Ecopreneurial Startups with Sustainable Innovations - A Case Study on the Emergence and Growth of Four Finnish Startup Companies

Bachelor’s Thesis 15 hp Department of Business Studies Uppsala University Spring Semester of 2019

Date of Submission: 2019-06-05

Anni Heikkinen Sonja Koskinen Supervisor: Susanne Åberg

Abstract

With growing attention to sustainable development, the role of sustainable innovations has gained increasing significance. Due to their high innovativeness, research has begun to recognize the importance of small companies that base their entire business rationale on sustainability, as they have a central role in creating solutions to some of the most critical environmental issues of today. The key aim of this paper is therefore to explore the emergence of ecopreneurial startups with sustainable innovations in order to develop a deeper understanding of how they grow and operate. By using a case study approach based on semi-structured interviews and secondary data sources, this study examines four Finnish startup companies. The results suggest that the emergence of the studied startups is highly linked to the ecopreneurs’ ability to identify potential business opportunities and to innovate through exploiting both their own and others’ previous knowledge. In addition, various internal and external aspects such as the work teams’ skills and expertise together with different push and pull factors contribute to the innovation development process around which the emergence of the companies is built.

Sammandrag Till följd av växande uppmärksamhet på hållbar utveckling har rollen av hållbara innovationer blivit allt viktigare. Mindre företag kännetecknas ofta av en hög grad av uppfinningsrikedom, och kan därmed ses som viktiga aktörer i att utveckla hållbara lösningar till några av de största miljöhoten idag. Forskning har följaktligen börjat att rikta fokus på speciellt de små företag som har byggt upp deras hela verksamhetsidé på hållbarhet. Huvudsyftet med denna studie är att undersöka uppkomsten av nystartade ekoprenöriella företag med hållbara innovationer för att få djupare förståelse om hur dessa företag växer och fungerar. Genom att utföra en fallstudie baserad på semistrukturerade intervjuer och sekundära källor granskar denna studie fyra finska nystartade företag. Resultatet visar på att uppkomsten av ekoprenöriella nystartade företag är starkt sammankopplad till ekoprenörens förmåga att identifiera potentiella affärsmöjligheter och innovera genom att utnyttja både sin egen och andras förkunskap. Vidare finns det diverse interna och externa faktorer, såsom teamets förmågor och expertis samt olika push- och pull-faktorer som påverkar innovationsutvecklingsprocessen som lägger grunden till företagens uppkomst.

Keywords: Sustainability, Ecopreneurship, Environmental entrepreneurship, Innovation, Startup, Case study

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Table of Contents

1. Introduction 4

1.1 Purpose and Research Question 6

2. Theoretical Framework 7

2.1 Eco-Innovation Analysis Model 7 2.1.1 Identification of the Problem 8 2.1.2 Generation of Ideas 8

2.1.2.1 Internal Factors 9 2.1.2.2 External Factors 9

2.1.3 Analysis and Selection of Innovative Ideas or Solutions 10 2.1.4 Development of the Idea 10

2.1.4.1 Type of Development 10 2.1.4.2 Type of Innovation 11 2.1.4.3 Selection Of Eco-Innovation Strategy 11

2.1.5 Implementation 12 2.2 Ecopreneurship 13 2.3 Summary of the Theoretical Framework 14

3. Method 15

3.1 Selection of case companies 15 3.2 Semi-structured interviews 16 3.3 Documentary evidence 17 3.4 Operationalization 18 3.6 Analyzing the Data Gathered 20 3.7 Limitations 20

4. Empirical Presentation 22

4.1 Dolea 22 4.2 Solar Foods 23 4.3 Sulapac 25 4.4 Woodio 28

5. Analysis and Discussion 30

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5.1 Identified Problems or Needs 30 5.2 Generation of Ideas 30 5.3 Selection of Innovative Ideas 31 5.4 Development of the Idea and Company 32 5.5 Implementation 32 5.6 Ecopreneurship in the Case Companies 33 5.7 A Summarizing Table of the Case Companies 35

6. Conclusions 36

References 38

Appendix - Interview Questions 43

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1. Introduction

Sustainable development is a concept that has risen to popularity with all of the challenges humanity is currently facing. Sustainable development is often defined as “development that meets the needs of the present without compromising the ability of the future generations to meet their own needs” (Brundtland, 1987, p. 37), as expressed in the Brundtland report from 1987, that first brought to the forefront the need to take global action for a sustainable future. Along with growing awareness of environmental issues, public pressure on society’s different actors to be more sustainable is also rapidly growing. One of these actors under pressure to change towards more sustainable practices are corporations and organizations around the world. Subsequently, many of them have begun to incorporate sustainability strategies as a part of their business. For example, corporate social responsibility is a term used to describe the actions firms take to further sustainable development, that go beyond what is required by law or regulations (Borglund et al., 2017). Other ways corporations have begun to take initiative are for example, through triple bottom line reporting, where in addition to the firm’s economic performance, their impact on the environment and on people is also demonstrated, as well as through following voluntary standards such as the Global Reporting Initiative-standards that help companies to understand and communicate their impacts on important sustainability issues (Borglund et al., 2017). Nevertheless, most companies are primarily focused on regulatory compliance, cost reductions, and brand image issues when it comes to sustainability (Metz et al., 2016), and most of the changes done by corporations, such as switching from plastic bags to paper bags or using more ecological raw materials in their production processes, can be seen as simple and incremental changes (Klewitz and Hansen, 2014). These actions could be classed to belong to reactive sustainability strategies, focusing on responding to regulatory interventions and public demands (Klewitz and Hansen, 2014). However, to tackle unsustainability at its core, more proactive strategies that go beyond adds-ons to counteract negative outcomes are needed (Bocken et al., 2014). These proactive strategies include for example introducing radical innovations to the market. Although the distinction between radical and incremental innovations is not definite, more radical innovations have more potential to influence sustainable development on a larger scale as they can reform existing practices (Klewitz and Hansen, 2014). Consequently, long term sustainability requires fundamental changes that go beyond eco efficiency and corporate social responsibility activities (Bocken et al., 2014), and sustainable innovations brought to the market could potentially provide a solution. These kinds of sustainable innovations, or sustainability oriented innovations, can be defined in various ways. They can be described as innovations that aim to increase social and environmental sustainability through an improved economic performance (Bos-Brouwers, 2010), or as the integration of ecological and social aspects into different processes, products, and structures in organizations (Klewitz and Hansen, 2014). Due to their potential to

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stimulate transformative changes in technology, products and markets, sustainable innovations can even be perceived as driving forces of “creative destruction”, where the creation of new technologies and products can lead to the destruction of existing processes and practices (Larson, 2000). The movement toward sustainability through potentially transformative innovations, has therefore even been described as a new wave of creative destruction (Larson, 2000). Furthermore, throughout history there have been long waves of innovation, that have been associated with an acceleration towards a crisis followed by significant economic growth and social restructuring, and it has been proposed that a new wave of innovation, that is sustainability innovation is currently emerging (Seebode, Jeanrenaud and Bessant, 2012).

Traditionally, sustainable business management research has mainly focused on sustainable innovation in large firms. However, small and young firms such as startups are in the position to better exploit knowledge and pursue more radical innovation (Thompson and Scott, 2010; Schaltegger and Wagner, 2011), which has lead to small and medium sized enterprises receiving increasing recognition as central contributors to sustainable development (Klewitz and Hansen, 2014). These companies include so called green green startup companies, that have designed their products and processes to be environmentally friendly from the very beginning (Isaak, 2002). Consequently, rather than concentrating on how existing firms can become more sustainable, research has shifted its focus on the importance that small firms can play in the creation of new innovations and societal change (Schaper, 2002). Small firms do not show any difference in the quality and significance of the innovations (Van Dijk et al., 1997), however they do innovate differently from large companies, as they have the ability to internally communicate more efficiently and be more responsive to changing circumstances (Bos-Brouwers, 2010). Entrepreneurs who base their entire business rationale on sustainability, and who pursue to create sustainable and economic value around perceived market opportunities can be called ecopreneurs (Thompson and Scott, 2010). Moreover, as already mentioned fundamental changes and proactive strategies are essential for long term sustainability. It could therefore be stated that ecopreneurs in combination with more radical sustainable innovations are some of the key players to look for in today's world. It has been described that entrepreneurship together with knowledge is the engine of innovation (Hindle and Yencken, 2004), and that they can change existing consumption and production habits on the basis of individual initiatives (Schaltegger and Wagner, 2011). Additionally, as prior research has argued, small startups are often notably innovative and capable of transforming existing products and services on the market. Ecopreneurial startups are characterized both by the ambition to gain competitive advantage in order to be financially successful as well as to contribute to the common good of society and sustainable development. Finding the balance between making profit and thriving for environmentalistic values can therefore be a demanding challenge for ecopreneurs to

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navigate, both in the short and long term (Thompson and Scott, 2010). Hence, a question that arises, is how do these ecopreneurial startups then formulate their business strategy? Furthermore, how do they interpret their market opportunities in consideration of developing sustainable innovations and entering a market? Investigating these questions is essential as it would offer practical knowledge to current and future ecopreneurs through learning from the past and present experiences of other ecopreneurs (Schaper, 2002). As these ecopreneurs can be key actors in offering solutions to some of the worlds biggest and most critical environmental issues, deeper knowledge regarding especially sustainable innovations in small startups would therefore be of significant importance. How these innovative ecopreneurial startups operate remains, however, less well-understood and documented (Rodgers, 2010).

1.1 Purpose and Research Question

The purpose of this study is to describe the role of sustainable innovation in the emergence and growth of ecopreneurial startups, in order to gain a better understanding of how these types of startups operate. We aim to explore the driving factors behind ecopreneurship and the development of sustainable innovations. Furthermore, we want to broaden our understanding of the opportunities and challenges these types of startups face during their growth, and in the development and implementation of a new innovation. These ambitions lead us to our research question below:

How do ecopreneurial startups with sustainable innovations emerge and operate?

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2. Theoretical Framework

In this following section we will present a theoretical framework that will build a basis for our study. In order to understand the role of sustainable innovation in ecopreneurial startups, we will be focusing on an eco-innovation analysis model created by Tamayo-Orbegozo, Vicente-Molina, and Villarreal-Larrinaga (2017) as well as examining typical characteristics of ecopreneurs. The definitions of sustainable innovation depend on what dimension of sustainability they are perceived to cover. In our work while discussing sustainable innovations we refer to the dimension of environmental sustainability. Therefore, we find it appropriate to use an eco-innovation analysis model, where eco-innovations are defined as innovations that can significantly improve productivity of resources or reduce environmental impact, and thus benefit the environment (Tamayo-Orbegozo et al., 2017). Furthermore, with the help of prior research we will combine the eco-innovation analysis model with the perspective of ecopreneurship, to build a coherent picture of the emergence of ecopreneurial startups with sustainable innovations in our analysis. This is relevant due to the fact that innovation processes taking place in smaller companies are strongly linked to the entrepreneur’s own values and strategic vision (Gast, Gundolf and Cesinger, 2017).

2.1 Eco-Innovation Analysis Model

The eco-innovation analysis model was originally created for a study where the aim was to identify and understand how and why eco-innovations are developed, as an analytical tool to establish a unified conceptual context to analyse the phenomenon (Tamayo-Orbegozo et al., 2017). The model has broken eco-innovation down into simpler parts with various phases and principle key factors related to eco-innovations. The five main phases of the eco-innovation analysis model that can be seen below in Figure 1 are: identification of the problem-need, generation of ideas, analysis and selection of innovative ideas or solutions, development of the idea, and implementation. The authors, however point out that the model is not linear, rather it attempts to reflect the real situations of dynamic and non-linear of eco-innovations, and acknowledges the possibility that in the process different factors from different phases can come into play.

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Figure 1. Eco-Innovation Analysis Model (Tamayo-Orbegozo, Vicente-Molina, and Villarreal-Larrinaga, 2017).

2.1.1 Identification of the Problem

Sustainable innovations begin from identifying a problem or a need, and they differ from other types innovations in that they are essential for long-term industrial growth and aim to improve resource efficiency and current processes (Tamayo-Orbegozo et al., 2017). At the present moment various natural resources are over-exploited in addition to that the lifestyle of developed societies generate enormous amounts of waste and other major pollutants (Global Footprint Network, 2019). Consequently, there are many environmental problems that can be identified that require the development of innovative solutions. The cause of these problems may lie for example in prevailing products, production processes or organisational processes. Sustainable innovations are seen as strategic tools that help maintain and enhance competitive advantage (Tamayo-Orbegozo et al., 2017), as well as grow business value, improve economic performance, and build stronger relationships with customers (Metz et al., 2016). Moreover, market opportunities linked to sustainable products are growing (Santini, 2017), and identifying a specific problem area, and consequently what is needed on the market, can lead to an idea of a solution, and thus also to valuable business opportunities.

2.1.2 Generation of Ideas

There are many internal and external factors that can either hinder or facilitate the generation of sustainable innovations during various phases of the sustainable innovation process. These factors shape the context that the innovation is developed in, and they can be divided into factors internal to the organisation, specific to the organisation’s environment, and general to the organisation’s environment (Tamayo-Orbegozo et al., 2017).

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2.1.2.1 Internal Factors Internal factors refer to knowledge, resources, capacities, and skills within the organisation. Some especially important factors are the firm’s involvement, commitment, and motivation for developing sustainable innovations, as well as long term vision of environmental needs (Tamayo-Orbegozo et al., 2017). These factors build a basis for the organisation’s philosophy and culture and translate into the actions of the employees, management, and research and development (Bossle et al., 2016). Furthermore, the firm’s outlook on differentiation and creation of competitive advantage shape their strategy and thus their commitment to innovation research and development efforts (Hallstedt, Thompson and Lindahl, 2013). This organisational culture is also shaped by the organisation’s skills, competencies and resources, and in the case that these are insufficient, in the organisation’s capacity to establish and advance relationships with other actors. 2.1.2.2 External Factors External factors forming the general environment surrounding the organisation and their sustainable innovation include laws, regulations, policies, public opinion, and mass media (Tamayo-Orbegozo et al., 2017). These political, legal, and social aspects can act as promoting factors for sustainable innovation and stimulate creative thinking, especially when they are anticipated by innovative actors (Hallstedt et al., 2013). Specific countries or regions can further promote the development of sustainable innovations, for example by government funding for research and institutional arrangements for innovation systems. Consequently, proximity to universities, research centers and other external knowledge institutions significantly influence sustainable innovations and their development. Regulatory, normative, expanding market, and technology pressures can thus be significant drivers for sustainable innovation (Bossle et al., 2016). However, interdependencies between societies’ existing structures and technological systems can also form economic, technological, social, cultural, and political barriers for sustainable innovations (Tamayo-Orbegozo et al., 2017). Factors specific to the organisation's environment comprise of factors such as the organisation’s stakeholders, network, technological capacity of the industry, availability of financing, competition, and market conditions (Tamayo-Orbegozo et al., 2017). Taking into account the innovation’s product life cycle and value chain can be beneficial for the implementation of the innovation, in that it considers the value and use for its customers, suppliers, and distributors. Furthermore, for the development of sustainable innovations, the importance of networking and collaboration is especially highlighted. Cooperation and relationships between other organisations, research institutes, universities, authorities, and other actors within the industry, are central for driving sustainable innovation and provide diverse skills, competences, and resources for its development (Triguero, Moreno-Mondéjar and Davia, 2013).

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2.1.3 Analysis and Selection of Innovative Ideas or Solutions Whether the sustainable innovative ideas are worth pursuing and developing into innovations adapted to the market, needs to also be evaluated and determined. Accordingly, the innovation’s viability, its potentiality and ability to succeed and perform in its intended function, should be considered before it is further developed and implemented (Tamayo-Orbegozo et al., 2017). Some of the aspects that can affect the viability of innovative ideas, are its costs, prices of resources, its scalability, compliance with legislation, and the available access to technology and further the possibility to develop it. Additionally, for sustainable innovations specifically, it is crucial to assess the advantages and benefits of the innovation and how it would contribute to sustainable development, and whether it would have a high degree of importance for solving environmental issues (Keskin et al., 2013).

2.1.4 Development of the Idea

The development process of a sustainably innovative idea is complex, and consists of various aspects the firm needs to take into account in order to gain competitive advantage despite increasingly strict regulations, social pressures, effects of climate change, and scarce resources (Bocken et al., 2014). It covers different dimensions that are each affected by the firm's sustainability strategy, type of innovation, and whether the idea will be developed internally, externally, or mutually with other actors on the market. After the prototype design, the product, its development and production have to be analyzed and planned together with what needs to be taken into account prior to market launch (Tamayo-Orbegozo et al., 2017). 2.1.4.1 Type of Development Companies and organizations have different ways to innovate depending on, among other things, their corporate goals, current resources, size, the overall characteristics of the industry, and values. As mentioned, the ideas can be developed internally, externally, or jointly in alliances, partnerships, networks, or collaborations in order to facilitate the development and implementation of innovation (Tamayo-Orbegozo et al., 2017). When developed internally, the organization relies on their internal resources and know-how, but often especially small and medium-sized enterprises are unable to internalize all parts of an innovation process due to the lack of resources. To compensate the lack of for example advanced technology, companies can prefer to innovate jointly (Bos-Brouwers, 2010), or choose to outsource the innovation process to another organization (Tamayo-Orbegozo et al., 2017). Compared to bigger companies startups may have less resources and know-how, however, according to innovation management literature, they are nonetheless more likely to innovate (Schaltegger and Wagner, 2011). Thus, in developing eco-innovation, companies often aim to take advantage of both their internal resources such as personnel and research and development as well as external resources. Due to this, they can choose to cooperate with customers, suppliers, manufacturers, knowledge institutes, and the government, which allows them to benefit from

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for example additional know-how and expanded or supplemented personnel capacities through open innovation (Tamayo-Orbegozo et al., 2017). Furthermore, the knowledge transfer and institutional support arising from joint development of ideas and innovation between a firm and other social actors including unions, other firms, and knowledge institutes, contributes to incentivising eco-innovation (Tamayo-Orbegozo et al., 2017). In addition to this, as the amount of tasks and complexity in the development process increases, the surrounding network becomes even more important (Keskin et al., 2013). Co-creation has also been argued to be a key issue in ecopreneurship due to the mutual learning (Schaper, 2002), creativity, collaboration and societal orientation embedded in it (Santini, 2017), and although the networking is of course essential for entrepreneurs, its importance has been especially stressed when it comes to sustainable innovation (Schaltegger and Wagner, 2011). 2.1.4.2 Type of Innovation Sustainable innovation can build around products or processes. These two types of innovations have diverse degrees of sustainability depending on the firms deliberate strategy and emergent strategic behaviour (Klewitz and Hansen, 2014). The more sustainable the strategic behaviour is, the more it aims to contribute to sustainable development of markets and society (Klewitz and Hansen, 2014). The innovations can focus on different corporate aspects including technological, organizational and marketing (Tamayo-Orbegozo et al., 2017). Technological and organizational environmental innovations aim to relieve strains on environmentally sensitive resources and sinks, whereas marketing innovations are products or processes in a commercialized form, emerging from a certain innovation (Huber, 2008). Furthermore, it is worth mentioning that technologies and regulations changing due to differing reasons, can also give more potential for environmental innovations to emerge (Thompson and Scott, 2010). Such determinants of technological change can for example be pull factors as new technological opportunities, entrepreneurial activities, institutional support for new technologies, or push-factors such as technological needs including scarcity of materials and changes in demand. How well organizations manage to react to these changing circumstances depends on their capability to use available knowledge and techniques and recognize early market niches (Rennings, 2000). 2.1.4.3 Selection Of Eco-Innovation Strategy The selection of an eco-innovation strategy depends on whether the organization aims to solve environmental problems before they become urgent, or if they seek to tackle those that already have occurred (Tamayo-Orbegozo et al., 2017). Moreover, the choice of strategy is therefore strongly linked to the pull- and push-factors of above mentioned determinants and success factors for technological change, which can through supporting and constraining make organizations react to environmental issues (Tamayo-Orbegozo et al., 2017). In addition, a firm can have a more defensive or offensive innovation strategy, which depends on whether the competitors have already developed something similar or if the firm is a first-mover in launching the product or process on a market (Tamayo-Orbegozo et al., 2017).

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The more offensive and proactive, and therefore sustainable the innovation strategy is, the more likely it will lead to a radically sustainable product or process innovation with increased interaction with external actors (Klewitz and Hansen, 2014). Radical sustainable innovations, that have the potential to create new-to-the-world markets both for customers and manufacturers (Boons et al., 2013), are crucial in order to achieve more efficient use of resources, and therefore to increase long term sustainability. Consequently, business opportunities for radical sustainable innovations going beyond reactive strategies are optimal (Hansen, Grosse-Dunker and Reichwald, 2009). 2.1.5 Implementation

Finally, the implementation and marketing of sustainable innovations at a functional level is a crucial part of the innovation development. Whether the organization chooses to implement the product or a process locally, regionally or globally, depends on the problems associated with these different levels (Tamayo-Orbegozo et al., 2017). Regional systems can encourage and facilitate the development of eco-innovation through setting directives, transmitting signals and supporting innovative initiatives. Furthermore, communication between different actors aid in the creation of networks, and therefore also enhances the circulation of knowledge and development of environmentally sustainable technology. Moreover, the innovative and environmental regional culture further affects the network actors’ organizational values (Tamayo-Orbegozo et al., 2017). In addition to the careful selection of area and market for the implementation, a key challenge which remains relatively unexplored, is how to successfully introduce a sustainable innovation to a market (Boons and Lüdeke-Freund, 2013). This is especially relevant for organizations with new sustainable technologies that are developed in laboratories and launched through demonstration projects (Schot and Geels, 2008). The time it takes from the first phase of the innovative process, the identification of the problem, to having a product or a process ready to be implemented on a market, depends on various aspects. The earlier mentioned internal and external factors, such as the competition on the market and the customers’ loyalty and openness towards ecological products, have an enormous effect on the duration of the innovation development process. The obstacles in implementing sustainable innovation can be reduced if the innovation is strongly embedded in the organizational culture, mission and vision, as well as being perceived more as an opportunity than an issue. However, fear or rejection of change, too much bureaucracy, lack of motivation, staff or organizational adjustments can create obstacles in implementing eco-innovations. At a functional level, obstacles that remain unsettled are often related to human resources management (Tamayo-Orbegozo et al., 2017). Identification of these existing drivers, barriers and stimuli that affect eco-innovation on a market is important for understanding the current market conditions and for enabling better planning of policies, which further helps in overcoming the obstacles and creating incentives for eco-innovation (Tamayo-Orbegozo et al., 2017).

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2.2 Ecopreneurship

Former literature has mainly focused on the innovation processes occuring in companies that are trying to adapt sustainable practices, but less research is available on how the innovation processes take place within small and medium enterprises (Rodgers, 2010) and new ventures, where sustainability is in the core of their business from the very beginning (Keskin, Diehl and Molenaar, 2013; Schaper, 2002). Ecopreneurs can be described as entrepreneurs that have found a new business idea based on sustainability principles, and who contribute to the green economy through providing environmentally sustainable solutions and practices that can be adopted to the market (Santini, 2017), or as persons who habitually create and innovate to build sustainable and economic value around perceived opportunities (Thompson and Scott, 2010). By taking advantage of their prior knowledge concerning sustainability, ecopreneurs become experts in their areas which makes them pioneers both in business and environmentalism (Rodgers, 2010). Moreover, ecopreneurs today are seen as business people determined to gain a market share in a relatively competitive environment (Santini, 2017). Thus, they can be characterized by a high desire to change the world and to make money (Thompson and Scott, 2010). Although ecopreneurs come in all different shapes and sizes with various business strategies and goals, they all contribute towards a greener and more sustainable economy as well as provide new solutions and practices to existing industries (Walley and Taylor, 2002). As opposed to achieving value through efficiency, entrepreneurs also tend to focus more on creativity, which gives them the capability to exploit knowledge generated by large firms and knowledge institutes (Thompson and Scott, 2010). Traditionally, entrepreneurs have been perceived to have characteristics such as leadership, ambition, team building, personal involvement, and commitment. These characteristics equally apply to ecopreneurs as they are seen to combine the concepts of entrepreneurship and sustainability (Schaltegger and Wagner, 2011). Moreover, it has been argued by Walley and Taylor (2002) that entrepreneurs’ and ecopreneurs’ similarities in terms of social processes and attitudes make entrepreneurship more likely to sustain environmentalism compared to the other types of organizations and corporations. Thus, the ecopreneurs’ entrepreneurial drive enables the pursuit of environmental goals, building a link between entrepreneurship and environmentalism (Dixon and Clifford, 2007). Successful entrepreneurship requires a cohesive process of planning and idea development, organizing resources, financing, and adoption of creative and innovative techniques together with risk taking (Schaper, 2002). Due to the sustainability aspect, eco-enterprises might even require an increased risk tolerance compared to traditional entrepreneurs. However, it is the ethical element of ecopreneurship that gives it a more powerful entrepreneurial force (Rodgers, 2010). Although entrepreneurship and environmentalism can ideally be mutually reinforcing, combining market and environmental sustainability goals can be seen as a key challenge for ecopreneurs (Thompson and Scott, 2010). Traditionally, entrepreneurs aim to

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profit from the exploitation of resources through gaining financial returns in a short period of time, whereas ecopreneurs seek to use human and natural resources in an environmentally sustainable way for as long as possible (Parrish, 2010). Due to that environmentalism is often perceived as a collectivistic and communitarian-oriented force, whereas entrepreneurship is more individualistic and consumption-oriented, the two aspects can therefore also be seen as intrinsically adverse (Walley and Taylor, 2002). Accordingly, the question of how to combine the environmental values and the objective of making money has been discussed among ecopreneurs (Santini, 2017). However, companies that have sustainability as the centre of their business are also capable of linking their economic success to their sustainability principles (Santini, 2017). 2.3 Summary of the Theoretical Framework

Ecopreneurs with sustainable innovations have identified a problem or a need and selected an innovative idea to provide a solution that is further developed and finally brought to a market. In this process of analysing and developing sustainable innovations many internal and external factors can either facilitate or hinder the process during various phases. Furthermore, in the case of startups and smaller companies the ecopreneurs’ personal goals and preferences are largely reflected in the company’s goals (Schaltegger and Wagner, 2011), making it relevant to complete our analysis with the ecopreneurial aspect of the innovation development process. Therefore, the different phases of the eco-innovation analysis model together with the ecopreneurial aspect will build the foundation for the analytical framework of this study.

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3. Method

In this part the method for our study will be presented. Due to the nature of our research question, which aims to describe and explore a certain phenomenon in more detail, a more qualitative approach has been chosen. Consequently, in order to develop a better understanding of the emergence and strategies of ecopreneurial startups with sustainable innovations, a case study focusing on examining four Finnish startups has been conducted. The objective of this study is not to provide representative and generalizable results, rather the focus is on collecting comprehensive information on a restricted number of objects in their specific context. To increase the validity of our study, multiple data collection methods and sources have been used. Accordingly, data has been collected by conducting interviews with the case companies’ founders, as well as by examining documentary information available from multiple secondary sources. Below we will further describe the methods for the selection of the case startups, collection of data, how it was analysed, and lastly the limitations of our study. 3.1 Selection of case companies

As our aim is to broaden our understanding of the driving factors regarding the emergence of ecopreneurial startups, we selected companies that were born green, meaning that sustainability is in the core of their business idea. Potential case companies were searched for through media outlets such as news articles about sustainable innovations and startups, and contacted for the possibility of participating in our study. An additional criteria was that the companies would originate from a similar startup and innovation environment. Finland as a startup environment was deemed appropriate as it is recognized as one of the global leaders in innovation, providing national funding and access to skilled workforce as well as advanced technology to young and innovative companies (Business Finland, 2019a). Consequently, in addition to being willing to take part in our study, the case startups needed to fulfill the above mentioned selection criteria of having built their business around sustainable innovation as well as originating from Finland. Thus, a purposive selection method was chosen, enabling us to choose appropriate companies given our research strategy (Seawright and Gerring, 2008). This selection method is further supported by the contention that in-depth interviews are preferably conducted with smaller amount of samples that have not been chosen randomly (Walle, 2014). Furthermore, the selected startups offer very unique products, differentiating them both from each other and existing actors on the market. All the companies had also demonstrated notable growth in a short period of time, as well as the wide recognition received both on the domestic and international markets prior to participating in the study. By analyzing the differences and similarities in the growth, strategies, values, and internal and external factors of these companies we were able to build a valuable basis for a deeper analysis on innovative, ecopreneurial startups.

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3.2 Semi-structured interviews

In order to gain a genuine understanding of the purpose of our study, we decided to conduct semi-structured interviews with the companies’ founders. We perceived semi-structured interviewing as the most suitable interview method for our study since it gives the interviewees the possibility to explain their answers thoroughly and openly, while providing us with an opportunity to pose complementary questions when needed (Bryman and Bell, 2015; Walle, 2014), including both open-ended and theoretically based questions (Galletta, 2013). Thus, in a semi-structured interview, the interviewer follows a list of topics to be discussed which the interviewee can answer quite freely according to their knowledge and capability. The order and wording of the questions may also vary. This method has been proven to be suitable for especially multiple case studies, as it offers some structure and therefore ensures the possibility for cross-case comparability (Bryman and Bell, 2015). Hence, all of the interviews covered the same main themes and questions with some variation occurring in wording as well as the follow-up questions, which allowed us to address more specific topics and facilitated the analysing of the data later on (Bryman and Bell, 2015). Prior to the interviews, the companies were contacted separately to ask about their willingness to participate in the study, together with information on the approximate duration of the interviews, the topics to be covered and the purpose and use of the information obtained. Permission for recording the interviews was also always asked before starting the interviews. Furthermore, the companies had the chance to separately review the information presented in this study before it was handed in to ensure no sensitive information to the companies was included and that their answers were accurately presented. Due to the companies’ relatively small size, the limited amount of employees working in them, as well as the nature of our research question, the amount of relevant people to be interviewed per company was small. As a smaller amount of in-depth interviews with key respondents are able to offer sufficiently focused insights into a specific research question (Reinecke, Arnold and Palazzo, 2016), we were able to include multiple startups in our study. Therefore, we aimed to interview the CEO’s and founders of the companies as they were the most suitable persons to answer our questions concerning the startups’ growth, innovations, values, and strategies. The amount of interviewees per company involved varied depending on their size and structure as well as the time they could invest in our research. Since we were two interviewers in each interview situation, we decided to divide the roles so that one of us asked the questions while the other one made sure that the interviews were recorded, and participated in asking complementary questions. Thereby we could ensure that the interviewing style would not vary and the comparability between the answers would increase (Bryman and Bell, 2015). We began by presenting the purpose of our study and expressing our appreciation to the interviewees for taking part. Additionally, we highlighted their right of leaving questions unanswered if they felt the need to do so (Galletta, 2013). Because of recording instead of taking notes during the interview, and when possible conducting the interviews in person, we were able to actively listen and show interest in the

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interview allowing the the interviewees to feel more positive towards the situation and to talk more openly (Bryman and Bell, 2015). In the case that a face-to-face interview was not possible due to the interviewees busy schedule, a recorded telephone interview was conducted. Recent research however suggests that telephone interviews are as representative as face-to-face interviews, and additionally are easier to administer (Bryman and Bell, 2015). The duration of the interviews varied between 20 and 30 minutes per company. Furthermore, the detailed interview questions can be found in the appendix. The face-to-face interviews were conducted in calm places such as their meeting rooms and offices, providing us with minimal external distractions in order to decrease the effects of variation in the interview environment. Furthermore, all of the interviews were conducted in Finnish, which helped us avoid misunderstandings, and enabled the interviewees to express themselves more freely. On the other hand, a down side with the choice of language is that implicit meanings may be lost later in translation (Bryman and Bell, 2015). Table 1 below summarizes the selected case companies, their eco-innovations, the persons interviewed as well as the type of interview conducted. Table 1. Persons interviewed, their positions and the type of interview. Company Type of

eco-innovation

Name of the

interviewee

Interviewee’s position in

the company

Type of

interview

Dolea Drinking straw Mika Salomäki CEO and founder Face-to-face

Solar Foods

Protein Jari Tuovinen Co-founder, member of the board, responsible for business strategy

Telephone

Sulapac Packaging material

Imran Ahmed Antti Pärssinen

Responsible for sales and partnerships Co-founder, responsible for innovation and technology

Face-to-face

Woodio Washbasins and wall panels

Petro Lahtinen CEO and founder Face-to-face

3.3 Documentary evidence

In addition to conducting interviews, we have collected data from multiple secondary data sources. This method of combining semi-structured interviewing with documentary data collection primarily helped us avoid reliance on only one approach (Bryman and Bell, 2015). Sources focusing on gathering more information on the case companies included company websites, reports, product presentations, press releases, and news articles. Moreover, to gain a deeper understanding of the context the companies are embedded in, we also collected information about the case companies’ notable network partners, governmental institutions,

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and relevant regulations through official websites and newspaper articles. The main functions of these secondary data sources were to provide a basis for understanding the concept of the innovations and the emergence of the startups, as well as to control that the information received from the interviews fits with the general narrative of the startups as presented in other sources. Thus, through using this method of triangulation, we were able to see whether the data gathered from the interviews and secondary data sources included any convergent or divergent information, which further increased the credibility of our study (Reinecke et al., 2016). 3.4 Operationalization

In our collection of data, we aimed to pose questions and collect information relating to the concepts covered in our theoretical framework. Therefore, we formulated our interview questions so that they would be relevant to our research question, but without making them too specific (Bryman and Bell, 2015). The questions were formulated not to be leading, and the same questions were asked with a similar wording from interview to interview, even though some necessary variation in the word choices occurred due to the differences between the chosen companies. Furthermore, the first question was the most open-ended, which aimed to encourage the respondent in more generative narrative from the beginning (Galletta, 2013). As mentioned earlier, many of the factors and aspects in the eco-innovation analysis model can affect several phases in the process, and this is also reflected in the formulation of our interview questions. Hence, the answer of one interview question can cover multiple theoretical aspects discussed. Moreover, our intention was not to cover all of the conceivable possibilities, rather we wanted to identify the most impactful and important aspects significant to the cases studied, and thus generate more meaningful results. We also used simple language in order to make the questions comprehensible and relevant to the interviewees (Bryman and Bell, 2015). Furthermore, we wanted to avoid posing questions concerning information that was already found from secondary data sources prior to the interviews, such as information about the type of sustainable innovation, the company’s background, and the interviewee’s name and age. This enabled us to formulate relevant questions as well as to better understand and contextualize the answers (Bryman and Bell, 2015), keeping in mind that the questions should be relevant regarding our theoretical framework (Galletta, 2013). Moreover, secondary data sources provided us with information about the problem the companies had identified to solve, as well as their external networks to a certain extent. The general thematic interview guide without the adaptations to suit the specific case companies, as well as the theoretical concepts we perceive them to cover, will be described below. The detailed interview questions and their thematic grouping are presented in the Appendix. We began the interviews by asking about the growth story of the startup with questions concerning the formation of the business idea and how the founders had come together to form a company. Answers to these questions gave us an overview of all of the theoretical

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concepts of ecopreneurship and the phases included in the eco-innovation analysis model. However, this first theme relating to the creation of the company aimed to especially explore the identification of the problem or need and the generation of the ideas. Thereafter, in order to investigate the impact of various internal factors, we focused on the background, skills, and prior knowledge of the employees both in general and concerning sustainable innovation. Furthermore, we asked the interviewees to describe the roles and responsibilities they currently have in the company together with the general expertise and commitment of the whole team. These questions also gave us deeper insight on the entrepreneurial drive behind the startup. The following theme covered in the interviews related more specifically to the ecopreneurial aspect of the innovation process. The interviewees got to describe their ecopreneurial values and attitudes, as well as what motivates them to work with an environmentally sustainable innovation. We also asked if they have had to make compromises between environmental values and making profit, and whether they consider them as contradicting objectives. In addition to the ecopreneurial aspect, these questions were strongly related to the analysis and selection of innovative ideas or solutions as well as the development and even implementation of ideas. Additionally, we discussed the various challenges and successes the companies had faced during their growth. In order to better define successes, we exemplified them as phases that possibly went better than the company had initially expected. Lastly, we asked about how much and what kind of external support they had received from different external actors. When asking about this topic, we presented the interviewees with different examples such as partners, investors, and the network in general that they could describe in more detail. This aspect aimed to cover especially the role of external sources on the analysis and selection of ideas or solutions, idea development and implementation. Moreover, due to the overlapping nature of the different phases and the integrated influence of ecopreneurship on the whole development process, we decided to formulate our interview questions so that they would not only focus on one part of the eco-innovation development process, but that they would rather be more open, covering broader entities spreading over the various phases. This also allowed us to ask less specific questions where the interviewees could freely resonate and describe their views and thoughts, as well as sustain the possibility for us to keep the themes essentially the same for all of the companies, which is relevant for semi-structured interviews (Bryman and Bell, 2015). Furthermore, these types of questions were more suitable considering the diversity of the companies involved and the lack of deeper knowledge from our part concerning the development of their innovation processes.

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3.6 Analyzing the Data Gathered

Due to the qualitative nature of our research, the data gathered needed to be organized and interpreted (Bryman and Bell, 2015). Therefore, after conducting the interviews the interview recordings were transcribed into separate documents, enabling us to avoid memory limitations as well as to conduct a more thorough and repetitive examination of the answers (Bryman and Bell, 2015; Galletta, 2013). Thereafter, the interviewees’ answers were analysed and grouped into themes relating to our theoretical framework such as the foundation story, innovation, human resources within the company, challenges, successes, external factors and the sustainability aspect. By searching for common themes in each interview, we were able to identify key dimensions relating to our theoretical framework, and thus establish an applicable foundation for analyzing the data gathered. These common themes were documented, which helped in locating and labeling the found patterns (Galletta, 2013). Additionally, information found from secondary sources was related to the interview answers in order to create a logical and comprehensible basis for the analysis.

3.7 Limitations

As most qualitative studies, our study is limited to its specific context (Bryman and Bell, 2015; Zainal, 2007). In order to create a relevant sample through ensuring sufficient variation between the case companies while also fulfilling our selection criteria, the startups were chosen through purposive sampling. We have a small amount of companies all originating from the same country, Finland, and due to the qualitative nature of the study as well as the purposive sampling method, the results from our study cannot be seen as representative for Finland or the Finnish markets (Zainal, 2007). Moreover, as the results generated will be profoundly context bound (Bryman and Bell, 2015; Zainal, 2007), they cannot be generalised towards ecopreneurial startups with sustainable product innovations operating in other geographical areas either. Furthermore, due to the time constraints for carrying out our study, we needed to limit our selection of case companies to only four ecopreneurial startups instead of gathering together a more comprehensive and representative sample. The interview results also reflect the interviewees own perceptions and experiences, which gives our study a strongly subjective nature (Bryman and Bell, 2015; Zainal, 2007). The companies could thus choose what information to share with us and what to leave out, and therefore the results might not give a fully thorough description of the subject. Furthermore, one of the interviews conducted was a telephone interview. Although one of the advantages is that the respondents answers can not be affected by the interviewer’s characteristics or presence (Bryman and Bell, 2015), it is not possible for the interviewer to analyze the interviewees reactions either. However, due to the nature of our research question, it was not seen a factor that would essentially affect our results. In addition, our secondary data consisted of both private and public documents concerning the companies, which develops further limitations. The private documents are not necessarily credible or representative, possibly reflecting their writers’ personal points of view, and the public data such as newspaper articles may as well be subjective and lack authenticity (Bryman and Bell, 2015).

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Although these factors make our study hard to replicate and no conclusions can be drawn concerning Finnish or ecopreneurial companies in general, the results primarily allow us to examine and analyze our theoretical framework in more depth, and thus contribute to theory building. In order to increase the objectivity of the study, further research could focus on carrying out in-depth interviews with several employees in the case companies, as well as on diversifying the chosen research methods by for example incorporating an analysis of Finland as a business environment for ecopreneurial companies and startups.

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4. Empirical Presentation

In this section the empirical findings of our research will be presented. Information gathered from the interviews will be combined with information found from secondary sources to build a coherent picture of the case companies and their emergence. Moreover, each case company will be presented separately, beginning with an introduction concerning the companies’ innovations and followed by their startup and growth story. Further, internal and external factors relating to the companies will be described, as well as what the interviewees see as the challenges and successes of the companies. Moreover, the interviewees’ views on sustainability and how they see that sustainability relates to their business will be presented. 4.1 Dolea

Dolea offers a renewable, fiber-based and plastic free drinking straw which is recyclable and biodegradable. Using high-technology manufacturing methods, the company seeks to replace plastic straws by providing food and food service industries with this ecological and planet-friendly alternative. Dolea straws come in two shapes, and in addition to the straws being recyclable in regular paper recycling, the buyer can choose specific print designs on the straw, which makes them particularly convenient and attractive for businesses. Moreover, the straws are made of entirely compostable material with no additional ingredients such as adhesives (Dolea, 2019), which separates them from the existing products on the market, making the innovation significant. In the early 2018, the conversation about plastic pollution in the seas became more widespread. The CEO of Dolea, Mika Salomäki, saw videos of sea turtles with plastic straws stuck in their noses and newspaper articles about the threats emerging from plastic pollution. Around the same time, Queen Elizabeth II banned the use of plastic straws in the royal estates. Together with a colleague, Salomäki wondered why the straws needed to be banned instead of being replaced with a more sustainable alternative (Salomäki, 2019). Having a Master of Science in Forest Products and Technology as well as working in a patent and trademark agency, Salomäki was already familiar with wood-based materials and had seen different innovations being developed on a daily basis (Salomäki, 2019). He then decided to contact his old friend who had a Master of Science in Chemical Engineering, and who had been working in the food packaging and recycling industry in Europe. Together with her, Salomäki started to generate the ideas (Salomäki, 2019). He had also noticed that traditional juice boxes were impractical to use, and recognized a need to improve the packaging (The Finnish Packaging Association, 2018). Determined to find a solution, they established Her Majesty’s Drinking Box, a company consisting of five highly committed and skilled employees that aims to replace single-serve plastics and increase the recyclability of fibre-based materials in the food sector (HMDB, 2019). As a result, they developed a sustainable juice box, called Skip a Straw, which contains no loose parts and can be recycled as a paper or carton packaging, challenging the traditional juice boxes (The Finnish

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Packaging Association, 2018). Inspired by this innovation, Salomäki then decided to start working on a fully plastic-free single straw. HMDB came in touch with Kotkamills, a company offering wood-based, sustainable product innovations (Salomäki, 2019), that lately had created an entirely plastic free cardboard material for packaging and food service industries called ISLA board (Kotkamills, 2019). Kotkamills’ innovation was radically different from the existing materials that are used to make paper or carton cups, since their coating usually contains plastic, or bio-plastic which is plant-based instead of oil-based but that still requires a chemical composting process with more than 70 degrees celsius and the right humidity (Salomäki, 2019). Salomäki and his team realised that by combining their knowledge and expertise with Kotkamills’ innovation, they could create a fiber-based straw that is fully compostable, biodegradable and recyclable in paper recycling and is sealed with heat instead of adhesives (Salomäki, 2019), and unlike paper straws, they are suitable for both hot and cold drinks (Circular City Week, 2019). Moreover, the straws’ printability and shape options were important factors for Dolea’s commercialization, further differentiating the straws from the existing competitors on the market and giving Dolea its competitive edge (Dolea, 2019). Thus, as the company sells licences for its product and manufacturing lines, the printable surface offers their clients a possibility to benefit from branding, promotional and entertaining purposes (Dolea, 2019). Although the innovation has only received positive reactions from clients and partners, and the company has not had any setbacks so far, the production efficacy for the straws is tenfold compared to traditional paper straws which makes it challenging to correctly price the product (Salomäki, 2019). However, while the objective is making financial profit, Salomäki thinks that this does not contradict with the ecological idea behind the innovation; “I see it so, that these two aspects support each other, that we are doing something good, even though we would then obtain financial returns at the same time” . Nevertheless, external support has been important in the growth of the startup. In addition to receiving funding from Business Finland, a state-owned organisation that aims to financially support different innovations and the internationalization of smaller companies (Business Finland, 2019b), Dolea has received assistance from for example its partner network with Kotkamills, which has helped them carry out product tests and trials when needed (Salomäki, 2019). Likewise, Salomäki’s connections to the trademark and patent agency has helped in the protection and development of the innovation process (Salomäki, 2019).

4.2 Solar Foods

Solar Foods is a company that produces a unique single-cell protein, named Solein, that is produced with renewable energy using exclusively CO2, water and electricity. The end product of Solein’s fully natural fermentation process, which is similar to production of yeast or lactic acid bacteria, looks and tastes like wheat flour, but contains approximately 50% protein, 20-25% carbohydrates, and 5-10% fat. The production technology enables nearly limitless production regardless of the location, land, and climate conditions. Since the

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production requires minimal amounts of water and land, Solein is more environmentally friendly than other protein sources available on the market (Solar Foods, 2019). The original innovation of Solein was born from NASA and Soviet Union space programmes, and the production method was further developed in research projects at VTT Technical Research Centre of Finland Ltd as well as Lappeenranta University of Technology (Private Document 1, 2019; VTT, 2018), where its potential and functionality as highly protein-rich nutrition was revealed and the results received remarkable international recognition (VTT, 2018). Later on, Jari Tuovinen and Janne Mäkelä were working on a different project with Pasi Vainikka who currently worked at VTT, where the three aimed to make fuel with only electricity and CO2. They travelled to the Middle East to market the product, but soon realized that its energy efficiency was not sufficient to make it commercially interesting or turn it into a reasonable business at the moment (Tuovinen, 2019). In the airplane on their way back, the two began to talk about a similar process that had been researched at VTT, where food was produced with only CO2 and electricity. Traditional food production wastes water, energy and land, and generates emissions making it unsustainable to continue with the current production methods (Private Document 1, 2019), creating a problem that needs to be solved in order to provide food for 9 billion people by 2050 (Private Document 2, 2019). Producing Solein is free from agriculture which means that it does not require arable land or irrigation and is not dependant of climate conditions. It also binds CO2 instead of causing emissions and uses renewable solar energy to produce electricity (Private Document 2, 2019), providing a solution to the problem. Additionally, due to the characteristics of the product and the production system, Solein could even be used for space missions, although the main objective is sustainable food production on earth (ESA, 2018). Thus, from the beginning the product was radically different from the existing ones on the market (Lappalainen, 2018). In 2018, Juha-Pekka Pitkänen and Pasi Vainikka, who had been working as scientists at VTT, saw the business potential in Solein and left VTT to establish Solar Foods together with Tuovinen, who had a long entrepreneurial background and was responsible of the commercialization and funding of the startup from the beginning (Tuovinen, 2019). Pitkänen, the current CTO of Solar Foods, is the creator and developer of Solein and works as the technology director and Vainikka, who has a background in energy industry, is the CEO. The fourth founder of the company is Sami Holmström, who is responsible for the laboratory and production process. (Tuovinen, 2019). Their board members further include Janne Mäkelä, who is responsible for sales, and Jero Ahola, who is responsible for power conversion technology (Solar Foods, 2019). All of the team members are highly skilled and committed to the growth of the startup, which Tuovinen perceives as extremely important. Their commitment is also yearly assessed through evaluations of their contribution in the work and shares. Thus, when someone has been in the business for four years they get to keep all their current shares, but dropping out before might cause them to lose some. Consequently, these approaches allow the company to evaluate the commitment of the team (Tuovinen, 2019). According to Tuovinen, the biggest strengths of the company are indeed the relevance,

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importance and uniqueness of the product combined with the highly committed and skilled work team. The new mass consumers are putting more and more emphasis on healthy, sustainable food alternatives (Private Document 1, 2019), which enhances the market demand for innovations like Solein. Due to the increased consciousness and knowledge amongst the consumers, innovations that are genuinely ecological and sustainable are often preferred (Tuovinen, 2019). Accordingly, Tuovinen does not think that the objective of generating financial profit contradicts with the company’s sustainability principles; “I think that only the kind of ecological solutions, that are sustainable but that also have the commercial aspect strongly embedded within the idea, are going to change the world. So no, we would not have turned this into a business if it wasn’t commercially reasonable also”. Furthermore, he points out that due to this reason, the initial idea of producing fuel was left behind; “To cause a world-wide effect, it needs to be legitimate business” (Tuovinen, 2019). External financing has been essential since the company was founded in 2018. During their first year, they received a total of 2 million euros of seed financing from Lifeline Ventures, Green Campus Innovations and VTT Ventures (VTT, 2018). In addition, the startup received a development and piloting loan from Business Finland (VTT, 2018) and 50 000 euros from Ålandsbankens Baltic Sea Project (Virtanen, 2019). With this support the startup has been able to build their pilot factory and start the production of Solein. However, some challenges have arisen during the growth. A technical issue that the company is working to solve is the scalability of the product. Until now it has only been produced it in a small factory and a laboratorium (Tuovinen, 2019), but in order to launch Solein to global markets, the company needs scale the production on a higher level (Carleton, 2019). In addition, bringing a new food product on a market creates its own issues for market introduction. The company needs to decide whether they will sell it to consumers as their own branded product, or to other businesses as a raw material for food production. Moreover, as Solein is not a plant- or animal-based product but a single cell protein, and is therefore classified as a novel food product by the EU, it will take approximately 1,5 years to complete the legislation process. However, although this could have been avoided by entering a market with lower or non-existing regulations, the company preferred to take the longer route that would end up being more profitable in the end (Tuovinen, 2019).

4.3 Sulapac

As environmentally friendly packagings are the core of Sulapac’s business idea, the company has created a microplastic-free and fully biodegradable material, called Sulapac, that aims to set new sustainability standards for world packaging markets. One of the main advantages of this radical product innovation is that it has high scalability since plastic manufacturers can produce it using their existing machinery. Sulapac is an innovation that has the benefits of plastic, but is entirely renewable, combining certified wood materials and Nordic design

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(Sulapac, 2019). Sulapac was born out of the initiatives of Suvi Haimi, as she had been thinking about becoming an entrepreneur even before the idea for Sulapac had been developed (Pärssinen, 2019). Having completed her Doctorate Degree in Biochemistry and working as a researcher in the University of Tampere, she contacted Laura Kyllönen, who she had supervised for her doctorate’s thesis, and together they began to develop a business idea. They identified a problem with cosmetics packaging, and how even ecological cosmetics were packaged in plastic (Sulapac, 2019). Many years before in a biomaterials conference, Haimi had met Antti Pärssinen who had been working with wood fibre based products in several companies. With Haimi and Kyllönen’s knowledge, skills, and ideas combined with Pärssinen’s expertise in wood-based fibre materials, the idea for Sulapac, a biomaterial and a wood-based packaging material to replace plastic was born and a startup was created in 2016 within two years of the initial idea (Pärssinen, 2019). Even though the company started from the idea of replacing plastic cosmetics packaging with a biodegradable, recyclable alternative made by using renewable sources, they now see that the material they have developed can serve as an environmentally friendly alternative to many other products that typically are made from plastic or other less sustainable materials (Sulapac, 2019). In addition to offering a customizable portfolio of different sized jars made from the developed material, they also offer a licencing model wherein existing manufacturers can change from producing plastic based products to producing products made from the Sulapac material using the same machinery and existing production lines (Sulapac, 2019). Additionally, the company is working with some bigger brand names, such as Fazer and Stora Enso (Sulapac, 2019). Pärssinen and Imran Ahmed, who works within the company as a sales and partnerships responsible, see that being associated with these bigger companies brings them more recognition and also upholds them to a certain standard and quality (Pärssinen and Ahmed, 2019). Sulapac has also published on their website big domestic companies as their customers (Sulapac, 2019), however Pärssinen points out that all innovations are developed internally within the company. Important growth phases for the startup have included two aspects that go on in cycles, that is finding financing as well as finding skilled personnel (Pärssinen and Ahmed, 2019). Pärssinen and Ahmed see that in the very beginning it was harder to find financing, while currently it is more difficult to find experienced and competent employees to further support the growth of the company. Sulapac was however able to collect seed financing of 1 million euros on their first financing round (Niipola, 2017), and has recently received funding from the European Union’s Horizon 2020 research and innovation programme among other investors and grants (Sulapac, 2019). Because Sulapac is a startup and a lot depends on one innovation, Pärssinen and Ahmed determine that high risk tolerance is an important characteristic for the company’s employees. They see that the work team possesses a will to take it all the way, that is when problems arise they are solved and everything keeps moving

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forward. While many of the product development employees have previous experience working with biomaterials, many of the business side employees are new to working with explicitly sustainable products (Pärssinen and Ahmed, 2019). However, Pärssinen and Ahmed conclude that everyone working for the company are experts in their own fields, and that the whole team is on average more committed to the company’s mission as could be compared to other business ideas, because they see the necessity and the acuteness of the solution the company is offering. Challenges the company has faced during its growth revolve a lot around how much time necessary phases take, as the step from product development to mass production doesn’t happen in a flash (Pärssinen and Ahmed, 2019). Even though the material can be produced with existing machinery, writing contracts and carrying out challenging test runs with new customers for the product take often up to a year, although this processes is seen to become more efficient in the future (Pärssinen and Ahmed, 2019). Additionally, adapting to all regulations and getting the right certifications for the new material on the market takes time. Furthermore, during the innovation process they had to tackle many problems that previously developed environmentally friendly products had faced, such as having adequate water, oil, and oxygen resistance, while also biodegrading under sufficient conditions and not being too expensive (Eskola, 2018). Nonetheless, they see that they are working with a hot topic, as the EU is about to restrict the use of plastics in the near future (European Commission, 2018) and many are seeking for alternatives on the market, and while others are waking up to the issue, Sulapac will be able to strike first as a startup (Pärssinen and Ahmed, 2019). When asked about the company’s successes, Ahmed (2019) says that they have been very well received by the media. He speculates that this could be due to the fact that Sulapac combines many trendy elements such as educated female entrepreneurs, nordic design, and a valuable idea for solving a big issue in the modern society. Moreover, Sulapac has been very successful in winning multiple awards, such as the best green packaging solution at the Luxe Pack in green Awards in Monaco, a WorldStar Award organised by World Packaging Organization, and the Sustainable Beauty Award in Paris (Sulapac, 2019). Haimi and Kyllönen agreed that in addition to being sustainable the product had to have a beautiful and differentiated design (Eskola, 2018), and the many awards could suggest that they have succeeded in that. When asked about whether sustainable development and gaining financial profits could be contradicting forces for the company, Ahmed said: “ We have started out with such a strong statement that that isn’t an option anymore”. Furthermore, Pärssinen stated that once you have chosen a path of sustainability everything you do needs to fit into that approach, otherwise nothing would be solved. What Sulapac offers is so far into the sustainability spectrum that it would be impossible to come even close to the issues related to plastic (Pärssinen and Ahmed, 2019). However, Pärssinen points out that sustainability is an additional aspect of the product, as it still has to include all of the other features that

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competing materials have to offer and be able to compete in price with them; “then there are the production and raw material costs, and if that then is 5 to 6 times more expensive, then it won’t make a difference anymore” (Pärssinen, 2019).

4.4 Woodio

Highly different from the existing products on the market, Woodio produces fully recyclable washbasins and wall panels made out of fully water resistant and moldable wood material. The ecological wood composite is a mix of wood and sustainable polymers, and due to the versatile possibilities and high potential of the material, the company is able to continuously develop their product and expand their product lines. Expressing Scandinavian design, quality and functionality through sustainability, is in the core of Woodio’s business (Woodio, 2019). Woodio was founded in 2016 by Petro Lahtinen after having left Onbone, the previous company he had founded that produced non toxic wood composite based casts for hospitals (Lahtinen, 2019). With his previous experience of working with wood-based materials and having a Doctorate Degree in Chemistry, he wondered what else could be made using a similar technique based on wood as a raw material, and the idea of making bathroom tiles popped up (Lahtinen, 2019). This however turned out to be quite difficult to start with, and the amount of bathroom tiles produced would need to be tens if not hundreds for one customer, and therefore the product Woodio chose to instead bring to the market was a washbasin. Currently Woodio produces several different types of washbasins and decorative wall panels, however they are working on bringing those bathroom tiles as well as bathtubs and toilet seats to their collection in the near future (Woodio, 2019). By using the technology from his previous company as a base, Woodio was able to develop a water resistant and moldable material that acts similarly to ceramic (Lahtinen, 2019). Furthermore, the molds used for Woodio’s material are less expensive than those used for ceramic, and therefore it is possible to produce smaller quantities in various shapes and colors (Kangasniemi, 2018). In addition to selling their products domestically through multiple retailers (Woodio, 2019), they have recently begun working on exporting and now have import agreements with Sweden, Denmark, Germany, and Japan (Lahtinen, 2019). The company has grown fast during the last year expanding from a team of two into a team of eight employees (Lahtinen, 2019). Lahtinen says that working as a CEO of a startup it is important that one is able to tolerate high risks and to take on versatile tasks, such as formulating a marketing strategy and choosing the right contracts. Except for Lahtinen, other employees don’t have previous experience working specifically with sustainable products, and all the more everyone is new to working in the design world of bathroom decoration. Nevertheless, Lahtinen sees this as a strength as this way everyone is willing to try new things, be creative, and not do things the same way that the industry has always been doing. Consequently, everyone on the team is committed to learning, and with intense and dynamic

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working conditions of a startup everyone needs to stay motivated and interested in their work (Lahtinen, 2019). As the core of Woodio’s business is to produce physical products, one of the bigger challenges the company has faced relates to production (Lahtinen, 2019). Establishing a production facility and finding skilled and competent labor force to run the manufacturing plant has been difficult, and Lahtinen sees that labor intense work has become outdated in the Finnish society as the amount of qualified workers in the field has become scarce. Public financing has however been a big support for the company for example from institutions such as Business Finland and the Centre for Economic Development, Transport and the Environment. Lahtinen nonetheless says that external support has mainly been financial, and while some discussions have taken place between Woodio and possible partners, they have not gone further than those discussions. This is due to the fact that during the early phases of the company, Lahtinen sees