Information Asymmetries and the Paradox of Sustainable Business Models: Toward an integrated theory of sustainable entrepreneurship

In this conceptual paper, the traditional conceptualization of sustainable entrepreneurship is challenged because of a fundamental tension between processes involved in sustainable development and processes involved in entrepreneurship: the concept of sustainable business models contains a paradox, because sustainability involves the reduction of information asymmetries, whereas entrepreneurship involves enhanced and secured levels of information asymmetries. We therefore propose a new and integrated theory of sustainable entrepreneurship that overcomes this paradox. The basic argument is that environmental problems have to be conceptualized as wicked problems or sustainability-related ecosystem failures. Because all actors involved in the entrepreneurial process are characterized by their epistemic insufficiency regarding the solving of these problems, the role of information in the sustainable entrepreneurial process changes. On the one hand, the reduction of information asymmetries primarily aims to enable actors to become critical of sustainable entrepreneurs’ actual business models. On the other hand, the epistemic insufficiency of sustainable entrepreneurs guarantees that information asymmetries remain as a source of new sustainable business opportunities. Three further characteristics of sustainable entrepreneurs are distinguished: sustainability and entrepreneurship-related risk-taking; sustainability and entrepreneurship-related self-efficacy; and the development of satisficing and open-ended solutions, together with multiple stakeholders.