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The VUCA framework has been used in various business establishment scenarios to explain the changes in the external business environment that impact how a business functions. It describes the business environment as unstable, characterized by chaotic changes, unclear standards, or prevalent outdated projects and plans. Despite the increase in eco-friendly start-ups, the VUCA quadrant maintains its negative impact on businesses and continues to threaten the existence of such businesses. Applying the VUCA quadrant in eco-entrepreneurship helps highlight the key challenges faced by entrepreneurs from 2022 onwards, including start-up capital, entrepreneurship competence, resource availability, and growth opportunities.
Successful eco-entrepreneurship is characterized by their ability to address the conditions of the VUCA framework, which define the features of the ecological system they operate in. Volatility deals with the rapid changes a business undergoes and the dynamic patterns present in the environment (Popova et al., 2018). In eco-entrepreneurship, volatility represents the fluctuations in the financial market, pricing, and macroeconomics. The main challenge in this area is inflation following the impact of COVID 19, which saw the economy start to resume normalcy (Bobeica & Hartwig, 2022). This poses a threat to the capital required to start or expand a business. The critical predictor of this challenge is environmental pressure that may affect the country where individuals want to start their business. Worst hit countries faced negative economic outcomes that threatened investment opportunities to provide start-up capital for eco-entrepreneurs (Bobeica & Hartwig, 2022). To address this challenge, eco-entrepreneurs need to understand the cultural and natural elements, including innovation, climate change, and changes in world markets due to unpredictable events.
Despite this understanding, it is still impossible to establish the correct connection where rapid changes are likely to occur, making it difficult for eco-entrepreneur to establish their business efficiently. Changes often occur rapidly, which would be challenging if eco-entrepreneurship does not have a central process monitoring system over the slated period (Chauhan et al., 2020). This challenge is achieved when entrepreneurs conduct assessments that provide enough insight, especially if the findings are retrieved from various research. This reveals that eco-entrepreneurship volatility does not suggest that threats come and go. Instead, it illustrates that various processes within a system produce challenges and that it is up to the entrepreneur to assess the market early before a change occurs.
After understanding the volatility challenge of eco-entrepreneurship, the second factor revolves around uncertainty. Uncertainty mainly focuses on the unpredictable nature of the business environment and the possibility of endless elements of surprise (Popova et al., 2018). Eco-entrepreneurship is best implemented if an entrepreneur possesses the proper knowledge of all aspects of the business environment. This would increase their credibility and entrepreneurial competence in challenging situations like finding investors. Their understanding and ability to generate accurate predictions for the environmental and socio-political factors will be vital for the establishments success, and the likelihood of investors joining them since their business will focus on sustainability (Chauhan et al., 2020). However, the uncertainty of their idea and predictions are likely to exceed what they initially perceived, making it difficult for their business to take off. Investors, on the other hand, may pull off their investment plans.
Uncertainties reveal that the business environment is not the perfect slope that an entrepreneur initially predicted. They reveal distinct systematic behavior that can jeopardize initial conservation objectives and the efficacy of numerous management functions. The challenge of uncertainty caused by the pandemic is investment uncertainty. Many entrepreneurial firms, including eco-entrepreneurship, face investment uncertainty, especially those requiring close investor-entrepreneur interaction. Eco-entrepreneurship is among the fields that have been worse hit by COVID 19 (Faghih & Forouharfar, 2022). Investment uncertainty can be solved by creating effective communication channels to meet investors, highlight business goals and objectives in the future, and realize the impact of the pandemic on business returns.
The third factor of the VUCA framework applicable to eco-entrepreneurship is complexity. This factor focuses on the extensive network and dynamic blueprint present between all system elements (Popova et al., 2018). Complexity also highlights how a system built on chaos is fairing. In eco-entrepreneurship, ecological systems should be identified as complex functional systems that need addressing (Chauhan et al., 2020). Complex systems borrow their properties from other sources, suggesting that cause and effect scenarios are not associated with space and time. Effective eco-entrepreneurship is achieved if relevant parties understand the complicated relationship between the environment and human wellbeing.
Entrepreneurs may be challenged through complexity in several instances. First, entrepreneurs are faced with the challenge of identifying and assessing the link between the observation effect (COVID 19) and several factors of the business environment, such as staff, resources, and finances (Dias et al., 2022). This is evident when a systems positive and negative feedback channels are considered, revealing underlying outcomes. In eco-entrepreneurship, complexity usually arises because of environmental systems different temporal and spatial scales, posing several challenges, including resource availability (Chauhan et al., 2020). Entrepreneurs will be forced to assess the organizational, political, social, and economic aspects of the venture and understand how different ecosystems work to determine the appropriate one to address the complexity challenge, especially since these factors influence key business outcomes such as government decisions to implement lockdowns which derails resource availability.
Ambiguity is the final and most theoretical factor of the VUCA framework. This factor focuses on how hazy the reality is, mixed outcomes for an action, mixed explanations for a condition, and the prevalence of misleading elements (Popova et al., 2018). The common ambiguity challenge facing eco-entrepreneurship during the pandemic is confusion and getting overwhelmed, which impairs growth opportunities (Sedera et al., 2022). The possibility of having various information suggests that the most essential and perhaps challenging effort is to filter and interpret it. Eco-entrepreneurs are tasked with finding and selecting the right source of information for different business needs to oversee business growth. Scientific and technological advancements directly impact eco-entrepreneurship as they push towards implementing standardized procedures used to generate and disseminate information (Chauhan et al., 2020). Any change in the environment where a venture looks to operate should be addressed with the right approach. Therefore, to address ambiguity, eco-entrepreneurs need to conduct personal assessments and establish coping strategies to prevent getting overwhelmed.
Upholding sustainability in the case of eco-entrepreneurship depends on adopting an equitable management system. The VUCA framework highlights that some challenges may lead to the collapse of a business if they are not addressed. From the eco-entrepreneurship perspective, these challenges can be addressed through decisions to conduct assessments providing enough insight into the future, establishing effective communication channels, assessing the external business environment to understand how they work and settle on one solution, and establishing coping strategies. Although the pandemic has negatively impacted eco-entrepreneurship, solutions such as Any change in the ecosystem brought about by eco-entrepreneurship that may negatively influence their wellbeing is caused by a poor or incomplete understanding of the business environment. Applying the VUCA framework helps highlight these challenges and help future eco-entrepreneurship ventures avoid pitfalls that may lead to their demise.
References
Bobeica, E., & Hartwig, B. (2022). The COVID-19 shock and challenges for inflation modelling. International Journal of Forecasting.
Chauhan, A., Joshi, M., Kumar, A., & Abidi, S. (2020). Taxonomy of VUCA in Indian start-ups: The future of entrepreneurship. International Journal of Technology Transfer and Commercialization, 17(1), 76-98.
Dias, Ã. L., Silva, R., Patuleia, M., Estêvão, J., & González-RodrÃguez, M. R. (2022). Selecting lifestyle entrepreneurship recovery strategies: A response to the COVID-19 pandemic. Tourism and Hospitality Research, 22(1), 115-121.
Faghih, N., & Forouharfar, A. (2022). An Introduction to contextual strategic entrepreneurship: Perspectives on the regional contexts, social elements, and entrepreneurial competitiveness. Contextual Strategic Entrepreneurship (pp. 3-14). Springer, Cham.
Popova, N., Shynkarenko, V., Kryvoruchko, O., & Zéman, Z. (2018). Enterprise management in VUCA conditions. Economic Annals-XXI, 170(3-4), 27-31.
Sedera, D., Tan, C. W., & Xu, D. (2022). Digital Business Transformation in Innovation and Entrepreneurship. Information & Management, 103620.
Ya_l1o lu, M. M., & Toplu Ya_l1o lu, D. (2020). Entrepreneurship for the Future: A conceptual look toward sustainability entrepreneurship. Eurasian Business Perspectives (pp. 277-290). Springer, Cham.
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