Intellectual Capital Driving SMEs Entrepreneurial Orientation towards Sustainable Development

Abstract: Addressing the scarce knowledge of sustainability practices in small and medium-sized enterprises (SMEs), the purpose of this paper is to identify how and if there is a link between intellectual capital (IC) and entrepreneurial orientation (EO), and if this connection contributes to a company’s sustainability performance. Based on a series of semi-structured interviews conducted with Swedish SMEs, our findings show that despite the limitations these companies experience in terms of financial and human resources, a focus on tackling sustainability issues appears to inspire entrepreneurial behaviour. Specifically, seeking opportunities when it comes to product development or process improvement to incorporate sustainability, and exploring these opportunities without knowing the real outcome, are dimensions associated with an entrepreneurial orientation. Although the literature has discussed the positive effect that entrepreneurial orientation has on sustainability investments, as well as how intellectual capital contributes to the sustainability performance of a firm, we also found that entrepreneurial orientation can overcome limitations with intellectual capital and therefore contribute to the sustainability performance of SMEs.The link between EO and IC has not been studied before, nor how it may impact the adoption and maintenance of sustainability practices. But our findings further indicate that Swedish SMEs, operating in a country with a high Sustainability Index, have high requirements when it comes to sustainability, and with few resources, entrepreneurial behaviour is common to explore opportunities associated with sustainability. Furthermore, drawing on our findings we attempt to provide theoretical contributions in the field of entrepreneurship, sustainability, and intellectual capital, as well as practical recommendations that will help business owners, managers, and policymakers to better enable sustainability practices