Entrepreneurs’ ingenuity and self-imposed ethical constraints: creating sustainability-oriented new ventures and knowledge
Authors: Siqueira Ana Cristina O , Honig Benson 
Published: September 2019

Purpose

Ingenuity can be viewed as the use of creativity to develop innovation within constraints. The authors investigate how entrepreneurial ingenuity is enhanced by self-imposed ethical constraints, by using a case study of sustainability-driven technology enterprises in an emerging economy. The authors find that self-imposed ethical constraints can enhance entrepreneurial ingenuity because they encourage entrepreneurs to solve more complex problems as a result of considering the impact of the business on a more diverse set of stakeholders. The aim of this study is to show that while additional resources are normally considered an advantage, a dearth of resources can be a source of competitive advantage leading to ingenuity. By self-imposing ethical constraints, founders increase engagement of stakeholders who shape the firm’s industry toward greater sustainability knowledge.

Design/methodology/approach

The authors used semi-structured interviews which are typically the most important data source in the Gioia methodology because they provide both retrospective and present accounts by individuals experiencing the phenomenon of theoretical interest (Gioia et al., 2012). The authors focused on founders at each enterprise who had sufficient knowledge to speak comprehensively and authoritatively about their organizations. The goals of the semi-structured interview protocol were to focus on the research question, avoid the use of terminology that could lead interviewees in their answers and maintain flexibility to explore spontaneous themes during the interviews.

Findings

The authors examined the influence of entrepreneurial ingenuity on the creation of knowledge in an organization's environment. They defined entrepreneurial ingenuity as a type of organizational ingenuity (Lampel et al., 2014a, 2014b) and by focusing on the role of ethical constraints, examined the conditions under which it is influenced. They emphasized that ethical constraints warrant consideration in the knowledge management process (Rechberg and Syed, 2013) because they can stimulate entrepreneurial ingenuity. The authors also investigated the relevance of ethical constraints for founders of social enterprises in Brazil, an emerging economy of growing interest to knowledge management scholars.

Research limitations/implications

This study brings the following three main contributions. First, by incorporating the scope of social entrepreneurship, the research contributes to the perspective that both ethics and innovation can positively coexist within an organization while contributing to knowledge management creation and success (Borghini, 2005; Schumacher and Wasieleski, 2013). Second, the authors establish ethics as an important type of constraint that can spark ingenuity and help break through the constraints of bounded awareness for knowledge management (Kumar and Chakrabarti, 2012). Third, by highlighting the role of self-imposed ethical constraints, this study helps answer a recent call for research on “entrepreneurial actions that benefit others” (Shepherd, 2015, p. 490) addressing “What are the constraints that disable or obstruct an organization’s normal routines from alleviating human suffering?..It could be less about whether it is good or bad to ignore constraints and more about which constraints are ignored and which are abided by” (Shepherd, 2015, pp. 499, 501, emphasis added).

Practical implications

In this study, the authors show that entrepreneurs facing ethical dilemmas experience a unique cycle of equilibration, essentially throwing customary norms of equilibrium into disequilibrium. Treating ethics as both a lever and a constraint allows a more unique set of problems to be solved through knowledge management and entrepreneurship, so solutions to these problems can themselves become new sustainability-driven businesses.

Social implications

This study opens up several opportunities for future research. The authors conducted a study with five sustainability-driven enterprises from Brazil. New research may benefit from examining a larger number of organizations in other countries to investigate potential environmental differences that affect ingenuity and knowledge management. This study highlights the notion of ethical constraints as enabling mechanisms, and thus self-imposed ethical constraints merit a more systematic consideration as a key additional factor that may inspire disruptive innovation (Christensen, 2013), blue-ocean strategy (Kim and Mauborgne, 2004), as well as value-creation for stakeholders (Tantalo and Priem, 2016).

Originality/value

Resources are critical to both knowledge management and entrepreneurial activity and have been examined from numerous perspectives (Alvarez & Busenitz, 2001; Barney, Wright, & Ketchen, 2001; Moustaghfir and Schiuma, 2013). Entrepreneurs following a creation strategy depend less on accumulating existing knowledge and resources before beginning, and more on forming new knowledge or relationships that do not yet exist. They do this through a process of entrepreneurial trial and error (Alvarez & Barney, 2007, 2010). From a knowledge management perspective, individual knowledge sharing through both experimentation and learning by doing provide consistently high levels of knowledge sharing (Burns, Acar and Datta, 2011). This research emphasizes that constraints, such as limited resources and self-imposed ethical standards, can be a source of advantage leading to ingenuity and knowledge creation.