business models for sustainability innovation - phd thesis defence - florian lüdeke-freund - 13 dec...
DESCRIPTION
The full conceptual paper and further related publications are available at SSRN: http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=1411470 An open reference list of publications on business models and sustainability issues is available here: http://literature.SSBMG.com Background information This dissertation deals with the relationships between business models, sustainability innovations, and the business case for sustainability. Its main purpose is to define theoretical and conceptual interrelations between these concepts. According theoretical foundations are developed and combined with empirical studies on the solar photovoltaic industry. This industry is particularly suitable for this kind of research because of its increasing maturity paired with public policy and market dynamics that lead to a variety of business model challenges. The overarching research question is: How can business models support the commercialisation of sustainability innovations and thus contribute to business cases for sustainability? Theoretical and conceptual foundations are developed from a systematic literature review on the role of business models for technological, organisational, and social sustainability innovations. Further, business model innovation is linked to sustainability strategies and the business case for sustainability. These foundations are applied in an in-depth case study on BP Solar. Moreover, because supportive public policies and the availability of financial capital are important preconditions for commercial success with solar innovations, the dissertation contains a comparative public policy study as well as a conjoint experiment to explore debt capital investors’ preferences for different photovoltaic business models. The main contribution of this work is the “Business Models for Sustainability Innovation” (BMfSI) framework. It is based on the idea that business models are artificial and social constructs that fulfil different functions based on social interaction and their deliberate construction. The framework emphasises the mediating function, i.e. the iterative alignment of business model elements with company-internal and external factors as well as with the characteristics of environmentally and socially beneficial innovations.TRANSCRIPT
Business Models for Sustainability InnovationTheoretical Foundations and the Case of Solar Energy
Florian Lüdeke-Freund
PhD Thesis Defence, Lüneburg, 13th December 2013
Committee: Prof. Dr. Stefan Schaltegger, Leuphana University Lüneburg (1st supervisor, chair)Prof. Dr. Frank Boons, Erasmus University Rotterdam (2nd supervisor)Prof. Dr. Ursula Weisenfeld, Leuphana University Lüneburg
Agenda
Introduction and research problem
Research approach
“Business Models for Sustainability Innovation” (BMfSI) framework
The case of solar energy
Summary of results
Limitations and outlook
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BMfSI framework
Background and research problem
The challenge:Sustainable entrepreneurs have to create business cases for their sustainability innovationscf. Schaltegger & Wagner 2006, 2011; Hockerts & Wüstenhagen 2010
The gap: Lack of understanding of how business models relate to sustainability innovations and business cases for sustainabilitycf. Boons et al. 2013; Charter et al. 2008
The question:How can business models support the commercialisation of sustainability innovations and thus contribute to business cases for sustainability?
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Question
Methods
Sustainability innovation
Business case for
sustainabilityBusiness model
Research approach
4Florian Lüdeke-Freund
? ?
Conceptual (e.g. literature review) Empirical and case-based (e.g. case study)
Results
“Business Models for Sustainability Innovation” (BMfSI) framework Improved understanding of the business model as a mediator
between sustainability innovations and business cases for sustainability
Theoretical perspectives
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Business models for
sustainability innovation
Innovation managementFocus on sustainability
innovations and commercialisation barriers
cf. Boons et al. 2013; Charter & Clark 2007; Hansen et al. 2009;
Teece 1986, 2006
Corporate sustainabilityFocus on sustainable
entrepreneurship and innovation-based business
cases
cf. Schaltegger & Wagner 2006, 2011; Wüstenhagen & Hockerts
2010Business models
Focus on the business model construct and its mediating
function
cf. Al-Debei & Avison 2010; Chesbrough & Rosenbloom 2002;
Teece 2010
Theoretical perspectives
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Business models for
sustainability innovation
Innovation managementFocus on sustainability
innovations and commercialisation barriers
cf. Boons et al. 2013; Charter & Clark 2007; Hansen et al. 2009;
Teece 1986, 2006
Corporate sustainabilityFocus on sustainable
entrepreneurship and innovation-based business
cases
cf. Schaltegger & Wagner 2006, 2011; Wüstenhagen & Hockerts
2010Business models
Focus on the business model construct and its mediating
function
cf. Al-Debei & Avison 2010; Chesbrough & Rosenbloom 2002;
Teece 2010
Business model*
*cf. Osterwalder & Pigneur 2011
Defining a new function for the business model
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How can business models support the commercialisation of sustainability innovations and thus contribute to business cases for sustainability?
Discursive ambiguity Methodological constraints
Business model
Sustainability innovation
Business case for
sustainability
Directional risks Radical innovation
System-level change
Double externality problem
Barriers / challenges
“Business Models for Sustainability Innovation” framework
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Business model
Sustainability innovation
Business case for
sustainabilityA
B
Conceptual paper 1
Conceptual paper 2
C
Empirical paper 1
D
Empirical paper 2
Public policy
Financing
“Business Models for Sustainability Innovation” framework
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Business model
Sustainability innovation
Business case for
sustainabilityA
B
C
D
Muni-ficence
Dyna-mism
Industry change …
…Stake-holders
Compe-tition …
Company level
Business environment Public policy
Financing
The BMfSI framework applied to the case of solar energy(A) The sustainability innovation interface
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Business model
Sustainability innovation
Business case for
sustainability
Public policy
Financing
Muni-ficence
Dyna-mism
Industry change …
…Stake-holders
Compe-tition …
Company level
Business environment
D
A
B
C ExampleBP Solar’s business model
CorollaryThe constructability and adaptability of the business model can compensate for sustainability innovations’ competitive disadvantages
The BMfSI framework applied to the case of solar energy(B) The business case for sustainability interface
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Business model
Sustainability innovation
Business case for
sustainability
Public policy
Financing
Muni-ficence
Dyna-mism
Industry change …
…Stake-holders
Compe-tition …
Company level
Business environment
D
A
B
CExampleBP’s solar business case
CorollaryBusiness model innovation can amplify the effects of corporate sustainability strategies and improve business case drivers
The BMfSI framework applied to the case of solar energy(C) The public policy interface
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Business model
Sustainability innovation
Business case for
sustainability
Public policy
Financing
Muni-ficence
Dyna-mism
Industry change …
…Stake-holders
Compe-tition …
Company level
Business environment
D
A
B
C ExampleBP Solar’s international activities
CorollaryThe business model can adapt to different public policy environments and combine own resources with complementary assets provided by public policies
The BMfSI framework applied to the case of solar energy(D) The financing interface
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Business model
Sustainability innovation
Business case for
sustainability
Public policy
Financing
Muni-ficence
Dyna-mism
Industry change …
…Stake-holders
Compe-tition …
Company level
Business environment
D
A
B
CExamplesSolar project financingBP Solar’s financial services
CorollaryThe business model’s financial approach can be aligned with investors and customers’ preferences and lead to new value offerings
Four answers to my research question
How can business models support the commercialisation of sustainability innovations and thus contribute to business cases for sustainability?
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Corollaries How …?
Business models compensate for sustainability innovations’ competitive disadvantages (A) -> use business model as competitive device
Business models amplify sustainability strategies and business case drivers (B) -> develop and improve business case drivers
Business models combine own resources with public policy-based complementary assets (C) -> integrate missing resources and capabilities
Business models adapt to investors and customers’ preferences to obtain financing (D) -> develop and explore new financial models
Limitations
Technology bias, i.e. “sustainability innovation” mostly interpreted as technological innovation
Little attention paid to demand side issues, i.e. demand for sustainability innovations is assumed to be given
In a large part based on theoretical assumptions due to a lack of complementary research
Set of constructs and variables needs to be harmonized across individual research projects and papers
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Outlook: “Profiting from Sustainability Innovation” as contingency theory
The business model as a contingency factor that influences the ability to profit from sustainability innovation
New contingency theory based on BMfSI framework Theoretical framework -> “Teece reloaded” Contingency factor framework -> analytical model Large data sets -> companies developing sustainable business models
Expected outcomes Combine types of business models and sustainability innovations Empirically prove business case potential of BMfSI Measure influence of contingencies, e.g. public policies and financing Sustainability-oriented Teecian theory Policy and management implications for developing BMfSI
Possible funding source: Horizon 2020 – sustainable business model track
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Thanks a lot for your attention!
Florian Lüdeke-Freund 17
Publications contained in PhD thesis
Conceptual paper 1Boons, F. & Lüdeke-Freund, F. (2013): Business models for sustainable innovation: State-of-the-art and steps towards a research agenda, Journal of Cleaner Production, Vol. 45, 9-19.
Conceptual paper 2Schaltegger, S.; Lüdeke-Freund, F. & Hansen, E. (2012): Business cases for sustainability: The role of business model innovation for corporate sustainability, Int. Journal of Innovation and Sustainable Development, Vol. 6, No. 2, 95-119.
Empirical paper 1Hansen, E.; Lüdeke-Freund, F.; West, J. & Quan, X. (2013, in review): Beyond technology push vs. demand pull: The evolution of solar policy in the U.S., Germany and China, submitted to Research Policy.
Empirical paper 2Lüdeke-Freund, F. & Loock, M. (2011): Debt for brands: Tracking down a bias in finan-cing photovoltaic projects in Germany, Journal of Cleaner Production, Vol. 19, No. 12, 1356-1364.
Empirical paper 3Lüdeke-Freund, F. (2013, forthcoming): BP's solar business model: A case study on BP's solar business case and its drivers, Int. Journal of Business Environment.
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Literature
Boons, F.; Montalvo, C.; Quist, J. & Wagner, M. (2013): Sustainable innovation, business models and economic performance: an overview, Journal of Cleaner Production, Vol. 45, 1–8.
Charter, M. & Clark, T. (2007): Sustainable Innovation - Key conclusions from Sustainable Innovation Conferences 2003–2006 organised by The Centre for Sustainable Design. Farnham, UK: The Centre for Sustainable Design, University College for the Creative Arts.
Charter, M.; Gray, C.; Clark, T. & Woolman, T. (2008): Review: The role of business in realising sustainable consumption and production, in: Tukker, A.; Charter, M.; Vezzoli, C.; Stø, E. & Andersen, M. M. (Eds.): Perspectives on radical changes to sustainable consumption and production. System Innovation for Sustainability. Sheffield: Greenleaf Publishing, 46–69.
Hansen, E.; Große-Dunker, F. & Reichwald, R. (2009): Sustainability Innovation Cube - A Framework to Evaluate Sustainability-Oriented Innovations, International Journal of Innovation Management, Vol. 13, No. 4, 683–713.
Hockerts, K. & Wüstenhagen, R. (2010): Greening Goliaths versus emerging Davids — Theorizing about the role of incumbents and new entrants in sustainable entrepreneurship, Journal of Business Venturing, Vol. 25, No. 5, 481–492.
Osterwalder, A. & Pigneur, Y. (2011): Aligning Profit and Purpose Through Business Model Innovation, in: Palazzo, G. & Wentland, M. (Eds.): Responsible management practices for the 21st century. Paris: Pearson, 61–76.
Schaltegger, S. & Wagner, M. (2011): Sustainable entrepreneurship and sustainability innovation: categories and interactions, Business Strategy and the Environment, Vol. 20, No. 4, 222–237.
Schaltegger, S. & Wagner, M. (Eds.) (2006): Managing the business case for sustainability. The integration of social, environmental and economic performance. Sheffield: Greenleaf Publishing.
Teece, D. (1986): Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy, Research Policy, Vol. 15, No. 6, 285–305.
Teece, D. (2006): Reflections on “Profiting from Innovation”, Research Policy, Vol. 35, No. 8, 1131–1146.
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