Drivers and Barriers for Sustainable Entrepreneurship
4. Analysis
4.3 Material Attributes .1 Policies
that, you know, it’s something that is, it’s not hard to do, but you can also do it. So if they have questions, we’re more than happy to answer.(S-E-6)
Two others, however, were willing to share basic information, yet felt that this should be limited, since “[they] did all the work and then you just give it to somebody”, while another felt that their “data is proprietary” (S-E-2; S-E-4). Moreover, all of the interviewed sustainable entrepreneurs would ask others for resources, and have successfully done so, since multiple of them have acquired not only advice and assistance, but also affordable space and financing through their networks (S-E-2;S-E-3;S-E-7).
4.2.4 Mentor and Role Models
The presence of sustainable role models and mentors can greatly increase the likelihood of entrepreneurs starting and successfully operating sustainable enterprises. On the island of Aruba, there is not a comprehensive history of sustainable entrepreneurship; almost all of the interviewed sustainable enterprises were less than 6 years old, and therefore it is unsurprising that almost none were inspired by established sustainable entrepreneurs before them.
However, one of the interviewees who started their business this year had been inspired to do so by another Aruban sustainable entrepreneur:
I came in contact with a very good friend of mine, [individual], she has [business name] and [...] started recycling, and then you do more research and you encounter stuff [...] and if we all do a little bit, [...] we will do better off.
(S-E-7)
Therefore, we can already see that relatively recently established sustainable businesses inspire other individuals to become sustainable entrepreneurs themselves.
Concerning mentorship, there is a similar tendency. Solely one of the interviewed sustainable entrepreneurs claims to have a mentor (S-E-7).
4.3 Material Attributes
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40 TNO, a Dutch “renowned not-for-profit organization for applied scientific research”, which established a Caribbean branch on Aruba in 2011. Their most prominent project is Smart Community Aruba, a collaborative effort of the Aruban government, TNO and “a 20 unit residential neighborhood aimed at sustainable living” that functions as
“a professionally managed research, test and demonstration environment” for sustainable technologies.
Additionally, the United Nations Development Program (UNDP) announced the establishment in Aruba of a Centre of Excellence for the Sustainable Development of Small Island Developing States in 2015, “to provide a platform for strengthening innovation and resilience among SIDS”
(UNDP, 2015).
Besides partnering up with external actors, the government of Aruba has also assisted in the creation of (semi-) governmental organizations itself. For example, Bureau Innovatie (BI), founded in 2014, was part of the Ministry of General Affairs, Sustainable Development, Innovation and Science, “to strategically develop, support and advise on the areas of social-, technological- and economic innovation for the benefit of Aruba’s vision to create a sustainable society”
(Bureau Innovatie, 2017).
BI initiated and supported multiple projects and initiatives. One of such projects is Startup Aruba, which was “a public-private platform to cocreate and facilitate the development of a startup ecosystem in Aruba.” (Government of Aruba, 2017, p. 31). Another project BI supported was TEDx Aruba, which “strives for sustainable innovation, new business creation and bringing ideas to life” (TED, 2015). TEDx Aruba attempts to accomplish this through their annual coordination of an independently organized event where predominantly international inspirational speakers, among them (sustainable) entrepreneurs, can inspire Aruban individuals.
Furthermore, BI organized Coffee Bytes, Hackathons and other workshops where knowledge concerning entrepreneurship, innovation and sustainability were created and dispersed. Additionally, BI also founded the Green’S’Cool Foundation, which “aims to educate the next generation on the importance of living green and instill environmentally friendly behaviors among Aruban citizens” through “innovative, viable and fun methods”
(Green’S’Cool Foundation, 2018).
Lastly, the Mobile Tech Lab program was initiated, a program focussed on exposing and teaching primary school pupils to work with new technologies. BI was discontinued after Eman’s AVP was voted out of office in the 2017 elections.
However, some of the projects have been continued by the current government.
Another governmental organization designed to “boost economic activity, sustainable development, and encourage local entrepreneurship” is the Aruba Investment Agency (ARINA), which was founded in 2012. As an investment agency, ARINA provides local and foreign investors intelligence, advice, assistance, connections, and most importantly, a fast track for licenses and permits, signifying that these can be acquired relatively faster. (Government of Aruba, 2017).
Moreover, Iniciativa pa Desaroyo di Empresa Arubano (IDEA) was created in order to contribute to the formation of sustainable development in the business sector. IDEA provides small business owners with practical assistance and education, such as workshops concerning business plans, social media management, and small business tax (Aruba Economic Affairs, 2018).
Additionally, the Aruban government has banned single-use bags in order to “prevent litter on the streets and in the sea” and to “to contribute to preserving the environment.”
(Government of Aruba, 2016). Furthermore, import tariffs
on ‘green’ products, such as solar panels and windmills, but also machines utilized for sustainable businesses, have been reduced to 2%, and businesses that employ sustainable activities may employ a profit tax rate of 10% and an exemption of dividend withholding tax.
Despite the fact that sustainability has been evident in Aruban policies, the majority of the interviewed sustainable entrepreneurs stated that in their opinion these measures have had little impact and go as far as saying that “for the past eight years that AVP sat in the government, it was all talk and no actions, which are political, nothing. Nothing was done.” (S-E-1). Others have expressed that the efforts of the Aruban government are solely “marketing” or a
‘marketing scheme” “to make it seem like a lot of things are going on” (S-E-3;S-E-4;S-E-6).
The frustration often lies with the high amount of bureaucratic red tape associated with applying for licenses and permits, but also with applying for tax reduction. For example, some of the interviewed have received import tariff reductions when they purchased their required equipment (S-E-1;S-E-2;S-E-4;). However, the majority of the interviewed sustainable entrepreneurs have not received any tax incentives from the government at all (S-E-3;S-E-5;S-E-6;S-E-7). For some sustainable businesses this is due to the government’s focus on green technology rather than sustainable activities in general; those that conduct the latter are frequently not eligible for the tariff reduction, since they simply do not have to import ‘green’ equipment.
Furthermore, there are also those that do apply for the reduction of the import tariffs, but find the process of receiving this reduction cumbersome, resulting in the eventual retraction of their application. For example, according to one of the interviewees, the process of receiving the import tariff reduction was unpractical:
It was just like a lot of bureaucracy that doesn’t happen. It wasn’t accessible. It wasn’t useful [...] it is three months and
you still can’t get your machines. It is a lot of time. [...] we ended up paying more than 2000 [Aruban] guilders to just bring in things [...] it would mean a whole other machine or something that like by law we should be able to have tax free, just because there is too much red tape. (S-E-3) This bureaucratic red tape also seems to be apparent in the process of acquiring permits, licenses and other requirements for starting up a business. While some businesses experienced this process as “easy” or “average”, multiple others experienced the process as long, confusing and inhibiting. For one of the interviewees, the process of acquiring the required permits is “really difficult” and hinders their business:
“If [they] are not ready we are not allowed to open [...] we are working with an external company [...] to see if they can get a temporary permit.” (S-E-7)
For others, the process of acquiring all the required permits, licenses and forms has taken years, yet is still unfinished. In theory, larger local and international investors could make use of ARINA’s fast track, reducing the time it takes acquire the required permits and licenses. In reality, however, the departments responsible for providing these service are not capable of doing so (G-O-3).
Another phenomenon that came up during the interviews, yet is absent in SEE theory, is the impact that government discontinuation has on policies and campaigns concerning sustainability. For example, one of the interviewed entrepreneurs actively refrains from participating in government campaigns and collaborations due to the politicization of government projects, stating that:
“We’d rather just work directly with companies and people that are not trying to push something through the government because it’s not very sustainable, it takes four years and there’s another government. So if you have
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42 something that is built within the community, it has more resilience than something that gets implemented through the government”. (S-E-3)
This notion was also reiterated by another interviewee, who commented on how the “discontinuation” of government policies hinder business processes, claiming that “good things get lost or because the other minister signed it and the other one will not” (S-E-4).
An example of this is the closure of Bureau Innovatie after the election of the MEP in 2017, since it was deemed too close to the previous AVP government. However, both former and current government representatives state that this discontinuity does not affect projects and that they are in contact with each other in order to accommodate this transition (G-O-1;G-O-2).
Also, the current government has appointed a Chief Innovation Officer, who is appointed to guide the smart diversification of the economy and digitalization of government protocols, with a special focus on innovation, creativity and sustainability. A government strategic plan concerning these developments will be released in June 2018, and will include multiple measures that will stimulate sustainable entrepreneurship. Examples include utilizing blockchain technology to reduce red tape, a strategic venture fund to provide finance to innovative or sustainable enterprises, and setting up a youth agenda in order to instill entrepreneurial spirit in the younger generations (G-O-2).
Lastly, some of the interviewed actors claimed that, in their opinion, Aruba’s rigid labour laws and high tax rates also inhibit the ability of entrepreneurs to start and operate their business. Nevertheless, none of the sustainable entrepreneurs mentioned this as a barrier (S-S-2; R-U-1).
4.3.2 Research Universities
Research universities can play crucial roles in SEEs through providing the interdisciplinary knowledge required for
understanding and executing sustainable development.
Furthermore, it can promote sustainable development through enriching its curriculum with courses and faculties focused on sustainability, thereby educating potential sustainable leaders, entrepreneurs, employees and consumers. Additionally, research universities can develop technological solutions capable of enhancing sustainability.
Aruba has multiple institutes of higher learning, such as the Instituto Pedagogico Arubano (public institution for higher professional education), All Saints University of Medicine and Xavier University School of Medicine (private institutions for medical science), Compulearn (IT training), Doc (private institution for financial administration, management etc.) and the Caribbean Academy of Business (private institution for business studies) (NUFFIC, 2013).
The only research university, however, is the University of Aruba, which was established in 1988. Currently, the university consists of four faculties, which are the Faculty of Law, Faculty of Economics and Finance, Faculty of Hospitality and Tourism Management Studies, and the Faculty of Arts and Science. Together, these faculties provide a wide range of bachelor and master programs, including, but not limited to International Tourism Management, Social Work & Development and Organisation, Governance
& Management (R-U-2).
Multiple courses contain sustainability aspects. For example, students in the final year of the Business Economics and Commerce programs have to approach business questions from a “sustainable development perspective”, which has resulted in “them being involved in community projects” concerning sustainability (R-U-2). Furthermore, a sustainability program has been set up in the Faculty of Hospitality and Tourism Management Studies, and sustainable development plays a fundamental role in the relatively recently founded faculty of Arts and Science.
However, the current curriculum does not offer courses that provide sufficient technological and sustainability-related knowledge that is required to educate the local population.
In order provide in this need, the University of Aruba is opening a fifth faculty in 2019, the Faculty for Sustainable Island Solutions Through Science, Technology, Engineering and Mathematics. This new faculty will offer a Bachelor’s degree in bioenvironmental studies, data and informatics and technology and engineering, and a Master’s degree in Sustainable Solutions. Moreover, the new faculty will start off with a PhD program, that in collaboration with students of the new Bachelor and Master programs, will focus on making the practices and other programs of the University of Aruba more sustainable (R-U-1;R-U-2).
Additionally, the University of Aruba has set up the Academic Foundation Year (AFY), a program at the HBO propaedeutic level that “has been created with the purpose of serving as a bridge between high school and university”
(University of Aruba, 2017). The program is comprised of four pillars: the Coaching and Counseling program, Academic core program, Language skills program, and the Academic orientation program. As part of the curriculum, a large number of students participate in the Earth and Environment track, which has shown to increase their engagement in sustainability initiatives (R-U-2).
Furthermore, AFY provides its students the opportunity to intern with researchers from the UAUCU program, an annual Undergraduate Research Exchange between the University of Aruba and University College Utrecht. In this program, undergraduate students conduct research primarily focused on sustainable subjects, such as sustainable tourism, waste management, energy policies and coral reef research. This program produces a large amount of knowledge concerning sustainability in Aruba. Interning with these researchers inspires these AFY students to be further involved in sustainability initiatives, or at least assists in them becoming educated consumers (R-U-2).
In relation to sustainable entrepreneurs, the University of Aruba is actively connected to them. Several of the interviewed sustainable entrepreneurs have either publicly spoken at the university or invited students to visit their enterprise to give guided tours in “order give back to them and give them information to guide them to the direction that I think they should be guided” (S-E-4). Others that have not done this yet would be interested in doing so, because they “think it is cool to pay it forward” (S-E-7).
Currently, the University of Aruba does not develop any sustainable techniques or technology, which explains why none of the interviewed sustainable entrepreneurs utilized any techniques developed by the University of Aruba.
However, none of the interviewed was opposed to this idea. One interviewee in particular was passionate about this possibility, stating it would be beneficial for the island, since universities can develop techniques at a lower costs than private engineers would (S-E-4).
4.3.3 Infrastructure
The physical infrastructure of a region can play an important role. For example, transportation costs, the connectivity and state of the roads, the availability of affordable housing, electricity, and water can influence sustainable entrepreneurs’ ability to start and operate their businesses.
In recent years, the Aruban government has invested large amounts of money to enhance Aruba’s infrastructure.
Examples of this include the urban renewal of Oranjestad and San Nicolas, the construction of the Green Corridor, which is the expansion of the road between the Reina Beatrix Airport and San Nicolas, the construction of the Watty Vos Boulevard Route, the repurposing of the Port of Oranjestad and Baracadera and the expansion of the Reina Beatrix Airport (Government of Aruba, 2017).
A limitation of Aruba’s infrastructure is the fact that it is an island, meaning that all import and export goods need
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44 to be transported utilizing airplanes or container ships, making this process relatively expensive. Many interviewed sustainable entrepreneurs saw this as a barrier or nuisance to their operations for several reasons (S-E-2;S-E-4;S-E-5).
Firstly, “being on an island makes it difficult because you got to transport everything via container when everything is in containers it is already expensive” (S-E-4). Because of these expensive costs, certain sustainable entrepreneurial activities cannot be executed, as the same interviewee claims:
“Glass is something that, you know, in other countries you can do [...] we have to ship glass, it’s going to cost a fortune, so that makes it prohibitive.” (S-E-4)
However, not only the costs form a barrier, also the process is viewed as troublesome. For example, two interviewees claimed that the process of exporting goods is “horrible”
due to the fact that the customs procedure takes 4 or 5 days, thereby slowing down the process. Another sustainable entrepreneur described the process of importing goods as
“like a drama”, since packages get lost and the process of claiming takes weeks (S-E-2;S-E-4;S-E-5).
Most entrepreneurs did not have any trouble concerning electricity and water when their property was already connected. However, two entrepreneurs found the process of getting connected to these infrastructures a difficult and long process. One interviewee explains:
“That is typical Aruba [...] it took months, months, months, before we got our own power. But now it’s OK. It was a really big barrier. If we, if we would have wanted to start up faster it would not be possible because of this.” (S-E-2).
Another form of infrastructure that is not present in the model, yet mentioned by several sustainable entrepreneurs is the lacking financial infrastructure. Some of the interviewees namely claimed that it took months to open
an account at a bank, which is necessary for receiving and sending money, and therefore essential for starting a business (S-E-2;S-E-3;G-O-3)
Regarding water, most entrepreneurs did not experience any problems. To one of the entrepreneurs, however, the current water price is preventing him for operating his sustainable agricultural business, since the water is too expensive for their business to be profitable (S-E-1).
Lastly, two interviewees also noted the relatively high costs of renting or buying properties as possible barriers.
However, this did not pose any barriers, since those entrepreneurs that were facing problems capable of finding affordable solutions through their networks (S-E-4).
4.3.4 Support Services
Support services, which include not only accountants, tax lawyers, human resource advisers, but also incubators, accelerators and co-working spaces can provide essential services to starting sustainable enterprises. In order to most effectively support sustainable enterprises, it is essential that these support services understand and value the sustainability aspect of their business (Spigel, 2015; Cohen, 2006).
The majority of the interviewees made use of accountant services, while a few also made use of other services, such as tax lawyers. Most of these found that their accountant understood and valued the sustainability aspect of their business, in some cases they were active supporters or even investors of the enterprise (S-E-2; S-E-3; S-E-5; S-E-6; S-E-7).
Co-working spaces can also provide starting sustainable enterprises with services that are especially important in an early stage. On Aruba, there are two co-working spaces, which are Co-lab and the Vault. As part of these co-working spaces, tenants can rent either an office or a desk space, reducing the costs that are normally associated with renting office space. Furthermore, not only basic utilities such as
electricity, water, WiFi connection, and a conference room are included, but also training, workshops, and networking events. None of the interviewed sustainable entrepreneurs were part of such co-working spaces; however, the interviewed co-working space would be open to sustainable enterprises that would like to join (S-S-1).
For most of the interviewed sustainable entrepreneurs, incubators were not relevant, since their business model required specific characteristics for their location. For example, a hotel or a waste recycling plant can not practically be part of an incubator. However, of those that were practically able to join an incubator were positive about this possibility (S-E-3; S-E-7).
At this moment, there are no business incubators present on the island of Aruba. However, there are multiple initiatives that are currently working on creating this support service.
The most tangible project is part of the COSME project, an EU funded program that has the responsibility to allocate
$15 million dollars to “contribute to the sustainable and climate-resilient economic diversification and prosperity of Caribbean states” (COSME, 2018). As part of this program, incubators are being set up across the Overseas Caribbean Territories in order to stimulate the sustainability and competitiveness of SMEs. In Aruba, two incubators will be set up: one in Oranjestad and one in San Nicolas. They are planned to be up and running in Q1 2019 (S-S-2).
Currently, the incubator program is promoted by the Aruba Chamber of Commerce (KvK), in collaboration with other public and private actors, such as the University of Aruba and the government. As part of this, the KvK has conducted an incubator survey, to which 18% of the respondents claimed that they would definitely make use of the incubator (Aruba Chamber of Commerce, 2018).
Additionally, the survey also asked the respondents what services an incubator should provide, of which the most
popular answers were accounting and legal assistance, business guidance, networking and assistance in acquiring capital. Taking this feedback into account, these services will be part of the incubator, with the KvK providing the relevant guidance, consisting of courses, lectures and trainings.
Besides this initiative, the creative platform Beam, which now organizes creative and entrepreneurial events, is also planning to provide a co-working space in the near future, as well as one of the interviewed sustainable entrepreneurs, who desires to provide their space available to other creative and sustainable entrepreneurs (S-E-7;S-S-3).
3.3.5 Open Markets
The availability of strong local markets is another important factor for the success of a SEE, because the presence of local clients with specialized issues makes a good climate for introducing new solutions. Furthermore, local sustainable entrepreneurs are capable of identifying the issues present in the area, and can test solutions on a small scale, using it as a stepping stone for entering other markets (Spigel, 2015).
Aruba is able to provide such a climate, because of its SIS-status, which signifies that the island experiences a whole range of unique issues, that therefore also require a large number of solutions. The majority of these solutions are still insufficiently discovered, which signifies that there are numerous opportunities in the form of entrepreneurial spinoffs.
The majority of the interviewed sustainable entrepreneurs directly address SIS-related issues. For example, three of them provide assistance to solutions for the waste management process, recycling waste into products that can be reused on the island, such as oil, gas and appliances.
Furthermore, others have found innovative solutions for Aruban agriculture, which is traditionally difficult because of the arid and hot environment (S-E-1; S-E-2). This makes Aruba more sustainable through decreasing the
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46 dependence on uncertain streams of produce, such as the currently politically unstable Venezuela.
For two of the interviewed sustainable enterprises, Aruba indeed forms a springboard to other regions. One interviewed sustainable entrepreneur illustrates this thought clearly:
I think [...] what we put here on the island, [...] that’s going really well, so when this is finished you can see it also as a concept to put it somewhere else, then you can also take it and put it on Curacao. (S-E-2)