“The leadership style of ecopreneurs”

Abstract

The aim of this Thesis is to investigate the differences in leadership style between ecopreneurs and non-ecopreneurs. The leadership style is measured by the risk-taking attitude of the CEO. To get a glimpse of the risk-taking attitude of the CEO, two proxies have been used: the genetic variable gender and the environmental variable age as the proxies of leadership that have a great influence on the risk-taking attitude of the leader. The risk-taking attitude of the leader is measured by the leverage of the firm. The leverage of the firm presents the financial risk the company takes by dividing the long-term debts by equity. New insights are provided into how ecopreneurs are different in leading their firm as compared to non-ecopreneurs, and the risks they take.

Using a hand-collected database from Orbis including 2296 firms from 14 different countries over the time period 2011-2017, different analyses have been performed in order to test the risk-taking attitude of the leader. The results show that male CEOs take more risks than female CEOs, and that older CEOs take less risks than younger CEOs. The influence of green and non-green industries is clear. CEOs in non-green industries take more risks than in green industries, and women moderate the latter finding, that is, women take more risks in green than in non-green industries.

Introduction

Ecopreneurship, a niche of entrepreneurship, made its appearance in the nineties of the last century (Santini, 2017). Through an increasing concern for the climate by governments and consumers, entrepreneurs saw business opportunities in sustainable and green business models (Schaper, 2016). Entrepreneurs started firms that were focused on recycling, reusing, waste minimisation and greening the supply chain (Kirkwood & Walton, 2014). Those were the first ecopreneurs. The amount of ecopreneurs grew fast in the nineties, through the increasing awareness of governments and consumers for taking care of the environment (Kirkwood & Walton, 2010). More recently, the concerns for the environment by governments also increases after the economic crisis of 2008. By that time, it was time to recover the economy, but also to think about sustainable business models (Schneider, Kalis & Martinez-Alier, 2010). So, the European Union came up with a plan to integrate both with a special role for entrepreneurs (Entrepreneurship 2020 Action Plan, 2013). Entrepreneurs are a very important factor in the economic growth of a country, Schumpeter already argued in 1934 that entrepreneurship is the engine of economic development (1934). Entrepreneurs come up with new innovations, open up new markets, increase employment, and play a vital role in the early evolution of industries (van Stel, Carree & Thurik, 2005; Fritsch & Noseleit, 2012).

To capture all of these positive effects of entrepreneurship, the EU introduced the action plan 2020 based on three pillars: developing entrepreneurial education, creating the right business environment, and reaching specific groups (Entrepreneurship 2020 Action Plan, 2013). One of the specific groups are entrepreneurs in green industries. The focus on the green industries is intertwined with other sustainable aspects of the EU agenda. Simultaneously, the European Union wants i) to reduce the greenhouse gas emission by 20%, ii) a 20% increase in energy efficiency, and iii) that 20% of the energy comes from renewables (Entrepreneurship 2020 Action Plan, 2013). To reach both targets, sustainability and stimulating entrepreneurship, the action plan 2020 stimulates entrepreneurial activity in green industries with financial funding. In other words, the European Union wants to stimulate ecopreneurs.

These trends and policies make it more interesting and also necessary to do more research into ecopreneurship. To get the money at the right place and use it in the most effective way, we need to get to know the ecopreneur better. This research could help decisions makers to find the right way to approach ecopreneurs.

Little is known about the individual ecopreneur and his/her characteristics. The past research on ecopreneurship has mostly focused on the underlying motivations on why ecopreneurs started their businesses and on the categorization of the different types of ecopreneurs (O’Neill & Gibbs, 2016). This research will shed light on another aspect of ecopreneurship that is neglected so far: the ecopreneur as a leader.

As a leader, making strategic decisions is part of the job and that makes leaders have a great impact on the outcomes of the firm (Westaby, Probst & Lee, 2010). The way leaders make those decisions is influenced by the leadership style they have (Flood, Hannan, Smith, Turner, West & Dawson, 2000). The leadership style of the ecopreneur influences the entrepreneurial decision making, or – better in this context – the ecopreneurial decision making (Hambrick & Mason, 1984). Different styles and different situations can influence the decision-making and affect the outcomes of the firm in a

different way (Heller, 1973). Two broad categories of a leader’s characteristics influence his/her style of leading: his/her genetics and the environmental experiences the leader has been exposed to. In this Thesis, the former (latter) will be measured by means of the gender (age) of the leader. Different characteristics between men and women influence the way they make decisions for their company (Eckel & Grossman, 2008). Leaders are also influenced by the environment in which they were born and raised, as proxied, for instance, by the different age generations they lived in (Benmelech & Frydman, 2015).

For this Thesis, not having at disposal individual survey-based information, the leadership style will be measured by means of one key aspect of corporate decision-making, namely taking (financial) risky decisions. Corporate risk-taking is fundamental to decision-making and has a great influence on the performance and survival of the firm (Li & Tang, 2010). Leaders have to take risks to make large gains and survive: actually, it is very unlikely to experience big returns without taking big risks (Core, Guay & Larcker, 2003). This indirect approach to measure the leadership style has been frequently used in the literature (Faccio, Marchica & Mura, 2016; Cain & McKeon, 2014; Cronqvist, Makhija & Yonker, 2012).

Many studies have been focused on the risk-taking attitude of leaders, and most of them conclude that entrepreneurs take more risks than non-entrepreneurs – even though there is still little empirical evidence that supports this idea (Naldi, Nordqvist, Sjoberg & Wiklund, 2007). In this Thesis, I will not give an answer on this broad topic, but I will focus on the comparison between ecopreneurs and ecopreneurs. Still, not having survey-based information, I will categorize ecopreneurs and non-ecopreneurs on the basis of the industry in which their venture operates. This classification has been previously used by, for instance, Mrkajic, Murtinu and Scalera (2017), and Kirkwood and Walton (2010).

This Thesis tries to bring some clarification about the financial corporate risk-taking attitude of ecopreneurs, by making a comparison between the risk-taking attitude of ecopreneurs and that of non-ecopreneurs. This results in the following main question: Is there a difference between the risk-taking

attitude of ecopreneurs and non-ecopreneurs?

The rest of the Thesis is organized as follows. The next section, will explain the different concepts in the theoretical framework resulting in hypotheses. Section three describes the data collection

procedure and is followed up by the analysis and results. In the last section, the results are discussed some conclusions will be made. Additionally, limitations and implications for future research are given.

Theoretical framework Ecopreneurship

The field of ecopreneurship got his attention in the late 1990s (Kirkwood & Walton, 2010). At that time, entrepreneurs saw profitable opportunities in business practices with environmental

responsibility (Schaper, 2016). It opened up profitable niches for the individual entrepreneur, but it was also important for an overall shift to more sustainable industries (Schaper, 2016). More and more industries became green or whole new green industries occurred. This shift was caused by ecopreneurs that acted as a pull factor, inviting other firms to go green. Through this ability of ecopreneurs,

changing whole industries, ecopreneurs are called ‘change agents’ (Schaper, 2016).

But who and what are these “change agents” exactly? Ecopreneurship is the combination of the words ‘Ecological’ and ‘Entrepreneurship’ and can roughly be defined as entrepreneurship through an environmental lens (Schaltegger, 2002). They use green aspects in their business models mostly based on recycling, reusing, waste minimisation and greening the supply chain. This results in no harmful by-products or toxic material, being organic, and minimal packaging (Kirkwood & Walton, 2014). This is a really broad description, but trying to find a clearer definition of the ecopreneur is very hard. Ecopreneurs can be find in many different industries, and have different motivations and intentions (Schaper, 2016). Through all these differences and through the wide variety of business activities, makes it hard to identify and define the ‘Ecopreneur’. Trying to get some help from the literature about entrepreneurship cannot help us either. Even “the mother of ecopreneurship” lacks a unique definition (Bruyat & Julien, 2000). There is no consensus about what entrepreneurship really is. Dixon and Clifford (2007) argue that the lack of definition of entrepreneurship can be the reason why there is no clear definition of the ecopreneur.

In this Thesis, the definition of Mrkajic, Murtinu and Scalera (2017) is used. They used the following definition for an ecopreneurial firm: i) businesses that provide produce goods or provide services that

benefit the environment or conserve natural resources or, ii) businesses that use more environmental friendly production processes or use fewer natural resources than their peers (p. 15). They derived the

definition from the U.S. Bureau of Labor Statistics. This definition is used, because it includes a lot of above aspects and it is a broad definition that fits with Schaper (2016) his statement that ecopreneurs are involved in a lot of business activities and active in different fields. This definition makes it also possible to make a comparison between green and non-green peers.

Ecopreneurs vs. Entrepreneurs

Because ecopreneurship is derived from entrepreneurship, there are some similarities between the ecopreneur and the traditional entrepreneur. A lot of characteristics to be successful as an entrepreneur are the same to be successful as an ecopreneur: like moving fast, motivate others and take risks (Schaper, 2016). Even as entrepreneurs, ecopreneurs experience problems by getting funding (Linnanen, 2002). Ecopreneurs come up with innovative and novel business concepts, that are unfamiliar by the traditional funders (Dixon & Clifford, 2007). That is the reason why ecopreneurs collaborate more with other corporations to get the needed resources.

Besides the similarities there are also differences. Kirkwood and Walton (2010) came up with a main distinctive trait of ecopreneurs in relation to the traditional entrepreneur: the ability to shape the face of their company. This has to do with the fact that the strong commitment of ecopreneurs translate in management practices or organizational solutions that change the entire business model. The strong commitment of ecopreneurs can also traced out by the fact that most ecopreneurs are ‘pulled’ into the business. They start a business not from dissatisfaction, but from a kind of passion (Kirkwood & Walton, 2010). This is an important factor for the motivation and the long-term success (Amit & Muller, 1995). This commitment may also explain the ability to shift a whole industry as mentioned above. Changing whole business models and the ability of shifting whole industries says something about the persuasiveness of the ecopreneur.

This changing ability is mostly done with a little amount of resources in emerging markets, however ecopreneurs still fight their way through (Rodgers, 2010). This brought Rodgers (2010) to the conclusion that ecopreneurs possess a higher tolerance of risk-taking than traditional entrepreneurs. Ecopreneurs use alternative ways of producing in alternative markets. That makes that they have to take more risks to succeed, because of the uncertainty they face (O’Neill & Gibbs, 2016).

dimensions as good as possible (Kirkwood & Walton, 2010). Because of this tension, business growth is an important issue that concerns ecopreneurs (Holt, 2011). Holt (2011) tracked ecopreneurial businesses 20 years after start-up, and saw that many companies had problems with the expansion of their business. A reason for this could be caused by the difficulties in balancing the green values and the economic outcomes. Kearin, Collins and Tregidga (2010) came up with another reason. They argue that growth is not so important for ecopreneurs, they prefer gaining a wider acceptance of their green vision. This is in line with Rodgers’ conclusion that quantity growth was not so much a concern for ecopreneurs as the quality of the growth (2010). So, ecopreneurs wants to spread their green values and tries to influence other people and businesses to go green. That is for them more important than getting rich. This also becomes clear from a survey of Kirkwood and Walton (2010), they found that 80.9 percent of the ecopreneurs would sacrifice revenue for ecological concerns.

Based on the above information and especially the fact that ecopreneurs are seen as more risk-takers, due their lack of resources and the introduction of new methods of producing, I suggest that

ecopreneurs are more risk-takers than non-ecopreneurs. They act in new markets with a lot of uncertainty, this ask for a risk-taking attitude. Complement on this, money and quantity grow is not the primary goal of the ecopreneur, this could be a reason to take more risks. They are not afraid to lose money. Losing money is a reason for leaders not to take corporate risks (Sanders & Hambrick, 2007). Therefore, I posit the following hypothesis:

Hypothesis 1: Ecopreneurs are more risk-taking than non-ecopreneurs.

Leadership and corporate risk-taking

Leaders of a firm are empowered to make corporate decisions, that makes that they have an important influence on the outcomes of an organization (Hambrick & Mason, 1984). Corporate decision-making is “the infrequent decisions made by the leaders of the organization that critically affects the health

and survival of the firm” (Eisenhardt and Zbaracki, 1992, p. 17). How they make those decisions and

how this influence the outcomes of the firm are related to the leadership style of the leader (Flood, Hannan, Smith, Turner, West & Dawson, 2000). The style of the leader is influenced by two main aspects. The first aspect is personality, the genetics of the leader. This is known as the trait theory, assumes that leadership depends on the personal qualities of the leader (Judge, Ilies, Bono & Gerhardt, 2002). The second aspect is the influences from the environment. Leaders are influenced by the environment in which they are born and raised (Benmelech & Frydman, 2015). Different circumstances and experiences from the past influences the style of the leader.

This Thesis sheds light on different variables that influence leadership and the risk-taking attitude of the leader. Risk-taking is fundamental to decision-making and have a great influence on the

performance and survival of the firm (Li & Tang, 2010). Besides that, corporate risk-taking is a critical aspect to improve competitive advantage and performance (Naldi, et al., 2007).

So, you would expect that leaders of businesses are risk-takers to get the best out of the company. But from different studies it appears that CEOs do not like to take risks at all (Sanders & Hambrick, 2007). To find out if this is a general tendency or if it is affected by different variables, this study explores the influence of the variables gender and age on the risk-taking attitude of the leaders of an ecopreneurial and non-ecopreneurial firm. To get an understanding to what extent the style of the leader is

influenced by the variables gender and age, and the effect of these variables on the risks leaders take.

Gender

Some individuals are more willing to take responsibility for the company than others. The individuals that are willing to take this responsibility act like decision-makers in corporate life (Ertac & Gurdal, 2012). They act voluntary in decision-making positions and are mostly driven by the desire for controlling others or they have an aversion to leave the control to others. This are the (natural) leaders and these decision-making positions are mostly filled by men. Men are more willing to take these decision-making positions with the risky attitude it takes than women (Eckel & Grossman, 2008). Women are less risk tolerant and prefer positions that are less involved with financial decision-making (Bernardi & Arnold, 1997). This risk-averse attitude affects the corporate financial decisions of a firm, resulting in less investments and firms with a lower leverage (Vandergrift & Brown, 2005; Sunden & Surette, 1998; Jianakoplos & Bernasek, 1998). This makes that there are differences between male and female leaders. Time-series shows that a transition from a male to a female CEO is associated with an economically and statistically significant decline in corporate risk-taking (Faccio, Marchica & Mura, 2016).

Because of this risk-aversion of women, they prefer safer jobs with a stable compensation and firms that are in a less risky environment (Hersch, 1998). This also works the other way around, firms with relatively high risks appoint female CEOs in the hope the risks may decrease (Martin, Nishikawa &Williams, 2009). But this doesn’t mean that the performance of the firms that are led by female CEOs are less. Because women are more risk-averse they worry more about how the money of the company is spent, take more ethical decisions and extract less personal benefits from the firm (Barber & Odean, 2001; Bliss & Potter, 2002).

resource requirements and the uncertainties their firm faces (Li & Tang, 2010). This cognitive bias is less present by women. Research shows that women are less overconfident than men (Reuben, Rey-Biel, Sapienza & Zingales, 2012). They asses their performance and abilities lower than men. So, men will take more risks than women, because they think they can handle it better and see the situation as less risky. These overconfident leaders, so mostly men, think that they have enough internal resources and internal information to launch risky products and support their strategic actions without external support (Malemendier & Tate, 2005).

So, with above information the expectation is that men take more risks than women. The

psychological aspects that influence a risk-taking attitude, makes that men will take more and faster risky decisions. Based on the above information about women leading firms with lower leverage and doing less investments, I assume that women are more risk-averse. On the opposite, we may expect that women that are leading a firm in a green industry have a more risk-taking attitude. This through self-selection. We expect, hypothesis 1, that green industries ask for a more risk-taking attitude than non-green industries. Women that are in the leading position of an ecopreneurial firm must then be able to take more risks. Women that can take this risk-loving attitude, selected themselves out and differ from the general women. Therefore, I posit the following hypotheses:

Hypothesis 2: Men are more risk-taking than women.

Hypothesis 3: Women in green industries are more risk-taking than women in non-green industries.

Age

Besides gender, age is also a relevant managerial trait that influences that style of the leader (Betrand & Schoar, 2003). In 1971 Vroom and Pahl already discovered that the age of managers and their risk-taking behaviour were negatively correlated to each other. When people get older, get married, and get children the responsibilities to persons other them themselves increase and that affects risk-taking negatively. Betrand and Schoar (2003) also confirmed this outcome with financial data and concluded from their research that older CEOs are more conservative and invest less than younger CEOs. In the study of Betrand and Schoar (2003) they also found out that older CEOs also choose for lower levels of financial leverage and have higher levels of cash holdings. A lower level of cash holding suggests a more aggressive financial style. This indicates that older CEOs prefer a less aggressive financial style of leading.

(born between 1947-1964), Generation X (born between 1965- 1976), Generation Y (born between 1977-1988) (Reisenwitz & Iyer, 2009).

These four generations have each a different set of leadership styles, values and core experiences (Andert, 2011). The Veterans believe in collective action and trust in centralized authority (Andert, 2011). Benmelech and Frydman (2015) did research into the influence of serving in the army on leadership style, and concluded that CEOs that served had a more hands-on leadership style and are able to make better decisions under pressure or in a crisis. Besides that, military CEOs invest less, have lower expenditures on R&D, and lower leverage ratios. That makes them less risk-taking. They have a more conservative way of leading and leads the firm with the money they have.

The Baby Boomers are very loyal to the company and have a participative leadership style. However, they lack full leadership skills in areas like: understanding, communicating and motivating (Joo & Lim, 2009; Andert, 2011). The Baby Boomers are influenced by events as the Vietnam War and the Cold War (Williams, 2011).

Generation X and the Baby Boomers have common values and characteristics, but next to that generation X is seen as selfish and wants immediate results (Andert, 2011). This generation has a more entrepreneurial spirit and they value self-development. They change much more easily between jobs than the Baby Boomers and need a unique and changing environment, otherwise they leave the company (Reisenwitz & Iyer, 2009). This would suggest that they are risk-takers, not afraid of losing their job and the financial security. But generation X is a reactive generation that has a risk avoidance attitude (Reisenwitz & Iyer, 2009). They avoid risks, because they are sceptical about long-term commitments and maybe that is the reason why they leave easily their job. Generation X is influenced by a struggling economy, the energy crisis and the personal computer (Williams, 2011). All together you could argue that they will take less term debts, because of their sceptical attitude to long-term commitment and the influences of the crises.

Generation Y is optimistic, confident, and constantly seeking for opportunities and challenges (Dawn & Powers, 2013). The continuous drive to seek for opportunities and challenges makes them also more risk-taking than generation X. Exploiting opportunities and commit with challenges will ask a risky attitude. In contrast to generation X, they are more loyal to the company, but will leave the company when they can’t balance work and life anymore (Reisenwitz & Iyer, 2009). Generation Y is influenced by the computer, ethnicity and sexual alignment.

Concluding from the above information, we can assume that older CEOs take less risks than younger CEOs. This is in line with the description of the generations Veterans and Baby Boomers. The youngest generation, generation Y, is described as the most risk-taking generation of all four. Therefore, I posit the following hypotheses:

Hypothesis 4: Age has a negative effect on risk-taking.

Conceptual model

Methodology

Data collection

In this Thesis, secondary data is used from the database Orbis. Orbis is a database that is owned by Bureau van Dijk, which is a major publisher of business information. Bureau van Dijk is a private company that combines data with software to analyse companies. The database of Orbis is filled with more than 200 million private companies from more than 200 countries.

To come up with a suitable database for this research, different selections were made. The first selection was selecting the green industries available in Orbis. The selection process was based on the definition of Mrkajic, Murtinu and Scalera (2017), that was provided in the theoretical framework. Two major industries in Orbis that are mostly related to green industries, are the industries: “Recovery of sorted material” and “Remediation activities and other waste management services”. Within these industries, the active small and medium sized enterprises in the region Western-Europe were selected. From this selection, the companies with available information about the gender and the age of the CEO, and financial data about debts and equity were selected. The last available financial data are used, because ecopreneurship and green industries are relatively new, so the most updated information was acquired. To make the list of green industries more complete, another database was used. The clean tech database I3 was used to complement the database. 323 companies in the alternative energy (wind and solar), and organic food and beverage were added to the list in Orbis. This ended up with a total of 1,500 green companies.

To make the comparison between ecopreneurs and non- ecopreneurs, another database was made in Orbis. Similar to the selected green industries (“Recovery of sorted material”, “Remediation activities and other waste management services”, “Alternative energy”, and “Organic food and beverage”), non-green industries were selected. The following non-non-green industries were selected; “Manufacture of food products”, “Electric power generation, transmission and distribution”, “Manufacture of gas”. The same selection criteria for the green industries as above are also used for the non-green industries. Orbis came up with 7,468 companies.

Measurements

Dependent variable

The dependent variable in this research is the corporate risk-taking attitude of ecopreneurs. In order to measure this attitude, the variable “Leverage” is used. Leverage is an indicator of risk-taking.

Leverage measures the riskiness of corporate financing choices (Faccio, Marchic & Mura, 2016). Leverage is defined as the ratio of financial debt divided by equity. The long-term debts are chosen as the financial debts, and based on the balance sheets, equity equals the shareholder funds (capital and other shareholder funds). The higher the leverage, the more risks the company takes. Than the company lends more money on the long term than they can cover by their equity.

In the database, there were some firms with a negative equity. This is possible when the equity is devalued due a decrease in the company’s market value. This results in a negative leverage. In this Thesis, I used an approach similar to Welch (2011), changing the negative signs of leverage in positive sings. This is due to the fact that when a company has a high negative leverage, caused by high long-term debts and a negative equity, this situation is even more riskier than a situation characterized by a high long-term debt divided by a positive equity. Thus, this transformation represents a conservative assumption, and the estimated effect of independent variables on the corporate risk-taking is likely to represent a lower bound of the “real” effect.

Alternatively, I removed observations with negative leverage and results hold. This way of checking the analysis is also used by Mersland and Strøm (2008) in their research.

Independent variables

Because we made use of a secondary database and do not have primary data available, we measured leadership with two different proxies. We made use of a personality variable and an environmental variable to get an understanding of the leadership style. The personality variable is “Gender” and the environmental variable is “Age”. The environmental variable “Age” is divided in 4 generations. We made use of the generations “Veterans”, “Baby Boomers”, “Generation X”, and “Generation Y”. Because there is a little group in the dataset that is born later than the birth years of Generation Y, called Generation Z, I put them under the generation Y. Because there is a lot of variation in the birth years of generation X and generation Y in literature, generation Z can be placed in generation Y. Some sources even use the birth years 1980-2000 for generation Y (Andert, 2011).

select the entrepreneurial firm because these criteria are available in Orbis. A firm is an ecopreneurial firm when the firm satisfies these two conditions and operates in a green industry. A firm is an entrepreneurial firm (non-ecopreneur) when the firm satisfies the two conditions and operates in a non-green industry. The ecopreneur equals 1 and the non-ecopreneur equals 0 in the database.

Control variables

There are different control variables used to isolate exogenous factors that may bias the relationship between the dependent and the independent variables. The control variable “number of employees” is used to control for size. The more employees the larger the company. Larger companies face lower risks than smaller companies (Sharpe, 1990). CEOs of big firms experience it as lower risks, because they have less uncertainty and have more resources comparing to entrepreneurial firms (Miller & Friezen, 1984). Another control variable that is used, is the country of origin. Different cultures and different environmental circumstances can influence the risk-taking attitude of a CEO (Li, Griffin, Yue & Zhou, 2013). The countries are divided in countries form the north and countries from the south of western Europe. The financial circumstances between those countries, can influence the risk-taking attitude of CEOs (Alderman, 2010). The economy of the south of Europe is less developed than the economy of the north, and struggles with high numbers of unemployment.

Besides these control variables, also the age and the foundation year of the company are used. The different ages of the company can influence the firm by the different stages the company goes through. Taking risks as a young firm can have another impact in your firm than when the firm is older.

Analysis

In the next section, I will show the descriptive statistics of the entire sample. But I will also show descriptive statistics of selections such as the selections green and non-green, age generations and gender to give a complete picture of the database we are dealing with. These selections are used to make summaries about the sample and their measures. These summaries will give a manageable overview of all the data. The descriptive statistics includes the mean, minimum and maximum. Together with the descriptive statistics, I will present results from the Independent Sample T-Tests. These tests are used to analyse the significant differences between the means of groups and gives us the first impression of the hypotheses.

In the section Results, the hypotheses are tested. The first step to test the hypotheses is analysing the results of the Pearson correlation, and the final conclusion is given by the results of the multiple linear regression.

Descriptive statistics and Independent Sample T-Test

Analysing the whole database (table 1), we see that it includes in total 2296 companies, divided in 1912 non-green and 384 green companies.1956 companies are led by a male CEO (85.2 percent) and 320 companies are under control of a female CEO (13.9 percent). The database consists of 14 different countries all from Western-Europe. 85 percent of the companies are from Norway, Germany and France. Most CEOs are part of the generation X, followed by Generation Y.

Looking at the means, we see that a CEO is on average 48.78 years and the companies have a leverage of 1.62.

Splitting the whole dataset in a category green and a category non-green (table 1), shows that both categories have on average 9 employees per firm and the average age of the CEO are both around 47 years. There is a big difference between the leverages. The mean leverage of the non-green firms is 1.71, and for the green firms is that 1.15. Conducting a T-test shows a significant difference between both leverages. The most companies of both categories are from Germany, France and Norway (both 85 percent).

When we look at the differences in leverages between the four age generations (table 3), we see that Generation Y (1.93) has the highest leverage. The other generations have the leverages, 1.68

(Generation X), 1.26 (Baby Boomers), and 1.34 (Veterans). An Independent Sample T-Test shows us that the leverage of Generation Y is significant different from the generations Baby Boomers, but not significant different from generation X and Veterans.

Splitting the dataset in the different generations and compare them between green and non-green firms gives us information about the differences of their risk-taking attitude. Results shows us that there are some differences within generations between green and non-green companies. An Independent Sample T-Test shows that with a confidence interval level of .90 percent, there is a significant difference between the leverage of Generation Y in green and non-green firms. There is also a significant difference between Generation X green and non-green firms with .95 percent. Both generations take more risks in a non-green firm than in a green firm.

Table 1.

Table 2.

Table 3.

Complete dataset Non-Green Green

Companies 2296 1912 384

Mean Minimum Maximum Mean Minimum Maximum Mean Minimum Maximum

Leverage 1.62 0 19.96 1.71 0 19.96 1.15 0 19.3 Age 48.78 21 90 48.99 21 90 47.67 24 74 Employees 9.4 0 100 9.44 0 100 9.1 0 63 Male CEO Female CEO Complete

dataset Non-Green Green Complete dataset Non-Green Green Companies 1956 1629 327 320 283 37 Leverage 1.63 1.71 1.19 1.67 1.74 1.18 Age 49.17 49.42 47.9 46.41 46.54 45.44 Employees 9.36 9.38 9.22 9.68 9.78 7.25

Generation Y Generation X Baby Boomers Veterans

Complete

dataset Non-Green Green Complete dataset Non-Green Green Complete dataset Non-Green Green Complete dataset Non-Green Green

Leverage 1.93 2.04 1.48 1.69 1.79 .99 1.25 1.30 .99 1.34 1.07 4.02

Age 35.21 35.25 35.05 48.63 48.62 48.67 61.38 61.35 61.56 77.07 77.39 73.75

Employ

Results

In this section, the results of the conducted analyses will be explained in detail. Starting with the correlation between the different variables, and then the regression results are provided to support or not support the hypotheses.

Correlations

In the table below (table 4), the correlations between the variables are pictured. Overall, most of the correlations are significant. The most important correlations will be highlighted here. The relation between green companies and leverage is significantly negative (-.066**) and that would suggest, only based on the correlation, that hypothesis 1 is not supported. Looking at the correlation between gender and leverage, there is no significant relationship and that makes it hard, only based on the correlations, to say something about hypothesis 2. However, there is a significant correlation (-0.58*) between leverage and the interaction variable Green*Gender. Only based on the correlation I would say that there is a negative relationship between the risk-taking attitude of women and green industries. Both Generation Y and Age of the CEO are significant correlate (.057** and -.084**) with leverage. Generation Y is positive correlated and age of the CEO is negatively correlated, both results are in line with the hypothesis.

The next section, will show if the results also hold in a multi linear regression.

Multiple regression

A multiple linear regression is used to test the hypotheses. The whole model is significant, because the p-value of the ANOVA test is significant with a p-value of .003. That means that the model is able to predict the relationship between the independent variables and the dependent variable.

The multiple regression table (table 5) shows us that operating in a green industry has a significant relationship with the dependent variable leverage (p= .000**). This outcome is the opposite of our Hypothesis 1. We hypothesized that green companies would be more risk-taking than non-green companies, but the opposite is supported. When we look at the B value we see that there is a negative relationship. This negative relationship is also confirmed by the Pearson correlation. So, hypothesis 1 is not supported.

The multiple linear regression shows that the gender of the CEO is negatively significant (p= .089*) related to leverage, and that means that we can support hypothesis 2. The negative relationship illustrates that women take less risk than men. Women seem to be more risk-averse.

The significant positive relationship (p= .000***) between leverage and the interaction variable Green*Gender, supports the hypothesis that women take more risk in green industries. Hypothesis 3 is supported. The age of the CEO is significant correlated (p= .098*) to leverage, and the B value shows a negative relationship. This supports hypothesis 4, that suggests that older CEO take less risks than younger CEOs. The last hypothesis is not supported. There is no evidence for the hypothesis that CEOs borne in Generation Y take more risks than the CEOs borne in the generations X, Baby Boomers, and Veterans.

Sig.

B.

Green

.000***

-6.21

Gender

.089*

-.50

Green*Gender

.000***

5.33

Generation Y

.343

-.370

Foundation year

.400

-.00

Age of the CEO

.098*

-1.53

Number of employees

.000***

.41

Age of the company

.743

.08

Table 5.

Dependent variable: Leverage; country dummies are included in the estimation but not reported in the table.

Discussion

Ecopreneurship is a subject that has not been intensively researched, also because this phenomenon is still in its infancy. There is not a clear image of the ecopreneur nowadays. However, ecopreneurship has been becoming more and more an important factor in the contemporary society. Due the growing concerns for the environment and the importance of eco-friendly solutions, the ecopreneur already has and will get a main role in the future. That makes research into this field quite important. This Thesis has provided some new insights in the world of ecopreneurship and the way ecopreneurs deal with risks. The analyses have been performed and some hypotheses have been supported and others did not. It is time to come back to the main question and to discuss the underlying hypotheses.

The main question of this Thesis is: Is there a difference between the risk-taking attitude of

ecopreneurs and non-ecopreneurs? We can now answer this question with a “yes”. There is a

difference in the risk-taking attitude of an ecopreneur in comparison with a non-ecopreneur. However, it was not the difference I expected. Hypothesis 1 suggested that ecopreneurs were more risk-taking than non-ecopreneurs, mainly by the environment in which they are operating and the (few) resources they have. Ecopreneurs change whole industries and come up with radical and innovative products, and new ways of producing. The reader would expect that a risk-taking attitude is needed to do all these things. However, the analyses show that it is the other way around. Non-ecopreneurs take more risks than ecopreneurs. So, we can conclude that non-ecopreneurs are more financial risk-taking than ecopreneurs. A reason for that can be the difficulties ecopreneurs face to get the money. It is hard for ecopreneurs to get external money due their innovative products and new ways of producing. When they finally have the money, they are careful with it and don’t take risks with it. Another reason can be that ecopreneurs are less interested in money, and so the financial part of the firm can be less

important for them. Kirkwood and Walton (2010) concluded that ecopreneurs would sacrifice revenue for ecological concerns. Both explanations are with a small question mark, because it is also hard for non-ecopreneurs to get the money. Maybe they don’t come up with unfamiliar products that scare banks, but in general entrepreneurs also face difficulties getting external financing. And on the baseline, the reader could say that money is important for every entrepreneur to run a business. So maybe there is a difference in the personalities of the non-ecopreneurs, as compared to the

ecopreneurs. This suggestion is worth of future research.

Maybe ecopreneurs are still more risk-taking than non-ecopreneurs, but not in terms of financial leverage. They come up with innovative products and new ways of producing, so in a certain way they take more risks. Testing this hypothesis with another dependent variable that also represents a risky attitude, like number of patents or investments in R&D, could lead to different conclusions. These dependent variables are more focused on the innovative part of risk-taking and that is the part where ecopreneurs are likely to distinguish themselves from non-ecopreneurs.

results in a higher financial leverage. Women seem to be more risk-averse and that results in businesses with a lower leverage.

However, very interestingly, hypothesis 3 has been supported. This would mean that women in green industries take more risks than women in non-green industries. Only focusing on this, we would say that a green environment influences female CEOs in such a manner that they have to be more risk-taking. However, we may not forget the outcome of hypothesis 1. When we go back to the result of hypothesis 1, we remember that CEOs in non-green industries take more risks than CEOs in green industries. This would suggest that green industries are the “safer” industries. If we then come back to hypothesis 3, the result has a different outcome. Now we know that CEOs in non-green industries take more risks than CEOs in green industries, means that women take more risks in safer industries. Women feel them more comfortable in “safer” industries, and that gives them the confidence to take more risks. However, this is only based on a financial measurement of risk-taking. This evidence seems to not support the “beyond the glass ceiling” theory (Adams and Funk, 2012), arguing that women that are positioned in a risky environment are so influenced by the environment that they become more risk-taking and/or are self-selected on the basis of their risk-taking propensity. As discussed above, this evidence may be different when using other dependent variables that represents a non-financial risk-taking attitude.

Continuing with the other proxy of leadership, age, we can conclude that the older is the CEO, and the less risk he/she takes. This supports the hypothesis and is in line with the written theory in the

theoretical framework. Older CEOs are more conservative and in most cases, they deal with more responsibility. The outcome is totally in line with the study of Betrand and Schoar (2003) that concluded that older CEOs invest less and choose for lower levels of leverage.

However, we cannot say that the youngest generation, generation Y, is the most risk-taking generation of all of them. There is no support for hypothesis 5. The Independent Sample T-Test already showed us that there was no significant difference between Generation Y, and Generation X and Veterans. In literature, researchers use different boundaries according to the birth years of generations. These different ways of categorizing generations may have an influence on the outcomes. Generation X and Y or very close and both have risk-taking aspects, so maybe another categorization would give another outcome that would support that the youngest generation indeed takes more risks. The outcomes of hypothesis 4 and 5 would than match perfectly together.

would expect that the older is the CEO, and the less risks he/she takes. This surprising effect is mainly data driven: it appears in fact that only 4 “Veteran” CEOs are included in the sample. So, it is hard to generalise this outcome.

The control variables “number of employees” and “countries in the south of EU” show a significant relationship with leverage. The number of employees is positive related with leverage and that would suggest that the more employees, the more risk the CEO takes. More employees can be a good indicator of the size of the company. When you have more employees, you have a bigger firm and probably with more resources and money. When you have more resources and money, you are able to take more risks. Big companies face less uncertainty due their size and influences in the market (Miller & Friezen, 1984). This position can give them a more risk-taking attitude.

Practicalimplications

Due to this Thesis, we know the ecopreneur a little bit better. One of the most important findings is that ecopreneurs are not really risk-takers. At least not in the field of financial risk-taking. Policy makers that want to stimulate ecopreneurs have to keep in mind that they prefer less risky situations and markets. Policy makers can stimulate them to make it less risky and easier to get funding. When it is easier to get external financing, ecopreneurs will faster start an ecopreneurial business. Today ecopreneurs are really necessary to save the planet and to reach the political agreements like the climate agreement of Paris. Policy makers have to be more aware of the role ecopreneurs can play to reach the climate goals. Besides the ecological benefits of ecopreneurs, they also stimulate markets to grow, open up new industries, provide employment and economic development.

In the action plan 2020, policy makers not only want to stimulate entrepreneurship by focusing on ecopreneurs but also to stimulate women. Combining these two groups by stimulating women to become an ecopreneur, the sword cuts on two sides. It is hard to get women into entrepreneurship because nowadays it is really a men’s thing. This may be explained by the fact that entrepreneurship requires a risk-taking attitude, and women are more risk-averse. However, from this research we know that women take more risk when they are in a green industry. Thus, stimulating women to become an ecopreneur can really work out. Because they feel more comfortable to take risks in green markets, will make them better entrepreneurs, and as a side-effect eco-friendlier companies are born.

This Thesis can be a start for other researchers to start investigating more into the ecopreneur as a person. This Thesis shows that an ecopreneur has a less risk-taking attitude than non-ecopreneurs, but why exactly? Has this something to do with personality? Other researchers can see this Thesis as the first step to get a detailed understanding of the ecopreneur. This is worthy for the field of

Limitations and future research

A limitation of this Thesis is that there has been made use of a secondary database instead of primary data. With primary data, the influence of the leader on the firm would be more accurate and different aspects could be discussed. In a primary data collection, including different question explicitly tuned on risk-taking behaviour, would give a better understanding what factors play a role in risk-taking by leaders. More information about the psychological aspects of the leader and their attitude against risks could be collected. The decision-making part why leaders take risks and how the process works can be better understood.

The used environmental variable “Age”, is not a pure environmental variable. So, age cannot give the best indicator for the environmental influences on leadership. For example, investments in R&D would be a better variable to look at an environmental aspect. When you invest less, than you have a conservative way of leading and you are not a risk taker, when you invest a lot in R&D you have a more aggressive style of leading and that involves a risk-taking attitude (Benmelech & Frydman, 2015). Unfortunately, this variable was not available in Orbis. In this Thesis, only two aspects are used and the research could be improved when more personality and environmental variables are included. For future research, the influence of culture can be a good variable to investigate. The culture where the CEO is part of, can have a great influence on the risk-taking style of the CEO (Li, Griffin, Yue & Zhou, 2013). An important aspect of culture that can influence the leader is individualism versus collectivism. Individualistic leaders are more willing to take risks, than leaders that are influenced by a collectivistic culture. Uncertainty avoidance is also an important aspect that can have a great influence on leaders (Li, et al., 2013). In cultures were uncertainty avoidance is high, they are less comfortable with financial systems that are characterised by uncertainty and ambiguity. By contrast, members of low uncertainty avoidance society are more comfortable with unpredictable outcomes. This can influence leaders attitude on risk-taking.

Future research could include other risk-taking measurements. Including measurements that are more focused on the innovative part of the leader, can give other results on the influence of green and non-green industries. Focusing for example on the number of patents or R&D expenditures, could give a whole different image of the ecopreneur. Also, research in the personality of ecopreneurs can give us a better understanding of the differences between ecopreneurs and non-ecopreneurs.

Conclusion

In this Thesis, I investigated the influence of the leadership style of the CEO on the financial leverage of the firm. In the theoretical framework, I showed that leaders in corporate positions like CEOs have an important impact on the decision-making of a firm. I focused in this Thesis on one important aspect of decision-making, namely risk-taking. Two important aspects that influence the leadership style of a CEO, gender and age, have been used to investigate their influence on the risk-taking attitude of a firm. I found out that the personality trait gender influences the risk-taking attitude of the CEO, and in turn the leverage of the firm, in such a manner that male CEOs take more risks than female CEOs. Women lead firms with a lower financial leverage. Next to that, the results of this Thesis shows that older CEOs take less risks than younger CEOs. Older CEOs led firms that have a lower financial leverage than CEOs led by younger CEOs.

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