Environmental Intrapreneurship for Engaged Sustainability: Challenges and Pitfalls
The chapter explores the philosophy of environmental sustainability from an organizational standpoint. How do organizations push the frontiers of intrapreneurship in their proactive exploration and exploitation of environmental opportunity? Patagonia Inc. is among the most visible and early adopters of environmental intrapreneurship. This company has been engaged in resolving environmental degradation, a key issue that has challenged the business world. The chapter evaluates eight specific measures or programs that are indicative of active environmental intrapreneurship. These relatively new and radical programs range from supply chain logics, technical design standards, funding models, and cooperative networks and alliances with key stakeholders. From an inductive case-based approach, a two-by-two framework of environmental intrapreneurship initiatives is offered that are either intra- or inter-organizational as well as the presence or absence of collaborations. Practical outcomes include deriving guidelines for companies that may benefit from knowing the challenges and pitfalls of engaging in environmental intrapreneurship. Theoretical outcomes include the stimulation of research to build better explanations of engaged sustainability. Pedagogic outcomes include the potential for learning and teaching using decisional heuristics of the environmental intrapreneurship framework.
KeywordsSustainability Intrapreneurship Environmental Sustainability Stakeholder Triple Bottom Line Patagonia Inc. Challenges Pitfalls
Sustainability includes the triple concerns of people (society), planet (environment), and profits (company) and has a generational aspect as well. According to the Brundtland Commission report (formally known as the World Commission on Environment and Development), sustainability is economic activity that “meets the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations 1987). Sustainability is a relevant and pressing topic that has affected the way organizations approach their business topics, stimulating theory, research, and practice.
However, environmental concerns and its incorporation into the fabric of business priorities and considerations are a fairly recent phenomenon (Haigh and Griffiths 2009). In the past, the typical business, from a traditional standpoint, only recognized the primacy of the investor or owner of the business, who was considered the most important (and sometimes only) stakeholder . Thus, the purpose of the business was to appease the interest of the owner/investor by providing returns for their investment in the form of profits. If one were to consider the reason for businesses continued existence, following this logic, it would continue to exist as long as it satisfied the needs of its owner/investor. Soon enough, and in this vein, the primary identity of a business became the ability to generate profits. Even the field of strategic management began to espouse that the holy grail of all business was the pursuit of competitive advantage (Porter 1980; Christensen and Fahey 1984; Kay 1994). This competitive advantage referred to the ability to generate “above average” returns to the business owner/investor and referred almost exclusively to financial returns or profits. This trend continued even as businesses chose other legal forms such as becoming incorporated or publicly traded firms with many investors/owners. The pressures of public companies to appease their shareholders via quarterly or yearly dividends are a good example of how financial considerations and returns on investment remained at the forefront of all businesses, regardless of size or legal entity.
Over time and as other social and environmental values began to be recognized as being equally important as the financial considerations for firms, the idea of the triple bottom line (Spreckley 1981; Elkington 1997) gradually became more salient. Activists, ideological leaders, agencies, and sometimes even governmental bodies started to pay more attention to the actions of firms and their negative effects on the society and environment. In the most egregious cases, such as the Chernobyl disaster, Bhopal gas tragedy, Fukushima accident, or the British Petroleum oil spill, worldwide attention was drawn to the unfortunate fact that a neglect of environmental concerns by any company can prove disastrous to the society and ecosystem in which it is embedded. This was quite apart from and in addition to the financial losses suffered by the perpetrating company. These major catastrophes are among the worst industrial disasters of the world, causing enormous environmental damage by radiation, contamination, and pollution on a scale that was previously unknown, with far-reaching effects that continued over several generations. Greater oversight, tighter regulations , and new policies and fines typically ensued after much public outrage and protests were leveraged against the companies that caused such disasters.
In response to this negative attention, companies were pressured to be more cognizant of the consequences of their activities and its impact not just on financial measures, such as profitability, but the implications for environmental and societal well-being and health. However, such responses by companies after the fact or following policy restrictions are reactive and often forced and not being done of their own volition. This is a reflection of firm behavior that can be classified as a reactive response. On the other hand, some companies make environmental considerations a part and parcel of their operations, are proactive in ensuring that they do not cause any environmental harm, and may even go further by activating responses that would trigger positive effects on the environment. This is a reflection of firm behavior that can be classified as a proactive response that was voluntarily undertaken. Thus while there are the unfortunate companies on one extreme that are causing environmental harm, there are fortunately some firms that lie on the opposite spectrum because they proactively pursue environmental goals of their own volition, even in the absence of any mandated requirement.
Understanding that firm responses to environmental concerns may be either involuntary and reactive or voluntary and proactive has important implications. When firms react to external pressures to show concern for environmental aspects, they are doing the legal minimum that is being forced onto them. An example would be observing the legal limit on the emission of harmful gases. In contrast, when firms are proactive and voluntarily try to reduce environmental harm, they tend to impose a stricter standard on themselves which goes over and beyond what has been mandated. An example of this would be a company that tries to achieve zero emission of harmful gases by constantly measuring and monitoring its activities and taking remedial measures to prevent crossing its self-imposed standards. This type of proactive environmentalism generally delivers greater positives and is much more beneficial than the reactive type.
The motivations that explain why firms can choose whether to be proactive or reactive have been the subject of much research (Ricks 2005; Groza et al. 2011). Firms pursuing proactive approaches were found to do so prior to any negative information (Du et al. 2007), while reactive strategy usually occurs to reduce harm to the firm image after some negative information was reported (Murray and Vogel 1997; Wagner et al. 2009). As the motivations differ, proactive responses are viewed positively as they are considered to be altruistic (Becker-Olsen et al. 2006), while reactive responses were viewed negatively by consumers (Ricks 2005; Becker-Olsen et al. 2006; Lee et al. 2009).
It is often said that firms need some level of discretionary power to be able to make the choice of how they wish to react to environmental concerns. For instance, having high discretionary power means that firms have the autonomy and freedom to decide their course of action (Salancik and Pfeffer 1974). Not all firms have the same level of decision-making autonomy as there is heterogeneity in the locus of decision-making within different organizational structures. In a public corporation, for example, decisions are made by the top management team, and a single person is unlikely to have much say in the strategic planning. However, in most entrepreneurial firms, since the entrepreneur is the owner and manager, all or nearly a hundred percent of the decision-making autonomy is vested in this single person. So the entrepreneurs have high discretionary power and can choose to take a strategic path single-handedly without having to convince an entire team to agree. As such, entrepreneurs have the flexibility and freedom to pursue proactive environmental strategies if they wish to without having to encounter much opposition or obstacles in their own firms.
Entrepreneurship refers to the recognition and exploitation of opportunities that exist outside the firm and usually occurs in new ventures and start-ups, while intrapreneurship refers to the recognition and exploitation of opportunities within established firms. The term environmental intrapreneurship refers more specifically to the exploitation of environmental opportunities within established firms. In the next section, a brief literature review of intrapreneurship and entrepreneurship is provided as an illustrative background of these concepts.
Entrepreneurship and Intrapreneurship
The term intrapreneur was first found in a white paper written by Pinchot and Pinchot (1978) and was later picked up by other scholars and academicians, leading to a new field of inquiry over the past four decades since its original conceptualization. In 1983 Miller highlighted entrepreneurship at the enterprise level, offering new avenues for exploration. In 1985, Pinchot defined intrapreneurs as “Those who take hands-on responsibility for creating innovation of any kind within an organization. They may be the creators or inventors but are always the dreamers who figure out how to turn an idea into a profitable reality” (p. ix). Nielsen et al. (1985) defined intrapreneurship as “the development within a large organization of internal markets and relatively small and independent units designed to create, internally test market, and expand improved and/or innovative staff services, technologies or methods within the organization. This is different from the large organization entrepreneurship/venture units whose purpose is to develop profitable positions in external markets” (p. 181). In 1992, the word intrapreneur was added to the American Heritage Dictionary of the English Language where it was defined as “a person within a large corporation who takes direct responsibility for turning an idea into a profitable finished product through assertive risk-taking and innovation.” In 1994, Carrie expanded the notion from large corporations to small and medium enterprises. Later scholars continued to refine the concept (Parker 2011; Gundogdu 2012; Antoncic and Hisrich 2001, 2003; Sharma and Chrisman 1999), stimulating research and clarifying its usage.
The term entrepreneur is derived from the French word entreprendre which means to begin something or to undertake. It was first used by Cantillon in Cantillon 1759 who explained that entrepreneurs are specialists in taking risk. Since then, due to the concerted efforts of scholars, an increased consensus is seen on the concept of entrepreneurship “as the process of uncovering and developing an opportunity to create value through innovation and seizing that opportunity without regard to either resources (human and capital) or the location of the entrepreneur—in a new or existing company” (Churchill 1992, p. 586).
Though both entrepreneurs and intrapreneurs exploit opportunity and create economic value, the former start new ventures outside an existing organization, while the latter develops a new venture within an existing organization. Morris and Kuratko (2002) highlight further differences between entrepreneurship and intrapreneurship. While entrepreneurs take the full risk and responsibility for their start-up ventures, own the intellectual rights, and have to rely finding their own resources, for intrepreneurs the situation is quite the opposite. In the case of intrapreneurs, the risk is borne by the company which also owns the concept and intellectual property, and the resources are provided by the company, prompting more risky decisions made by intrapreneurs. Intrapreneurship is considered to be a multidimensional construct with eight distinct dimensions, i.e., new ventures, new businesses, product/service innovativeness, process innovativeness, self-renewal, risk-taking, proactiveness, and competitive aggressiveness (Antoncic and Hisrich 2003).
As business environments get increasingly competitive and challenging, organizational survival depends on several factors. Key among them is the ability to stay current and manage the complexity of changing demands by focusing on innovating products, processes, and services. Intrapreneurship has been recognized as an important catalyst for innovation in organizations (Zhao 2005). Over the years, intrapreneurship has metamorphosized into being considered as an effective organizational strategy (Baruah and Ward 2015). Since intrapreneurship may be utilized as a tool to achieve a company’s objective, it has also been viewed as a firm level capability. In particular, intrapreneurship can help companies achieve sustainability goals via process innovation (Hastuti et al. 2016).
Pinchot (1985) suggests that large firms try to promote intrapreneurship by making structural changes such as flattening hierarchy and delegating authority to units. Operational autonomy is important to allow employees to focus on new ideas without excessive constraints that may hamper the development and execution of innovations. When autonomous processes are enabled, employee initiatives and intrapreneurship emerge from lower levels to shape the businesses overall strategy and direction (Hart 1991). The role of product champions is critical as it allows these initiatives to be protected from dismissal, helps in securing adequate funding, and also generates positive interest from the rest of the company while simultaneously shielding it from organizational norms that may cause its rejection (Burgelman 1983; Kanter 1983; Peters and Waterman 1982). They also favored creating autonomy by bypassing usual procedures and bending rules (Shane 1994). Having the necessary organizational infrastructure, processes, and incentives facilitates the practice of intrapreneurship.
Intrapreneurship enables companies to be innovative and meet the challenges of competition. Companies that do not actively engage in innovation are likely to fail (Deeb 2015). Some examples of failed firms which chose to rest on past successes instead of pursuing continuing innovation are Pan Am in the airline industry, Montgomery Ward in the apparel retail store sector, and Borders in the book and music retail segment. Among the success stories in these same industries are Southwest Airlines, J.C. Penney, and Barnes & Noble bookstores. Several well-known products and businesses emerged from intrapreneurship encouraged within big firms such as iPhone of Apple, Post-it notes inside of 3 M, Saturn inside General Motors, Gmail and driverless cars inside Google, and Digital Light Processing technology inside Texas Instruments. Some of the popular and much publicized champions of intrapreneurship are Richard Branson from Virgin, Sergey Brin and Larry Page from Google, and Steve Jobs from Apple. Not surprisingly, Pinchot (1985) recognized that “The Future is intrapreneurial.” The solution for organizational complexities is effectively offered by intrapreneurship (Baruah and Ward 2015). It has been shown that paradigm-breaking companies invest and nurture in intrapreneurship (Mohanty 2006).
Thus intrapreneurship is important for organizations, but even more so when the focus is on achieving environmental standards and sustainability goals, because the benefits go beyond the firm and impact the larger society, over an extended period of time. In the following sections, a detailed company example is presented to bring to life the various ways in which a firm can pursue environmental intrapreneurship. The chapter then moves on to displaying the common challenges and pitfalls that befall companies that wish to pursue environmental intrapreneurship as well as some pedagogical implications. The concluding section discusses implications and offers directions for future research in environmental intrapreneurship.
As described earlier, environmental intrapreneurship is highly beneficial to the environment and is among the ideal firm behaviors. The company that is highlighted is a particularly well-known firm, Patagonia Inc. This company is appropriate because it allows us to consider a key issue that has challenged the business world – environmental degradation – and because this organization (i.e., Patagonia Inc.) has been very intrapreneurial in taking specific steps to resolving this issue (Salimath 2014). To assist with the analysis, a qualitative case-based methodology is leveraged in order to explore an organization that has been one of the most visible and early adopters of environmental intrapreneurship. Consequently, this chapter evaluates eight specific measures or programs that are indicative of active environmental intrapreneurship. These relatively new and radical programs range from supply chain logics, technical design standards, funding models, and cooperative networks and alliances with key stakeholders. From this inductive case -based approach emerges a framework of environmental initiatives that are based within or between firms and are either collaborative or not. This discussion helps to shed light on specific organizations that are pushing the frontiers of intrapreneurship in their proactive exploration and exploitation of environmental opportunity. The practical outcome of this approach is to derive prescriptions and guidelines for other intrapreneurial companies that may benefit from knowing the challenges and pitfalls of engaging in environmental intrapreneurship.
In contrast to entrepreneurship which is typically the focus of smaller or new ventures, intrapreneurship is concerned with the entrepreneurial activities of established firms which may include large corporations. Thus regardless of size, when innovative processes, projects, or activities are carried out in established firms, it is considered to be intrapreneurship or entrepreneurship within organizations (Miller 1983; Antoncic and Hisrich 2001). The pursuit of intrapreneurship is important as it allows established firms to develop new initiatives and pursue opportunities that have positive consequences for firm longevity and economic development. Research in intrapreneurship has generally converged on three distinct domains – the characteristics of the individual entrepreneur (Souder 1981), the creation of new corporations (Hlavacek and Thompson 1973), and the characteristics of entrepreneurial organizations (Hanan 1976). Since the 1980s, scholars have shown that intrapreneurship has important beneficial effects on the performance of organizations and is a worthy topic of inquiry (McKinney and McKinney 1989).
A specific term, “environmental intrapreneurship,” is chosen to describe intrapreneurship efforts that are focused on environmental issues. This would include activities, projects, and processes that established firms carry out to safeguard and protect the health of the natural environment which may be adversely impacted by business practices. Thus environmental issues are a subset of larger social issues and corporate social responsibility . As prior scholars have noted, intrapreneurship is a multidimensional construct (Felício et al. 2012), and as such, it is necessary to clarify which specific dimension of intrapreneurship is the focus of our study.
This chapter examines intrapreneurship, in a rather novel company context, à la Patagonia, or in the style of the company Patagonia. A case-based methodology helps to address how companies may choose to adopt, implement, and lead environmental efforts within their own organizations. While regulatory efforts by governments and institutions have imposed some level of mandatory compliance from businesses in terms of environmental responsibility, those companies that respond in a reactive fashion often do so to avoid penalties or sanctions and may try to maintain minimal legal standards of environmental responsibility. Not surprisingly, those companies that take a more proactive approach to environmental responsibility tend to go over and beyond mandated standards and are often environmental leaders and stewards.
Importance of Environmental Intrapreneurship
The issue of environmental degradation and the ensuing need to adopt protective mechanisms to restore the vitality of the planet’s resources have begun to enter mainstream business thinking. Recent environmental disasters resulting from poorly managed businesses such as the British Petroleum oil spill in the Gulf of Mexico, Fukushima nuclear disaster in Japan, Bhopal Gas tragedy in India, and the Chernobyl disaster in the Soviet Union indicate that this has become a global phenomenon that can impact the lives and livelihood of people, as well as the success and failure of businesses. Often these disasters were caused because of inadequate control and monitoring systems within the organizations or sometimes a failure to acknowledge the severity of the impact of such negligence. As the above unfortunate incidents indicate, when these companies reacted later to stem further environmental damage (e.g., chemical or nuclear radiation, oil contamination, etc.), they were unable to effectively curtail or counteract the massive implications of their initial negligence toward environmental issues.
This leads to the need for proactive organizational attempts that would prevent the possibility of such environmental disasters. Some companies are pioneers, taking on environmental intrapreneurship to achieve specific goals, by effectively recognizing and exploiting environmental opportunity. Surprisingly, there is a paucity of research on environmental intrapreneurship, and this investigation attempts to fill the gap by considering and assessing such an ignored sample of business.
Yet despite these research gaps that are evident in the extant scholarship, on a practical level, it is possible to find that some businesses have moved ahead and paved the way for successful interpretations of environmental intrapreneurship. For example, Patagonia Inc. is well known for its environmental stewardship. For a fascinating look at the history of the company, from its early beginnings to a global giant and environmental leader, see the part biography offered by the founder of Patagonia (Chouinard 2005). More recently, the founder, along with the co-editor of its Footprint Chronicles, shares some valuable “actionable” steps to help businesses become socially responsible (Chouinard and Stanley 2012). Indeed, the emergence of Patagonia’s social responsibility did not occur without several missteps. In fact, it appears that they view their sustainability efforts to be an ongoing and never-ending journey, and they humbly declare that they are not a “model” of social responsibility. Furthermore, in an effort to engage other businesses on the sustainability journey they have started on, they have created a checklist that can be used or modified to help other businesses that seek to become socially responsible organizations. The checklists are publicly available and cover five dimensions of critical stakeholders: business health, workers, customers, community, and nature.
The aim of the chapter is to examine environmental intrapreneurship in a different context – i.e., as it is reflected in the mode (à la) of a particularly well-known firm, Patagonia Inc (Patagoni Inc. company profile 2014). Thus an evaluation of eight specific measures or programs that are indicative of active environmental intrapreneurship is undertaken (Patagonia Company Initiatives 2014). These relatively new and radical programs range from supply chain logics, technical design standards, funding models, and cooperative networks and alliances with key stakeholders. Following recent calls, we use a case study using qualitative methodology. For our particular case, grounded methodology techniques are both suitable and appropriate (Strauss and Corbin 1990, 1998). This allows for fine-grained analysis and is suitable for examining phenomenon from an exploratory perspective.
From this inductive case-based approach, a framework of environmental initiatives is offered that are either intra- or inter-organizational as well as the presence or absence of collaborations. Theoretically, this investigation will shed light on specific organizations that are pushing the frontiers of intrapreneurship in their proactive exploration and exploitation of environmental opportunity. The practical outcome of this research is to derive prescriptions and guidelines for other intrapreneurial companies that may benefit from knowing the challenges and pitfalls of engaging in environmental intrapreneurship. In addition there are some pedagogical applications of environmental intrapreneurship and engaged sustainability that are also briefly presented.
The company selected is Patagonia Inc. which operates in the outdoor apparel and accessories business. According to the company profile, “Patagonia has scaled the peak of the outdoor apparel and accessories business. The company designs and markets rugged clothing and accessories to mountain climbers, skiers, surfers, and other extreme sport enthusiasts and environmentalists who are willing to pay for the Patagonia brand and its environmental ethic. Besides its signature Patagonia line (for outdoor gear and apparel), the company also sells items from sister companies Lotus Designs (paddling gear), Water Girl (women’s sportswear), and Great Pacific Iron Works (retails outdoor gear and apparel). Patagonia, owned by Lost Arrow Corporation, sells these items, as well as luggage, through specialty retailers, a catalog, website, and its own stores” (http://biz.yahoo.com/ic/47/47281.html). It is a private company founded in 1972 by Yvon Chouinard and is headquartered in Ventura, California, USA.
Patagonia started initially as a small company that made tools for climbers and eventually grew larger and a bit more varied in its products over the years. However, it is endearing to note that Alpinism remains at the core of the global business. While it does make clothes for climbing, it also does so for other related sports such as skiing, snowboarding, surfing, fly fishing, paddling, and trail running. Interestingly these are silent sports that do not require a motor or the cheering crowds of other sports. Instead, the reward in these sports comes in the form of connection between humans and nature.
We strive to make the best product, cause no unnecessary harm, (make our products with the least impact possible), and inspire and implement solutions to the environmental crisis (we do our best to accomplish this by conducting our business in a way that incorporates environmental considerations as well as contributing money and in-kind donations to a wide variety of environmental non-profits that are dedicated to protecting the earth’s many wonderful things).
Patagonia’s values reflect a minimalist style that is also seen in its bias for simplicity and utility in its product design. Given that their targeted sports typically occur in natural settings that are wild and beautiful, it also reflects a love of the planet and an ensuing fight to save environmental health of the planet. To reverse ill effects and environmental decline, this company has started numerous initiatives and donates time, resources, and service to other environmental groups around the world.
Sample Inquiry Areas
The following eight specific initiatives implemented by Patagonia Inc. were examined and assessed. All information was derived from secondary sources. The sources of data utilized were publicly available information from company sites and portals (http://www.patagonia.com/us/environmentalism), articles, and reports.
The Footprint Chronicles®
This initiative uses transparency about the supply chain to help reduce adverse social and environmental impacts, on an industrial scale. Right on their homepage, this initiative allows consumers to know where a particular product was made and its journey through the supply chain. There are videos and interviews with suppliers, growers, and others who play a role in creating the product at various stages. It also allows consumers to interact and share their thoughts and feedback to the company. “Our goal is to reduce the adverse social and environmental impacts of our products and to make sure they are produced under safe, fair, legal and humane working conditions throughout the supply chain” (http://www.patagonia.com).
This initiative works with Bluesign® Technologies, based in Switzerland, to reduce resource consumption and harm from dyes and finishes in fabrics that they use. Bluesign Technologies AG provides independent auditing of textile mills, manufacturing processes and emissions, and assessing each component’s ecotoxicological impact. Textile mills can become certified “System Partners” if they commit to adopting Bluesign’s recommendations and allowing verification through audit processes in five key production process areas: resource productivity, consumer safety, water emissions, air emissions, and occupational health and safety. It also includes screening of chemicals and allocation to one of the three categories: blue, safe to use; gray, special handling required; and black, forbidden under the standard. The factories using black chemicals are assisted in eliminating them and finding other alternatives for use. Consumers can be assured apparels with the Bluesign label are those that are the most environmentally friendly and socially conscious version. Patagonia was the first to adopt the Bluesign standard.
1% For The Planet®
This initiative is about forming an alliance of businesses committed to leveraging their resources to create a healthier planet. In 2002, in order to “encourage more businesses to donate 1% of sales to environmental groups,” the founder of Patagonia (Yvon Chouinard) and the founder of Blue Ribbon Flies (Craig Mathews) started 1% for the planet. The mission is to “build, support and activate an alliance of businesses financially committed to creating a healthy planet.” Proceeds go to “sustainability-oriented nonprofits” that companies have chosen to support. The nonprofit organization’s track record, credibility and impact, and contributions received are verified. The following categories are supported: alternative transportation, climate change, energy and resource extraction, environmental education, environmental law and justice, environment and human health, food, land, pollution, water, and wildlife. This initiative had met with success, and it has been credited to have contributed more than $100 million to preserving the environment in 2012.
This initiative encourages other companies in the outdoor industry to financially support environmental organizations and to become more involved in environmental work. It was cofounded in 1989 by Patagonia along with three peer companies, REI, The North Face, and Kelty, in order to increase outdoor industry support for conservation efforts to protect threatened wild places. The Conservation Alliance collects annual dues from companies in the outdoor industry. A 100 percent of the dues are then directly contributed to grassroots conservation organizations that are subjected to a strict grant proposal review. The alliance now boasts 180 member companies and has contributed more than $10 million.
Patagonia itself contributes generously to the Conservation Alliance with $100,000 annually. The alliance funds are said to have helped conservation of wild spaces significantly, having saved over 50 million acres of wildlands and protected over 2000 miles of rivers. This initiative has been very successful in its impact. With more than 200 member companies, the alliance expects to contribute $1.8 million in 2017.
Common Threads Initiative
Reduce: “We make useful gear that lasts a long time. You don’t buy what you don’t need.”
Repair: “We help you repair your Patagonia gear. You pledge to fix what’s broken.”
Reuse: “We help to find a home for Patagonia gear you no longer need. You sell or pass it on.”
Recycle: “We will take back your Patagonia gear that is worn out. You pledge to keep your stuff out of the landfill and incinerator.”
Reimagine: “Together we reimagine a world where we take only what nature can replace.”
Promise to create long-lasting products as long as consumers do not buy what is not needed (reduce).
Promise to repair products as long as consumers fix what is broken (repair).
Promise to “find a home” for Patagonia products as long as consumers continue to pass on their unwanted gear (reuse).
Promise to take worn out products and dispose in a sustainable manner as long as consumers do not irresponsibly throw belongings in landfills (recycle).
Together help encourage a world where only renewable resources are used (reimagine).
This initiative has been quite successful. Since 2004, Patagonia has recycled approximately 164,000 pounds of products. These recycled products are further transformed into a broad range of items that include cozies, dog coats, tablet cases, and hand planes for bodysurfers (Patagonia 2015).
Environmental Grants Program
This initiative formalized support of environmental activism by committing at the greater of t 1% of sales or 10% of pretax profits. The funding is provided to protect habitat, wilderness, and biodiversity programs that lack corporate sponsors. Being a privately held company gives Patagonia to be selective and has the freedom to fund programs that are not mainstream but may be off the more commonly known and well-trodden paths.
Patagonia therefore chooses to fund (a) only environmental work, (b) organizations that identify root causes of problems with a commitment to long-term change, and (c) focuses on organizations that create a strong base of citizen support. Patagonia believes that building grassroots momentum is the most direct path to real change, so they like to support provocative direct-action agendas of small grassroots activist organizations. They believe that the individual battle of frontline communities to protect a specific natural environment or species is the most effective in raising more complicated issues – especially biodiversity and ecosystem protection – in the public eye. Their grant guidelines specify fairly clearly those avenues that they do not fund such as green building projects (http://www.patagonia.com/grant-guidelines.html).
This initiative created an Employee Internship Program which allows employees to leave their jobs for up to 2 months to work for an environmental group of their choice, without losing salary or benefits. Patagonia employees enjoy the outdoors and are also passionate about preserving it, and this initiative allows them to work for an environmental group of their choosing without foregoing their paychecks. Having a free Patagonia employee intern work for any small, grassroots group in local communities is very beneficial. When interns return, their experiences inspire and reinvigorate commitment to Patagonia’s environmental mission. Patagonia reports that their employees clocked in almost 10,000 volunteer hours for 43 organizations in a single year.
This initiative aims to protect and restore Patagonia’s wildland ecosystems, biodiversity, and healthy communities through creating national parks. Conservación Patagónica’s mission is “to create national parks in Patagonia that save and restore wildlands and wildlife, inspire care for the natural world, and generate healthy economic opportunities for local communities.” It was founded by Kristine Tompkins, former CEO of Patagonia Inc. in 2000. The first focus was on the creation of Monte León National Park in Argentina, which was also the country’s first coastal national park. In 2004, a second project was undertaken – the creation of Patagonia National Park in Chile’s Aysen Region. The Patagonia National Park Project consists of four major program areas: buying land, restoring biodiversity, building public access, and engaging communities. This initiative also was met with much success.
A Framework of Environmental Intrapreneurship
Below is the broad classification of the eight initiatives under each quadrant – presented as an example of an approach that can apply to classifying other organizational initiatives in different companies.
Quadrant I: Internal Source and Collaborative
In this quadrant, environmental intrapreneurship initiatives stem from within the organization; however, there is collaboration with other entities and firms in order to achieve the objectives.
Examples: The Footprint Chronicles® and Bluesign® Standard.
Quadrant II: Internal Source and Non-collaborative
In this quadrant, environmental intrapreneurship initiatives stem from within the organization; however, there is no collaboration with other entities and firms in order to achieve the objectives.
Examples: Environmental Grants Program and Enviro Internships.
Quadrant III: External Source and Collaborative
In this quadrant, environmental intrapreneurship initiatives stem from outside the organization; however, there is collaboration with other entities and firms in order to achieve the objectives. Examples: 1% For The Planet®, Conservation Alliance, and Common Threads Initiative.
Quadrant IV: External Source and Non-collaborative
In this quadrant, environmental intrapreneurship initiatives exist outside the organization; however, there is no collaboration with other entities and firms in order to achieve the objectives.
Example: Conservación Patagonica.
It must be noted that Patagonia Inc. has several sustainability-related efforts and projects besides the above that are either newly developed or continuing. This is not surprising, and quite expected, as the company continues to reinvent its role in ensuring sustainability in a variety of areas such as packaging and merchandizing, traceable down, responsible wool, supply chain, etc. The eight initiatives we have introduced here are sufficiently well known and broad in their impact on sustainability. For more information on the other initiatives by this company and others, one may visit the company websites and reports for details.
Limitations and Applications of the Framework
An exploratory and case-based approach was presented in order to facilitate the understanding of the ways in which environmental intrapreneurship may be best understood. For companies trying to get started on the path to becoming environmentally responsible, a wide range of options and choices are present which may inadvertently pose challenges of making the right choice. Thus, at a minimum, our framework helps firms to figure out what type of initiative to select based on two rather simple dimensions – source of the initiative and need for collaboration. However, given that the focus rested primarily on a single case and one that is fairly unique, there may be generalizability issues that arise. Hence future scholars are urged to analyze initiatives of a wider spectrum of organizations to enhance our two-by-two framework of environmental intrapreneurship.
In addition, it must be noted that the boundaries of the four quadrants are not fixed but have a dynamic quality. For example, initiatives that were initially internal or non-collaborative may, at a later stage, become external or collaborative in order to achieve the company objectives in a better fashion. The initiatives can likewise be scaled up or down depending on the firm’s resources and goals. It is hoped that this helps to stimulate future research on the evolving nature of environmental intrapreneurship initiatives.
Finally, from a pedagogic perspective, this framework is valuable as it can be used in the classroom to teach students in a general business class to categorize various environmental initiatives that companies have already engaged or committed to. For more specialized courses, such as strategic management classes or entrepreneurship classes, students can use the framework to plan sustainable strategies or exercise entrepreneurial choice in deciding whether to go for collaborative approaches to environmental intrapreneurship.
Discussion of Challenges and Pitfalls of Environmental Intrapreneurship
The Patagonia Inc. company is among the most striking example of engaged sustainability and is also among the early adopters of sustainability as an integral part of its mission and identity. This company has taken a proactive approach and has embraced sustainability goals through environmental intrapreneurship. Most interestingly, this company has not only engaged in sustainability, but it has also been able to engage the larger community of stakeholders in this endeavor.
The role of the leader or champion in initiating and continuing sustainability efforts cannot be understated. Patagonia Inc.’s founder Chouinard was instrumental in shaping the company goals and was passionate about preservation and sustainability of the environment. This helped him to create a company ethos that breathed and lived on the sustainability mission. From its inception, and throughout the company’s history, the sustainability motif spread and encompassed all products, processes, sourcing of inputs, advertising, and marketing. Indeed, almost all value chain activities were touched and influenced by sustainability. Almost as a necessary corollary to Patagonia Inc.’s focus on sustainability, other entities that were part of the value chain also began to be persuaded or influenced to likewise engage in sustainability. The various environmental initiatives that were collaborative in nature, no doubt, helped collaborating firms and entities to incorporate sustainability and environmentalism. Thus a ripple effect of engaged sustainability occurred, starting from the firm and spreading to suppliers, distributors, and end users. Perhaps the greatest challenge most companies face is that they lack a champion who is genuinely interested in furthering sustainability efforts.
Though the showcased company Patagonia Inc. has made tremendous inroads and has been recognized as a pioneer as far as environmental intrapreneurship is concerned, success is neither guaranteed nor is the path smooth and straightforward for all companies seeking to pursue environmental goals. It would be naïve to assume that there would be no obstacles or pitfalls on such a journey. Consequently, this section alerts firms to some of the potential challenges and pitfalls that may befall them.
Most companies jump on the sustainability bandwagon to earn quick brownie points to carry ideological favor with customers and the public by investing in environmentally friendly processes, products, and services. Unfortunately, they go after the low-hanging fruit which is relatively easier and simpler to do in a company and which generates significant return on investment. Some examples of low-hanging fruit include recycling or changing their energy consumption to renewable forms. Usually firms initially do those tasks that earn them money in the short term and are often guilty of “green washing” . Some will make a huge deal of their environmentally friendly activities and then back down after making some money. For example, the fashion industry gets a lot of media attention for their promotion of a small percentage (1%) of organic cotton in their fabric selections. When it is time to do real hard work which involves long-term payout, they may no longer be interested in pursuing it. Thus sustainability initiatives have to be part of the vision and long-term strategic plan of the company. To be effective, a sustainability initiative has to have “buy in ” from important stakeholders throughout the organization. A commitment to the organization’s sustainability goals must be nurtured at all levels.
Among the classic sustainability pitfalls are the fairly obvious ones such as creating an environmental disaster by failing to have precautions or safety checks, having no budget set up to cover expenditures, giving no autonomy to sustainability staff to make decisions, having an immature supply chain, presenting conflicting messages from the top to the rest of the organization, over analysis, or forgetting that the business has still to make money in order to survive. Companies are also surprisingly finding out that they are far from immune from the problems found in their supply chains.
Another pitfall is that firms may quickly find that just because their initiatives hold great potential; it is not sufficient in gaining success right away. Potential is necessary, but efforts should be made to ensure that the market for the sustainable product is also cultivated. Sometimes a company may feel that they are not seeing a market response to their initiatives and are disappointed enough to give up. This can also occur when initiatives may have not yet reached the scale needed to sufficiently transform or change consumption patterns (Bocken 2017). In such situations, it is recommended that using social marketing type of techniques may hold some promise in encouraging sustainable consumption.
Failure to adequately perform assessment and measurement can prove to be problematic and is a pitfall that could be addressed during the planning stages. Assessment helps companies to realize the challenges they face in achieving sustainability goals and the pitfalls that they should try to avoid in the future. Several measurement tools exist that may be developed either specifically for the company and by the company itself or they may be independently developed by third parties that are external to the company. One of the most popular tools is an externally developed tool by B Lab , a nonprofit organization that has a team of experts from business and academia. The B impact assessment tool allows companies to measure the impact of their social and environmental impact. It is a free tool that has been utilized by over 40,000 companies to measure not only financial prowess but their ability to create value for their customers, employees, community, and the environment. The B impact score if positive indicates that the company is doing something positive for the environment and society. Scores range from 0 to 200 and are used by a range of companies (small to large) that may be interested in improving their environmental impact or getting certified as B corporations. B corporations pursue the triple bottom line of financial, environmental, and social goals simultaneously. The process is actively managed by B Lab as they also undertake verification of the accuracy of the reports submitted by companies.
There are other reporting platforms such as the Global Reporting Initiative (GRI) or IRIS that help by offering specific ways to report impact metrics to allow comparability across reports. For instance, they may define the best way to report a company’s emissions, to allow for comparability with other company reports easily. IRIS is managed by the Global Impact Investing Network (GIIN), a nonprofit organization dedicated to increasing the scale and effectiveness of impact investing. The GIIN offers IRIS as a free public good to support transparency, credibility, and accountability in impact measurement practices across the impact investing industry. IRIS provides added value in the following ways: IRIS is the catalog of generally accepted performance metrics that leading impact investors used to measure social, environmental, and financial success, evaluate deals, and grow the sector’s credibility. Thus the GRI or IRIS information tells you if the company is following best practice in reporting its emissions, while the B impact assessment tells consumers and activists whether the company has lowered or increased its emissions relative to others so that they may choose to support the business or not.
Assessment and accurate measurement are essential because it helps to reveal the areas that companies are investing their efforts in as well as the outcomes of their efforts. It also indicates what areas need more attention and resources and has room for improvement. Likewise, it shows what areas are proving to be counterproductive and may be disinvested. For example, better “facilitation” of employee involvement in greening initiatives by the company itself is much more effective than merely giving employees a day off toward those ends without providing them with specific avenues of action. Thus having some company-specific program for a day (e.g., cleaning debris and planting trees around the storage area) that is undertaken by the company itself would be more directional in aiding these efforts.
However, such company initiatives must also be assessed so that its impact can be evaluated. For example, Patagonia Inc. offers several opportunities for employees to participate in environmental or social activism, but without assessment, it is tough to know how many employees participated or to what degree. Similarly, companies like Dell, Kraft, and Campbell Soup Company are also pursuing sustainability initiatives that would benefit greatly from an assessment of their relative success or failures and important lessons for the future.
Interestingly, interpreting the assessment is not always straightforward, and simplistic conclusions about impact may be erroneous. It is important to understand that just because a particular program did not succeed at the first instance does not mean that its impact is nonexistent. This is a bit counterintuitive to understand. For example, the failure of Puma’s biodegradable range did not ring the death knell of eco-fashion, as other companies producing biodegradable clothes are thriving. Companies that start new environmental programs seem to be instrumental in promoting a sustainability caused by creating initial momentum, which gets picked up and nurtured by other firms. Even if the initiating firm experienced nonsuccess, the cause is ignited and continues to shine in other locations and companies, often becoming a movement that has industry-wide effects.
The role of activists and vigilantes cannot be underestimated or can it be conveniently ignored either. Often due to their watchful efforts, many hard-to-find information about company violations of environmental or sustainability regulations become public knowledge. For example, Volkswagen slowly poisoned the environment by manipulating the emission controls in its engines to allow their cars to emit 40 times the legal limit of nitrogen oxide. The detection of this undoubtedly spurred greater regulation of the auto industry and automakers on the pollution that their products cause.
Due to the highly embedded nature of sustainability, it is important to note that a concerted effort by multiple stakeholders is necessary to achieve any threshold of sustainability. Collaborating with channel partners, suppliers, distributors, developers, and customers will ensure that the sustainability goals are adequately met at all stages of the product’s life cycle. Otherwise it would be difficult to ensure that a product is sustainable because though sustainable sourcing and manufacturing were followed, the packaging and delivery were not subject to the same sustainability metrics. Consequently, teaming with other agencies and companies would lead to multi-stakeholder involvement that may have greater support from the society as well as greater momentum, energy, and visibility for sustainability goals.
One encouraging trend related to multi-stakeholder inclusion and transparency is that some companies are sharing their tier 1 and tier 2 supplier information. They not only measure their supplier’s sustainability performance but are also willing to disclose this to industry peers who are struggling with supply chain sustainability challenges. This information was previously either not sought by firms or was considered proprietary and was closely held without being openly disclosed to the public.
Achieving a better balance between what is sent to the marketplace and what impact it has on the natural world is something that many firms struggle with. Having a best practice guide that connects the companies to others in the field who actually practice the various options would be quite a valuable learning experience of much benefit. The best practice guides can be generated by companies chronicling their experiences as well as by industry experts that can provide benchmarks for various stages or steps in the sustainability journey.
Merely having goals or even strategies appears insufficient unless there are corresponding structural changes with the organization to facilitate sustainability efforts. Reports show that firms also make governance changes to make sure that the sustainability goals are embedded in structural and procedural processes within the organization. Thus several companies have a board of directors formally oversee sustainability performance, many hold management accountable for sustainability performance, some have linked executive compensation to sustainability goals, and yet others have well-written corporate policies for sustainability.
Furthermore, having a sustainability strategy that is a stand-alone version does not augur well for its success. That is, instead of having a separate sustainability strategy, it is important to have sustainability integrated with the firm’s competitive strategy. This would help with garnering ongoing funding from budgets allocated to strategic implementation. Companies such as UPS, Starbucks, Centrica, and Hitachi are infusing their strategies with sustainability by taking care to ensure that the ties between strategy and sustainability are natural, by connecting sustainability to new strategic opportunities, and integrating it with competitive strategy. However this can generate an interesting pitfall – if sustainability is successfully integrated with strategy, then employees have a harder time trying to articulate, identify, or know what the sustainability initiative is or how it differs from what another firm may be doing.
Implications and Future Research
To create a culture of environmental intrapreneurship, corporations should hire employees that are innovative and are not afraid of risk-taking and making decisions on their own. Big companies should also make it known that failure will not be punished and that it is ok to make mistakes. As an employee, it is important to find and stay in companies that will encourage you to pitch your environmental ideas to management and should be proactive in seeking opportunities to advance their innovations.
There are several barriers to achieving successful intrapreneurship in organizations (Buekens 2014) which are applicable to environmental intrapreneurship as well. He suggests that the analytic techniques for centralizing decision-making and scientific management techniques are suitable for making existing things better in an organization but destroy the ability to do something truly innovative and thus do not foster intrapreneurship. Having an environment at work that gives freedom and time to pursue new ideas helps environmental intrapreneurship to take root in the organization. Many companies such as Google give their employees a certain percentage of time during the workday where the sole task is to engage in new, creative, and innovative ideas that originate from the employees themselves. When organizations are rigid and do not allow such flexibility to explore new avenues, intrapreneurial employees get frustrated with the lack of opportunity given to them, and often leave, taking their ideas outside the company. Thus companies lose valuable talent and the potential to earn profit from employee innovations.
Regardless of size, organizations must encourage environmental intrapreneurship not only to attain a competitive advantage but also to meet sustainability goals. At a practitioner level, businesses such as Patagonia Inc. have taken proactive steps to pursue environmental intrapreneurship and have forged ahead creating their own methods and processes to do so. However not much is known about the factors, conditions, antecedents, and consequences of environmental intrapreneurship, and more scholarship and inquiry in this vibrant and emerging area are needed.
Future research can explore the antecedents of sustainability at the firm level such as the capabilities of environmental intrapreneurship. It may be helpful to know the boundaries and assumptions under which environmental entrepreneurship can be effective in organizations and whether the size, type, and industry context of firms would make a difference. It would be interesting to know if any cross-national variation exists in the practice and effectiveness of environmental intrapreneurship. Developing and developed economies of the world face different environmental challenges, and it would be useful to understand how country-specific environmental policies would unfold and influence environmental intrapreneurship in companies in these economies. Future questions that can be explored include longitudinal assessments of environmental intrapreneurship within the same organization and its evolution over the organizations life cycle. The impact of external pressures in the form of regulatory policy and environmental standards on companies would be yet another fruitful area for future research.
In conclusion, environmental intrapreneurship is a fruitful way for companies to engage in sustainability; however, care and caution must be undertaken to ensure that the common challenges are met and that the company does not fall victim to the typical pitfalls during the journey to engaged sustainability. The Patagonia Inc. case showcases some interesting ways to engage with other stakeholders to deliver sustainability goals. The two-by-two framework of environmental intrapreneurship may assist companies in deciphering where and how to plan its sustainability activities and prove useful in the educational efforts in the classroom and in the research efforts of scholars to build a theory of engaged sustainability.
- Antoncic, B., & Hisrich, R. D. (2003). Clarifying the intrapreneurship concept. Journal of Small Business and Enterprise Development, 10(1), 7. Retrieved from https://libproxy.library.unt.edu/login?url=https://search.proquest.com/docview/219320555?accountid=7113 CrossRefGoogle Scholar
- Cantillon, P. (1759). The analysis of trade and commerce. London: Macmillan.Google Scholar
- Chouinard, Y. (2005). Let my people go surfing: The education of a reluctant businessman. New York: The Penguin Press.Google Scholar
- Chouinard, Y., & Stanley, V. (2012). The responsible company: What We’ve learned from Patagonia’s first 40 years. Ventura: Patagonia Books.Google Scholar
- Christensen, K. and Fahey, L. (1984). Building distinctive competences into competitive advantage. Strategic Planning Management, February, pp. 113–123.Google Scholar
- Churchill, N. C. (1992). Research issues in entrepreneurship. In D. L. Sexton & J. D. Kasarda (Eds.), The state of the art of entrepreneurship (pp. 579–596). Boston: PWS Kent.Google Scholar
- Deeb, G. (2015). Big companies that embrace intrapreneurship will thrive. entrepreneur.com, March 19, https://www.entrepreneur.com/article/243884#
- Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Oxford: Capstone Publishers.Google Scholar
- Hanan, M. (1976). Venturing corporations – Think small to stay strong. Harvard Business Review, 54(31), 139–148.Google Scholar
- Hart, S. L. (1991). Intentionality and autonomy in strategy-making process: Modes, archetypes, and firm performance (Vol. 7). Greenwich, CT: JAI Press.Google Scholar
- Hastuti, W. A., Talib, A. N. B., Wong, K. Y., & Mardani, A. (2016). The role of intrapreneurship for sustainable innovation through process innovation in small and medium-sized enterprises: A conceptual framework. International Journal of Economics and Financial Issues, 6(3). Retrieved from https://libproxy.library.unt.edu/login?url=https://search.proquest.com/docview/1809611972?accountid=7113.
- Kanter, R. M. (1983). The change masters: Innovation and entrepreneurship in the American corporation. New York: Simon & Schuster.Google Scholar
- Kay, J. (1994). Foundations of corporate success. Oxford: Oxford University Press.Google Scholar
- McKinney, G., & McKinney, M. (1989). Forget the corporate umbrella—Entrepreneurs shine in the rain. Sloan Management Review, 30(4), 77–82.Google Scholar
- Morris, M. H., & Kuratko, D. F. (2002). Corporate entrepreneurship: Entrepreneurial development within organizations. Cincinnati: South-Western Publishing.Google Scholar
- Patagonia. (2015). Environmental and social initiatives. Retrieved from http://www.patagonia.com/on/demandware.static/Sites-patagonia-us-Site/Library-Sites-PatagoniaShared/en_US/PDF-US/patagonia-enviro-initiatives-2015.pdf.
- Patagonia Company Initiatives. (2014). http://www.patagonia.com/us/environmentalism. Last accessed 17 April 2014.
- Patagonia Inc. company profile. (2014). http://biz.yahoo.com/ic/47/47281.html. Last accessed 17 April 2014.
- Patagonia. (2011, September 7). Introducing the common threads initiative: Reduce, repair, reuse, recycle, reimagine. Retrieved from http://www.patagonia.com/blog/2011/09/introducing-the-common-threads-initiative/.
- Peters, T., & Waterman, R. (1982). In search of excellence. New York: Harper & Row.Google Scholar
- Pinchot, G., & Pinchot, E. (1978). Intra-Corporate Entrepreneurship. Tarrytown: Tarrytown School for Entrepreneurs.Google Scholar
- Pinchot, G. (1985). Intrapreneuring: Why you don't have to leave the corporation to become an entrepreneur. New York: Harper & Row.Google Scholar
- Porter, M. E. (1980). Competitive strategy. New York: Free Press.Google Scholar
- Salimath, M. S. (2014). Environmental Intrapreneurship à la Patagonia. Proceedings, World Conference on Entrepreneurship, International Council for Small Business, Dublin, Ireland.Google Scholar
- Sharma, P., & Chrisman, J. J. (1999). Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship. Entrepreneurship Theory and Practice, 23(3), 11–27. Retrieved from https://libproxy.library.unt.edu/login?url=https://search.proquest.com/docview/213809448?accountid=7113 CrossRefGoogle Scholar
- Spreckley, F. (1981). Social audit – A management tool for co-operative working. Penarth: Beechwood College.Google Scholar
- Strauss, A., & Corbin, J. (1990). Basics of qualitative research: Grounded theory procedures and techniques. Newbury Park: Sage.Google Scholar
- Strauss, A., & Corbin, J. (1998). Basics of qualitative research: Techniques and procedures for developing grounded theory (2nd ed.). Thousand Oaks: Sage.Google Scholar
- United Nations General Assembly. (1987). Report of the World Commission on Environment and Development: our common future, toward sustainable development, Chapter 2, Paragraph 1.Google Scholar