Entrepreneurial investors in renewable electricity production : motives and investment processes

• The transformation of energy systems towards a low-carbon economy requires large investments in renewable electricity production capacity, in terms of new power plants as well as conversion from fossil fuels to renewable fuels such as biomass. In order for those investments to increase, a larger number of actors have to see renewable electricity production as an opportunity worth pursuing. Understanding the motives and decision processes involved in opportunity recognition and exploitation in this field is, thus, key to predicting and encouraging further investments.Recent studies have shown that investments in renewable electricity production are made by a diverse (in terms of knowledge and experience) set of actors (Bergek et al., 2012). Many of these have little or no previous experience of electricity production, which implies that recognizing and pursuing the opportunity of renewable electricity production implied a radical break with their existing routines for the purpose of creating new (for them) combinations of resources (cf. Schumpeter, 1934b). In this conference paper, we study these actors from an entrepreneurship perspective in order to understand why they came to recognize the same basic opportunity (to invest in renewable electricity production) in spite of their apparent lack of knowledge and previous experience, and how they were able to acquire the resources needed to exploit the opportunity.Traditionally, economic value has been seen as the main entrepreneurial motive: entrepreneurs exploit opportunities in order to generate profit (cf. Baumol, 1990; Casson, 1982; Gilad and Levine, 1986; Kirzner, 1973; Schumpeter, 1934b; Shane and Venkataraman, 2000b; Silver and Auster, 1969). Recently, the idea has been put forward that exploitation of opportunities may be driven by sustainability values or concerns, such as a wish to induce social or environmental change (e.g. Hockerts and Wüstenhagen, 2010; Schaltegger and Wagner, 2007; Zahra et al., 2009). Based on the results of 22 interviews conducted with entrepreneurs of different sizes, backgrounds and main activities, we show that economic motives were predominant. However, in spite of the fact that all entrepreneurs saw a potential economic value in the opportunity, only few of them developed the opportunity using a profit-maximization strategy. For a majority of entrepreneurs, even a small profit was acceptable or seen as a bonus. Motives such as environment and social improvements were not decisive for pursuing the opportunity. Most of the entrepreneurs were driven by personal or internal motives, i.e. fulfilling personal or internal needs, rather than by market-needs, i.e. market-driven opportunities or market-gaps.Authors have emphasized the importance of some determinants of opportunity recognition, e.g.  prior knowledge (cf. Baron, 2006), networks (cf. Ucbasaran et al., 2001) and interests (cf. Ardichvili et al., 2003; Guth and Ginsberg, 1990). Our study of the entrepreneurial process shows that entrepreneurs are indeed influenced by their personal network but that other factors such as access to an initial resource, e.g. land, can also affect their recognition process. Moreover, we found that some triggers were decisive for their opportunity exploitation decisions: the decision to start a company, the recognition of a market-need, an interest in the technology, a problem or the access to a natural resource. This led us to the identification of different types of entrepreneurs: investment-driven entrepreneurs, diffusion-driven entrepreneurs, technology-driven entrepreneurs, solution-driven entrepreneurs and efficiency-driven entrepreneurs. Finally, previous literature especially emphasizes the importance of identifying resource needs, managing existing resources and acquiring new resources in order to exploit opportunities (Alvarez and Busenitz, 2001; Brush et al., 2001; Katz and Gartner, 1988; Ucbasaran et al., 2001). Entrepreneurs typically do not control all the resources they need to exploit an opportunity and they, therefore, have to acquire them from external sources (Shook et al., 2003; Ucbasaran et al., 2001). This can be a challenging process, since emerging ventures lack reputation and track record (Brush et al., 2001). In our study, in the process of opportunity development, each type of entrepreneur had access to one or several initial resources but had to acquire additional key resources. We found that the resource acquisition of those additional resources is less challenging when intermediary actors and existing personal networks are in place and when entrepreneurs control instrumental resources that can be used to obtain other resources.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Renewable electricity

entrepreneurs

motives

triggers

opportunity recognition

resource combination

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