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Drivers and Barriers for Initiating the Business Model Innovation Process for Sustainability Based on Ecosystem Services
Halmstad University, School of Business, Innovation and Sustainability. (Avdelningen för miljö- och biovetenskap, Department of Environment and Biosciences)ORCID iD: 0000-0002-2848-7717
Halmstad University, School of Business, Innovation and Sustainability. (Avdelningen för miljö- och biovetenskap, Department of Environment and Biosciences)ORCID iD: 0000-0003-3068-5269
2022 (English)In: Proceedings of the 7th International Conference on New Business Models: Sustainable Business Model Challenges: Economic Recovery and Digital Transformation / [ed] Michelini L.; Minà A.; Alaimo Di Loro P., Rome: LUMSA University , 2022, p. 253-256Conference paper, Oral presentation with published abstract (Refereed)
Abstract [en]

The agricultural sector has a critical role in creating social and environmental value from natural resources in addition to its traditional role of creating economic value through food production. In fulfilling this dual role, the agricultural sector faces what is often viewed as competing pressures: to operate financially profitable businesses and to create, maintain and benefit from ecosystem services (ES) in their operations. ES, such as food production, climate regulation, and water management, are benefits ecological systems provide humans and that are critical to the function of life-support systems on earth (Costanza et al., 1997).

Previous research shows that agricultural businesses associate maintenance of sustainability-oriented ES (other than those connected to food production such as climate regulation and water purification) with increased costs connected to their preservation, and uncertain incomes due to their intangibility and long-termism (Bocken and Geradts, 2019; Hansson et al., 2012; Smith and Sullivan, 2014). As a result, drivers, barriers, and changes in the external environment greatly shape business strategies and decisions on activities for creating, delivering, and capturing sustainable value (Kaplan, 2011; Teece, 2010; Yang et al., 2019). Moreover, the understanding of such moderating factors is especially important for realising sustainable business activities that require radical changes in current business models (BMs) (Lütz and Bastian, 2002; Bocken and Geradts, 2019). A BM describes the business logic of a company i.e., how economic value is created, captured, and delivered (e.g., Teece, 2010; Zott and Amit, 2007). It can be used to describe and implement a company’s current and future plans for financial success through producing, marketing, and selling sustainable goods and services (Karlsson et al., 2018).

Sustainability-oriented BM changes can be realized via a business model innovation process for sustainability (BMIpfS) that builds on a systematic and holistic mindset of the involved actors (Stubbs and Cocklin, 2008; Zott and Amit, 2010). The BMIpfS requires businesses to make strategic decisions related to market, customers, and value propositions for optimizing social and environmental value creation (Bocken et al., 2014; Schaltegger et al., 2016). The BMIpfS can thus be crucial for driving the development of sustainable BMs (Karlsson et al., 2018) for agricultural businesses in which the creation and processing of ES are important elements. Through BM changes supported by the BMIpfS, inclusion of ES previously not captured by BMs could become a sustainable value-creating activity for agricultural businesses and their stakeholders (e.g., customers, suppliers, and retailers) by creating financial value from ES while simultaneously preserving the ecosystems.

Thus, the aim of this study is to further the understanding of drivers and barriers, as perceived by agricultural business managers, for initiating the BMIpfS based on the inclusion of sustainability-oriented ES. The study uses qualitative thematic content analysis (Graneheim and Lundman, 2004) to analyse the data of perceived drivers and barriers to the initiation of the BMIpfS as they are revealed in semi-structured interviews by ten agricultural business managers operating farms in southern Sweden.

The results show that business managers’ main business concerns were based on financial considerations that acted as either drivers or barriers for the initiation of the BMIpfS depending on whether the managers viewed the inclusion of sustainability-oriented ES as business risks or as opportunities. The drivers reported by the managers were based on the core idea of realising and taking advantage of business opportunities, both on a short-term and a long-term basis, in connection to the uncaptured value inclusion of sustainability-oriented ES in BMs can offer. The managers were also driven by their belief that sustainable value creation is a business responsibility in relation to stakeholders and the global population in which challenges to food supplies play an important part. The drivers included the idea that a breaking point may arrive when profit cannot be sustained and a new balance between shareholder and stakeholder value is needed. To proactively avoid such breaking points, they viewed value creation and capture of sustainability-oriented ES as an important part of sustainable farming systems. The barriers identified revealed that the business managers’ main concern was the financial risks associated with the sometimes substantial changes to current farming systems required to include sustainability-oriented ES. They were concerned with how these changes would affect their long-term profit, especially the impact on their revenue streams. This was emphasised by their low tolerance for uncertainty when making decisions about business changes, especially because they thought the proposed changes were antithetical to their traditional value-creating activities and their self-perception of what it means to be a food producer. Unclear benefits from meeting sustainability targets added to their doubts.

On a general level, this study contributes to the business model innovation literature by identifying drivers and barriers that moderates the initiation of the BMIpfS. It complements previous research regarding the connection between individual, sustainability concerns and organisational values in a BM change process (Bansal 2003; Rauter et al., 2017). Through the contributions of this study, the needs connected to sustainable BM change amongst agricultural business managers can be better understood and met as the managers acknowledge the importance of long-term, sustainable social and environmental value creation, while addressing their grave doubts about the profitability of activities associated with the initiation of the BMIpfS based on to the inclusion of sustainability-oriented ES. The managers would benefit from taking a more proactive, long-term approach to business model changes for sustainability and from acquiring more knowledge about market demand for sustainability-oriented ES. Support is needed by one or several actors that can facilitate (clarify, motivate, and practically assist) change and improve the turning of profits based on sustainable value creation (Kundrupi et al., 2021). The results could also be important for policy makers in the development of agricultural support systems and programmes. These, in turn, can benefit the implementation of sustainability-oriented BM changes that can play a crucial role in preservation of natural ecosystems.

Place, publisher, year, edition, pages
Rome: LUMSA University , 2022. p. 253-256
Keywords [en]
Business model innovation process, sustainable value creation, ecosystem services, agriculture
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hh:diva-48982ISBN: 979-12-210-1188-3 (print)OAI: oai:DiVA.org:hh-48982DiVA, id: diva2:1721178
Conference
7th International Conference on New Business Models, Rome, Italy, June 23-24, 2022
Available from: 2022-12-21 Created: 2022-12-21 Last updated: 2022-12-21Bibliographically approved

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Hansson, AnnaKarlsson, Niklas

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