Sustainable Business Models – What Do Management Theories Say?

Literature describing the notion and practice of business models has grown considerably over the last few years. Innovative business models appear in every sector of the economy challenging traditional ways of creating and capturing value. However, research describing the theoretical foundations of the field is scarce and many questions still remain. This article examines business models promoting various aspects of sustainable development and tests the explanatory power of two theoretical approaches, namely the resource based view of the firm and transaction cost theory regarding their emergence and successful market performance. Through the examples of industrial ecology and the sharing economy the author shows that a sharp reduction of transaction costs (e.g. in the form of internet based systems) coupled with resources widely available but not utilised before may result in fast growing new markets. This research also provides evidence regarding the notion that these two theoretical approaches can complement each other in explaining corporate behaviour.

Green business process management: towards the sustainable enterprise

- Preface by Richard T. Watson - Discusses the emerging challenges of designing “green” business processes - Presents tools and methods that organizations can use in order to design and implement environmentally sustainable processes - Provides insights from cases where organizations successfully engaged in more sustainable business practices Green Business Process Management – Towards the Sustainable Enterprise" consolidates the global state-of-the-art knowledge about how business processes can be managed and improved in light of sustainability objectives. Business organizations, a dominant part of our society, have always been a major contributor to the degradation of our natural environment, through the resource consumption, greenhouse emissions, and wastage production associated with their business processes. In order to lessen their impact on the natural environment, organizations must design and implement environmentally sustainable business processes. Finding solutions to this organizational design problem is the key challenge of Green Business Process Management. This book discusses the emerging challenges of designing “green” business processes, presents tools and methods that organizations can use in order to design and implement environmentally sustainable processes, and provides insights from cases where organizations successfully engaged in more sustainable business practices. The book is of relevance to both practitioners and academics who are interested in understanding, designing, and implementing “green” business processes. It also constitutes a valuable resource for students and lecturers in the fields of information systems, management, and sustainable development.

Modeling and analyzing the carbon footprint of business processes

Many corporations and individuals realize that environmental sustainability is an urgent problem to address. In this chapter, we contribute to the emerging academic discussion by proposing two innovative approaches for engaging in the development of environmentally sustainable business processes. Specifically, we describe an extended process modeling approach for capturing and documenting the dioxide emissions produced during the execution of a business process. For illustration, we apply this approach to the case of a government Shared Service provider. Second, we then introduce an analysis method for measuring the carbon dioxide emissions produced during the execution of a business process. To illustrate this approach, we apply it in the real-life case of a European airport and show how this information can be leveraged in the re-design of "green" business processes.

Modeling and Analyzing the Carbon Footprint of Business Processes

Many corporations and individuals realize that environmental sustainability is an urgent problem to address. In this chapter, we contribute to the emerging academic discussion by proposing two innovative approaches for engaging in the development of environmentally sustainable business processes. Specifically, we describe an extended process modeling approach for capturing and documenting the dioxide emissions produced during the execution of a business process. For illustration, we apply this approach to the case of a governmental Shared Services provider. Second, we then introduce an analysis method for measuring the carbon dioxide emissions produced during the execution of a business process. To illustrative this approach, we apply it in the real-life case of an European airport and show how this information can be leveraged in the re-design of “green” busi-ness processes.

Implementing green business processes : the importance of functional affordances of information systems

An environmentally sustainable and thus green business process is one that delivers organizational value whilst also exerting a minimal impact on the natural environment. Recent works from the field of Information Systems (IS) have argued that information systems can contribute to the design and implementation of sustainable business processes. While prior research has investigated how information systems can be used in order to support sustainable business practices, there is still a void as to the actual changes that business processes have to undergo in order to become environmentally sustainable, and the specific role that information systems play in enabling this change. In this paper, we provide a conceptualization of environmentally sustainable business processes, and discuss the role of functional affordances of information systems in enabling both incremental and radical changes in order to make processes environmentally sustainable. Our conceptualization is based on (a) a fundamental definition of the concept of environmental sustainability, grounded in two basic components:the environmental source and sink functions of any project or activity, and (b) the concept of functional affordances, which describe the potential uses originating in the material properties of information systems in relation to their use context. In order to illustrate the application of our framework and provide a first evaluation, we analyse two examples from prior research where information systems impacted on the sustainability of business processes.

Sensemaking and sustainable practicing: Functional affordances of information systems in green transformations

This paper explores how a world-wide operating software solutions provider implemented environmentally sustainable business practices in response to emerging environmental concerns. Through an interpretive case study, we develop a theoretical framework that identifies four important functional affordances originating in information systems, which are required in environmental sustainability transformations as they create an actionable context in which (1) organizations can engage in a sensemaking process related to understanding emerging environmental requirements, and (2) individuals can implement environmentally sustainable work practices. Through our work, we provide several contributions, including a better understanding of IS-enabled organizational change and the types of functional affordances of information systems that are required in sustainability transformations. We describe implications relating to (1) how information systems can contribute to the creation of environmentally sustainable organizations, (2) the design of information systems to create required functional affordances, (3) the management of sustainability transformations, and (4) the further development of the concept of functional affordances in IS research.

The mining boom and Western Australia's changing landscape : towards sustainability or business as usual?

The practices and public reputation of mining have been changing over time. In the past, mining operations frequently stood accused of being socially and environmentally disruptive, whereas mining today invests heavily in ‘socially responsible’ and ‘sustainable’ business practices. Changes such as these can be witnessed internationally as well as in places like Western Australia (WA), where the mining sector has matured into an economic pillar of the state, and indeed the nation in the context of the recent resources boom. This paper explores the role of mining in WA, presenting a multi-disciplinary perspective on the sector's contribution to sustainable development in the state. The perspectives offered here are drawn from community-based research and the associated academic literature as well as data derived from government sources and the not-for-profit sector. Findings suggest that despite noteworthy attitudinal and operational improvements in the industry, social, economic and environmental problem areas remain. As mining in WA is expected to grow in the years to come, these problem areas require the attention of business and government alike to ensure the long-term sustainability of development as well as people and place.

A lesson in business: cost-effectiveness analysis of a novel financial incentive intervention for increasing physical activity in the workplace

Background: Recently both the UK and US governments have advocated the use of financial incentives to encourage healthier lifestyle choices but evidence for the cost-effectiveness of such interventions is lacking. Our aim was to perform a cost-effectiveness analysis (CEA) of a quasi-experimental trial, exploring the use of financial incentives to increase employee physical activity levels, from a healthcare and employer’s perspective.

Methods: Employees used a ‘loyalty card’ to objectively monitor their physical activity at work over 12 weeks. The Incentive Group (n=199) collected points and received rewards for minutes of physical activity completed. The No Incentive Group (n=207) self-monitored their physical activity only. Quality of life (QOL) and absenteeism were assessed at baseline and 6 months follow-up. QOL scores were also converted into productivity estimates using a validated algorithm. The additional costs of the Incentive Group were divided by the additional quality adjusted life years (QALYs) or productivity gained to calculate incremental cost effectiveness ratios (ICERs). Cost-effectiveness acceptability curves (CEACs) and population expected value of perfect information (EVPI) was used to characterize and value the uncertainty in our estimates.

Results: The Incentive Group performed more physical activity over 12 weeks and by 6 months had achieved greater gains in QOL and productivity, although these mean differences were not statistically significant. The ICERs were £2,900/QALY and £2,700 per percentage increase in overall employee productivity. Whilst the confidence intervals surrounding these ICERs were wide, CEACs showed a high chance of the intervention being cost-effective at low willingness-to-pay (WTP) thresholds.

Conclusions: The Physical Activity Loyalty card (PAL) scheme is potentially cost-effective from both a healthcare and employer’s perspective but further research is warranted to reduce uncertainty in our results. It is based on a sustainable “business model” which should become more cost-effective as it is delivered to more participants and can be adapted to suit other health behaviors and settings. This comes at a time when both UK and US governments are encouraging business involvement in tackling public health challenges.

SMEs engaging at the bottom of the pyramid: Exploring drivers of business strategies

This research paper investigates how the market conditions at the base of the pyramid (BOP) influences South African small and medium sized enterprises (SMEs) to take certain business decisions in the townships and rural areas. It takes a qualitative approach to explore how SMEs with social objectives develops mitigating strategies to successfully engage with and in poor communities. The research suggests that prevailing BOP strategies are lacking certain aspects to successfully realize them on the ground. It advices firms to take a more practical hands-on approach to identify a sustainable business model by testing, experimenting, learning and adjusting, eventually being eligible for up-scaling.

Facing the climate change challenges in the mining and mineral industry as providers of a sustainable manufacturing process

A sustainable manufacturing process must rely on an also sustainable raw materials and energy supply. This paper is intended to show the results of the studies developed on sustainable business models for the minerals industry as a fundamental previous part of a sustainable manufacturing process. As it has happened in other economic activities, the mining and minerals industry has come under tremendous pressure to improve its social, developmental, and environmental performance. Mining, refining, and the use and disposal of minerals have in some instances led to significant local environmental and social damage. Nowadays, like in other parts of the corporate world, companies are more routinely expected to perform to ever higher standards of behavior, going well beyond achieving the best rate of return for shareholders. They are also increasingly being asked to be more transparent and subject to third-party audit or review, especially in environmental aspects. In terms of environment, there are three inter-related areas where innovation and new business models can make the biggest difference: carbon, water and biodiversity. The focus in these three areas is for two reasons. First, the industrial and energetic minerals industry has significant footprints in each of these areas. Second, these three areas are where the potential environmental impacts go beyond local stakeholders and communities, and can even have global impacts, like in the case of carbon. So prioritizing efforts in these areas will ultimately be a strategic differentiator as the industry businesses continues to grow. Over the next forty years, world?s population is predicted to rise from 6.300 million to 9.500 million people. This will mean a huge demand of natural resources. Indeed, consumption rates are such that current demand for raw materials will probably soon exceed the planet?s capacity. As awareness of the actual situation grows, the public is demanding goods and services that are even more environmentally sustainable. This means that massive efforts are required to reduce the amount of materials we use, including freshwater, minerals and oil, biodiversity, and marine resources. It?s clear that business as usual is no longer possible. Today, companies face not only the economic fallout of the financial crisis; they face the substantial challenge of transitioning to a low-carbon economy that is constrained by dwindling natural resources easily accessible. Innovative business models offer pioneering companies an early start toward the future. They can signal to consumers how to make sustainable choices and provide reward for both the consumer and the shareholder. Climate change and carbon remain major risk discontinuities that we need to better understand and deal with. In the absence of a global carbon solution, the principal objective of any individual country should be to reduce its global carbon emissions by encouraging conservation. The mineral industry internal response is to continue to focus on reducing the energy intensity of our existing operations through energy efficiency and the progressive introduction of new technology. Planning of the new projects must ensure that their energy footprint is minimal from the start. These actions will increase the long term resilience of the business to uncertain energy and carbon markets. This focus, combined with a strong demand for skills in this strategic area for the future requires an appropriate change in initial and continuing training of engineers and technicians and their awareness of the issue of eco-design. It will also need the development of measurement tools for consistent comparisons between companies and the assessments integration of the carbon footprint of mining equipments and services in a comprehensive impact study on the sustainable development of the Economy.

Characterization of ICT-based business models of social enterprises

In recent years new models for organizations working on overty alleviation have emerged. One of them, the social enterprise, has attracted the attention of both academics and practitioners all over the world. Even if defined in different ways depending on the context, social enterprise has an enormous potential to generate social benefits and to promote local agency and private initiative in poverty alleviation. In this sense, it is fitting to highlight the importance of identifying the main standards that permit the characterization of diverse social enterprises, in order to understand their main specificities and guarantee value generation for low-income populations. Another crucial factor is understanding innovation as a critical factor in promoting social enterprises. A powerful tool to enhance the impact and application of this model is Information and Communication Technologies. In the 21st century,these tools allow users to find new ways of collaboration, new sustainable business models and a cost-effective way of scaling-up initiatives. This paper, a product of the collaborative research between the Universidad Politécnica de Madrid and the Universidade Federal Fluminense, examines different business models for social enterprises and the role that ICT can play in scale and impact of these initiatives

Are we asking the right questions? Rethinking post-graduate design education towards sustainable visions for the future

Our society is currently facing complex challenges, such us climate change, loss of biodiversity, ageing population, unemployment, to name but a few. This has created growing expectations on designers and engineers to explore, experiment and implement innovative solutions to such issues. At this critical time, if we want design to be part of the solution, we need to wonder whether we are asking designers suitable and sustainable questions. Both in post-graduate design education and in business, the brief still overwhelmingly requires designers to follow a linear problem-solving approach that focuses on product rather than strategies, services and systems. Traditional design briefs result no longer appropriate to face the challenges of our unsustainable world, as they relate to market, growth economy and human needs rather than society, business models and the needs of nature. Instead, we need to be asking questions about, for example, how we create sustainable business opportunities, how we overcome the barriers for change, or how we facilitate the process of innovation through design methodology. If the role of design is to create new visions and outline strategic directions towards a sustainable future world - for policy makers, businesses, communities and individual citizens – we need those stakeholders to create briefs for designers that allow them to do that. This paper will explain how the reframing of questions has been embedded into SustainRCA’s teaching practice in post-graduate design, art and engineering, leading to the development of new tools and methods, as well as some innovative outcomes

Developing a supportive culture for teaching and learning : a university, faculty and school perspective

In the early 1990's the University of Salford was typical of most pre-1992 Universities in that whilst students provided much of it's income, little attention was paid to pedagogy. As Warren Piper (1994) observed, University teachers were professional in their subject areas but generally did not seek to acquire a pedagogy of HE. This was the case in Alsford. Courses were efficiently run but only a minority of staff were engaged in actively considering learning and teaching issues. Instead staff time was spent on research and commercial activity.----- In the mid-1990's the teaching environment began to change significantly. As well as Dearing, the advent of QAA and teaching quality reviews, Salford was already experiencing changes in the characteristics of its student body. Wideing access was on our agenda before it was so predominant nationally. With increasing numbers and heterogeneity of students as well as these external factors, new challenges were facing the University and teaching domain.----- This paper describes how a culture which values teaching, learning and pedagogic inquiry is being created in the university. It then focuses on parts of this process specific to the Faculty of Business and Informatics, namely the Faculty's Learning and Teaching Research Network and the establishment of the Centre for Construction Education in the School of Construction and Property Management.----- The Faculty of Business and Informatics' Learning and Teaching Research Network aims to raise the profile, quality and volume of pedagogic research across the five schools in the faculty. The initiative is targeted at all academics regardless of previous research experience. We hope to grow and nurture research potential where it exists and to acknowledge and use the existing expertise of subject-based researchers in collaborative ventures. We work on the principle that people are deliged to share what they know but need appreciation and feedback for doing so. A further ain is to surface and celebrate the significant amount of tacit knowledge in the area of pedagogy evidenced by the strength of student and employer feedback in many areas of the faculty's teaching.----- The Faculty embraces generic and core management expertise but also includes applied management disciplines in information systems and construction and property management where internationally leading research activities and networked centres of excellence have been established. Drawing from this experience, and within the context of the Faculty network, a Centre for Construction Education is being established with key international external partners to develop a sustainable business model of an enterprising pedagogic centre that can undertake useful research to underpin teaching in the Faculty whilst offering sustainable business services to allow it to benefit from pump-priming grant funding.----- Internal and external networking are important elements in our plans and ongoing work. Key to this are our links with the LTSN subject centres (BEST and CEBE) and the LTSN generic centre. The paper discusses networking as a concept and gives examples of practices which have proved useful in this context.----- The academic influences on our approach are also examined. Dixon’s (2000) work examining how a range of companies succeed through internal knowledge sharing has provided a range of transferable practices. We also examine the notion of dialogue in this context, defined by Ballantyne (1999) as ‘The interactive human process of reasoning together which comes into being through interactions based on spontaneity or need and is enabled by trust’ Social constructionist principles of Practical Authorship (Shotter, 1993, Pavlica, Holman and Thorpe, 1998)) have also proved useful in developing our perspective on learning and knowledge creation within our community of practice.

Final Report

This project aims to assess the extent of economic sustainability of working in international markets by Australian construction design-related firms. This investigation also identified barriers and success factors firms experience, which ultimately increases or reduces their exposure to financial risk. This study explored new research territory by developing a detailed understanding of the way three successful firms have maintained their longevity in various international markets. The firms are not considered to be large firms by international standards. The manner in which the firms achieve long term sustainability, deal with problems and barriers in international markets and develop successful strategies rely upon being adaptable to different markets and changes within markets. A model was developed based upon a critical analysis of the literature. An adaptive performance framework for sustainability was developed which had three key areas; internationalisation process, market knowledge and design management. The sustainable business model is underpinned by the management of non-economic factors, which include social, cultural and intellectual capital. The ultimate aim of any firm and the ultimate indicator of success is financial capital. Firms typically develop their own highly sophisticated financial measures themselves however have only an implicit understanding of other softer and less tangible factors that impact upon sustainability. Adaptive performance is the firm’s continual adaptivity of business practices to respond to and thereby achieve client satisfaction by a combination of self, market and project needs assessment.