Removing environmental market failure through support mechanisms: insights from green start-ups in the British, French and German energy sectors

Environmentally relevant market failure, relatedto the lack of value attached to environmentallybeneficial economic activity, constrains environmentalentrepreneurship as reported by Dean and McMullen(Journal of Business Venturing, 22, 50–76, 2007) .Unless this market failure is addressed, green start-upswill be confined to a Bgreen prison^ as stated in Pachecoet al. (Sustainable Development and Entrepreneurship,25, 464–480, 2010), unable to grow and disseminatetheir eco-innovations out with environmental nichemarkets.In Britain, France and Germany, support mechanismspromote the expansion of renewable power technologies.This paper examines environmental entrepreneurs’perceptions of the importance and effectivenessof supportmechanisms in removing environmental marketfailure in the energy sectors of these three countries.Our findings suggest that these support mechanisms areperceived by entrepreneurs as having provided a crucialpecuniary motivation among consumers to adopt ecoinnovation,creating greater market certainty for greenstart-ups. However, when these support mechanisms arereformed, aiming at greater market integration for ecoinnovation,green start-ups find this transition from protectionto more market exposure as challenging andmore suited for incumbent firms