The scope of this research and the analytical framework to be developed aim to uncover the features of the business environment may have on the development of businesses, including the interlinked subarenas that interact directly or indirectly with the businesses and shape the opportunities and limitations or even threats to their development. Approaches found in the literature which address business environments related issues focally or peripherally include the business and entrepreneurial ecosystem approach. The Relational Organization of Entrepreneurial Ecosystems [22
]; the transition management approach [23
] and the technology innovation systems (TIS) approach [24
]. There is a rich body of literature using these approaches which have been very influential in explain transitions of sociotechnical systems and networks of businesses. However, the two widely used approaches by practitioners, business analysts and policy makers to describe business environments are the “Ease of Doing Business” World Bank [25
] and “Investment climate” DCED [18
]. The two approaches mainly consider business models where the value proposition typically refers to the economic return of a delivered good and/or provided service. The focus of “Ease of Doing Business” is mainly on the rules and regulations that govern businesses and their interaction with other organizations [25
]. The Ease of Doing Business project has captured several important administrative and regulatory factors of the business environment as they apply to local businesses. Some relevant factors not included are policies, technology, and resources that, directly or indirectly, influence the performance of businesses. The “Investment climate” from DCED has broad understanding factors and defines the business environment as a composite of policy, legal, institutional, and regulatory conditions that govern business activities. It defines the business environment as a subset of the investment climate and includes the administration and enforcement mechanisms that are established to implement government policy, as well as the institutional arrangements that influence the way key actors behave and operate. Important components of the business environment are not explicitly addressed, such as funding, technology, knowledge, consumer values, resources, and training and education.
In order for business models in general and the bioeconomy in particular to be considered sustainable [13
], there is a need to incorporate ecological and social value propositions in addition to economic value propositions. Another specificity of entrepreneurship in rural areas, which includes the majority of enterprises in the bioeconomy, is new combinations of place-based or localized natural resource-uses that create value not only for the entrepreneur but also for the local community and/or whole society [27
] and valorize the natural environment. Thus, the new and emerging business models in the bioeconomy are not driven solely by monetary motives; rather, the pursuit of environmental, social, and cultural value creation is a characteristic of many business models in the bioeconomy [16
]. The businesses and value chains of enterprises in the bioeconomy are often crosscutting and involve cooperation across sectors and professionals from different areas [28
]. To our knowledge, the approaches used so far for monitoring and steering the business environments of enterprises do not sufficiently consider the specificities of bioeconomy enterprises operating in rural environments. Even though these approaches consider some relevant factors such as the natural environment, they do not explicitly capture the specific requirements of businesses in the bioeconomy, such as circularity, inclusiveness, replicability, and cumulativeness. By using approaches that do not take sufficient account of the specificities of enterprises in the bioeconomy, entrepreneurs and decision-makers run the risk of not promoting the development to a bioeconomy to the best of its ability. In the next section, we propose a comprehensive business environment framework as an alternative approach for analyzing business environments and assessing their performance and supportiveness for businesses in the development towards the bioeconomy.
Conceptual Categories of the Business Environment
The main analytical elements needed for understanding business environments comprehensively are derived next, taking into account their embeddedness and interrelations as depicted in Figure 1
, which shows the Business Environments Framework (BEF) for analyzing business environments. In the framework, we conceptualize the businesses and their business environments as separate, but interdependent action arenas. Figure 1
shows the business environment and its subarenas in more detail, as this is also the focus of the present study. Business environments are composed of subarenas where various actors interact in action situations [29
]. The performance of action situations as well as innovations in the action arenas are determined by factors such as Strategy, Steering Structure, Cooperation and Process that we may also call capacity factors as they are assumed to be decisive for the businesses’ success. Since these factors are not objective elements of the framework, they are shown in dotted boxes. Enterprises interact with their business environment in defined action situations, which take place in the subarenas and may influence each other. These interactions and interdependencies are bi-directional, which is shown by the arrows between the subarenas to the enterprises in the Figure 1
.The subarenas are characterized by specific action situations where different actors undertake actions and transactions governed by institutions and governance structures. The subarenas in which the action situations take place must be further differentiated according to the level, i.e., from local to global.
Institutional development in our framework describes the subarena of the business environment where rules and regulations are being crafted and implemented by actors. This is very much in line with World Bank [21
], DCED [18
], and Roos [11
], who stated it as basic and important components of the business environment. In accordance with Roos [11
], we also argue that policy should be considered as part of the subarena institutional development since it influences the relative competitiveness of businesses in the bioeconomy. We refer to this subarena as “institutional development”, encompassing sets of rules, regulations, and policy that affect the businesses and are intentionally designed [31
] by public agents, associations, or networks to regularize the actions and transactions of actors in the economy. Such institutions determine who is eligible to make decisions in a subarena, what actions are allowed or constrained, what aggregation rules will be used, what procedures must be followed, what information must or must not be provided, and what payoffs will be assigned to individuals, depending on their actions (32 P.51). The complexity and scope of the issues addressed by the actors in the subarena institutional development suggest that the factors cooperation, strategies, leadership structures, and processes, as well as learning and innovation are very important for the emergence of conducive rules and regulations that are developed in this subarena.
Consumers’ agency refers to the subarena where actions and interactions take place that shape the ability of individuals, organizations, and societies to make decisions based on their knowledge, values, awareness, perception, and attitudes, which in our research case is toward biobased products, thereby promoting or limiting consumer demand and influencing consumer decisions [11
]. A change in consumers’ agency is considered as one of the important factors for driving the future demand for biobased products [36
]. A challenge for entrepreneurs in this subarena is that potential customers often do not have the capability to make informed decisions related to the use of the offered new products and services provided by bioeconomy companies, and thus they have difficulties assessing the benefits or gains. Sijtsema et al. [37
] reported that consumer demand for biobased products depends on the awareness, knowledge and understanding of the concept of biobased, the perception of the product, usability, production method, and proportion of biobased materials used in the biobased product. Enterprises have the capacity to influence or change consumers’ agency but only to a very limited degree, since other actors in the business environment can also greatly influence the consumers’ agency. Therefore, it is important to assess how the nature of consumers’ perception toward bioproducts affects demand and production decisions in the business [11
]. In this subarena, the interacting actors, the transactions, governance structures, and strategies shaping the values and perceptions of consumers are considered when characterizing consumers’ agency and understanding how a favorable business environment may foster the ability of consumers to make decisions.
Technology and knowledge is the subarena concerned with generation of knowledge and the research, development, and diffusion (i.e., R&D) of the technical processes and tools for the production and conversion of renewable biological resources into value-added products [39
]. Yet, creating new markets for biobased products often depends on achieving a technological breakthrough and cost effectiveness [11
]. Innovative businesses in the bioeconomy require creating conditions to facilitate the translation of available technological and nontechnological innovations into commercial products [36
]. Such activities require interactions with various actors at different levels who are not necessarily involved in the business or enterprise, and thus we define technology and knowledge as one of the subarenas of the business environment. In addition, the subarena also describes the existing technology and knowledge that are already available in the business environment.
Resource and infrastructure refers to the subarena that makes available and accessible to enterprises and society all types of basic physical structures, including services and facilities (e.g., buildings, roads, power supplies), that are needed for the functioning of the enterprise and the society, such as communication (internet, phone), road, transport, and networks that enterprises use to facilitate their communication and transportation of products and services. In addition, it includes the availability and access to raw materials and human resources. Infrastructure and resources are critical for human resource and raw materials. The subarena is particularly critical to businesses in rural areas where access to infrastructure and certain resources can be more limited compared to urban areas. The availability and provision of services and resources not only attracts businesses and facilitates their development in rural areas, but it is also an important factor for attracting skilled workforce to work and live in rural areas instead of commuting to nearby towns. A conducive subarena is understood as a subarena that enables businesses to effectively acquire and appropriate the necessary resources (e.g., people, raw materials, or infrastructure) and other basic structures, services, and facilities in their environment [40
Funding is the subarena that determines the availability and access to the financial capital needed for entrepreneurs and companies to develop their business. This subarena is in particular relevant and critical for entrepreneurs in the bioeconomy where many emerging businesses depend on starting capital, as some of them are very capital intensive. A challenge for entrepreneurs in this subarena is that public and private investors are not always familiar with the products and services provided by bioeconomy companies [28
], and therefore have difficulties to assess the opportunities and risks associated with investments in the sector. This may lead to higher costs for capital resources as well as additional demands from investors in terms of collateral from the companies. Access to information on credit offers, time, and costs to process applications and obtain approval, as well as the diversity of financing agencies are some of the criteria used to describe the funding environment in the “Ease of Doing Business” index [26
]. In addition to access to credit, we include in this subarena another criterion, i.e., the availability of funding from public agencies, as well as the requirements, collaboration, and procedures needed to apply for it. Further, new companies in the bioeconomy are often considered less lucrative by traditional investors. Against this background, developing new ways for raising capital is of particular importance for business development in the bioeconomy. We therefore take a special look at the ability of entrepreneurs and companies to develop innovative ways of raising capital. This subarena reflects on the funding opportunities not only for the businesses but also for other actors engaged in other subarenas of the business environment, including among other associations, interest groups, producer groups, NGOs, clusters, and even public agencies.
Market structure is the subarena in the business environment in which the actual transactions of products and services are negotiated and agreed upon between the enterprises and their customers. The subarena can be characterized among others by the properties and strategic actions of actors, as well as the imperfections in the processes and structures that businesses are dealing with in bioeconomy [8
]. This further can be determined by the conditions and nature of the bioproduct, its collaborations with stakeholders, and other businesses in the sector. Standardization is found to be essential in supporting the creation of new markets and in creating trade opportunities for biobased products [39
]. The development of new markets, such as in the bioeconomy, often exceeds the possibilities of individual companies and makes the commitment of cross-sectoral organizations necessary.
Training and education is the subarena where investment in education and training takes place to develop and transfer skills that can ultimately contribute to opening up markets and enhance the competitiveness of bioeconomy enterprises [41
]. The subarena ideally enables the transfer of skills and knowledge that results in higher technology absorption, business management, and sectoral governance capacity. Education and training need to be developed to meet demands for labor force with specific capacities in the sector [41
], increase public agencies awareness, and facilitate entrepreneurship and property rights [21
]. In this subarena, we subsume factors such as the availability, frequency, and quality of the education and training that is available for businesses and other actors (e.g., entrepreneurs, public agents, consumers, professional associations) at different levels in the various subarenas of the business environment.
Enterprises in the bioeconomy need to use a mix of resources, and they also need to collaborate and select solutions to turn their ideas into products and services. In this work, we propose and validate the success factors identified as relevant in business and project management [42
] so that we can assess the conditions of the presented subarenas for enhancing the performance and innovation of the business environment. These factors include (a) strategy, (b) steering structure, (c) cooperation, (d) process, and (e) learning and innovation (see Figure 1
). Strategy refers to the consistency on the strategic orientation of actors, their goals and expectations resulting from a process of deliberation and selection of various options available. Cooperation refers to the networks of people and organizations that are necessary to facilitate change. A clear understanding of who the enterprise works with or needs to work with, in what way, and at what level can enable the enterprise to achieve its goals more efficiently. Steering structure is about selecting a particular form of governance in favor of a particular management structure that is based on communication and interaction between different stakeholders. The basic functions of the steering structure include resource management, strategy, decision-making, coordination, and conflict and risk management. Processes as a factor that influences the performance of a subarena describes the structured negotiations and agreements about which process should be managed and which are essential in order to guarantee the acceptance and sustainability of the change process. Learning and innovation refers to the capacity of individuals and organizations in each of the subarenas to actually appropriate and implement primarily new strategies, steering structures, forms of cooperation, and processes.
We propose to characterize the business environment by decomposing it into the subarenas and assessing it using the success factors elaborated above. The subarenas can be further decomposed according to different levels depending on the nature of the business and its affectedness by the subarenas from the local to the regional, national, or even global level. The relevance of the different levels may vary from case to case and from subarena to subarena, as, for example, in a business case the relevant levels of the funding subarena may be the EU, national, and regional level, whereas for the consumers’ agency subarena, only the local level may be relevant.