mkt 344 ecopreneurship
TRANSCRIPT
Definition of Ecopreneurship
The term “ecopreneur” is derived from two terms which are “entrepreneur” and “ecology.
An entrepreneur is a person who undertakes innovations, finance and business acumen in
an effort to transform innovations into economic goods and who accepts the risks associated with
them. (Schaper, Michael.2002) He can be anyone who identifies an opportunity in a market
and has a belief that it would succeed in the economy and on that belief he starts exploiting the
opportunity. They may create a new organization or may be a part of an existing organization
where they revitalize the organization in response to their perceived opportunity. Generally, the
word entrepreneur is used to denote a person who starts a new business but with time and more
understanding of the subject, the revised definition of an entrepreneur also includes
“intrapreneurs”, that is an entrepreneur operating within a corporate environment. Entrepreneurs
are the strategic factors in economic development and the central factors in the trade cycle as
they are the driving force of an economy.
Ecology or environmental biology is the branch of biology which takes into consideration
the examination of living organisms in the natural environment. It includes the study of
individuals, populations, communities, and ecosystems. (Goliath.2002).The ecology has
reached enormous importance in the last years because of man’s interest in the environment in
which he lives and to find ways to protect the environment in order to make it sustainable.
The word ecopreneur is a portmanteau of “ecological” and “entrepreneur.” An
ecopreneur is an individual who is focused on ecologically-friendly issues and causes, attempting
to do business in a way which benefits the environment. He may not be a person or entity only
involved in products like solar powered cells, water conservation system or compostable
packaging. In fact, an ecopreneur is anyone who ranks environment more than or equally to
profits as his most effective criteria as a business owner (reuters, 2007) . “While many
entrepreneurs may be motivated, at least in part, to the mantra of “greed is great” on their
journey to becoming a millionaire, growing numbers of ecopreneurs are adopting a different
course, focusing on solving the problems facing society through the businesses they create,
greening their bottom line. Many are redefining their wealth, as we have, not by the size of their
bank account or square footage of their home. Wealth is defined by life’s tangibles: health,
wellness, meaningful work, vibrant community life and family.”(John Ivanko.) . The main aim of
an ecopreneur is to build a firm which is more sustainable and environmentally friendly.
Sustainability development is a pattern of resource use such that it not only meets present
human needs, but also preserves the environment so that the resource can also be utilized by the
future generations. Sustainable business, or green business, is enterprise that has no negative
impact on the global or local environment, community, society, or economy—a business that
strives to meet the triple bottom line (people, planet and profit). Often, sustainable businesses
have progressive environmental and human rights policies. In general, business is described as
green if it matches the following four criteria:
It incorporates principles of sustainability into each of its business decisions.
It supplies environmentally friendly products or services that replace demand for
nongreen products and/or services.
It is greener than traditional competition.
It has made an enduring commitment to environmental principles in its business
operations.
Who is an Ecopreneur
“An entrepreneur whose business efforts are not only driven by profit, but also by a concern for
the environment”.(Schuyler. 1998). The terms such as “Sustainopreneur”, “environmental
Entrepreneur” and “eco capitalist” are synonymous with ecopreneur. The characteristics of
ecopreneur are:
They all undertake business ventures which involves a measure of risk
They must identify a feasible business opportunity
Their activities must have a positive impact on the environment.
The degree of intentionality separates ecopreneur from accidental entrepreneurs.
Principles of ecopreneurship
There are some basic principles and measurements that can help guide the practice of ecopreneur
and provide some basic standards of principle to this emerging group.
1. Energy and Resource Use Efficiency and Maximization:
“In nature, one-way linear flows do not long survive. Nor, by extension, can they long survive in
the human economy that is a part of the earth's ecosystem. The challenge is to redesign the
materials economy so that it is compatible with the ecosystem”. (Lester Brown. Earth Policy
Institute). By minimizing waste production and maximizing reuse of waste streams, sustainable
business can potentially significantly increase profits.
2. Ecosystem Services:
Services related to protection of ecosystem and natural resources and preventing environmental
degradation can be an inspiration for a green business idea for ecopreneurs.
3. Natural step principles:
Ecopreneurs can see potential risks, such as extinction of substances extracted from the Earth’s
crust or overharvesting etc, as opportunities for success through green business.
4. Eco- efficiency and eco-effectiveness:
Ecopreneurs should find methods of decreasing waste while increasing productivity such that the
waste of the production process and the product itself can be the raw materials of a new product
of service.
Drivers and Challenges
The driving forces behind ecopreneurship are as follows:
1. Global population growth:
Ecopreneurs realize that as the resources and land area is limited, so it is their
responsibility to ensure that there are enough resources not only to fulfill the needs of the
current population which is growing continuously, but also for the future generations.
Hence they should find ways to conserve energy, materials, and resources by developing
new technologies or finding ways to control birth rate and finding ways to meet the food
and shelter demand for the growing population in order to make sustainability possible.
2. Increasing life expectancy:
Ecopreneurs value life, not only their own and of family members, but of the whole
humanity. They want everyone to live a longer and healthier life, that is why they
develop products and ways to increase life expectancy such as healthier food, purified
water etc.
3. Climate change:
Climate shapes the way we live on this planet and the way we live, work and play is
advertently changing the climate. The pollutants released in the air due to use of fossil
fuels is adversely affecting the climate. In order to sustain the climate, ecopreneurs are
involved in finding alternate ways to produce energy such as using wind, water and solar
energy.
4. Resource scarcity:
The diminishing natural resources are a great issue as we will be left with no natural
resources if we do not sustain them. In order to sustain them, ecopreneurs constantly look
for alternatives by recycling them or using a cheaper, abundantly available resource if
possible.
5. Lack of equity in the world:
The people of the world are living in a continuum, with one end which has all the
facilities of the world including the best quality food, water and home, while on the other
end are people who do not even have the basic necessities of life. Ecopreneurs want to
make sure that every living being on the world is treated equally so that no one is
deprived of anything. That is why they are active members of movements such as WTO
and also find ways to produce goods and services affordable by everyone. They are also
involved in philanthropic acts such as giving charity donations to help the deprived
people of the society (Environlution, 2010).
Organic Food as Eco Friendly Product
Organic foods are foods that are produced using methods that do not involve modern synthetic
inputs such as synthetic pesticides and chemical fertilizers, do not contain genetically modified
organisms, and are not processed using irradiation, industrial solvents, or chemical food
additives.
For the vast majority of human history, agriculture can be described as "organic"; only during the
20th century was a large supply of new synthetic chemicals introduced to the food supply. The
organic farming movement arose in the 1940s in response to the industrialization of agriculture
known as the Green Revolution.
Organic food production is a heavily regulated industry, distinct from private gardening.
Currently, the European Union, the United States, Canada, Japan and many other countries
require producers to obtain special certification in order to market food as "organic" within their
borders.
ORGANIC VERSUS CONVENTIONALLY- PRODUCED FOOD
Although the attributes associated with organic foods may be difficult to identify by visual inspection
alone, most consumers purchase organic products because of a perception that these products have unique
(and in some cases superior) attributes compared to conventionally grown alternatives (Vindigni et. al,
2002). On the other hand, a major reason why some consumers do not purchase organic foods is linked to
a perception that such foods are not better than their conventionally produced alternatives (Jolly et al.,
1989). There is, thus, a continuing debate about whether organically produced products are superior to
and/or different from conventionally produced alternatives and, if so, in terms of what characteristics.
CONSUMER AWARENESS AND KNOWLEDGE ABOUT ORGANIC FOOD
The environmental ethic that gained worldwide prominence with Earth Day 1990 placed emphasis on
individual responsibility (for personal health) and social action (on environmental quality and animal
welfare) (MacEachern 1990; Jolly, 1991). Personal responsibilities include making informed consumer
choices. This, in turn, requires consumer knowledge and awareness about competing products.
Knowledge and awareness have other direct and indirect effects on attitudes toward consumer products,
and the willingness to pay a price premium. Because organic products are credence goods, consumers
(unlike producers who are aware that their products are organic) may not know whether a product is
produced using organic or conventional methods, not even after repeated purchase and consumption,
unless they are told so (Giannakas, 2002). Thus, awareness and knowledge about organically produced
foods are critical in the consumer purchase decisions. If an individual cannot clearly differentiate between
two alternative products, a price premium on the organic product can confuse and/or affect the
individual’s purchasing decision, in favor of the cheaper product.
Most studies on consumer knowledge about organic products reflect a conceptual belief that is true and
justified. Consequently, studies typically use measurement methods that essentially rely on correctness to
answers on survey questionnaire (Hunt, 2003). Correct (or incorrect) responses imply that the respondent
has knowledge (or does not have knowledge) about organic foods and products. Hunt (2003) has noted
some limitations associated with such a narrow definition of consumer knowledge, and proposed a wider
definition and measurement that captures other important, but often neglected, dimensions of knowledge.
Studies that investigated the level of consumer awareness and knowledge about organic foods include
Jolly et al. (1989), Ekelund (1990), Akgüngör et al. (1997), Hutchins and Greenhalgh (1997), Wang et al.
(1997), Compagnoni et al. (2000), Environics (2001), Øystein et al. (2001), Kenanoðlu and Karahan
(2002), Cunningham (2002), Demeritt (2002), Hill and Lynchehaun (2002). A critical review of these
studies suggests that, overall, there is some consumer awareness about organic foods around the world.
This awareness is high especially in Western Europe, where the organic market is relatively well
developed, compared to other regions of the world. Consumer awareness of organic products in North
America compares reasonably well with that of Western Europe.
Although there is general consumer awareness around the world, the literature also suggests that
consumers have inconsistent interpretations about what is ‘organic’. For example, in a survey of
consumers in three California counties, Jolly et al. (1989) found that respondents associated organic
produce with no pesticides, no artificial fertilizer, no growth regulators, and residue-free products.
Similarly, survey respondents in the UK perceived ‘organic farming’ to imply absence of chemicals,
‘absence of growth hormones’, and ‘not intensively grown’ or ‘products grown naturally’ (Hutchins and
Greenhalgh, 1997). In a more recent study for the UK, respondents described organically produced food
as one that is more natural and healthy, compared to conventional food (Hill and Lynchehaun, 2002).
Furthermore, there was no difference in the UK consumers’ understanding of “organic” among organic
and non-organic food buyers. In other words, both buyers of organic and non-organic products felt that
organic alternatives have no pesticides and/or use no chemical fertilizers, and are natural and healthy. In
contrast, Jolly (1991) reported a substantial difference in how US buyers and non-buyers rated organic
product quality, compared to conventionally grown products.
Consumer knowledge and awareness will continue to be important in the organic food market in two
respects. First, there is still a segment of the potential market that is not yet informed about organic foods.
For example, in a US study which reported that knowledge and awareness was considered the number one
reason why consumers do not buy organic food, 59% respondents indicated that they never considered
organic products because they did not know about them (Demeritt, 2002). A second dimension to the
knowledge and awareness puzzle is the possibility that those who do not consider organic products may
have a general knowledge about them, but do not have enough detailed information to clearly
differentiate the unique attributes of organic from conventionally grown alternatives.
In summary, knowledge and awareness about organic products can affect attitudes and perceptions about
the product and, ultimately, buying decisions. If the skepticism about organic products stemming, in part,
from reported cases of mislabeling and fraud are assuaged, perceptions about the appeal and inherent
characteristics of organic may translate into actual demand.
CONSUMER ATTITUDES AND PERCEPTIONS
Consumers' actions regarding organic food stem from attitudes that in turn, are linked to a complex set of
ideas, motivations and experiences. Beliefs and perceptions are highly subjective notions (Fishbein and
Ajzein, 1975), because they reflect opinions about the objective state of the world. Although in reality
such perceptions may or may not be true, the individual who holds the perception thinks that it is true.
Given Lancaster's (1966) notion that consumers demand bundles of product characteristics, perceptions
about particular (desirable) characteristics of organic food can influence a buyer's choice. Studies on
consumer perceptions about organic versus conventionally produced food therefore attempt to determine
what consumers think is true. By comparison, consumer attitudes are likes and dislikes. That is, the
positive and negative orientations toward organic or conventionally grown food. Weistberg et al. (1996)
argued that consumer preference for a particular product is based on attitudes toward available
alternatives.
Thus if consumers are asked to indicate their preferences regarding organically versus conventionally
produced food, such respondents typically compare their attitudes toward the methods of purchasing the
goods, and/or the product characteristics under consideration, before stating their preferences. Although
particular attitudes are often assumed to lead to specific behaviors, the food and nutrition science and
social-psychological literature provide limited evidence to support the assumption (Goldman and Clancy,
1991; Sims, 1980). Overall, the scholarly literature suggests that various consumer attitudes work in
contrasting ways- for and against purchasing organic products.
Several consumer studies have been undertaken in North America and Europe to assess consumer
perceptions about organic foods (e.g., Hay, 1989; Ott, 1990; Huang et al, 1990, Huang et al, 1993; Misra
et al, 1991; Jolly et al, 1989; Jolly, 1991; Goldman and Clancy, 1991; Ekelund, 1990; Baker and Crosbie,
1993; Swanson and Lewis, 1993; Groff et al, 1993; Sylvander, 1993; Buzby and Kees, 1994; Byrne et al,
1994; Fricke and von Alvensleben, 1997; Hack, 1997; Hutchins and Greenlagh, 1997; The Packer, 1998;
Thompson and Kidwell, 1998; Øystein et al, 2001, O’Donovan and McCarthy, 2002; Jolly, 2001; The
Packer, 2001; Demeritt, 2002; Wolf, 2002; Cunningham, 2002). The key findings from selected studies
on consumers’ attitudes and preferences about organic foods are summarized in Table 4. Most of these
studies concluded that consumers purchase organic foods because of a perception that such products are
safer, healthier, and more environmental friendly than conventionally produced alternatives. Some studies
reported health and food safety as the number one quality attribute considered by organic product buyers.
Concern for the environment was less important compared to food safety and health concerns, suggesting
that such consumers might rank private or personal benefits higher than the social benefits of organic
agriculture.
CONSUMER PREFERENCES FOR ORGANIC FOOD
Consumer preference for organic food is based on a general perception that organic products have more
desirable characteristics than conventionally grown alternatives. Apart from health, food safety and
environmental considerations, several other product characteristics such as nutritive value, taste,
freshness, appearance, color and other sensory characteristics influence consumer preferences (Bourn and
Prescott, 2002).
Studies that investigated the effect of organic quality attributes and other characteristics on consumer
preferences include Jolly et al., 1989; Hay, 1989; Ekelund, 1990; Jolly, 1991; Jolly and Norris, 1991;
Sylvander, 1993; Buzby and Skees, 1994; Huang, 1996; Kyriakopoulos et al., 1997; Schifferstein and
Oude-Ophuis, 1998; Akgüngör et al., 1997; Mahesh et al., 1997; Land, 1998; Torjusen et al., 1999; The
Packer, 2001; Meatnews, 2001; Loureiro et al., 2001; Aguirre, 2001; Demeritt, 2002; Wolf, 2002; and
Cunningham, 2002. These studies differ in several respects, making comparisons across studies difficult.
For example, there is inconsistency in defining the concept of quality. Thus, while some studies examined
quality in terms of both sensory and nutritive characteristics, others differentiate sensory characteristics
from nutritive attributes. Thus, different studies may have conveyed different notions of quality to the
various survey respondents.
In general, the empirical evidence supports the hypothesis that product quality characteristics affect
consumers’ preferences for organic food; with the most important including nutritional value, economic
value, freshness, flavor or taste, ripeness, and general appearance (especially of fruits and vegetables).
Wolf (2002), for example, reported that respondents in California rated fresh-tasting and fresh-looking
grapes as the most desirable attribute. Other North American surveys that ranked taste as the most
important quality characteristic influencing consumer demand include The Packer (2002), Cunningham
(2002), and Demerit (2002). The Packer (2002) reported that 87% of US respondents identified taste as
the primary factor considered in the purchase of fresh produce. Cunningham (2002) also reported that
93% of Canadian respondents prefer food products with good taste. In contrast, studies for other parts of
the world (e.g., Jolly et al., 1989; Buzby and Skees, 1994; Torjusen et al., 1999) reported that consumers
ranked nutritional value and freshness higher than taste and other related quality characteristics. While
most studies reviewed for North America tended to suggest that consumers rank taste and related sensory
characteristics as more important than food safety and environmental concerns, studies in the other
regions (such as the EU) tended to place health and food safety, and environmental concerns at the top of
the preference ranking (see, for example, Sylvander, 1993; Shifferstein and Oude Ophuis, 1997;
Akgüngör et al., 1997; Aguirre, 2001; Sandalidou et al., 2002). What seems clear, and consistent across
studies, is that consumers in all regions tend to prefer locally grown organic produce, compared to
shipments from other places.
In addition, organic product purchase decisions tend to be influenced more by product quality and other
inherent characteristics, than by price premium. On the other hand, several studies (e.g., Sylverstone,
1993; Buzby and Skees, 1994; Davies et al., 1995; Roddy et al., 1996; Latacz-Lohman and Foster, 1997,
Worner and Meier-Ploeger, 1999; Øystein et al., 2001; Demeritt, 2002; O’Donovan and McCarthy, 2002)
reported that price premium, lack of knowledge and product availability were the major reasons
preventing non-buyers from purchasing organic food. Demeritt (2002), for example, reported that the
most important reason why US consumers did not purchase organic food was lack of knowledge or
awareness. About 59% of those who did not purchase organic products indicated they never really
considered organic, while 39% indicated that price was the main inhibiting factor. Another 16% reported
they did not purchase organic foods because of limited availability. Davies et al. (1995) and O’Donovan
and McCarthy (2002) also reported product availability and price as key inhibitors to consumers’ demand
for organic foods in Ireland. According to Davis (1995), two-thirds of non-buyers of organic food in
Ireland reported they would buy organic if it was easily available. By comparison, O’Donovan and
McCarthy (2002) reported that among Irish respondents who did not purchase organic food, 43%
indicated it was too expensive, 28% cited lack of availability, while 29% were just not interested.
Challenges in Organic Food Industry
Successful transition from niche to mainstream status
The major challenge the organic food industry faces is the successful transition from niche to mainstream
status. Although organic foods are becoming more visible in European food retailers, they have yet to
acquire broad appeal with consumers.
Organic foods are not considered to have mainstream status since a small amount of consumers account
for the majority of purchases in most countries. For instance, consumer research shows that 61% of
organic foods in the UK are purchased by 7% of consumers. In Denmark, 1% of consumers account for
80% of purchases.
Although many consumers are now buying organic foods in European countries, a small consumer base is
responsible for the bulk of purchases. This is responsible for slowing growth rates in countries like
Denmark and the UK.
Organic foods need to have broader consumer appeal if they are to take mainstream status in the food
industry and the major challenge faced by many organic food companies is how to expand the loyal
consumer base.
Prevention of fraudulent business practices
A number of cases have been reported in the last couple of years of non-organic food being labelled and
sold as organic food. For instance, in May 2001 it was discovered that 20,000 tonnes of non-organic grain
was imported and sold as organic grain to unsuspecting British organic farmers and producers.
This is a major threat to the industry for consumers purchase organic foods because of the belief that it
has been grown according to organic farming principles. The continuation of these fraudulent cases risks
undermining consumer confidence in organic foods. Consumer demand for organic foods, especially
imported products, could collapse if this type of fraud continues.
Continuing political support required for industry development. There is growing pressure to reform the
European Common Agricultural Policy (CAP) and changes are likely in the short term. There is a need
for political representation of organic farming.
Organic farming needs to be promoted at the ministerial level as a sustainable form of agriculture. The
question is: who will take the lead with political change happening on a regular basis due to the growing
trend of coalition governments?
Protection of price premium
Organic foods, because of their nature of production, have a price premium over conventional foods. This
can range from 15% for organic milk to over 100% for some organic exotic fruit and specialty cheeses.
There is growing pressure for organic food growers and producers to reduce production costs. This
pressure comes from retailers, which attempt to narrow the price premium as low as possible in order to
encourage consumer demand. The major barrier to product adoption in many countries consumers is the
high price.
The concern is that this pressure could translate into a compromise in organic standards and the method of
production. For instance, organic farmers can be tempted to produce to the lowest standards of organic
production in order to cut costs. This is likely to erode consumer confidence and promote divisions in the
organic food industry on the lines of organic standards.
Recommendations for organic food industry
Food safety, hygienic regulations and consumer protection
• Politicians and decision makers should promote the idea of mature and responsible producers
and consumers with regard to food safety.
• Controls and liability for food safety should not be burdened only on the shoulders of
governments and authorities. Citizens will relieve authorities by accepting responsibility too.
• The duty of governments and authorities will only be to function as controllers of private
control services.
• Producers, processors, traders and consumers should hold regular meetings on round tables and
develop mutual confidence with the aim to accept together responsibility for food safety.
• Fair prices (no dumping prices) for high quality and healthy food are an important precondition
to guarantee food safety.
• The practiced biodynamic farm model to produce a high percentage of the animal feedstuff
directly on the farm and use mainly the own fertilizer is a very suitable one to ensure food safety.
Food quality
• Creation of consciousness that food quality means more than producing hygienic sound
nutrition.
• Food quality must not be reduced only to chemical detectable contents.
• Conventional food quality analyses should be supplemented by other analytical methods that
can detect vital force in foodstuffs.
• The production of superior food quality( that fulfils all quality aspects) should be promoted.
Education in organic farming
• Promoting education of children in schools about organic food and agriculture.
• Establishing and funding of vocational education programs especially for organic Farming.
• Funding of practical studies and training in organic farming organizations.
Reference
Website - http://www.quicklogodesign.com/blog/ecopreneurship-entrepreneurs-and-
ecology.
http://en.wikipedia.org/wiki/Sustainable_business
http://en.wikipedia.org/wiki/Triple_bottom_line#Definition
http://en.wikipedia.org/wiki/Principles_of_ecopreneurship
http://academic-papers.org/ocs2/session/Papers/F6/216-2066-1-DR.doc
http://en.wikipedia.org/wiki/Organic_food
http://www.just-food.com/analysis/european-organic-food-industry-challenges-future-
outlook_id93636.aspx
http://demeter.net/brussels/di_eu_action_plan.pdf
http://www.greenprof.org/wp-content/uploads/2010/06/The-Making-of-the-Ecopreneur.pdf
http://www.ajofai.info/Abstract/Consumer%20knowledge%20and%20perception%20about
%20organic%20food%20a%20challenge%20for%20consumer%20education%20on%20the
%20benefits%20of%20going%20organic.pdf