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Capturing Value from Green Offers An Examination of Environmental Differentiation and Economic Performance

Marcus Linder

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5 years in 25 minutes

1. So what?

2. Research aim

3. Method

4. Contributions

5. Implications

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So what: Society

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So what: Society

Working Group I Contribution to the IPCC Fifth Assessment Report Climate Change 2013: The Physical Science Basis Summary for Policymakers Page 35

Rockstrom et al (2009)‘A safe operating space for humanity’, Nature, Vol. 461, No. 7263, pp.472–475.Page 472

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So what: Society

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So what: Society

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So what: Businesses

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So what: Businesses

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So what: Businesses

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So what: Businesses

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Research aim

“…to contribute to the environmental strategy literature by providing new theoretical viewpoints on, methodological approaches to and empirical data on the development, commercialization and economic performance of environmentally differentiated offers.” (Cover paper, p. 1)

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Research questions

1. To what extent are firms appropriating economic value from environmentally differentiated offers, and what situations facilitate value appropriation?

2. How can the development of environmentally differentiated offers be managed effectively?

3. What are the risks and opportunities associated with service-based offers designed for closed-loop material flows?

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Phenomenon

“environmentally differentiated offers”– “an offer that is justifiably claimed to be superior on

the environmental impact performance dimension, to the typical alternatives that the customer is choosing between.” (Cover paper, p. 1)

Operationalization:– 1) Claim by firm towards me as researcher– 2) Independent assessment

• Government evaluation of “environmental technology” (EU definition)

• My evaluation according to TNS four system conditions

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Mixed methods

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Papers Paper I: Linder, M. (International Journal of Innovation & Sustainable Development)

– 'A problem-solving perspective on strategies for appropriating environmental value – some implications from considering institutional solutions to social dilemmas’

Paper II: Bjorkdahl, J. and Linder, M. (Under review, 3rd)– ‘Formulating Problems for Commercializing New Technologies: The Case of

Environmental Innovation’. Paper III: Linder, M., Bjorkdahl, J. Ljungberg, D. (Business Strategy & The

Environment)– ‘Environmental Orientation and Economic Performance: A quasi-experimental

study of small Swedish firms’. Paper IV: Linder, M. (Under review, 1st)

– ‘Determinants of economic performance for environmental technology-based offers – A cross sectional study of small Swedish firms’.

Paper V: Linder, M. and Williander, M. (Under review, 2nd)– ‘Examining the challenges of implementing closed-loop service-based business

models from an entrepreneurial perspective’.

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Paper I Linder, M. (2012)

– 'A problem-solving perspective on strategies for appropriating environmental value – some implications from considering institutional solutions to social dilemmas’

Finding: Generic appropriation strategies for environmental differentiation: – Eco-lean, Eco-branding, Eco-lobbyism and Eco-transaction design.

Why contribution?– Conceptual: Showing why environmental differentiation is a business

model challenge.– Conceptual: Showing how much of previous literature on drivers and

strategies for environmental differentiation can be understood as special cases of these four appropriation strategies.

– Conceptual: Derivation of generic appropriation strategies from Ostrom (1990) and Williamson (2000).

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Paper II Bjorkdahl, J. and Linder, M.

– ‘Formulating Problems for Commercializing New Technologies: The Case of Environmental Innovation’.

Finding: Explicit top management commitment, e.g. ‘sustainability visions’, enable opportunities based on existing solutions.

Why contribution?– Conceptual: Introducing problem-solving perspective to literature

on implementing an environmental differentiation strategy.

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Paper III Linder, M., Bjorkdahl, J. Ljungberg, D. (forthcoming)

– ‘Environmental Orientation and Economic Performance: A quasi-experimental study of small Swedish firms’.

Finding: Negative association between environmental differentiation and economic performance

Why contribution?– Method: Data set (small firms)

• Understudied• Less “noise”

– Method: Nearest neighbour matching (uses information on 80000 firms)

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Paper IV Linder, M.

– ‘Determinants of economic performance for environmental technology-based offers – A cross sectional study of small Swedish firms’.

Finding: Out of several examined advantages of environmental differentiation, only resource efficiency leading to low total cost of ownership is associated with economic performance.

Why contribution?– Method: Data set (small firms)

• Understudied• Less “noise”

– Method: Controls for suspected covariates• Branding benefits• Supporting regulation• Improved quality due to environmental control• Customers valuing provision of environmental information

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Paper V Linder, M. and Williander, M.

– ‘Examining the challenges of implementing closed-loop service-based business models from an entrepreneurial perspective’.

Finding: Service-based circular business models imply more risk than only-product-based linear business models with the same product

Why contribution?– Conceptual: Explains PSS literature conundrum: why lack of

adoption– Method: Intervention enabled longitudinal study of rare

phenomenon– Conceptual: Brings in business assumption testing idea into PSS

literature

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Implications for practice

1. Cause for caution

2. Cost efficiency seems safest route

3. Circular business models big but risky opportunity

4. Explicit sustainability goals / accelerate dormant business opportunities

5. If small env. tech. firms are desirable, further support is needed; consider tax shift.

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Capturing Value from Green Offers An Examination of Environmental Differentiation and Economic Performance

Marcus Linder