A theoretical approach
Sustainable business models, also called business models for sustainability, aim to go beyond delivering economic value, allow simultaneous value creation for multiple stakeholders, and consider society and the environment as critical stakeholders (Bocken et al., 2013, 2014; Baldassarre et al., 2017; Dembek et al., 2022). Since some years ago, the term sustainable entrepreneurship means the contribution of entrepreneurial endeavours to sustainable development (Schaltegger & Wagner, 2011; Lans, Blok, & Wesselink, 2014). In that way, sustainable business models (SBM) are a way entrepreneurs and managers meet sustainable development needs (Evans et al., 2017).
This research aims to identify and define an integrative framework for assessing and categorising business models according to their degree of sustainability, which unifies criteria of motivation and value perceived by different stakeholders and the degree of impact of business activity according to the characteristics of the business model analysed.
The first step in this work in progress is a systematic literature review of the existing literature on the valuation and assessment of sustainable business models (or business models for sustainability), as well as on other theoretical approaches that, in an integrative way, justify the model to be proposed. The literature review will include new papers that are constantly appearing, such as the Journal of Cleaner Production's special issue "Assessing and forecasting the sustainability impact of new ventures: Theories, methods and empirical evidence", which includes a new conceptual framework and the assessing of sustainability of new ventures and start-ups that have been neglected within this field of research (Fichter, Lüdeke-Freund, Schaltegger and Schillebeeckx, 2023). The paper's core will be the theoretical proposal of the framework of stakeholder value creation (valuation matrix) and the business model impact identification (impact matrix). The main contribution will be a holistic approach that includes the different impacts a business model generates on its economic, social and environmental context, considering how its different stakeholder groups act and what they demand.
From the systemic sustainability perspective, a business model is more or less sustainable depending on the intensity and impacts the business activity generates on its economic, natural and social environment and how responsibilities can be allocated (Goffetti et al., 2022). Production and consumption business patterns have essential environmental and social impacts (Lüdeke-Freund et al., 2018). Business models are key factors that can condition and promote more sustainable production and consumption patterns, i.e., sectors such as food, housing, electrical appliances or transport have a higher environmental impact and dominate the environmental footprint based on both consumption patterns (Bocken, Niessen & Tukker, 2022) and production patterns. A business model generates impacts of different natures and intensities depending on its idiosyncrasy.
In addition, a detailed business model analysis makes it possible to identify mutual stakeholder relationships in which the stakeholder groups interact in the value-creation process and are both recipients and creators (Freudenreich, Lüdeke-Freund & Schaltegger, 2020). Value creation perspective is helpful in sustainable business model analysis (Sommer, 2012) to get to the bottom of what type of value the business creates, the relationships among stakeholder groups, who receive value and who create value. Different stakeholder groups have genuine and legitimate interests that differ from one another. However, the same type of stakeholder group will show similar preferences in different business scenarios due to their nature and own definition (see, Penzenstadler, Femmer & Richardson, 2013). Thus, they can be classified into one of the sustainability dimensions (Kumar, Rahman, & Kazmi, 2016). For example, all investors will select the sectors and activities they want to invest in, which is more or less sustainable. However, they will look for a higher financial return (or equivalent value) once they have identified the investment. As another example, all environmental groups will seek to maximise environmental protection over industrial activity, generally in any context. Moreover, the same stakeholder group may have interests in more than one dimension of the triple bottom line of sustainability. Thus, for example, employees will have economic interests in the company, i.e. getting a good salary, but they will also have social interests, i.e. that the company allows a good work-life balance and good non-economic working conditions.
The impact matrix allows a multilevel analysis in the impact business model analysis. Three aspects that can characterise business models are the type of industry to which it belongs, the geographical location in which it operates and impacts, and finally, the proposal and production or operation model, i.e. the way it solves the generation of value for its customers, suppliers and other stakeholders. The first two would belong to the business ecosystem level and the last to the business level (Antikainen & Valkokari, 2016). Also, the first could be considered the institutional level of analysis and the latter the business and operational level (Bocken & Geradts, 2020). These three aspects answer the questions about what the business model does, how, and where it does it. The "how" allows us to consider the differences between types of industrial activity and production technologies, such as their degree of maturity, dependence on more or less polluting processes and products, or the creation of more or less wealth or value than others. "Where" it does, it allows assessing, among other things, whether the company generates the impact locally or delocalised it or whether it impacts particularly sensitive or critical locations. In addition to questions inherent to the description of a general business model, the "what" includes aspects of sustainability archetypes and measures to compensate for negative sustainability impacts. In our framework, each of these three dimensions will be divided into groups of mutually exclusive categories, with indicators that will have an assessed value depending on the business model proposal to be evaluated. They will always have relative values depending on the context (e.g. average minimum wage in the sector). Considering relative (not absolute) weighted values allows innovative performances to be assessed against existing standards. Indicators can only consider scenarios of values within acceptable ranges, e.g. minimum wages or maximum CO2 emissions.
The priorities in stakeholder interests can be identified among the three dimensions of sustainability in the valuation matrix, which shows how the different stakeholders value the contribution of a business model in each of the aspects demanded by them.
This work proposes cross-referencing the so-called valuation matrix (which shows the degree of sustainability that motivates stakeholders) and the impact matrix (which shows the business model's economic, social and environmental impacts). The result will be a generic integrative three-dimensional model (like a Rubik's cube) that will classify different business models according to the characteristics of the business model through its impacts, the degree of sustainability demanded by the different stakeholder groups and the three types of desirable sustainability (economic, social and environmental) (see Figure 1). The interaction between the two matrices will make it possible to compare the impact of the business model activity with the valuation of the business model by the different stakeholders.
Source: Own elaboration
The design and evaluation of sustainable business models is a new and evolving field of research. Most work to date has focused on environmental impacts, but more and more stakeholders are demanding greater social commitment from the companies in which they participate (Fichter et al., 2023). This paper aims to contribute to this field with a holistic approach that includes the different impacts that a business model generates on its economic, social and environmental surroundings, taking into account how its different stakeholder groups act and what they demand.
As a result of the research, a generic framework model will be obtained that can be applied to a wide range of economic activity scenarios to assess the degree of sustainability of business models. This framework will make it possible to obtain a concrete and comparative assessment, allowing the creation of an assessable and certifiable scale. The model presented will be a first theoretical approximation that will allow it to be evaluated by the academic community with expertise in the field and begin a process of iterative validation until a satisfactory proposal is achieved.
Shortly, we expect that this work in progress will lead, firstly, to a conceptual framework and a qualitative tool that can be used by academics in the field of research and, secondly, to a practical, qualitative and quantitative tool that allows classifying sustainable business models from a stakeholders approach for academics and practitioners.
Sustainable business models, stakeholders, value proposal, assessment, indicators.
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