoring research and innovation policies in the Mediterranean region, Sci. Technol. Soc. 15 (2010) 233-269.

8. D.B. Audretsch, M.A. Carree, A.J. van Stek, A.R. Thurik, Impeded industrial restructuring: The growth penalty, Kyklos, 55(1) (2002) 81-98.

9. E. Autio, K. Fu, Economic and political institutions and entry into formal and informal entrepreneurship, Asia Pac. J. Manag. 32(1) (2015) 67-94.

10. M.H. Arouri, A. Ben Youssef, C. Elgin, Building human capital to set the Gazelles free: The informal economy, in: A. Soucat, M. Ncube (Eds.), One Billion People One Billion Opportunities Building Human Capital in Africa, Communications Development Incorporated, Washington, D.C., 2014.

11. W.J. Baumol, Entrepreneurship: Productive, unproductive and destructive, J. Political Econ. 98 (1990) 893-921.

12. M. Bleaney, A. Nishiyama, Explaining growth: A contest between models, J. Econ. Growth 7(1) (2002) 43–56.

13. J. Breitung, The local power of some unit root tests for panel data, in: B.H. Baltagi, (Eds), Advances in Econometrics: Nonstationary Panels, Panel Cointegration and Dynamic Panels. Elsevier, Amsterdam, The Netherlands, 2000.

14. F. Castellacci, J.M. Natera, Innovation, absorptive capacity and growth heterogeneity: development paths in Latin America 1970-2010, Struct. Chang. Econ. Dyn. 37 (2016) 27-42.

15. B. Cohen, M.I. Winn, Market imperfections, opportunity and sustainable entrepreneurship, J. Bus. Ventur. 22(1) (2007) 29-49.

16. V. Costantini, S. Monni, Environment, human development, and economic development, Ecol. Econ. 64(4) (2008), 867–880.

17. L. Conen, P. Benneworth, B. Truffer, Toward a spatial perspective on sustainability transitions, Res. Policy 41(6) (2012) 968– 979.

18. N.F. Crespo, C.F. Crespo, Global innovation index: Moving beyond the absolute value of ranking with a fuzzy-set analysis, J. Bus. Res. 69(11) (2016) 5265-5271.

19. L.A. Dau, A.C. Cazurra, To formalize or not to formalize: Entrepreneurship and pro-market institutions, J. Bus. Ventur. 29(5) (2014) 668–686.

20. H. De Soto, The Mystery of capital: Why capitalism triumphs in the west and fails everywhere else, Basic Books, New York, NY.

21. S. Dinda, Environmental Kuznets Curve hypothesis: A survey, Ecol. Econ 49(4) (2004) 431– 455.

22. P.F. Drucker, Innovation and entrepreneurship: Practice and principles. New York, USA: Harper Business, 1985.

23. R.F. Engle, C.W.G. Granger, co-integration and error correction: representation, estimation, and testing, Econometrica 55(2) (1987) 251–276.

24. S. Farhani, S. Mrizak, A. Chaibi, C. Rault, The environmental Kuznets Curve and sustainability: A panel data analysis, Energy Policy 17 (2014) 189–198.

25. Foresight, 2006. Infectious Diseases: Preparing for the Future. London: Office of Science and Innovation.

26. S. Franceschini, G.D.F. Lourenço R. Jurowetzki, Unveiling scientific communities about sustainability and innovation: A bibliometric journey around sustainable terms, J. Clean. Prod. 127(20) (2016) 72-83.

27. S. Farhani, S. Mrizak, A. Chaibi, C. Rault, The environmental Kuznets Curve and sustainability: A panel data analysis, Energy Policy 71 (2014) 189–198.

28. A. Gerlach, Sustainable entrepreneurship and innovation. Centre for Sustainability Management, University of Lueneburg, Conference Proceedings of Conference Corporate Social Responsibility and Environmental Management 2003 in Leeds, UK.

29. M. Goedhuys, L. Sleuwaegen, High-growth entrepreneurial firms in Africa: A quantile regression approach, Small Bus. Econ. 34(1) (2010) 31–51.

30. C.W.J. Granger, Some recent growths in a concept of causality, J. Econometrics 39 (1988) 199–211.

31. S. Gürlük, Economic growth, industrial pollution and human development in the Mediterranean region, Ecol. Econ. 68(8-9) (2009) 2327–2335.

32. K. Hamilton, M. Clemens, Genuine savings rates in developing countries, World Bank Econ. Rev. 13(2) (1999) 333–356.

33. J.K. Hall, G.A. Daneke, M.J. Lenox, Sustainable development and entrepreneurship: Past contributions and future directions, J. Bus. Ventur. 25(5) (2010) 439–448.

34. J. Hudson, A. Minea, Innovation, intellectual property rights, and economic development: A unified empirical investigation, World Dev. 46 (2013) 66–78.

35. J. Ihrig, K. Moe, Tax policies and informal employment: The Asian experience, Asian Econ. J. 15(4) (2001) 369-83.

36. K.S. Im, M.H. Pesaran, Y. Shin, Testing for unit roots in heterogeneous panels, J. Econom. 115(1) (2003) 53–74.

37. D. Kaufman, A. Kraay, M. Mastruzzi, Governance Matters III: Governance Indicators for 1996–2002. The World Bank, Washington DC, 2004.

38. E. Kraemer-Mbula, W. Watu, Innovation and the development agenda, OECD/IRDC, Greenleaf Publishing, Yorkshire, UK, 2010.

39. S. Johansen, Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models, Econometrica 59(6) (1991) 1551–1580.

40. A. Levin, C.F. Lin, C.S. Chu, Unit root tests in panel data: Asymptotic and finite sample properties, J. Econom. 108(1) (2002) 1–24.

41. A. Lippman, 2009, Inequality and entrepreneurship. Research in sociology of work. Volume 15.

42. R. Litan, W. Baumol, C.J. Schramm, Good Capitalism, bad capitalism, and the economics of growth and prosperity. New Haven: Yale University Press, 2009.

43. B-Å. Lundvall, National systems of innovation: Towards a theory of innovation and interactive learning, London: Pinter Publishers, 1992.

44. R. Lozano, R. Lukman, F.J. Lozano, D. Huisingh, W. Lambrechts, Declarations for sustainability in higher education: becoming better leaders, through addressing the university system, J. Clean. Prod. 48 (2013) 10-19.

45. G.S. Maddala, S. Wu, A comparative study of unit root tests with panel data and a new simple test, Oxf. Bull. Econ. Stat. 61(51) (1999) 631-652.

46. W. Maloney, Informality Revisited, World Dev. 32(7) (2004) 1159-1178.

47. S. Matos, J. Hall, Integrating sustainable development in the extended value chain: the case of life cycle assessment in the oil and gas and agricultural biotechnology industries, J. Op. Manag. 25(6) (2007) 1083–1102.

48. J.T. Mensah, Carbon emissions, energy consumption and output: A threshold analysis on the causal dynamics in emerging African economies, Energy Policy 70 (2014) 172– 182.

49. W. Naudé, Entrepreneurship, developing countries, and development economics: New approaches and insights, Small Bus. Econ. 34(1) (2010) 1-12.

50. W. Naudé, Entrepreneurship is not a binding constraint on growth and development in the poorest countries, World Development, 39(1) (2011) 33-44.

51. A. Omri, CO2 emissions, energy consumption and economic growth nexus in MENA countries: Evidence from simultaneous equations models, Energy Econ. 40 (2013) 657–664.

52. A. Omri, S. Daly, A. Chaibi, C. Rault, Financial development, environmental quality, trade and economic growth: What causes what in MENA countries, Energy Econ. 48 (2015) 242– 252.

53. G.D. O’Neill J.C. Hershauer, J.S. Golden, The cultural context of sustainability entrepreneurship, Green Manag. Int., 55 (2009) 33-46.

54. O. Orubu, D.G. Omotor, Environmental quality and economic growth: Searching for environmental Kuznets curves for air and water pollutants in Africa, Energy Policy 39(7) (2011) 4178–4188.

55. M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden, C.E. Hanson, eds. 2007. Impacts, Adaptation and Vulnerability: Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change 2007. New York: Cambridge University Press.

56. Pigou, A.C., 1932. The Economics of Welfare (4th ed.). MacMillan and Co., Limited, London.

57. J.E. Prieger, C. Bampoky, L.R. Blanco, A. Liu, Economic growth and the optimal level of entrepreneurship, World Dev. 82 (2016) 95-109.

58. F. Quatraro, M. Vivarelli, Drivers of entrepreneurship and post-entry performance of newborn firms in developing countries, World Bank Res. Obs. 30(2) (2014) 277–305.

59. J.S. Riti, A.M. Dankumo, H.D. Gubak, Entrepreneurship and environmental sustainability: Evidence from Nigeria, J. Econ. Sustain. Dev. 6 (2015) 2222–2855.

60. F. Sautet, Local and systemic entrepreneurship: Solving the puzzle of entrepreneurship and economic development, Entrepreneurship Theory and Practice, 37(2) (2013) 387-402.

61. M. Shahbaz, Q.M.A Hye, A.K. Tiwari, N.C. Leitão, Economic growth, energy consumption, financial development, international trade and CO2 emissions in Indonesia, Renw. Sustain. Energy Rev. 25 (2013) 109–121.

62. S. Schaltegger, M. Wagner, Sustainable entrepreneurship and sustainability innovation: Categories and interactions, Business Strategy Environ. 20(4) (2011) 222–237.

63. D.A. Sheperd, H. Patzel, The new field of sustainable entrepreneurship: Studying entrepreneurial action linking “what is to be sustained” with “what is to be developed”, Entrepreneurship Theory and Practice 35(1) (2011) 137– 226.

64. J. Schumpeter, 1934, The Theory of Economic Development. Harvard University Press, Cambridge.

65. Schumpeter, J., 1942. Capitalism, Socialism, and Democracy. Harper, New York.

66. F. Schneider, A. Buehn, C.E. Montenegro, New estimates for the shadow economies all over the world, Int. Econ. J. 24(4) (2010) 443-461.

67. P. Senge, B. Lichtenstein, K. Kaeufer, H. Bradbury, J. Carroll, Collaborating for systemic change, MIT Sloan Manag. Rev. 48(2) (2007) 44–53.

68. B.S. Silvestre, A hard nut to crack! Implementing supply chain sustainability in an emerging economy, J.Clean. Prod. 96(1) (2015) 171-181.

69. E. Stam, A. van Stel, 2011, Types of entrepreneurship and economic growth. In A. Szirmai, W. Naudé, & M. Goedhuys (Eds.), Entrepreneurship, innovation, and economic development. 78–95). Oxford, UK: Oxford University Press.

70. A. Van Stel, M. Carree, R. Thurik, The effect of entrepreneurial activity on national economic growth, Small Bus. Econ. 24(3) (2005) 311-321.

71. D.I. Stern, The rise and fall of the environmental Kuznets Curve, World Dev. 32(8) (2004) 1419–1439.

72. J. Stiglitz, Capital market liberalization, economic growth, and instability, World Dev. 28(6) (2000) 1075–1086.

73. J. Stiglitz, An agenda for sustainable and Inclusive growth for emerging Markets, J. Policy Model. 38(4) (2016) 693-710.

74. M.T.T. Thai, E. Turkina, Macro-level determinants of formal entrepreneurship versus informal entrepreneurship, J. Bus. Ventur. 29(4) (2014) 490–510.

75. Tietenberg, T., 2000. Environmental and Natural Resource Economics. Addison Wesley, New York.

76. J.P. Tamazian, J.P. Chousa, K.C. Vadlamannati, Does higher economic and financial development lead to environmental degradation: evidence from BRIC countries, Energy policy 37(1) (2009) 246–253.

77. United Nations and World Bank. 2010. Natural Hazards, UnNatural Disasters: The Economics of Effective Prevention. Washington, DC: World Bank.

78. M. Vivarelli, Is Entrepreneurship Necessarily Good? Microeconomic Evidence from Developed and Developing Countries, Ind. Corp. Change, 22(6) (2013) 1453-1495.

79. World Bank, 2015. World Development Indicators. Accessed from: (http://www. worldbank.org/data/on line data bases/ on linedatabases.html).