Sustainability Business Models: How integrated is sustainability in mainstream business models?

Anders Kolstad

Student thesis: Master thesis

Abstract

Managing the relationship between business and society has been one of the main topics in academic and business literature for a long time, and a discussion is whether sustainability should be treated as “built-in“ or “bolt-on”. This research paper focus on sustainability and business models, and the purpose is to find out how integrated sustainability is in mainstream business models. In addition to provide insights in the debate on how sustainability should be integrated, the research contributes as how sustainability challenges affect business models and strategy, the advantages of being engaged in sustainability, and it discuss difficulties encountered when pursuing sustainability. In addition to the contribution on sustainability, the research paper also helps to clarify some of the fuzziness that concerns literature on regular business models. In order to identify the features on how integrated is sustainability in mainstream business models, a multiple case study of four case companies that all have a strong focus on sustainability are analyzed. Data were collected both by semi-structured interviews and by company reports. Analysis of the business model was based on a theoretical framework developed through the analysis of the literature. The integration of sustainability in the mainstream business model was made by comparing sustainability initiatives already in place, in connection with business model components inherent in the case companies mainstream business models. The findings of the paper suggest two main conclusions. First, sustainability should be treated as “built-in”, rather than “bolt-on”. The sustainability initiatives in place at the case companies is integrated in their mainstream business models, which mean that it is connected to their day-to-day operations. Benefits by integration are related to product, infrastructure, customers and the financial. Secondly, the business models of the case companies were highly influenced by sustainability challenges related to their business and industry. There are several advantages in pursuing sustainability, such as enhanced reputation, increased trust among stakeholders and investors, competitive advantage, reduction of potential conflicts and its affects employees and recruitment in a positive way. There are some difficulties to be aware of as well. Time is one challenge, leaders have to lead the way, it should intersect with the main business areas, it can be costly in short-term perspective, and for global companies, sustainability has to be tailored to fit different values, cultures and legislation. It is important to have in mind that it sustainability is a challenge in itself, as it is difficult to balance social equity, environmental integrity and economic prosperity. Lastly, the paper contributes to research on business models, and shows that the business model ontology can be used to describe the business model of companies within various industries.

EducationsMSc in Strategy, Organization and Leadership, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2013
Number of pages157