The Dilemma of Disrupting Under Pressure: Exploring the sensemaking of entrepreneurial SMEs’ environmental innovations

Sammanfattning: Innovations with the goal of creating a more sustainable economy and industry has been a topic of study for many researchers over the recent decades. This comes to no surprise since large organizations flag for the problematic consumption and production patterns that could lead to environmental problems at a global scale. The research on these environmental innovations that has been done up until now has been focusing on applying quantitative methods on a wide sample size of large size enterprises, to figure out the drivers, motivators, and forces that affect the way environmental innovations are done. This thesis aims to explore environmental innovation, by looking into how institutional and stakeholder theories reflect the ongoing sensemaking process of small and medium size entrepreneurial enterprises. In contrast to previous studies, this thesis applies a qualitative method with an inductive approach in order to establish a deeper understanding of the nuances of environmental innovation from the perspective of three entrepreneurial SMEs in Sweden. The semi-structured interviews provide empirical data which then is organized into themes by using first and second order categorization. The findings show that the entrepreneurial SMEs face three main challenges in the form of dilemmas when engaging in environmental innovation. These dilemmas appear to stem from different stakeholder pressures and isomorphic processes. The first finding displays the tension entrepreneurial SMEs face when their sustainable ambitions go against the traditional business practices of an industry, which in turn is reflected poorly in their environmental innovation. The second finding shows that the disruptive ambition clashes with the industrial norm and results in incremental innovation, which supports the previous findings that uncertainty induces imitation. The third finding indicates that a compromise is necessary between changing the habits of the customer and adapting to the habits of the customer, which is a back-and-forth of teaching and learning.