Sustainable Entrepreneurship Management and Digitalization: A Green Digital Innovation Radar

1. Introduction

Today’s entrepreneurs and managers face challenges of a transformative character. Digital and sustainable transformations are changing the ways we start businesses and carry out work in terms of what is valuable to whom, the ways in which we use resources and create the most valuable internal and external capabilities, and where to innovate through digital technology and/or introduce sustainable practices for closing resource loops. Thus, digitalization and sustainability are both important and interrelated in contemporary entrepreneurship [1,2]. They are both mega trends that are bringing about changes in how we do business, for both new and established business, now and in the long-term future. Both digital entrepreneurship and sustainable entrepreneurship [3,4] provide distinct and timely perspectives from which entrepreneurship and management can be explored. However, less is known about how these forces collide, converge, or disrupt markets, competences, business models, networks, and opportunities. Entrepreneurs or innovators have a central role as change agents and have transformative capacity through carrying out new Schumpeterian combinations in the form and content of economic development. We have therefore invited researchers to contribute to this Special Issue by answering some of these questions.

Digitalization and sustainability are innovative forces and materials for new combinations within entrepreneurship and management. Digitalization is understood both as a necessity for survival and as an opportunity for transformative growth and competitive advantages [5]. The COVID-19 pandemic accelerated digitalization and its adoption by several years, and the digitalization of firms is increasingly more important for their ability to stay in business or seek new opportunities for growth. Conversely, sustainability is currently more voluntarily for entrepreneurs and managers; according to a survey of 3000 managers across the globe, sustainability is a top priority among 90% of them, yet only 60% of companies incorporate sustainability in their strategy, and a mere 25% have sustainability incorporated in their business model [6]. There is indeed a lack of action regarding sustainability, which is reflected in a shrinking rate of material extraction from circular-economy activities, from 9.1% in 2018 to 8.6% in 2020, and now 7.2% in 2023 [7]. Businesses and societies around the globe almost exclusively rely on new materials, which means that more than 90% of materials are either wasted, lost, or remain unavailable for reuse for years as they are locked into long-lasting stock such as buildings and machinery. It is thus essential to understand how we can innovate, use resources, and do business in new ways for our common good, as well as creating long-lasting effects of sustainability and digitalization within our economy.

Research has highlighted that digitalization and sustainability are growth enablers for the businesses of tomorrow [5,8]. However, prior research [9,10] has been inconclusive regarding the patterns of interaction among the above-mentioned growth paths, with only some convergence on complementarity between digitalization and sustainability within larger companies. Denicolai et al. [8] found evidence that international SMEs struggle to pursue both paths simultaneously, and that the liability of smallness is an explanatory factor in it, due to their limited resources. These organizations achieve international performance through a focus on digitalization or sustainability, and not on both simultaneously. Hence, sustainability and digitalization need to be on a “growth radar” for entrepreneurs and managers. However, since it may not be feasible for SMEs and entrepreneurs to engage in both simultaneously, we have therefore conceptually developed a green digital innovation radar that provides growth and innovation dimensions significant for new combinations and entrepreneurial action. We focus on green or environmental perspectives of sustainability to keep the radar simple, feasible and action-oriented in creating regenerative growth opportunities. This is seen as important in moving from a take-make-waste linear economy to a more circular and transformative way of doing business [11,12,13]. The research question our conceptual model responds to is the following: How can entrepreneurs and managers envision and innovate their business through new combinations and dimensions of digitalization and sustainability?

We acknowledge that organizational sustainability as an overall concept is more complex by addressing and integrating economic (profit), environmental (planet) and social (people) value creation as core to an organization’s way of doing business [14]. However, the model developed here includes a significantly greener environmental and circular perspective of sustainability. This corresponds to Denicolai et al. [8]’s findings of entrepreneurs and SME managers, who with their scarce resources and liabilities of small size have to make trade-offs when acting between economic, social, and environmental aspects of sustainability and digitalization. Furthermore, green opportunities invite entrepreneurs and managers to look more carefully at their resources by adding, extending, or closing loops for regenerative growth paths. In that way, balancing the liability of smallness by using resources and their means is economically and environmentally wise.

In the following section, we will present the green digital innovation radar in the form of a self-assessment tool to evaluate business opportunities. We will then introduce the Special Issue papers before providing conclusions regarding this Special Issue and our innovation radar.

2. Green Digital Innovation Radars

Innovation is considered an important driver of competitiveness and economic dynamics [15,16]. It is essentially a process of entrepreneurial vision, action, and pioneering, when successful commercial innovations create followers and imitators. Business innovation [17] through digital [18] and sustainable [19] innovation or transformation needs to be systematic and holistic in its approach. This has clear implications for managers and entrepreneurs. Similarly, the Schumpeterian creative destructor is an entrepreneurial model that goes beyond the mere process of adaptation and marginal change. There exists no ‘isolated innovation road’ or ‘best practice’ management; it is highly entrepreneurial, involving experimentation and transformation. This is due to new dilemmas and old ones which never fully end, perspectives in conflict and different starting points, and entrepreneurial or innovation capacity [5,19,20]. Blind spots are common errors, where digital technology is considered as a driver (enabler) only [5] and too much of the focus is placed on sustainability reporting [21] without realizing the desired impact for profit, people, and/or planet.

To avoid innovation blind spots, we suggest that entrepreneurs or managers think holistically in terms of all possible dimensions and options for new combinations in which their organizations can innovate in green and digital directions. An innovation radar is a suitable frame for understanding and finding the next best practices. Sawhney, Mohanbir, Wolcott, and Arroniz [17] developed an innovation radar as a tool for transformation. We now conceptually extend it to sustainable and digital business. We define green digital business innovation as the creation of substantial new and useful value for customers, the firm, and their environment, as well as for other stakeholders, by creatively combining and consciously changing one or more dimensions of the business system. This definition leads to the following three important principles and propositions for research.

• Business innovation is about new, useful, and conscious value impact. Businesses cannot rely only on new technology, digitalization, or sustainability measurement. Innovation is firstly relevant if it creates value and impact for customers, and therefore for the firm and its milieu. Secondly, novel, useful, and conscious value creation for others is advantageous through, e.g., new offerings and sustainable and digital processes. The customer is central in judging value within their ecosystem because they are the ones paying and therefore making a business viable. Nevertheless, in today’s environment customers are also increasingly demanding sustainable and digital products, services, marketing (brands), and organizations. Thirdly, resources are not inexhaustible, either naturally, socially, or commercially. The demand and supply sides of businesses increase consciousness about their impact as well as evaluating and measuring their efforts.
• Business innovation comes in many new combinations conditioned by uncertainty. Innovation can take place in any dimension of a business system constrained by uncertainty, and may therefore proceed in experimental, experience, and test-driven ways. This is a process of true uncertainty by defining what is valuable to whom, how to use resources and create the most valuable internal and external capabilities, and what to innovate through digital technology and/or sustainable practice for closing resource loops. Though uncertainty, any new combination will be within four anchor points, e.g., (1) the firm’s offering (what), (2) customers (who), (3) processes (how), and (4) presence (where).
• Business innovation is systemic and paradigm-changing, surrounded by profit, people, and planet. Successful business innovation requires the careful consideration of all aspects of doing business. Firstly, when innovating a new product, it needs to be synergistically integrated with both the supply and the demand side, meaning that from inbound and outbound logistics to marketing and sales, and after service, all needs must be aligned. Innovation is never a simple, isolated activity and relies on other complementary innovations, going beyond the boundaries of a single organization. Secondly, innovation can change depending on degrees of radicalness, paradigms of how to do business by including novelty, usefulness, digital technology, and sustainable impact in their offering, process, presence, and customer relations.

These three principles and propositions are central for our green digital innovation radar in terms of how to think and carry out sustainable entrepreneurship management and digitalization (Figure 1).

In this way, the green digital innovation radar is systemic and more holistic, not solely covering products, services, processes, or other innovation activities. It may involve new ways for the firm to create value and new firm offers (e.g., products or service innovations), new ways for the customers to view the firm’s offers (positioning innovation), and changes to how the firm views its activities (paradigm innovation) and operations (process innovation). As a result, this may be complementary to business model innovation when entrepreneurs and managers work systemically and holistically with their growth dimensions for paradigm innovation. The business model innovation perspective likewise includes value creation (offer and customer) and value delivery (process and presence), but in addition value capture (bottom line profit, people, planet) [5,22,23].

3. Entrepreneurial (Radar) Action and Reflective Self-Assessment

The green digital innovation radar provides a 360 degree view of business transformation with four anchor points (what, who, how, where) in between eight digital and sustainable growth dimensions of innovation, thus contributing 12 innovation dimensions significant for creating new combinations and entrepreneurial actions. When mapping the radar, it is not desirable or feasible to innovate all 12 dimensions in one holistic action, since entrepreneurs and managers, as well as their organizations, need entrepreneurial or innovation capacity for doing so. Instead, they should be aware of business opportunities for innovation, digitalization, and sustainability, but their action should be more reflective in terms of their offering (what), customers (who), processes (how), and presence (where). This depends on their strengths, resources, and capabilities for new combinations in creating and discovering new opportunities. As a self-assessment of current entrepreneurial action within their organization, entrepreneurs and managers alike can reflectively map their current innovation strengths, resources, and capabilities. By doing so, managers and entrepreneurs can holistically and systematically pinpoint their opportunities of innovation, digitalization, and sustainability.

There are notable managerial implications in terms of what to innovate of the 12 dimensions, and how these dimensions should be combined in a novel manner. We operationalized the 12 dimensions through a set of questions by using previous research: Clauss [24] tested a questionnaire used for the following dimensions, i.e., offering, customers, processes, presence, and knowledge of users and customer needs, and his operationalization has been found to be applicable in empirical research on entrepreneurial firms. Kirchherr et al. [11], Popović and Radivojević [12], and Sitadewi et al. [13] engaged in circular economy and sustainability research by examining the design and development of circular products or services, smarter product use, and the manufacturing and useful application of materials and technology. Schallmo et al. [25] conceptualized digital transformation research in terms of the following dimensions, i.e., networking and connectivity, digital data, automation, and digital customers’ access.

Table 1. Operationalization of the 12 dimensions of the green innovation radar. Please assess the extent to which your company, which you represent, can identify itself with the questions below: 1. Strongly disagree, 2. Disagree, 3. Neither agree nor disagree 4. Agree, 5. Strongly agree.

Green Digital Innovation Radar Dimension	Questions for Reflection and Self-Assessment
Offering (What)	Do we regularly address new, unmet customer needs?
	2. Are our products or services very innovative in relation to our competitors?
	3. Do our products or services regularly solve customer needs, which were not solved by competitors?
	4. Do we try to increase customer retention through new service offerings?
Networking and connectivity	5. Do we work with digital connectivity, such as cloud computing, broadband and sensor technology?
	6. Do we work with digital network opportunities, such as smart factory, platforms, remote manufacturing, and pure digital products?
Design and development of circular products/services	7. Do we use discarded products or their parts in a new product with different function?
	8. Do we use parts of discarded products in a new product with the same function?
	9. Do we restore old products and bring them up to date?
	10. Do we repair and maintain defective products, so they can be used with their original function?
	11. Do we reuse discarded products that are still in good condition and fulfill their original function?
Customer (Who)	12. Do we regularly take opportunities that arise in new or growing markets?
	13. Do we regularly address new, unserved market segments?
	14. Are we constantly seeking new customer segments and markets for our products and services?
	15. Do we emphasize innovative/modern actions to increase customer retention? (e.g., CRM)
Digital data	16. Do we work with big data, internet of things and/or wearables?
	17. Do we work with predictive maintenance, demand prediction and/or data-based routing?
Smarter product use and manufacturing	18. Do we make the product redundant by abandoning its function or by offering the same function with a radically different product?
	19. Do we make product use more intensive (e.g., by sharing products)?
	20. Do we increase efficiency in product manufacture or use by consuming fewer natural resources and materials?
Process (How)	21. Were we recently able to significantly improve our internal processes?
	22. Do we utilize innovative procedures and processes during the manufacturing of our products?
	23. Are existing processes are regularly assessed and significantly changed if needed?
Useful application of materials and technology	24. Do we process materials to obtain higher (high grade) or lower (low grade) quality?
	25. Do we work with the incineration of material for energy recovery?
Automation	26. Do we use digital technology, such as robotics and additive manufacturing, to automate?
	27. Do we use automation opportunities, such as drones, autonomous automobiles, and other intelligent processes?
Presence (Where)	28. Do we regularly utilize new distribution channels for our products and services?
	29. Have constant changes to our channels led to improved efficiency of our channel functions?
	30. Do we consistently change our portfolio of distribution channels?
Digital customer access	31. Do we use digital channels to reach customers through, e.g., social media, apps, and mobile internet?
	32. Do we use digital channels, such as e-commerce, infotainment, and digitalization of customer relations?
Knowledge of users’ and customers’ needs	33. Are we continuously researching and addressing unmet needs of users and customers?
	34. Relative to our direct competitors, do our employees have up-to-date knowledge and capabilities?
	35. Do we constantly reflect on which new competencies or capabilities need to be established in order to adapt to changing market requirements?

lists the respective questions for reflection and self-assessment as related to each dimension of the green digital innovation radar.

Overall, the contributing articles to this Special Issue further illustrate ways in which firms innovate by combining digitalization with sustainability, thus supplementing the development of the green digital innovation radar in the present introductory article. We next introduce these selected Special Issue articles in more detail.

4. Special Issue Papers

All of the articles published in this Special Issue address novel innovation combinations and value from sustainable and digital entrepreneurship management, thus helping to answer key questions regarding the intertwined natures of digitalization and sustainability in entrepreneurial firms and SMEs. Previous research has illustrated the importance of digitalization and sustainable practices for both international and domestic small entrepreneurial firms, and innovation is a significant concept through which to foster sustainable entrepreneurship management and digitalization in such firms. There are many paths, but most likely this will involve innovation questions of either what, who, how, or where within the developed radar. The development is a process of true uncertainty by defining what is value to whom, how to use resources and create capabilities most internally and externally, and where to innovate through digital technology and/or sustainable practice for closing resource loops. We will now highlight each individual paper for the reader.

Digital technologies and digital transformation can have a positive influence on the sustainability efforts of firms. What are the digital transformation actions that have had an impact on sustainability during the last five years, and what are the main investments of these companies to achieve sustainability? These are the questions Diaz and Montalvo [contribution 1] tackle in their article. The authors analyze the annual sustainability reports of five of the largest Mexican companies listed in the MSCI Emerging Markets Index. This review helps to identify digital transformation activities over a five-year period and how these contribute to the United Nations Sustainable Development Goals (SDGs). The findings indicate that the digital transformation actions of these firms contribute to their sustainability. Nevertheless, the path through these actions can be quite different for each company over the observed five-year period due to the needs of each industry. In addition, the recent coronavirus crisis accelerated the digital transformation actions. Although these actions contribute to the achievement of some of the sustainability goals, their contribution to these goals is often not intentional. The authors conclude that these firms might have a well-established agenda for digital transformation, but that is not necessarily linked to sustainability goals. It is rather the collateral effect than the direct effect of these digital actions on the accomplishment of sustainability goals.

Digitalization has rapidly increased during the coronavirus crisis and many firms have been faced with the necessity of reinventing themselves and innovating their business models as a result. The crisis period also saw the rise and fall of many new businesses, with ventures that particularly focused on digital technologies experiencing rapid growth. Based on this context, Rodriguez-Marin, Saiz-Alvarez, and Huezo-Ponce [contribution 2] review the scholarly work on digital entrepreneurship in their article, along with the role of innovation in the digital-entrepreneurship-related literature and the role of pay-per-click business models for promoting sustainable development. The authors conducted a bibliometric analysis of the literature between 2021 and 2022.

Their findings indicate that research on digital entrepreneurship increased during the coronavirus crisis. Researchers affiliated with universities in the European Union lead publications on the topic, followed by US-affiliated researchers. Interestingly, most research projects on digital entrepreneurship received funding from either a European Union or Chinese institution. The authors also identified that the keyword ‘innovation’ is closely linked to digital entrepreneurship. This relationship provides evidence of the increased interest in research digital entrepreneurship from an innovation perspective. Innovation does not necessarily mean a reduction in operation costs or production efficiency (i.e., value creation)—it can also be linked to innovations for value delivery. Furthermore, the findings indicate that the relationship between digital entrepreneurship and sustainable development is further enhanced through digital technologies and crowdsourcing.

Xu, Hou, and Zhang [contribution 3] explore the relationship between digitalization and sustainable entrepreneurship, and their study thus contributes to the discussion of organizational capabilities able to strengthen sustainable entrepreneurial activities. This is particularly interesting since relatively few studies have researched sustainable development from a capability perspective. The authors collected their data from SMEs in the pollutive industries in China, such as mining, oils, and textiles. These industries are more likely to receive pressure from the government and civil society for mitigating the environmental effects and implementing sustainable strategies. Their findings reveal that the SME’s digital capability has a positive influence on the firm’s digital entrepreneurial activities, that is, on social and environmental value creation, value delivery, and value capture (i.e., digital sustainable entrepreneurship—DSE). Furthermore, a digital innovation orientation further enhances the relationship between digital capabilities and DSE, and it can decrease the tension between the energy consumption of digital technology and social and environmental values. Most importantly, however, their study provides empirical evidence (moderating effect) of the importance of a manager’s cognition of sustainable opportunities for guiding digital capabilities and digital innovation orientation to convert into DSE within SMEs. This means that if the manager perceives sustainability rather as an opportunity than a threat, he or she is more likely to engage in the development of sustainable strategies, accelerate digital transformation, and unleash the SMEs digital capability.

Sustainable entrepreneurship is considered to provide solutions to the grand social and environmental challenges. The combined application of sustainability and digitalization leads to even higher levels of sustainability. Despite these positive effects of digitalization, there has been a lack of understanding in research about the application of digital technologies and their usage within the business models of sustainable entrepreneurship.

Hence, Fuerst, Sanchez-Dominguez, and Rodriguez-Montes [contribution 4] investigated the role of digital technologies for value creation, value delivery, and value capture within sustainable entrepreneurship. The authors studied the adoption and usage of digital technologies within the business models of 10 born-sustainable ventures in Mexico. Their findings indicated that context matters: despite the claims that digital technologies promote community integration, social inclusion, and broader stakeholder integration, important limitations exist that put constraints on the implementation of digital technologies, particularly in the value creation and value delivery components of the business models analyzed. The authors highlight how entrepreneurs leverage digital technologies in their business models from a Global South perspective.

5. Conclusions

Entrepreneurs and managers can create and discover new combinations of digital and sustainable innovation. This demonstrates that they are indeed change agents and have a transformative capacity within this new business reality by carrying out new innovative combinations of sustainability and digitalization. This Special Issue, with its contributing papers, finds theoretical and empirical evidence for sustainable entrepreneurship management and digitalization. The present article conceptualizes and contributes to these domains of the literature by suggesting a 360 degree view of business transformation, with four anchor points between eight digital and sustainable growth dimensions of innovation. Thus, it contributes 12 innovation dimensions significant for creating new combinations and entrepreneurial actions.

We highlight that entrepreneurs and managers alike should not innovate in all 12 dimensions at the same time. Instead, they can use self-assessment for reflecting and systematically mapping the green digital innovation potential of their business. The core focus and thus innovation action starts with their offerings, customers, processes, and presence by dealing with digitalization and sustainability holistically and systematically. As a result, entrepreneurs and managers will be more capable of envisioning, innovating, and acting with digital and/or sustainable transformation in creating their business reality of growth.

List of Contributions

• Diaz, R.; Montalvo, R. Digital Transformation as an Enabler to Become More Efficient in Sustainability: Evidence from Five Leading Companies in the Mexican Market. Sustainability 2022, 14, 15436, doi:10.3390/su142215436.
• Rodriguez-Marin, M.; Saiz-Alvarez, J.M.; Huezo-Ponce, L. A Bibliometric Analysis on Pay-per-Click as an Instrument for Digital Entrepreneurship Management Using VOSviewer and SCOPUS Data Analysis Tools. Sustainability 2022, 14, 16956, doi:10.3390/su142416956.
• Xu, G.; Hou, G.; Zhang, J. Digital Sustainable Entrepreneurship: A Digital Capability Perspective through Digital Innovation Orientation for Social and Environmental Value Creation. Sustainability 2022, 14, 11222, doi:10.3390/su141811222.
• Fuerst, S.; Sanchez-Dominguez, O.; Rodriguez-Montes, M.A. The Role of Digital Technology within the Business Model of Sustainable Entrepreneurship. Sustainability 2023, 15, 10923, doi:10.3390/su151410923.