The Dual-edged Sword: Strategic Dynamics of Digital and Sustainable practices in Dutch cleantech startups

Abstract

The 21st century has seen a significant rise in clean technologies driven by urgent environmental challenges alongside transformative digital innovations shaping global interactions. Despite these significant events, cleantech startups face substantial challenges and missed opportunities in effectively integrating digital technologies into their sustainable business strategies. To fully harness the potential of digital innovations, addressing the trade-offs and synergies cleantech startups encountered between digital and sustainable strategic practices is crucial, as is understanding the underlying causes of their strategic choices. Despite the rising interest of academia in sustainable and digital entrepreneurship, academic research fails to identify these trade-offs and synergies within cleantech startups.
As a result, the main objective of this research is to explore and identify trade-offs and synergies that arise when entrepreneurs follow a sustainable and digital strategy simultaneously within cleantech startups and how they are influenced by their stakeholders, resources, and external environment. By examining the influences of resources, stakeholders, and external pressures, the research seeks to understand entrepreneurs' strategic decision-making process and the implementation of digital technologies within a complex environment. The main research question is defined as follows:

“How do Dutch cleantech startups navigate the synergies and trade-offs between digital and sustainable practices, and what are the underlying dynamics shaping these interactions?”

A systematic literature review mapped the existing academic perspectives on the strategic practices of Dutch cleantech startups, revealing the research gaps. The study employs the resource-based view theory and is complemented by the institutional theory as the foundation of the research. The research uses the concepts of digital and sustainability strategic orientation to explain how their practices are influenced and define the resources and external incentives as moderators. Semi-structured interviews were conducted with nine Dutch cleantech startups in various industries, such as agriculture, shipping and renewable energies. A qualitative content analysis was conducted to explore the trade-offs and ynergies, resources and incentives, followed by a stakeholders analysis, interview comparison and relational analysis to research the underlying dynamics. The findings show that the startups navigate complex trade-offs between sustainable and digital practices, balancing investment in digital tools for profitability and scalability with commitments to sustainable R&D.
Pressures from financial investors prioritise digital scaling and profitability over sustainable impact. Startups prioritise external sustainability impacts over internal sustainable practices and technical talent acquisition over workforce equality. Synergies emerge from leveraging technologies like AI, machine learning, dashboards, and blockchain to enhance product quality, validation, credibility, operational efficiency, and regulatory compliance, supported by collaborations with universities and incubators. Stricter sustainable regulations secure funding and stimulate market demand, facilitating the integration of digital and sustainable strategies. Moderating dynamics are financial resources, influencing the balance between profit-driven practices and sustainable investments. Technical team knowledge enhances digital capabilities, and social networks with incubators and R&D institutions foster collaboration synergies despite challenges in data exchange due to limited digital infrastructure. Normative pressures from customers' expectations and coercive pressures from investors and regulators further shape strategic priorities, emphasising compliance with technical standards. Further research is recommended to evaluate the impact of various digital technologies in enhancing synergies and trade-offs. Furthermore, the direct relationship between resources and external incentives warrants further exploration to understand their influence on strategic practices. Additionally, addressing investor influence, including distinctions between impact investors and traditional venture capitalists, could be helpful. Broader studies with diverse samples from different regions and countries and longitudinal studies are recommended to explore the long-term effects of digital and sustainable orientations and practices.