Micro-processes of paradoxical learning: how entrepreneurs reconcile financial and ESG tensions

This study explores the micro-processes through which entrepreneurs learn to reconcile the inherent paradoxical tensions between financial viability and environmental, social, and governance (ESG) goals. Drawing on organizational paradox theory and entrepreneurial learning, we conducted in-depth interviews with entrepreneurs leading ventures that explicitly integrate financial and ESG objectives. Relying on a Gioia methodology for inductive analysis, we developed a process model of paradoxical learning that reveals four interconnected micro-processes: (1) cognitive reframing, (2) emotional regulation, (3) behavioral experimentation, and (4) social sensemaking. Our findings demonstrate that entrepreneurs move through three distinct phases of paradoxical learning: (a) tension recognition, (b) paradox acceptance, and (c) integration capability development. We find that digital technologies, digital business models, and digitally mediated feedback loops shape these learning processes in distinctive ways, accelerating experimentation cycles, enabling distributed sensemaking across digital ecosystems, and providing data-driven tools for developing integration capabilities. The findings contribute to entrepreneurial learning theory by revealing the dynamic capabilities required for managing persistent contradictions, extending organizational paradox theory to the entrepreneurial context, and offering practical insights for entrepreneurs seeking to foster integrated value creation. The study reveals that successful ESG integration requires not just strategic thinking but fundamental shifts in how entrepreneurs perceive, experience, and resolve competing demands, with digital ventures facing unique tensions and opportunities that shape the nature and trajectory of paradoxical learning.