Grand challenges and entrepreneurship: Emerging issues, research streams, and theoretical landscape

The basic idea of systems thinking is that human action cannot be effective (especially in the middle and long term) unless it is based on a good understanding of systems (Isaksson, 2019; Meadows, 2009). A system can be conceptualized as a loop (or set of interconnected loops) of cause–effect dynamics between factors and/or events that, by recurring over and over in cycles, structurally influence a certain configuration and/or resource level (e.g., see Abdelkafi & Täuscher, 2016). Systems are particularly valuable if their functioning stabilizes a desirable configuration and/or optimizes the level of a certain resource for collective benefit (Fanning et al., 2020). For example, a healthy natural ecosystem regenerates a configuration in which biodiversity is maximized; similarly, a successful value chain is composed of dynamic loops that keep employment and profits at high levels. However, systems may also destroy resources or lose their capacity to keep a configuration stable for the collective benefit. For example, this is what is happening to our food system, which contributes to jeopardizing the global climate due to the methane emissions of breeding farms. In contrast, the mafia is an example of a system that stabilizes an extractive configuration of the society in which it operates and generates resources for the few by destroying resources for the many.

Systems have a circular nature, that is, they are composed of sequences of processes that, through feedback loops, reinforce or weaken the repetition of those very same processes and/or their consequences in ways that may be very complex and highly counterintuitive. Further, many relevant systems are nonlinear: changes in outputs may be (even dramatically) not proportional to changes in inputs (Meadows, 2009).

In this light, entrepreneurship should contribute to developing and/or protecting “good” systems that stabilize flourishing configurations and regenerate resources for the collective benefit (Lüdeke-Freund, 2020; Schaefer et al., 2015). This idea is not alien to the mainstream entrepreneurship literature. For example, the Schumpeterian entrepreneur is called to contribute to the loop that generates economic growth by continuously triggering the creative destruction of old business models (Schumpeter, 1934). However, the Schumpeterian view is considered insufficient in the face of grand challenges for at least two reasons. First, entrepreneurs should contribute to the system that generates sustainable development, and not merely economic growth. That is, the system for which entrepreneurs should consider themselves co-responsible is the entire social-ecological system, rather than the mere economic system, which should not be artificially separated from the social-ecological system in which it is embedded (Muñoz & Cohen, 2018). Second, as opposed to Schumpeter’s optimistic view that the entrepreneurs’ fervid distributed experimentation has, per se, positive consequences for the system’s performance, we should acknowledge that social-ecological systems have many possibly hidden and nonlinear fragilities and therefore that any “creatively destructive” entrepreneurial action may have disruptive system-level consequences, particularly in the middle and long term (Nyström et al., 2019).

Besides being expected to contribute to (good) systems, entrepreneurs also depend on systems. For example, tourism entrepreneurship may depend on a certain place’s clean seaside and welcoming atmosphere. Digital entrepreneurship may depend on the support of incubators and venture capitalists. Again, the mainstream entrepreneurship literature has already begun to explore these interdependencies, and has developed the concept of a (sustainable) entrepreneurial ecosystem as the system that makes entrepreneurial action possible and maximizes its potential (O’Shea et al., 2021). However, scholars who are attentive to complain that studies on entrepreneurial ecosystems have so far often limited themselves to identifying “laundry lists” of the entrepreneurial ecosystem’s key actors and with what these actors are expected to provide entrepreneurs, thus paradoxically failing to understand the systemic nature of entrepreneurial ecosystems (Cavallo et al., 2018). Such scholars urge the research community to investigate the key dynamics (Anand et al., 2021), that is, the possible expected and unexpected cause–effect loops, of entrepreneurial ecosystems, and the long-term effects of these dynamics on entrepreneurial action and the larger social-ecological system.

In the basket of 19 recent and representative agenda-setting articles that we selected for analysis of the emerging theoretical landscape around the entrepreneurship – grand challenges nexus, seven advocate the analysis of system-level dynamics as a key approach. These seven articles are listed and synthesized in Table 1.

The basic idea of the theory of the commons, as it has evolved after Ostrom’s Nobel Prize winning research (Dietz et al., 2003; Ostrom, 1990, 2010; Ostrom et al., 1999), is that human fate strongly depends on resources that are (or could be) available for a certain community’s collective benefit, but whose availability is vulnerable to the behaviors of that very community’s members (Hardin, 1968; Hess, 2008). Examples include the attractiveness of a tourist destination, the reputation of an industrial district, the fish in a marine area, the quality of the contents in a wiki, a health care system’s capacity during a pandemic, and the stability of the global climate.

In each of the examples listed above, there is a community (ranging from small to global) that directly benefits form a resource, but whose misbehaviors may result in that resource becoming unavailable. For the resource to remain available for the collective benefit, a sufficient rate of beneficiaries must voluntarily refrain from overexploitation and/or carelessness, and take responsibility for the commons at stake. The debate on the commons began in economics and political sciences (Standing, 2019), but has recently gained significant traction in business and management studies (Ansari et al., 2013; Fjeldstad et al., 2012; Peredo et al., 2020), and particularly in organization studies (Ricciardi et al., 2020a, b; Rossignoli et al., 2018), sometimes by cross-fertilizing the theory of the commons (Albareda & Jose, 2020) with the theory of the common good of the firm (Higgins et al., 2014).

When a commons is at stake, then, a social dilemma is presented to beneficiaries: they might choose short-term, individual benefit (e.g., by saving the time and money that best-practice waste management would require), thus increasing the risk that the long-term, collective benefit will be lost (e.g., because of urban decay, or waste taxes increase), or they might choose to contribute to the long-term, collective benefit at the price of short-term individual benefit. As game theory experiments reveal, people hate the idea of engaging in pointless sacrifices, and may hate even more the idea that others, particularly the cheaters, might unfairly benefit from the sacrifices of others (Abele et al., 2010; Frischmann et al., 2019). Therefore, commons beneficiaries will likely contribute to the commons only if they have reason to believe that a high number of other beneficiaries will do the same, thus making the sacrifice useful and the reward (sufficiently) fair. For example, even when tourists begin abandoning a destination because it is dirty, the individual hotel owner is not likely to adopt best-practice waste management behaviors if most businesses in that tourist destination have so far cheated waste management regulations to save money. Thus, unfortunately, each individual misbehavior reinforces misbehaviors on the part of the others. In such scenarios, the role of organization and management sciences is likely to become increasingly relevant given that there is growing awareness that real-world commons do not merely raise social dilemmas, but pose sense-making, business and coordination challenges nested in social dilemmas (Abele et al., 2010; Adams et al., 2003).

That is, when a commons is at stake, beneficiaries’ behaviors influence each other in vicious or virtuous cycles, depending on a set of boundary conditions that Ostrom (Ostrom, 2009, 2010), and other scholars after her, have begun to identify. The presence of these loops highlights the systemic nature of the commons. Indeed, the so-called “tragedy of the commons” (Hardin, 1968) is a self-perpetuating vicious cycle that results in the destruction of the common resource. The tragedy of the commons is based on loops of “get it while you can” or “I won’t be the only fool who contributes” individual choices, and has been clearly identified as a systemic archetype by the seminal work of Meadows (2009)—Thinking in Systems.

In addition, one of the most viable research streams stemming from Ostrom’s work, that is, the stream on social-ecological system resilience and adaptive co-management (Berkes, 2009; Bodin, 2017) explicitly conceptualizes environmental commons (e.g., marine areas) as complex social-ecological systems that need to be collaboratively understood, modeled, governed, and managed as such (Ricciardi, De Bernardi, et al., 2020). Therefore, even if systems thinking and the theory of the commons are not explicitly co-advocated for their joint explanatory power by the 19 articles selected for this analysis, the existing theoretical link between these two approaches is strong and loud, as is represented by one of the red dotted lines in Fig. 4.

Based on the synergies and complementarities of the systemic and commons approaches, we conceptualize their joint explanatory and normative power as follows. The development and protection of systems that are able to regenerate collective benefit are core to addressing grand challenges, as argued in the previous section, but almost all these collective benefit systems embed commons-related dynamics (Ansari et al., 2013; Hess, 2008). That is, the systems that are relevant to grand challenges are typically threatened by the tragedy of the commons (triggered by beneficiaries’ loafing and/or overexploitation behaviors). In this light, we suggest that the role of entrepreneurship in the face of grand challenges is twofold.

First, entrepreneurs should not be among those who contribute to reinforcing a commons-related vicious cycle. This concretely translates into not only sustained compliance to state-of-the-art behaviors, but also into assurance of transparency, because when a commons is at stake even the suspicion that others are misbehaving reinforces the vicious cycle.

Second, and much more ambitiously, entrepreneurs should be among those who contribute to reinforcing a commons-related virtuous cycle. This implies viewing entrepreneurial action, and its continuous experimentation processes, as a means of participating in the never-ending effort to learn about the system’s dynamics and adaptively develop ever-improving solutions that serve the system’s health and resilience and that are economically sustainable (Sigmund et al., 2010). This “commons-activist entrepreneur” may play a way out of the so-called prison of social dilemmas (Pacheco et al., 2010) and shape the system for collective benefit.

In the basket of 19 recent and representative agenda-setting articles that we selected for the analysis of the emerging theoretical landscape around the entrepreneurship – grand challenges nexus, six advocate the analysis of system-level dynamics as a key approach. These six articles are listed and synthesized in Table 2.

As illustrated in the two previous sections, the two key theoretical poles identified in Fig. 4 jointly draw a high-level view of what the role of entrepreneurship in the face of grand challenges should be. That is, it should contribute to developing and/or protecting relevant systems for the collective benefit, and particularly to co-developing commons-related virtuous cycles (feedback loops) in these systems, or at least refraining from actions that are acknowledged as strengthening commons-related vicious cycles. In other words, entrepreneurship should actively contribute to benefit rather than simply passively not contribute to damage.

However, how can entrepreneurs concretely play this role in an effective way? Systems and commons thinking provide us with a new generation of clear and measurable general objectives, but they provide little, if any, concrete detail on how to achieve these objectives, and particularly on which entrepreneurial actions on the ground might really contribute to shifting from vicious to virtuous cycles at the system level.

The literature, and particularly the 19 recent agenda-setting articles that we review in this section, has already provided an interesting set of possible answers by identifying theories and approaches whose explanatory and normative power has been widely tested in the business and management literature, and that have proved sound and effective in translating goals into concrete working organizations and/or solutions that are also economically self-sustaining. As Fig. 4 demonstrates, these approaches overall draw a theoretical network linking the systemic and the commons approaches with a connective tissue that is hard-wired in today’s ongoing debate in the business and management disciplines.

The first group of approaches that play this bridging role in Fig. 4 is related to the social behaviors of the entrepreneur and includes the embeddedness, stakeholder, and institutional approaches. Social embeddedness theories have a long tradition in entrepreneurship research, dating back to the Austrian school and particularly Lachmann’s (1976) research. The entrepreneur is viewed as strongly embedded in its context, acting as a catalyst of social learning (Cantino et al., 2017). Embeddedness occurs at several levels. For example, sociocultural local embeddedness enables attaining help to develop the initiative; ecological embeddedness enables the granular collection and understanding of environmental feedback; community of practice embeddedness enables knowledge exchange and open innovation (Vlasov et al., 2018). As in the case of the link between system-level analyses and the governance and management of the commons, the link between social embeddedness and the commons approach is soundly present in the literature, although not explicitly advocated in the 19 articles under analysis. Self-organizing and participatory architectures for commons-related learning have been acknowledged as key to the governance and management of the commons (Ricciardi et al., 2020a, b). Again, this meta-theoretic link is represented by one of the red dotted lines in Fig. 4.

Further, entrepreneurs play a specific role in embedding their initiatives in a dynamic network of stakeholders. The stakeholder theory has significantly contributed to translating the embeddedness idea into concrete practices and performance measurement criteria. However, the time is ripe to develop a sounder theory of stakeholder governance and management (Amis et al., 2020). Scholars increasingly suggest overcoming the traditional, firm-centric versions of the stakeholder theory, and adopting a more systemic, commons-like view where stakeholders are not just beneficiaries but essential participants in problem solving and enterprise development because of their knowledge of local conditions and the role they can play in generating support (Lumpkin & Bacq, 2019). Unsurprisingly, the stakeholder approach is strongly linked with both the commons and the systems approaches, as presented in Fig. 4.

While stakeholder views focus on actor-to-actor embeddedness, the approaches based on institutional entrepreneurship and institutional work focus on actors’ embeddedness in social rules and values. Institutional theories view the context in which ventures are embedded as organizational fields (de Clercq & Voronov, 2011) in which different institutional logics (e.g., market logic or environment protection logic) are created, interact, clash, and evolve (Ansari et al., 2013). Continuous institutional work is needed to create and recreate the conditions for sustainability transitions, which is why the idea of institutional entrepreneurship has gained great traction in SDG-related studies (Wijen & Ansari, 2007a, b). Institutional work and entrepreneurship are explicitly co-advocated with systemic approaches and commons approaches by the literature (see Fig. 4), starting from Ostrom (1990) herself.

The second group of approaches that play a bridging role in Fig. 4 is related to the concrete cognitive, creative, and decision-making tools that entrepreneurs can adopt to address grand challenges successfully. Design-oriented approaches highlight that systems (including systems shaped by possible social dilemmas) can and should be (re)designed, for example, through sociotechnical approaches (Venkataraman et al., 2012), to make them resilient and capable of regenerating resources for the common good. Entrepreneurs are in a position to play a pivotal role in this never-ending systemic design challenge (O’Shea et al., 2021). Processual approaches (Jones et al., 2019) highlight that business opportunities co-evolve with social-ecological systems and continuous entrepreneurial learning is required to build the contribution of entrepreneurship to the SDGs throughout time. The effectuation approach (Sarasvathy & Ramesh, 2019) highlights how the specific relationship between the entrepreneur and the world, based on the entrepreneur’s capacity to embrace uncertainty and adaptively experiment around ideas and opportunities at hand, is key to the specific contribution of entrepreneurship to addressing grand challenges. The effectuation approach, which is means based (rather than ends based) is considered close to robust action and its dynamics of distributed experimentation (Ferraro et al., 2015). In a very recent article, Grimes and Vogus (2021) argue that the approach resulting from robust action and the effectuation framework may result in entrepreneurial action that, although necessary, is not sufficiently bold and systemic; therefore, entrepreneurs should be reoriented to possibilistic thinking, which prioritizes counterfactual reasoning and a strong focus on long-term and even on unlikely system-level consequences. This recent contribution confirms the emerging need to cross-fertilize the effectuation approach with systems thinking, alongside the theory of the commons.

In the basket of 19 recent agenda-setting articles that we selected for the analysis of the emerging theoretical landscape around the entrepreneurship – grand challenges nexus, six co-advocate at least one of the approaches mentioned in this section and the systemic approach (Table 1); three co-advocate at least one of the approaches mentioned in this section and the commons approach (Table 2); and six advocate at least one of the approaches mentioned in this section without explicitly co-advocating the systemic or commons approaches (Table 3). All of the approaches discussed in this section are co-advocated with the commons or systems approaches by at least one article, as demonstrated in Fig. 4.