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Sustainable entrepreneurship—entrepreneurship with social and ecological gains as well as economic ones—has the potential to play a significant role in addressing societal and environmental challenges. However, sustainability and entrepreneurship have hitherto been addressed through separate policy regimes, and it is not clear how policymakers can encourage sustainable entrepreneurship specifically. The authors develop a policy framework for sustainable entrepreneurship, using an open innovation approach with policymakers, business executives, academics, entrepreneurs and other relevant actors, including an online crowdsourcing event with 150 participants. The framework incorporates five policy domains: creating awareness and skills; building networks; funding and investing; measuring impact and performance; and innovating government. The article proposes a modified version of the multi-level perspective (MLP) on how socio-technical transitions occur, since the findings suggest that policy can catalyze the facilitation and aggregation of innovations coming from the niche level, thereby evolving the socio-technical regime, in addition to the role of policy described in earlier work in stabilizing the socio-technical regime. Contributions to entrepreneurship policy literature include the policy domain of measuring impact and performance, as appropriate success measures are non-trivial in a triple bottom line environment, and the potential for open policy innovation in entrepreneurship policy. Contributions to sustainability policy literature include the requirements for support mechanisms and capacity building to empower individuals to contribute as innovators and entrepreneurs and not just consumers. The sustainable entrepreneurship framework can be applied by policymakers to develop context-specific policies: this is illustrated with a worked example of EU policy recommendations. The paper also outlines a method for crowdsourcing policy innovations.

Sustainable entrepreneurship can contribute to sustainable development by seeking synergies between social, environmental and economic outcomes, turning market failures into commercial opportunities. However, institutional conditions often act to obstruct sustainable entrepreneurs. While policy is instrumental in shaping conditions for entrepreneurship, how policy can best support sustainable ventures specifically is under-researched. This study uses a novel crowdsourcing approach with multiple actors in the sustainable entrepreneurship ecosystem to explore how policy can create conditions conducive to sustainable entrepreneurship. An emergent multi-level policy framework outlines six mechanisms by which this may be achieved: resource prioritisation, competency building, sustainable market creation, networked sharing, collaborative replication, and impact valuation. These mechanisms enable three interconnected policy objectives: enterprise creation, system transformation, and impact reorientation. The study thereby makes four main contributions to literature on sustainable entrepreneurship and policy. First, it reveals the importance of a ‘meso-level’ of policy that supports the sustainable entrepreneurship ecosystem, complementing micro-level supply-side and macro-level demand-side policies. Second, it proposes a policy focus not just on enterprises and how they are grown, but on sustainability-oriented innovations and how they are replicated. Third, it identifies the need for ‘impact re-orientation’ policies that track and optimise entrepreneurs' individual and collective triple-bottom-line impacts. Fourth, the study exemplifies a promising crowdsourcing method of co-creating policy.

Innovation for environmental sustainability requires firms to engage with external stakeholders to access expertise, solve complex problems, and gain social legitimacy. In this open innovation context, stakeholder engagement is construed as a dynamic capability that can harness differences between external stakeholders to augment their respective resource bases. An integrative systematic review of evidence from 88 scientific articles finds that engaging stakeholders in environmental innovation requires three distinct levels of capability: specific operational capabilities; first-order dynamic capabilities to manage the engagement (engagement management capabilities); and second-order dynamic capabilities to make use of contrasting ways of seeing the world to reframe problems, combine competencies in new ways, and co-create innovative solutions (value framing), and to learn from stakeholder engagement activities (systematized learning). These findings enhance understanding of how firms can effectively incorporate stakeholder perspectives for environmental innovation, and provide an organizing framework for further research into open innovation and co-creation more broadly. Wider contributions to the dynamic capabilities literature are to (i) offer a departure point for further research into the relationship between first-order and second-order dynamic capabilities, (ii) suggest that institutional theory can help explain the dynamic capability of value framing, (iii) build on evidence that inter-institutional learning is contingent on not only the similarity but also the differences between organizational value frames, and (iv) suggest that operating capabilities impact the effectiveness of dynamic capabilities, rather than only the other way around, as is usually assumed. A methodological contribution is made through the application of quality assessment criteria scores and intercoder reliability statistics to the selection of articles included in the systematic review. Refereed/Peer-reviewed