This document is a theory paper discussing whether the notion of sustainable enterprise economies is a luxury for developed nations or a concept with global relevance. It begins by defining key concepts like sustainable development and discussing frameworks like the triple bottom line model and five capitals model. It then examines arguments that sustainable enterprise economies may be a luxury due to high costs, but counters that developing nations have demonstrated sustainable innovations. The document concludes that collaboration between developed and developing economies is needed to achieve sustainable enterprise economies globally.

1. 1/22/2016
Sustainable
Enterprise
Economies:
Theory Paper
BEMM161
650024371
MSC INTERNATIONAL MANAGEMENT, UNIVERSITY OF EXETER,

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IS THE NOTION OF SUSTAINABLE ENTERPRISE ECONOMIES A LUXURY FOR
THE DEVELOPED WORLD, OR IS IT A CONCEPT WITH GLOBAL REACH AND
RELEVANCE?
BEMM161 | 650024371| 22/01/16
SETTING THE STAGE
Concernsaboutthe changingstate of planet earth as weknow it have been raised repeatedly for
decades. Ward (1973) asksusto considerthe possibility that there are limits togrowth.That perhaps
the mechanisms and workingsthat make life onearth possible cannotbe sustained if the millions of
humansdwelling onthis planet aim to produce,consumeandpollute at the present rate. Fast-forward
to 2010 andthis sentiment is echoedby Petry et al (2010) whopostulatethatthe way in which
contemporarysocieties consumeandproducechallenge the possibility of a sustainable rate of
development. To delve deeper into this issue, one must first consider some key conceptsthatwill recur
throughoutthisessay. Firstly let usconsiderthe meaning ofsustainable development.
The World Commission on Sustainable Development (1987) definessustainable development as,
“Development meets the needs of the present withoutcompromisingthe ability offuturegenerations
to meet their ownneeds” (pg.16). Thisagain reiterates the proposition that Ward (1973) putsforward
that in order fordevelopment to be sustained there have to be limits of some sort. These limits
howeverare notinhibitory butin fact bringus to understandthe need for better management of social
and technologicalresourcesto bring abouta changein the processof economic growth.(World
Commission onSustainable Development, 1987).Intheworld it of businessit is imperative that modern
day capitalism is adjusted toconsider notonly profit butalso the other types ofcapital involved, for
example, humanand social (McIntosh,2009).
THE TRIPLE BOTTOM LINE & FIVE CAPITALS MODEL
The Triple Bottom Line model (see appendix 2) originated in 1994byJohnElkington. This model takes
into accountthree factorswhichElkington believed are the real bottom lines of business:People,
planet, profit (The Economist,2009). Thesethree factorsmeasure the truecosts ofbusiness,not just
financial profit. The model puts forwardthe idea that a company canonly be sustainable when they
considerthe impact on people and planet in addition to profit(Elkington, 1998).Oneissuewith this
model however is it is difficultto quantifythe non-financialcostsofbusiness as there is noglobal
standard forthese measurements (Slaper, 2011).Nevertheless it serves as a reminder forbusinesses to
considertheir full impact oftheir processes.
Anothermodel whichone canconsider whenlooking at sustainable development is the Five Capitals
Model (see appendix 2),whichwasdeveloped by Forumforthe Future,a UK based sustainable
development organisation (Forumforthefuture.org,2016).Thisframeworkfocusesonfive capitals from

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whichhumanity obtains the resourcesthat businesses use to create goodsand services.These being,
natural capital, manufacturedcapital, human capital, social capital andfinancial capital. This provides
decision makers with a simple lens throughwhichto view the range ofissues that affect sustainable
development (Forumforthefuture.org,2016).
WHAT IS A SUSTAINABLE ENTERPRISE ECONOMY?
Consideringall of these factorsintroducesus to the conceptofa sustainable enterprise economy (SEE).
A SEE can be defined as an economywhere there is duality ofinterest in self (profit) and obligation to
the surroundingcommunity,whereenterprises set out tohave minimal effecton the environment and
society as a whole (McIntosh,2009).Forthisconcepttohave any real relevance, it must be realized
worldover. Globalisation has played a hugepart in spreading unsustainable practicesto the developed
worldand the developing world alike (Waddock&McIntosh,2011).Itcanthereforebe argued that the
SEE cannotand must notbe a luxury forsome but is in facta necessity for all. The slogan “Think
Globally, ActLocally”,thoughused in many contextsprovidesus with anexhortation by whichwe are
able to understandhow a global picture ofsustainability couldbe seen (Powell,2009). Simplyput,local
communities are the starting pointsfor global SEEs (McIntosh,2009).
LUXURY OR NOT?
A luxuryis defined by the OxfordDictionaryas “Aninessential, desirable item whichis expensive or
difficultto obtain” (Oxforddictionaries.com,2016).As thisessay aims to illustrate, the need forSEEs is
anything butthat.
To understandwhyone might think a SEE is a luxurythat can only be realized in the developed world,it
is important to consider whatmakes sustainable development perhapseasier to achieve for a more
established economy.The primary factoris the apparent coststhat are incurredwhenseeking to
implement sustainable practices (Rangan,Chu& Petkoski, 2011). Forexamplewhenconsidering
tackling climate change,recent research hasshownthat in countriessuchas Denmark and Germany
where the economyis developed, have higher amountsofrenewable energy generated however,these
energy prices are considerably higher than non-renewablesources(The Economist,2014).Onemight
argue that if these costsare sohigh, then fora developing economywherefinancial capacityis much
lower, how couldachieving this be remotely possible? Is it even advisable?
Spain is an example ofa developed economywhohas facedissues dueto the financial costsof
sustainable practices.To encouragewider useof solar power,the Spanish government heavily
subsidised the costsof installation howeverthis backfired(Gonzalez & Johnson,2009).Though
renewable energy accountedfor54% ofSpain’s electricity supply,the subsidies that enabled citizens to
affordthis solar power thrustSpain into an economic crisis, with anassociated debt ofaround$34
billion (Pentland,2013). Tocounteractthispoint however, Crespin (2012)postulatesthat if in fact
becomingsustainable is more expensive thenperhaps it is notbeing carried out properly, as the

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Spanish example illustrates. This therefore negates the argument that sustainability is unachievable for
developing countrieswhere financial capabilities may be lower.
Secondly,developed economies experience their fair share of issues that are stumbling blocks to
sustainable development, whichagain points to the factthat SEEs are notachievable solely by financial
buoyancy.Forexample, large developed cities are and will continueto be heavy consumersof
resourcesand producersofwaste simply because ofthe fact that there is a concentratedlevel ofsocial
and economic activity within them (Pacione,2007). Itis also important to note that behaviour change
will have tobe consideredas most people will likely be resistant or unable to relinquish a lifestyle or
habit that may notbe sustainable, forexample living in the countrysidebutworkingand commutingto
city centres (Pacione,2007).Thismeans that governmentsand companies will have to invest heavily
into green marketing (seeappendix)toinspirebehaviour change(TheGuardian, 2013). Howeverina
developed economy onemust considerhow efficaciousthese marketing ploys are in inspiring change
whenfor many it is not deemed as a necessity butas an afterthought(McDonald& Oates, 2006).
A study carried outin New Zealand by Hjelmar (2005) illustrates the varied consumer attitudes towards
changingbehaviourfor environmental reasons .The below diagram illustrates that 62%ofconsumers
are not living a lifestyle that is actively considerate to the environment.
Fig 1. Consumer attitudestowardssustainablelifestyles (Hjelmar, 2005)
Aswe cansee there is still work to be donein developed economies. Ifwewish to see global realization
ofSEEs thenperhaps we have nochoicebut to look furtherafield to the developing world.

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DEVELOPING WORLD REALITIES
The developing world presents exciting opportunities formodelling sustainable enterprise economies.
Howeverit is important to considerthe issues that need to be tackled in order to dothat.
The millennium development goals are targets that the United Nation has set totackle the varying
formsof poverty,inequality and environmental issues. These were developed in 2000 tobe achieved by
2015.The first ofthese goals was achieved by 2010 whichwasto half the poverty rate of 1990
(Worldbank.org,2015).Althoughprogresshasbeenmade, povertyremains one ofthe key barriers to
the realisation of SEEs in the developing world.
The eradication of poverty hasthe potential to solve a plethora ofissues. Firstly it is important to
understandthat poverty does notsolely mean incomedeprivation butalso encompasses a lack of
accessto humancapabilities suchas accessto education,healthcare and clean water (Tashman&
Marano, 2009).
Lele (1991) arguesthathighlevels of poverty give wayto environmental dilapidation. Therefore the
economic growthofdeveloping countryis crucial forsustainable development within the nation which
in turnhas an impact on the global picture.This is due to the factthat economic growthis followed by
increases in employment, foreigndirect investment andGNP (Tashman& Marano, 2009).Referring
back tothe Triple Bottom Line model, this processexemplifies how the three componentsofthe
model, people, profitand planet all contributeand benefit fromsuccessfulmanagement ofone another
(Elkington,1998).
DEVELOPING WORLD ADVANTAGES AND PROGRESS
Whilst povertypresents a significant challenge to sustainable development, the developing world has
innovated sustainable initiatives that are at times superiorto those innovated by developed countries.
The in depth, traditional knowledge ofagricultural systems and industry have enabled them to put
forwardinitiatives that are more advancedthan those implemented by developed countries (Pretty,
Morison &Hine, 2003)
Aninteresting factto consideris that countrieswithhigh levels of povertyalso have highlevels of
innovation. Whenwe considerentrepreneurship it canbe driven by pull factors(anattractive market) or
pushfactors(necessity) (Kirkwood,2009).
Numerousideas have come fromnecessity for example, in Ghana, the Bamboo Bike Initiative is an
indigenous social enterprise whichcreates high quality bicycles from bamboo.This initiative tackles
issues suchas reducingpollution by encouragingcyclingasopposed to motorbikes or cars,maintaining
environmental sustainability by replanting surplusbamboo as it is utilised, as well as tackling poverty by
creating employment (Ghanabamboobikes.org,2016).Thisinitiative also contributesto the national
economyas they exported and sold globally (AlJazeera Plus,2016).

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Anotherexample ofsustainable innovation can be seen in Paraguay.The “Orquestade Recicladosde
Cateura” is an orchestrafoundedby FavioChavez in 2006,whereall instruments are made from
recycled waste froma local landfill, encouragingwaste management and educatingyoungpeople,
whilst also creating jobsfor the adults that create the instruments. They also play local concertsand
travel toperform in locations aroundthe world (OrquestaReciclados Cateura,2016).
Ecuadorprovides a governmental example ofa developing countryleading the wayto embedding
sustainable practicesinto legislation (Rightsof Nature.org,2016).Thecountryhas embedded the
“rights ofnature” into the constitutionwhichaims to recognizethe rightsof ecosystems andbalancing
the needs of humanswith the needs ofother species and the planet as a whole(Constitutionof the
Republic of Ecuador,2008).
InMexico, CompartamosBank specialises in microfinancewhere 98%ofloans go towardsempowering
womenentrepreneurs. The bank has 1 million clients and its successlies in the factthat it endeavorsto
have a strongsocial impact. The bankis a workingexample ofthe Triple Bottom Line model where it
provides social value in the community, economic value forits clients, andhuman value by providing
clients with the opportunityto nurturetheir skills as well as bettering the nation as a whole and
supportingthe economy(Rangan& Chu,2008).
Eachof these examples cater to whatis knownas the Base ofthe Pyramid. This accountsforthe 4.5
billion people wholive on $5per day or less (Tashman & Marano,2009). Theabove examples provide
uswith an image ofsustainable innovationthat meets the needs ofmany whilst generating profit and
growinginfrastructureofthe nation whilst workingwithin the community. Prime examples of “Think
Global, ActLocaland a step in the right directiontowards the creation ofSEEs (Powell,2009;McIntosh,
2009).
These enterprises show that seeking profitdoes not necessarily disqualify the ability ofa business to
provide social value (Rangan& Chu,2008).
COLLABORATION AND ECONOMICS OF MUTUALITY
Bothdeveloped anddeveloping countriesbothface varying issues whenit comes to workingtowards
sustainable development but it must be said that collaboration between them is the most likely wayin
whichwe cansee a world where sustainable enterprise economies are achieved or achievable. It is
important that we have local SEEs that collaborate together ona global scale (McIntosh,2009).
Developed countries canfacilitate the innovation ofdeveloping economies providing a cycleof
cooperationthat enables sustainable development (Department ofEconomic and Social Affairs,2013).
Multinational corporationscanembed sustainable practices into their value chain by engagingwith
suppliers (Crespin,2012). EconomicsofMutualityis a theory that seeks to ensurethere is a mutuality of
service and benefits along all stages ofthe value chain(Roche,2014).Inapresentation byMar’s Chief
Financial Officer,BrunoRoche,hedescribes how Mars strives toensure that the business benefits each
stakeholder fromthe farmer in Africafromwhomthey obtain their cocoasupply,to the consumerona

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high street in London.(Roche,2014).Thistheoryif adopted amongstMultinational corporationsis a
way in whichthe developed and developing worldcan worktogether to create mutually beneficial
experiences forone another whilst striving towardsSEEs.
CLOSING ARGUMENTS
Inconclusiononecannotdecide that the notionof a sustainable enterprise economyis restricted to
those in the developed world, as has been illustrated, developing economies have proventhat they can
play a part, if not leading role in the global effort towardssustainable development (Pretty,Morison &
Hine, 2003).Whilstfocusingonthe ensuringthat business practicestake into accountthe FiveCapitals
Model and The Triple Bottom line, it canbe ensured that the key factorsthat contributeto sustainable
development are considered:People, Profitand Planet (Elkington,1998;Forumforthefuture.org,2016).
It is only with focusedandcoordinatedefforts fromindividuals andcountrieswithin both developed
and developing economies alike that we will see global sustainable development and the growthof
sustainable enterprise economies (Turner,2011)

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APPENDIX 1
Fig 1. Green Marketing Posters
(TheGuardian, 2013)

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APPENDIX 2
Fig 2. FiveCapitalsModel
(Forumforthefuture.org, 2016)
Fig. 3. (Hatchnola.com, 2015)