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Market Failure, Market Dynamics, and Entrepreneurial Innovation by Environmental Ventures

HANDBOOK OF ENERGY ENTREPRENEURSHIP RESEARCH, R. Wustenhagen, R. Wuebke, eds., Edward Elgar, Cheltenham, 2011

Posted: 5 Jul 2011  

Elizabeth W. Garnsey

University of Cambridge - Judge Business School

Nicola J. Dee

University of Cambridge - Institute for Manufacturing

Simon Ford

University of Cambridge - Centre for Technology Management

Date Written: May 1, 2011

Abstract

Recent contributions to understanding the role of enterprise in environmental innovation have inferred that market failures are an unexpected source of entrepreneurial opportunities for ventures with environmental innovations. This inquiry used iterations between theory and evidence to explore this issue. The concept of market failure is explained, and explored in relation to evidence on opportunities targeted and constraints reported by UK environmental ventures including low carbon energy innovators. In the development of these young firms, some instances of market failures provided business opportunities, but other instances seriously impeded attempts at environmental innovation. The concept of market failure could not explain these differences. This suggested that the key question is how innovative environmental enterprises have in practice overcome impediments associated with market failure. This issue was explored through case studies. The logic of the inquiry showed that it was innovative responses to market dynamics rather than the existence of market failures that created business opportunities. The concept of market failure is undermined by certain theoretical assumptions and empirical limitations discussed in this chapter.

Keywords: environmental innovation, new ventures, market failure, market dynamics

JEL Classification: M13, O3

Suggested Citation

Garnsey, Elizabeth W. and Dee, Nicola J. and Ford, Simon, Market Failure, Market Dynamics, and Entrepreneurial Innovation by Environmental Ventures (May 1, 2011). HANDBOOK OF ENERGY ENTREPRENEURSHIP RESEARCH, R. Wustenhagen, R. Wuebke, eds., Edward Elgar, Cheltenham, 2011. Available at SSRN: https://ssrn.com/abstract=1879169

Elizabeth W. Garnsey (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0) 1223 338183 (Phone)

HOME PAGE: http://www.jims.cam.ac.uk/people/faculty/garnseye.html

Nicky J. Dee

University of Cambridge - Institute for Manufacturing ( email )

17 Charles Babbage Road
Cambridge, CB3 0FS
United Kingdom

HOME PAGE: http://www.ifm.eng.cam.ac.uk/people/nd248/

Simon Ford

University of Cambridge - Centre for Technology Management ( email )

Alan Reece Building
17 Charles Babbage Road
Cambridge, CB3 0FS
United Kingdom
+44(0)1223 766776 (Phone)

HOME PAGE: http://www.ifm.eng.cam.ac.uk/people/sjf39/

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