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For Startups, It's Not Easy Being Green

For Startups, It's Not Easy Being Green
Credit: Baramee Thaweesombat/Shutterstock

Despite a global push to cut greenhouse gasses, entrepreneurs trying to launch their own environmentally friendly businesses are finding a lot of pushback from those whose support they need most: investors, suppliers and customers, new research finds.

The study, which was recently published in the Journal of Business Venturing, revealed that many entrepreneurs attempting to start their own "green" businesses become disillusioned when they can't find the backing they expected.

Attempts by entrepreneurs to "stand out" by highlighting their values and beliefs on the environmental benefits of their business are, for the most part, not helpful for gaining support from financial investors, suppliers, and customers or clients, said Deniz Ucbasaran, one of the study's authors and a professor at Warwick Business School in the United Kingdom.

"Their ambitions to 'break free' and enact their hopes and dreams to make a difference often need to be tempered by the realities of attracting investors and other stakeholders whose primary goal is making money and not environmental issues," Ucbasaran said in a statement. "This led some entrepreneurs to question if it was all worth it as they had to compromise the scope of their 'green' ambitions."

For the study, researchers examined six new ventures over four years to understand how those efforts gained support and financial backing. The investigators conducted 18 interviews with the principle entrepreneurs, as well as 24 interviews with individuals involved in the ventures, including investors, customers, employees and suppliers. The researchers also analyzed company documents. [See Related Story: Environmental Policies Increasingly Important to Future Leaders ]

Ucbasaran said they found that when initially figuring out on how to gain support, the entrepreneurs focused on their own values and beliefs. However, they eventually had to tone down those thoughts as they tried to focus more of their pitch on what matters more to investors and suppliers.

"Eventually, the entrepreneurs arrive at an approach that tries to balance 'what matters to them and me,'" Ucbasaran said. "This saw the entrepreneurs shape their offering into one that was likely to be more widely accepted."

The lack of harmony caused by this balance often leads to some feelings of de-motivation and stress, Ucbasaran said. It even led some of the entrepreneurs to question their entrepreneurial ambitions, she said.

"We must offer a note of caution to entrepreneurs seeking to embed their values and beliefs into their businesses. Balancing 'what matters to me' with 'what matters to them' is likely to demand less discussion of environmental or social-change goals than perhaps hoped for," Ucbasaran said.

The study was co-authored by Isobel O'Neil, an assistant professor at Nottingham University Business School in the United Kingdom.

Chad Brooks

Chad Brooks is a Chicago-based writer and editor with nearly 20 years in media. A 1998 journalism graduate of Indiana University, Chad began his career with Business News Daily in 2011 as a freelance writer. In 2014, he joined the staff full time as a senior writer. Before Business News Daily, Chad spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including local and state government, crime, the legal system and education. Chad has also worked on the other side of the media industry, promoting small businesses throughout the United States for two years in a public relations role. His first book, How to Start a Home-Based App Development Business, was published in 2014. He lives with his wife and daughter in the Chicago suburbs.