Stam et al. (2012) define a high-quality start-up as one founded by an ambitious entrepreneur “who engages in the entrepreneurial process with the aim to create as much value as possible” (p. 40). While this interpretation of high-quality centres on the dimension of high-growth, the authors emphasise that the quality dimensions of innovativeness and internationalisation are also implied. They argue that “innovation is at the very heart of the well-established Schumpeterian tradition in entrepreneurship” (Stam et al. 2012, p. 40) and that corporate growth ambitions can be both domestic and international. Although the three quality dimensions of start-ups are interrelated and can also be considered as elements of a quality composite (Hermans et al. 2015; Stenholm et al. 2013), this paper follows a more widespread practice (Acs et al. 2017; Giotopoulos et al. 2017; Wong et al. 2005) and investigates the quality of start-ups individually, based on their degree of innovativeness, high-growth, and internationalisation.
Entrepreneurship literature (e.g., Acs 2010; Giotopoulos et al. 2017; Hermans et al. 2015) argues that engaging in high-quality entrepreneurial activity is an occupational choice that is based, inter alia, on entrepreneurs’ motivations. Entrepreneurship research confirms this argument by showing that start-up quality is predicted by entrepreneurs’ financial motivations (Cassar 2007), achievement motivations (Kolvereid 1992), and opportunity- and necessity-driven start-up motivations (Giotopoulos et al. 2017). However, only a few studies (Hoogendoorn et al. 2020; Wiklund et al. 2003) have examined the relevance of non-economic motivations, such as environmental orientation, in this context.
This thesis adopts the argumentation that the quality of start-ups is determined by entrepreneurs’ motivations. It argues that green entrepreneurs’ non-economic motivations to find innovative solutions to global environmental problems and to scale their sustainable impact worldwide through growth and exports (Cohen and Winn 2007; Dean and McMullen 2007), lead to innovative, growth-oriented, and international behaviour typical of high-quality start-ups. In the following sections, this thesis is substantiated with further arguments, and hypotheses are derived for the links between entrepreneurs’ environmental orientation and their degree of innovativeness, high-growth, and internationalisation (see Fig. 1).
2.1 Impact of environmental orientation on innovativeness
Research on innovative entrepreneurship goes back to Schumpeter’s (1942) theory of creative destruction, which states that innovative start-ups accelerate structural change, leading to more efficient economies. Innovative start-ups exploit new knowledge by introducing new services, products, and markets, thereby increasing competition, and stimulating economic development (Fritsch and Mueller 2004; Mueller 2007). Accordingly, the process of identifying pivotal innovative start-ups has attracted considerable interest in academia.
This paper builds on Hoogendoorn et al. (2020), who recently made a significant contribution to this topic by analysing the relationship between the environmental orientation of start-ups and their innovativeness. The authors hypothesised that green start-ups which put environmental value (other-regarding non-economic interests) over economic value (self-regarding economic interests) are more likely to be innovative. Hoogendoorn et al. (2020, p. 4) presented two key arguments which support this hypothesis. Their first argument, which builds on previous findings (van de Ven et al. 2007), is that intrinsic (environmental) motivations stimulate creativity and ideation and thus positively influence how start-ups recognise innovative opportunities. This argument is supported by empirical research (del Giudice et al. 2019; Renko 2013), showing that non-economic motivations are indeed positively related to innovativeness. Hoogendoorn et al.’s second argument is based on research findings (Cliff et al. 2006; Shane and Venkataraman 2000) which indicate that entrepreneurs, who are dissatisfied with prevailing business practices, are more likely to identify alternative solutions. Hoogendoorn et al. thus argue that green entrepreneurs, driven by a strong dissatisfaction with environmental conditions, insufficient environmental market offerings, and unsustainable behaviour, should be more likely to identify and exploit innovative opportunities. A third argument in support of Hoogendoorn et al.’s hypothesis, drawn from the importance of prior knowledge for opportunity identification and innovativeness (Shepherd and DeTienne 2005), is that environmentally-oriented start-ups tap into a raw potential for innovation that economically-oriented start-ups neglect. This argument is supported by sustainable entrepreneurship literature which highlights that environmental market imperfections provide significant opportunities for entrepreneurial innovations (Carayannis et al. 2012; Cohen and Winn 2007; Dean and McMullen 2007) and that green start-ups can foresee these opportunities through their superior environmental knowledge (Patzelt and Shepherd 2011; Schaltegger and Wagner 2011).
Hoogendoorn et al. (2020) empirically tested their hypothesis that environmental orientation is a characteristic of innovativeness by analysing GEM data from 2009. Their results confirm that entrepreneurs’ environmental orientation is significantly positively related to product innovativeness, process innovativeness, and a combination of both types. Furthermore, Hoogendoorn et al. found evidence of inducement effects from environmental regulations at the macro-level that positively moderate this relationship. This paper evaluates these preliminary findings on the relationship between environmental orientation and the innovativeness of start-ups by addressing three follow-up hypotheses.
First, due to their focus on new entrepreneurs and countries for which data on environmental legislation was available, Hoogendoorn et al.’s (2020) sample was limited to 2,945 observations. This paper evaluates whether the positive relationship still holds when a significantly larger sample size is used, and potential biases are eliminated by additional robustness tests. Based on the two arguments of Hoogendoorn et al., the third novel argument, and the promising empirical evidence presented in the previous paragraph, it is hypothesised here that:
H1a: The environmental orientation of start-ups is positively related to their innovativeness.
Second, this paper acknowledges that while new and nascent entrepreneurship are qualitatively distinct phenomena(Bergmann and Stephan 2013) characterised by different levels of environmental orientation (Hörisch et al. 2018), both are important for sustainable development (Carree et al. 2002; Wennekers et al. 2005). This paper thus extends the research of Hoogendoorn et al.(2020) by also including nascent start-up projects. First empirical evidence on social entrepreneurship suggests that the relationship between non-economic goals and innovativeness also applies to nascent start-up projects (Renko 2013). Hence, it is hypothesised here that:
H1b: The environmental orientation of both nascent entrepreneurs and new entrepreneurs is positively related to their innovativeness.
Third, this paper follows recent calls (e.g., Anand et al. 2021; Barrera-Verdugo 2021; Hoogendoorn et al. 2020) for more research that recognises that entrepreneurship differs between countries at different levels of development. Since Hoogendoorn et al. (2020) focused on the moderating impact of environmental legislation and the availability of data on environmental legislation in developing countries is limited, their sample is biased towards developed countries. This paper thus expands their research by investigating a more balanced sample containing groups of countries at different development levels. Drawing on evidence from the social entrepreneurship literature, showing that non-economic goals and innovativeness are also positively related in developing countries (del Giudice et al. 2019), it is hypothesised here that:
H1c: The environmental orientation of start-ups is positively related to their innovativeness, independent of the level of development of the country they are located in.
2.2 Impact of environmental orientation on high-growth
While research highlights that economic growth is mainly initiated by high-growth start-ups (Acs 2010; Stam et al. 2009, 2011), it is not easy to identify which start-ups will successfully scale (Acs and Mueller 2007). Researchers investigating the future growth of start-ups have applied various labels and concepts to measure it, such as growth willingness, growth intentions, growth aspirations, and growth expectations (Hermans et al. 2015; Verheul and Mil 2011). The underlying assumption that these growth intentions, aspirations, and expectations lead to actual growth is supported by the argument that (non-economic) motivations of start-ups determine their quality (introduction of Section 2) and empirical evidence (Bosma et al. 2004; Cassar 2007; Stam and Wennberg 2009). Therefore, high-growth start-ups are defined here as those who have concrete expectations of organisational growth without necessarily having already achieved it.
For green start-ups, the decision to pursue organisational growth is only one of many strategic trade-offs that must be considered when balancing their economic and environmental interests (Kirkwood and Walton 2014). For example, green entrepreneurs often prioritise the quality of growth over quantity (Rodgers 2010) and are more likely to choose organic growth (Melay et al. 2017). Moreover, they are less interested in financial success (Kirkwood and Walton 2010a, 2014). Although financial motivations are common among growth-oriented entrepreneurs (Cassar 2007; Hessels et al. 2008), this does not automatically imply that prioritising environmental goals over financial ones precludes high-growth ambitions. On the contrary, green start-ups might be particularly interested in scaling their organisational growth to reach more stakeholders and thereby scale their positive societal impact. Indeed, many start-ups have proven that growth is possible without sacrificing environmental ambitions (Hockerts and Wüstenhagen 2010). First quantitative evidence confirms the importance of non-economic motivations for high-growth and suggests that green entrepreneurs are characterised by high-growth expectations – despite their low financial interest (Kirkwood and Walton 2014). This finding implies that lower financial motivations, which are defined as extrinsic (Ryan and Deci 2000), do not reduce growth ambitions when substituted by intrinsic environmental motivations. This argument is supported by previous evidence showing that intrinsically-motivated entrepreneurs have higher growth expectations than those motivated by extrinsic financial interests (Guzmán and Javier Santos 2001) and that green start-ups implementing substantial greening strategies experience higher growth in terms of achieved turnover development (Neumann 2021b).
Hence, it is hypothesised here, based (a) on the idea of scaling organisational growth as a strategy to maximise societal impact, (b) the importance of intrinsic motivations for high-growth expectations, and (c) on the positive relationship between the implementation of greening strategies and turnover growth achieved, that entrepreneurs with stronger environmental orientation are more likely to have high-growth expectations.
H2. The environmental orientation of start-ups is positively related to their high-growth expectations.
2.3 Impact of environmental orientation on internationalisation
Empirical research shows that international start-ups striving to scale their value and impact globally are of higher quality than domestic start-ups in several respects. By identifying and exploiting opportunities across borders, they benefit from aggregating resources, knowledge, and networks and are characterised by higher innovativeness (Giotopoulos and Vettas 2018; Oviatt and McDougall 2005). The high quality of international start-ups is reflected at the macro-level, where internationalisation is positively related to the emergence of new start-ups (de Clercq et al. 2008) and economic growth (González-Pernía and Peña-Legazkue 2015; Hessels and van Stel 2011).
Horbach and Janser (2016) were among the first researchers to highlight the importance of internationalisation for green start-ups. They argued that green start-ups would benefit from networking with foreign firms and universities and should therefore adopt a global orientation. This paper goes one step further and argues that green entrepreneurs also have a strong intrinsic motivation to engage internationally. Green entrepreneurs who want to make the world a better place (Kirkwood and Walton 2010a, 2014; Manesh and Rialp-Criado 2019) address environmental problems around the world (Dean and McMullen 2007), and many of these environmental problems are inherently global in nature (e.g., marine pollution or climate change). Addressing these problems thus inevitably requires international efforts (Chen et al. 2018; Zahra et al. 2014). Although green entrepreneurs might want to produce locally (Kirkwood and Walton 2010b), it is hypothesised here that their motivation to solve environmental problems of global concern increases their willingness to distribute solutions not only to local customers but also worldwide. That green firms are indeed more likely to internationalise is supported by empirical research demonstrating that US manufacturers of environmental products (Becker and Shadbegian 2009) and entrepreneurs driven by non-economic motivations (Chen et al. 2018) are significantly more likely to export. The first evidence of the international orientation of green start-ups was recently provided by Mansh and Rialp-Criado (2019). In interviews with six Spanish start-ups, they found that internationalisation is a common strategy among start-ups in the renewable energy industry (Manesh and Rialp-Criado 2019).
It is thus hypothesised here, building (a) on the intrinsic motivations of green start-ups to scale their impact internationally, (b) promising quantitative evidence on green firms, and (c) the first qualitative interview results on the internationalisation strategies of green start-ups, that start-ups characterised by higher environmental orientation are more likely to establish themselves internationally:
H3. The environmental orientation of start-ups is positively related to their degree of internationalisation.