From Profit to Purpose

Maren Ingrid Kropfeld^1,* André Reichel²

¹sustainable AG; ²International School of Management, Stuttgart

*[email protected]

Extended abstract

Businesses can support sufficiency-oriented consumption practices by adapting their business models (Gossen & Kropfeld, 2022; Kropfeld & Reichel, 2021). This includes a multilateral negotiation of the value proposition of new practices, a reciprocal learning and change process of shared practices between the business and consumers in the value creation, and finally new payment models, profit sufficiency, and non-monetary value capture (ibid). It implies a de-emphasis on profit-maximization and a focus on benefitting the community, and community ownership (Johanisnova et al., 2013), which raises the question of what distinguishes sufficiency-oriented businesses, social enterprises, or so-called hybrid organizations, from alternative forms of organizations such as eco-communities or non-profit organizations (Banerjee et al., 2021; Khmara and Kronenberg, 2018; Nesterova, 2020; Trainer, 2020; Veleva, 2021). For these alternative forms of organizations, economic growth is subordinate to other principles such as community ownership, democratic decision-making, reducing resource consumption, and redistributing wealth, and could provide a promising basis for the development of an economy and society that lives within our planetary boundaries (Rätzer et al., 2018).

Summarizing, the so far unsolved key challenges for sufficiency-oriented businesses are the redefinition of profit, ownership, and governance structure, including the question of how and how much value is captured, the question of organizational growth, the appropriate business structure and organizational form for sufficiency and the normative aspects of organizations (Beyeler & Jaeger-Erben, 2022; Freeman, 1984; Spitzeck & Hansen, 2010).

In this contribution, we will approach the question of how sufficiency changes our understanding of organizations. We build our discussion on Veldmann and Willmott’s (2017) suggestion that the explication of the social ontology of modern corporations is not purely based on the aspect of its community, but on the political contestation of constant de-stabilizing and re-stabilizing legal entities as social constructs.

In the context of sufficiency, this might have various implications such as normative aspects, e.g., regarding the purpose of the organization, the governance structure, e.g., a stakeholder governance (Freeman, 1984; Spitzeck & Hansen, 2010), or the legal form of a business including its ownership structure and understanding of profit and value capture, e.g., Stakeholder Stewardship, Organizations for the Common Good, or Purpose Organizations.

We base our theory-led discussion on recent findings within the field of sufficiency-oriented business models. First insights are, for example, that most of the empirical sufficiency-oriented business cases studied are profitable, although most of them reinvest profits in the own company or distribute the profit in the ecosystem to other sufficiency-oriented projects (Beyeler & Jaeger-Erben, 2022). This aspect is of course, highly dependent on the financial ownership structure of an organization. Sufficiency-oriented businesses usually engage in financing options such as foundations, crowdfunding, cross-financing from other projects, or personal investment (ibid). This in turn has an impact on the legal structure of a business. Sufficiency-oriented business models value stakeholder collaboration and integration and actively engage with communities to understand and jointly shape their impact on people and the environment (Bocken & Short, 2020). This also implies a reframing of the corporate vision, priorities, and business model towards a positive contribution for the environment and society. Examples of a manifestation of these normative aspects within the organization and its fundamental architecture is the adoption of Benefit Corporation models (ibid).

We strive to explore and discuss these implications on a theoretical foundation to suggest a research agenda in the field of sufficiency and businesses. We want to raise research questions that consider the implications of a re-orientation of sufficiency-oriented business models from profit to purpose, from limited liability to common good, and from shareholder to stakeholder. By shifting the focus from the consumer-relation to structural challenges we intend to meaningfully advance the research field and allow for new and interesting ideas to be elaborated.

Keywords 

sufficiency, organizational theory, social ontology, stakeholder governance

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