Literature

Strategy Reading Notes
Week 2 Sustainable Strategy and Shared Value

1. Porter and Kramer – Creati ng Shared Value: How to reinvent capitalism, and unleash a
wave of innovati on and growth
Side-texts
Idea in brief
Three key ways that companies can create shared value opportunities:
1. By reconceiving products and markets
2. By redefining productivity in the value chain
3. By enabling local cluster development
Every firm should look at decisions and opportunities through the lens of shared value  new approaches
 greater innovation and growth
What is shared value?

Definition: policies and operating practices that enhance the competitiveness of a company while
simultaneously advancing the economic and social conditions in the communities in which it operates.
Shared value creation focuses on identifying and expanding the connections between societal and
economic progress.
Blurring the profit/non-profit boundary

The concept of shared value blurs the line between for-profit and non-profit organizations. New kinds of
hybrid enterprises are rapidly appearing
The connection between competitive advantage and social issues

There are numerous ways in which addressing societal concerns can yield productivity benefits to a firm.
The role of social entrepreneurs

Real social entrepreneurship should be measured by its ability to create shared value, not just social benefit
Creating shared value: implications for Government and Civil Society

The principle of shared value creation cuts across the traditional divide between the responsibilities of
business and those of government or civil society. From society’s perspective, it does not matter what types
of organizations created the value. What matters is that benefits are delivered by those organizations, or
combinations of organizations, that are best positioned to achieve the most impact for the least cost.
A new type of NGO has emerged that understands the importance of productivity and value creation.
Some private foundations have begun to see the power of working with businesses to create shared value.
Government Regulation and Shared value

Regulations can enhance shared value set goals and stimulate innovation:
- They set clear and measurable social goals
- They set performance standards but do not prescribe the methods to achieve them
- They define phase-in periods for meeting standards, which reflect the investment or new-product
cycle in the industry
- They put in place universal measurement and performance reporting systems
- Appropriate regulations require efficient and timely reporting of results, which can then be audited
by the government as necessary
Regulation that discourages shared value:
- Forces compliance with particular practices.
- Mandates a particular approach to meeting a standard
Regulation will be needed to limit the pursuit of exploitative, unfair, or deceptive practices in which
companies benefit at the expense of society.
Introduction
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In recent years business increasingly has been viewed as a major cause of social, environmental, and
economic problems. The presumed trade-offs between economic efficiency and social progress have been
institutionalized in decades of policy choices.
The solution lies in the principle of shared value, which involve creating economic value in a way that also
creates value for society by addressing its needs and challenges.
Government must learn how to regulate in ways that enable shared value rather than work against it. The
purpose of the corporation must be redefined as creating shared value, not just profit per se.
Moving beyond trade-offs

Business and society have been pitted against each other for too long.
A related concept is the notion of externalities (when firms create social costs that they do not have to bear
 society must impose taxes, regulations and penalties).
The concept of shared value recognizes the societal needs, not just conventional economic needs, define
markets. It recognizes that social harms or weaknesses frequently create internal costs for firms.
Shared value is about expanding the total pool of economic and social value.
A shared value perspective focuses on improving growing techniques and strengthening the local cluster of
supporting suppliers and other institutions in order to increase farmer’s efficiency, yields, product quality,
and sustainability.
The Roots of Shared Value

The competitiveness of a company and the health of the communities around it are closely intertwined 
interdependent.
In the old, narrow view of capitalism, business contributes to society by making a profit, which supports
employment, wages, purchases, investments and taxes.
It was not always this way. The best companies once took on a broad range of roles in meeting the needs of
workers, communities, and supporting businesses. As firms moved activities to more and more locations,
they often lost touch with any location. Indeed, many companies no longer recognize a home but see
themselves as global companies.
Companies have overlooked opportunities to meet fundamental societal needs and misunderstood how
societal harms and weaknesses affect value chains.
What has been missed is the profound effect that location can have on productivity and innovation.
How Shared Value is Created

Companies can create economic value by creating societal value  three ways:
- Reconceiving products and markets
- Redefining productivity in the value chain
- Building supportive industry clusters at the company’s location
Virtuous circle of shared value: improving value in one area gives rise to opportunities in the others.
Reconceiving Products and Markets

Society’s needs are huge: health, better housing, improved nutrition, help for the aging etc. Arguably, they
are the greatest unmet needs in the global economy.
In advanced economies, demand for products and services that meet societal needs is rapidly growing.
Whole new avenues for innovation open up, and shared value is created. Society’s gains are even greater,
because businesses will often be far more effective than governments and nonprofits are at marketing that
motivates customers to embrace products and services that create societal benefits, like healthier food or
environmentally friendly products.
For a company, the starting point for creating this kind of shared value is to identify all the societal needs,
benefits and harms that are or could be embodied in the firm’s products.
Meeting needs in undeserved markets often requires redesigned products or different distribution
methods.
Redefining Productivity in the Value Chain
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The congruence between societal progress and productivity in the value chain is far greater than
traditionally believed. The following are some of the most important ways in which shared value thinking is
transforming the value chain, which are not independent but often mutually reinforcing.
- Energy use and logistics: shipping is expense, not just because of energy costs and emissions but
because it adds time, complexity, inventory costs and management costs.
- Resource use: heightened environmental awareness and advances in technology are catalysing
new approaches in areas such as utilization of water, raw materials, and packaging, as well as
expanding recycling and reuse.
- Procurement: when firms buy locally, their suppliers can get stronger, increase their profits, hire
more people, and pay better wages – all of which will bnefit other businesses in the community
- Distribution: profitable new distribution models can dramatically reduce paper and plastic usage.
Similarly, microfinance has created a cost-efficient new model of distributing financial services to
small businesses
- Employee productivity: today companies have learned that because of lost workdays and
diminished employee productivity, poor health costs them more than health benefits do.
- Location: the myth that location no longer matters, because logistics are inexpensive, information
flows rapidly, and markets are global is challenged. This is partly because of the rising costs of
energy and carbon emissions, but also by a greater recognition of the productivity cost of highly
dispersed production systems.
Enabling Local Cluster Development

Productivity and innovation are strongly influenced by clusters, or geographic concentrations of firms,
related businesses, suppliers, service providers, and logistical infrastructure in a particular field – such as IT
in Silicon Valley, cut flowers in Kenya, and diamond cutting in Surat, India.
Firms create shared vale by building clusters to improve company productivity shile addressing gaps or
failures in the framework conditions surrounding the cluster.
A key aspect of cluster building in developing and developed countries alike is the formation of open and
transparent markets. Enabling fair and open markets, which is often best done in conjunction with
partners, can allow a company to secure reliable supplies and give suppliers better incentives for quality
and efficiency while also substantially improving the incomes and purchasing power of local citizens. A
positive cycle of economic and social development results. When a firm builds clusters in its key locations, it
also amplifies the connection between its success and its communities’ success.
The benefits of cluster building apply not only in emerging economies but also in advanced countries.
To support cluster development in the communities in which they operate, companies need to identify
gaps and deficiencies in areas such as logistics, suppliers, distribution channels, training, market
organization and educational institutions.
Efforts to enhance infrastructure and institutions in a region often require collective action  enlist
partners.
Creating Shared Value in Practice

Creating shared value presumes compliance with the law and ethical standards, as well as mitigating any
harm caused by the business, but goes far beyond that. The opportunity to create economic value through
creating societal value will be one of the most powerful forces driving growth in the global economy.
The Next Evolution in Capitalism

Shared value holds the key to unlocking the next wave of business innovation and growth. It will also
reconnect company success and community success in ways that have been lost in an age of narrow
management approaches.
There is nothing soft about the concept of shared value. These proposed changes in business school
curricula are not qualitative and do not depart from economic value creation. Instead, they represent the
next stage in our understanding of markets, competition, and business management.
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2. Hart, Milstein and Caggiano – Creati ng Sustainable Value
Executive Overview
The global challenges associated with sustainable development are multifaceted, involving economic, social
and environmental concerns. These challenges have implication for virtually every aspect of a firm’s
strategy and business model. Firms are ill-equipped to deal with the issue in a strategic manner, because
they frame sustainable development not as a multidimensional opportunity, but as a one-dimensional
nuisance.
We develop a sustainable-value framework that links the challenges of global sustainability to the creation
of shareholder value by the firm. We show how the global challenges associated with sustainable
development can help to identify strategies and practices that contribute to a more sustainable world while
simultaneously driving shareholder value: creation of sustainable value by the firm.
Intro
Global capitalism has not been performing well and is increasingly challenged to include more of the world
in its bounty and protect the natural systems and cultures upon which the global economy depends.
Terminology:
- Global sustainability has been defined as the ability to meet the needs of the present without
compromising the ability of future generations to meet their needs.
- Sustainable development is a process of achieving human development in an inclusive, connected,
equitable, prudent and secure manner.
- A sustainable enterprise is one that contributes to sustainable development by delivering
simultaneously economic, social, and environmental benefits  triple bottom line.
There remains disagreement among managers regarding the specific meaning of an motivation for
enterprise-level sustainability.
A few firms have begun to frame sustainability as a business opportunity, offering avenues for lowering cost
and risk, or even growing revenues and market share through innovation.
Many managers underestimate the strategic business opportunities. To avoid this, managers need to
directly link enterprise sustainability to the creation of shareholder value. Strategies that contribute to a
more sustainable world and simultaneously drive shareholder value: creation of sustainable value for the
firm.
Shareholder Value is a Multidimensional Construct
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Model using two well-known dimensions that are a source of creative tension for firms:
- Vertical axis: the firm’s need to manage today’s business while simultaneously creating tomorrow’s
technology and markets. Tension to realize short-term results while also generating expectations
for future growth.
- Horizontal axis: the firm’s need to grow and protect internal organizational skills and capabilities
while simultaneously infusing the firm with new perspectives and knowledge form the outside.
Tension: need to buffer the technical core so that it may operate without distraction
Four dimensions of performance:

- Lower-left: focus on those aspects of performance that are primarily internal and near-term in
nature: cost and risk reduction
- Lower-right: focus on performance dimensions that are near-term in nature but extends to include
salient stakeholders external to the firm – suppliers and customers in the immediate value chain, as
well as regulators, communities NGOs and the media.
- Upper-left: the firm must be mindful of generating the products and services of the future. This
means developing and acquiring the skills, competencies and technologies that reposition the firm
for future growth. The creation of shareholder value depends upon the firm’s ability to creatively
destroy its current capabilities in favour of the innovations of tomorrow.
- Upper-right: external dimensions associated with future performance. Credible expectations for
future growth are key to the generation of shareholder value.
Firms must perform well simultaneously in all four quadrats of the model on a continuous basis if they are
to maximize shareholder value over time.
Just as the creation of shareholder value requires performance on multiple dimensions, sustainable
development is also a multidimensional challenge. Yet, most managers frame sustainability not as a
multidimensional opportunity, but rather as a one-dimensional nuisance. The multiple challenges
associated with global sustainability, seen through the appropriate business lenses, can help to identify
strategies and practices which improve performance in all four quadrants of the shareholder-value
framework.
Global Drivers of Sustainability

Four sets of drivers related to global sustainability:
- Increasing industrialization and its associated material consumption, pollution, and waste
generation
- Proliferation and interconnection of civil society stakeholders
- Emerging technologies that may provide potent, disruptive solutions that could render the basis of
many of today’s energy- and material-intensive industries obsolete
- Increases in population, poverty and inequity associated with globalization
In short, global sustainability is a complex, multi-dimensional concept that cannot be addressed by any
single corporate action. Creating sustainable value requires that firms address each of the four broad sets
of drivers.
1. Firms can create value by reducing the level of material consumption and pollution associated with
rapid industrialization.
2. Firms can create value by operating at greater levels of transparency and responsiveness, as driven
by civil society.
3. Firms can create value through the development of new, disruptive technologies that hold the
potential to greatly shrink the size of the human footprint on the planet.
4. Firms can create value by meeting the needs of those at the bottom of the world income pyramid
in a way that facilitates inclusive wealth creation and distribution.
Connecting the Dots: the Sustainable Value Framework

Sustainability drivers present opportunities for firms to improve all four dimensions of shareholder value.
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- Growing Profits and Reducing Risk Through Pollution Prevention

The problems of material consumption, waste, and pollution associated with industrialization
present an opportunity for firms to lower cost and risk through the development of skills and
capabilities in pollution prevention and eco-efficiency.
With the appropriate set of skills and capabilities, firms pursuing pollution prevention and waste-
reduction strategies actually do reduce cost and increase profits. Pollution prevention provides
managers with the clearest, fastest way to increase shareholder value by growing the bottom line
for existing businesses through reductions in cost and liability.
- Enhancing Reputation and Legitimacy Through Product Stewardship
Product stewardship extends beyond organizational boundaries to include the entire product life
cycle. It involves integrating the voice of the stakeholder into business processes through extensive
interaction with external parties such as suppliers, customers, regulators, communities, NGOs and
the media  way to both lower environmental impacts across the value chain and enhance
legitimacy and reputation by involving stakeholder in the conduct of on-going operations. By
engaging stakeholders, firms increase external confidence in their intentions and activities, helping
to enhance corporate reputation and catalyse the spread of more sustainable practice within the
business system at large.
- Accelerating Innovation and Repositioning Through Clean Technology
Firms strive to solve social and environmental problems through the internal development or
acquisition of new capabilities that address the sustainability challenge directly. The sustainable
competencies that emerge from the search for clean technologies are central to a firm’s efforts to
reposition its internal skill set for the development and exploitation of future markets. A growing
number of firms have begun to develop the next generation of clean technology to drive future
economic growth. Firms that invest in clean-technology solutions tend to pursue more novel
approaches to long-term challenges and create organizational environments supportive of the
innovation process.
- Crystallizing the Firm’s Growth Path and Trajectory Through a Sustainability Vision
The growing gap between rich and poor, and the unmet needs of those at the bottom of the
economic pyramid, present opportunities for firms to define a compelling trajectory for future
growth. The realization of a more inclusive form of capitalism characterized by two-way dialogue
and collaboration with stakeholders can help to open up new pathways for growth in previously
unserved markets. A sustainability vision that facilitates competitive imagination by creating a
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shared roadmap for tomorrow’s business provides guidance to employees in terms of
organizational priorities, technology development, resource allocation, and business model design.
Listening to the poor and disenfranchised can be a source of creativity and innovation.
Information poverty may be the single biggest roadblock to sustainable development.
Firms that take the time to create a compelling sustainability vision have the potential to unlock
future markets of immense scale and scope
Toward Sustainable Value

The challenge of global sustainability is complex, multidimensional, and emergent.
We recommend the following steps in the pursuit of sustainable value:
- Diagnosis: taking stock of the company portfolio
By assessing a company’s activity in each of the four quadrants of the framework, managers can
assess the degree of portfolio balance. Few firms seem to recognize the full range of sustainable
business opportunities available. Most focus only on the bottom half of the matrix: short-term
solutions tied to existing products and stakeholder groups.
- Opportunity Assessment: strengths and weaknesses in capability
Relatively few established companies have begun to exploit the opportunities associated with the
upper half of the model, the portion focused on building new capabilities and markets. Given that
pursuit of clean technology and markets at the bottom of the pyramid is disruptive in character,
perhaps we should not be surprised that large incumbent firms have not actively blazed these trails
or that entrepreneurs have been likely to seek opportunities to leapfrog existing competitors and
claim undeserved market space. Yet it need not be this way. Some MNCs will be better positioned
than others to pursue clean technologies and bottom-of-the pyramid markets
- Implementation: the design of projects and experiments
To make this opportunity a reality, it is necessary to organize the range of possible activities into
discrete projects and business experiments. We recommend a real-options approach. We also
recommend creating a separate pool of investment capital to fund these initiatives and a separate
organizational entity to house the business experiments aimed at opening up new markets.
Sustainable Value: a Huge Opportunity

The opportunity to create sustainable value – shareholder wealth that simultaneously drives us toward a
more sustainable world – is huge, but yet to be fully exploited. The framework’s simplicity, however, should
not be mistaken for ease of execution: understanding the connections is not the same thing as successfully
implementing the strategies and practices involved.
Stagnant economic growth and stale business models present formidable challenges to corporations in the
years ahead.
Addressing the full range of sustainability challenges can help to create shareholder value and may present
one of the most under-appreciated avenues for profitable growth in the future.
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Week 3 Sustainable Business Models
3. Business cases for sustainability: the role of business model innovati on for corporate
sustainability – Schaltegger, Lüdeke-Freund and Hansen
Abstract
A considerable body of literature deals with the creation of economic value while increasing corporate
environmental and social performance. Some publications even focus on the business case for
sustainability which aims at increasing corporate economic value through environmental or social
measures. The existence of a business case for sustainability is, however, mostly seen as an ad hoc
measure, a supplement to the core business, or simply coincidence. As a contrast, this paper argues that
business model innovations may be required to support a systematic, ongoing creation of business cases
for sustainability. A framework for business model innovation is proposed as a means to strategically
create business cases on a regular basis as an inherent deeply integrated element of business activities.
Keywords
Business case for sustainability; business case drivers; business model for sustainability; sustainability
innovation, radical innovation; corporate sustainability; corporate social responsibility; CSR; sustainability
strategies; proactive environmental strategies; strategic management; framework; conceptual model.
1. Introduction
Companies have a large influence on the economy and life in general, their contribution is necessary for
sustainability. Corporate management is thus a crucial actor in shaping the future development of
companies as well as the economy and society.
The fact that companies are founded and run for economic purposes requires management to develop
most of its societal engagement in relation to the economic goals of the corporation.
This paper proposes that a business case for sustainability can be created by addressing business case
drivers. It argues that to strategically create business cases for sustainability on a continuous basis, requires
an innovative business model which supports te management of voluntary social and environmental
activities in addressing the business case drivers in a systematic manner.
2. What is a business case for sustainability?

A business case: a situation where economic success is increased while performing in environmental and
social issues. This paper focuses on the links between voluntary environmental and social activities and
corporate economic success, and how these links can be managed, advanced, or innovated in order to
improve economic success through voluntary social and environmental activities.  this is what we call the
business case for sustainability.
It is an illusion to believe that any kind of automatic relationship exists between voluntary societal activities
and business success.
A business case for sustainability – as a difference to just a conventional business case or a business case of
sustainability – has the purpose to and does realise economic success through (not just with) an intelligent
design of voluntary environmental and social activities. A business case for sustainability is thus
characterised by three requirements which have to be met:
1. The company has to realise a voluntary or mainly voluntary activity with the intention to contribute
to the solution of societal or environmental problems
2. The activity must create a positive business effect or a positive economic contribution to corporate
success which can be measured or argued for in a convincing way
3. A clear and convincing argumentation must exist that a certain management activity has led or will
to both, the intended societal or environmental effects, and the economic effect. A business case
for sustainability is characterised by creating economic success through a certain environmental or
social activity.
To create a business case for sustainability requires strategic management to identify, create and
strengthen the links between non-monetary social and environmental activities on the one hand and
business or economic success on the other hand.
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In order to achieve such business cases, the formulation and implementation of corporate strategies have
to change, compared to strategies that only strive for ‘market sustainability’ through competitive
advantages in the sense of the resource-based theory of the firm.
Question: how can strategic sustainability management contribute to create and manage business cases for
sustainability, what drivers does it have to address in order to create a business case for sustainability, and
how can business model innovation serve as a framework for this endeavour?
3. Drivers of business cases for sustainability

3.1 The link between voluntary societal activities and corporate economic success
Traditionalist view: firms face a trade-off between (better) environmental or social performance on the one
hand and (worse) economic performance or competitiveness on the other.
The fact that business case potentials are often overseen, even by well-informed corporate professionals,
and the necessity to identify and analyse business case potentials and to manage them in a structured way
is maybe most apparent in production where cleaner production approaches have had difficulties to spread
on a wide basis for the last decades even in companies with large cost saving potentials.
How can profit increasing societal activities, rather than cost increasing measures, be identified and
integrated with the core business approach of a company?
3.2 Drivers of business cases

The drivers of a business case for sustainability are variables which directly influence economic success and
therefore are related to the drivers of a conventional business case.
Core drivers for the business case for sustainability:

- Cost and cost reduction
- Risk and risk reduction
- Sales and profit margin
- Reputation and brand value
- Attractiveness as employer
- Innovative capabilities
Important, neglected issue when assessing the business or economic effect of environmental and societal
activities: their path of influence can be quite indirect, involving non-market links and actors such as
political initiatives, and NGOs. The variety of possible relationships and the different character of
sustainability issues requires:
- To distinguish different strategic positions towards integrating the societal and environmental
dimensions with business.
- To clarify if and how specific socially or environmentally relevant activities influence the business
model of a firm.
4. From business cases to business models for sustainability

4.1 The business model as a platform for creating business cases for sustainability
A business model of a company is a somehow elusive idea of how business is conducted in order to create
and capture economic value.
Moving from single to continuous business case creation may be supported by a business model rationale
which positions sustainability as an integral part of the company’s value proposition and value creation
logic.
To map the links between business case drivers, corporate sustainability strategies and business models the
following three questions are crucial:
- Does a corporate sustainability strategy comprise activities and projects which explicitly address
the business case drivers?
- Does the way of addressing these drivers conform to the characterisation of a business case for
sustainability?
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- Does the way a corporate sustainability strategy address business case drivers lead to or require
business model innovations in order to achieve economic success?
To offer a management approach that identifies the crucial links between the drivers of a business case for
sustainability, the corporate sustainability strategy and the business model, two types of interrelations
have to be characterised:
- Links between corporate sustainability strategies and business case drivers
- Links between business case drivers and the business model
4.2 Links between corporate sustainability strategy and business case drivers
Various taxonomies and typologies of sustainability strategies have been established representing a
continuum ranging from defensive to proactive approaches.
RDAP scale: as the reactive strategy entirely neglect environmental and social issues, only the three
strategy types defensive, accommodative and proactive are helpful in analysing strategy and business case
driver interrelations:
- Defensive (limited integration): defensive strategic behaviour is often a reaction on (perceived)
cost-constraints. The main motivation is the need to comply with legislation.
- Accommodative (integration): this strategy reflects a rather cautious modification of internal
processes and the modest consideration of environmental or social objective such as
environmental protection, eco-efficiency, or occupational health and safety.
- Proactive (full integration): proactive strategies integrate environmental or social objectives as part
of the core business logic in order to contribute to sustainable development of the economy and
society. The core business and thus all business processes and the full product range are directed
towards sustainability.
4.3 The links between business model and business case drivers
The above outlined interrelations between corporate sustainability strategies and the business case drivers
illustrate some of the complexities of managing this translation.
Two different causalities between sustainability strategies and the business model may be considered:
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1. If a company implements a strategy aiming at the business case for sustainability the business
model may have to change (directly or indirectly)
2. The business model also determines and constrains corporate strategy and the business case for
sustainability.
In other words, a company which tries to improve its sustainability performance has to change its business
model, however, incremental or radical, which can turn out to be the decisive factor for succeeding in
creating one or many business cases for sustainability.
In order to map out interrelations between business case drivers and the business model, a general
business model concept has to be introduce. Four central pillars can be identified when reviewing relevant
literature:
1. Value proposition
2. Customer relations
3. Infrastructure and network of partners
4. Financial aspects (cost and revenue structures)
When it comes to sustainability-oriented business model innovation it is essential to understand and
manage the links between these pillars and the business case drivers.
5. The role of business model innovation

5.1 Introducing business model innovation
The business model is a strategic asset to improve firm performance. However, the current discourse
widely ignores issues of corporate sustainability. To fill this gap, a basic understanding of what constitutes
business model innovation has to be related to corporate strategies, the above defined drivers and the
concepts of the business case for sustainability.
The most important finding of the study of Mitchell and Coles refers to a strategic leverage effect of
business model innovation. The identified cost and differentiation strategies to be driving outperformance,
whereas the new insight was that top performers were using business model innovations to amplify their
strategic effectiveness.
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5.2 Degrees of business model innovation
Mitchell and Coles propose a classification of business model innovations which distinguishes
improvement, catch-up, replacement and actual innovation. All of these steps of improvement are
differentiated:
1. Business model adjustment: changes of only one or a small number of business model element(s)
2. Business model adoption: changes that mainly focus on matching competitors’ value propositions
3. Business model improvement: when substantial parts of the business model elements are changed.
The value proposition remains unaltered
4. Business model redesign: an improvement leads to a completely new value proposition
6. An integrated framework of sustainability strategy, business case drivers and business model
innovation
This section introduces an integrated framework for the business case for sustainability by combining
sustainability strategies, the degrees of business model innovation and business case drivers.
This framework must be combined with a certain degree of business model innovation:
- Defensive strategies with slight degrees of business model adjustment or adoption protect the
current business model
- Accommodative strategies go along with a change and some improvement of the business model,
thus exerting some influence on business case drivers by experimenting with the current model
- As a contrast, proactive strategies leading to (actual) business model redesign address many
business case drivers strongly and continuously, with the effect of regular creations of business
cases for sustainability
7. Discussion and outlook

A business case of sustainability is often described as a situation where economic success is increased while
performing in environmental and social issues. A business case for sustainability is created only if economic
success through voluntary social and environmental activities is achieved.
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A good understanding of how the drivers of a business case can be positively influenced with societal and
environmental activities is required.
Sustainable development requires a fundamental change and development of the business model of the
company.
Based on the understanding of a business case for sustainability, a business model for sustainability can be
defined as supporting voluntary, or mainly voluntary, activities which solve or moderate social and/or
environmental problems.
Despite the promises of business model innovations being the next big step of strategic management, it has
to be recognised that this kind of innovation often faces significant barriers. Conflicts:
- With the prevailing business model
o The resistance of managers being afraid that the acknowledgement of their personal
contribution to the company might decrease
o The influence of the dominant business logic on the information that flows into and
circulates within the company.
- With the underlying asset configuration
o Asset configuration may not be changed. Asset allocation and exploitation are key strategic
issues directly related to managers decision-making and information availability.
Accommodative and proactive business model innovations might be blocked because of
allocation in principles in favour of existing technologies with high gross margins.
- Missing clarity about the ‘right’ business model to exploit innovations.
Sustainability-oriented innovations are obviously predisposed to not fit with the dominant logic of an
established business model. However, accommodative and proactive sustainability strategies may help
creating and adopting new business models which support the continuous and systematic creation of
business cases for sustainability.
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4. A literature and practi ce review to develop sustainable business model archetypes –
Bocken, Short, Rana and Evans
Abstract
Eco-innovations, eco-efficiency and CSR practices define much of the current industrial sustainability
agenda. While important, they are insufficient in themselves to deliver the holistic changes necessary to
achieve long-term social and environmental sustainability. How can we encourage corporate innovation
that significantly changes the way companies operate to ensure greater sustainability?
Sustainable business models (SBM) incorporate a triple bottom line approach and consider a wide range of
stakeholder interests, including environment and society. They are important in driving and implementing
corporate innovation for sustainability, can help embed sustainability into business purpose and processes,
and serve as a key driver of competitive advantage.
Many innovative approaches may contribute to delivering sustainability through business models, but have
not been collated under a unifying theme of business model innovation. The literature and business
practice review has identified a wide range of examples of mechanisms and solutions that can contribute to
business model innovation for sustainability. The examples were collated and analysed to identify defining
patterns and attributes that might facilitate categorisation.
Sustainable business model archetypes are introduced to describe groupings of mechanisms and solutions
that may contribute to building up the business model for sustainability. The aim of these archetypes is to
develop a common language that can be used to accelerate the development of sustainable business
models in research and practice. The archetypes are: Maximise material and energy efficiency; Create value
from ‘waste’; substitute with renewables and natural processes; deliver functionality rather than
ownership; adopt a stewardship role; encourage sufficiency; re-purpose the business for
society/environment’ and develop scale-up solutions.
Keywords
Business model innovation, industrial sustainability, value creation, stakeholders, sustainable consumption,
sustainable production
1. Background
With prospects of a rising global population, accelerating global development and associated increasing
resource use and environmental impacts, it seems increasingly apparent that business as usual is not an
option for a sustainable future.
A holistic approach is required to tackle the challenges of a sustainable future.
Features of a route to a sustainable economy:
- System that encourages minimising of consumption
- System designed to maximise societal and environmental benefit
- A closed-loop system where nothing allowed to be wasted or discarded into the environment
- A system that emphasises delivery of functionality and experience, rather than product ownership
- A system designed to provide fulfilling, rewarding work experience for all that enhances human
creativity/ skills
- A system built on collaboration and sharing, rather than aggressive competition
These types of changes require a fundamental shift in the purpose of business and almost every aspect of
how it is conducted.
With careful business model redesign, it is possible for mainstream businesses to more readily integrate
sustainability into their business and for new start-ups to design and pursue sustainable business from the
outset.
This paper uses a systematic review approach to formalise a categorisation of business model innovations
to deliver sustainability
1.1 What is a business model?

In this paper, a business model is defined by three main elements:
- Value proposition: product/service, customer segments and relationships
- Value creation and delivery: key activities, resources, channels, partners, technology
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- Value capture: cost structure and revenue streams
1.2 Why are business models important for sustainability?

Not enough has been done for sustainability. Sustainable business models can serve as a vehicle to
coordinate technological and social innovations with system-level sustainability. One of the key challenges
is designing business models in such a way that enables the firm to capture economic value for itself
through delivering social and environmental benefits.
1.3 What is business model innovation for sustainability?

What actually constitutes a business model innovation is still somewhat ambiguous.
Business model innovations for sustainability are defined as: innovations that create significant positive
and/or significantly reduced negative impacts for the environment and/or society, through changes in the
way the organisation and its value-network create, deliver value and capture value or change their value
propositions
1.4 Research gaps and objectives

The lack of a common source of information on business model innovations makes it difficult for
researchers and practitioners to gain an overview of the scope of business model innovation for
sustainability. This potentially limits research, education and training in this subject area, and hence limits
practical experimentation and implementation in industry.
A categorisation of sustainable business model archetypes is developed to describe groupings of
mechanisms and solutions that might contribute to building up the business model for sustainability and
identify gaps for future research agenda.
2. Method for categorising the mechanisms for delivering sustainability

This section discusses how the sustainable business model archetypes are developed form academic
literature and examples in practice.
2.1 Criteria for selection and categorisation of innovation examples

The main aims of the categorisation of sustainable business model archetypes are to:
1. Provide a means of categorising and explaining business model innovations for sustainability
2. Define generic mechanism for actively assisting the business model innovation process for
sustainability
3. Define a clearer research agenda for business models for sustainability
4. Provide exemplars which explain and communicate business model innovations to businesses to
de-risk the business model innovation process.
The archetypes need to be representative of underlying mechanisms of transformation in business model
innovation, clear and intuitive, mutually exclusive and explanatory, but not overly prescriptive.
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2.2 Literature review – conceptual frameworks for categorising SBM innovations
2.3 Identifying (sustainable) business model examples from practice

To identify sustainable business models developed in practice, a review of secondary literature on practice
was conducted. Industrial practice in (sustainable) business model development was investigated, by
exploring:
1. Sustainability rankings
2. Websites of organisations involved in industrial sustainability
3. Case studies on business models and sustainable business models (SBM)
2.4 Development of archetypes based on literature and practice (coding)

To address shortcomings of alternative categorisations from the literature, a deeper categorisation of
sustainable business model archetypes is introduced to explain different mechanisms for delivering
sustainability.
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3. Results: the sustainable business model archetypes

1. Maximise material productivity and energy efficiency
- Definition: do more with fewer resources, generating less waste, emissions and pollution
- Why selected: mitigate environmental impact of industry by reducing the demand for energy and
resources so reducing demand for primary extraction and resource depletion and reducing waste
and emissions
- Examples:
o Lean manufacturing
o Factor 4 and Natural Capitalism
- Value proposition: products or services that use fewer resources, generate less waste and
emissions and create less pollution than products/services that deliver similar functionality
- Value creation and delivery: activities and partnerships aimed at using fewer resources and
generating little waste, emission and pollution. Focus is on product and manufacturing process
innovation, but may extend to wider changes. New partnerships and value network
reconfigurations to improve efficiencies and reduce supply chain emissions
- Value capture: costs are reduced through the optimised use of materials and reducing waste, and
compliance leading to increased profits and competitive pricing advantage. Positive contribution to
society and environment through a minimised environmental footprint
2. Create value from ‘waste’

- Definition: The concept of ‘waste’ is eliminated by turning waste streams into useful and valuable
input to other production and making better use of under-utilised capacity
- Why selected: Rather than seeking to reduce waste to a minimum, it seeks to identify and create
new value form what is currently perceived as waste
- Examples:
o Industrial symbiosis
o Closed-loop business models
o Cradle-to-cradle
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o Under-utilised assets and capabilities
- Value proposition: The concept of ‘waste’ is eliminated by turning existing waste streams into
useful and valuable input to other production
- Value creation and delivery: Activities and partnership to eliminate life cycle waste, close material
loops and make best use of under-utilised capacity. Introduction of new partnerships (e.g. recycling
firms), potentially across industries, to capture and transfer waste streams
- Value capture: Economic and environmental costs are reduced through reusing material, and
turning waste into value. Positive contribution to society and environment through reduced
footprint, reduced waste and reduced virgin materials use.
3. Substitute with renewables and natural processes

- Definition: Reduce environmental impacts and increase business resilience by addressing resource
constraints ‘limits to growth’ associated with non-renewable resources and current production
systems
- Why selected: Reduce environmental impact of industry by substitution with renewable resources
and natural processes to create significantly more environmentally benign industrial processes
- Examples:
o Substitution with renewable (non-finite) resources
o Local renewable energy solutions
o Environmentally benign materials and production processes
- Value proposition: Reduce environmental impacts and increase business resilience by addressing
resource constraints associated with non-renewable resources and manmade artificial production
systems
- Value creation and delivery: Innovation in products and production process design by introducing
renewable resources and energy and conceiving new solutions by mimicking natural systems. New
value networks based on renewable resource supply and energy systems. New partnerships to
deliver holistic ‘nature inspired’ solutions.
- Value capture: Revenue associated with new products and services. Value for the environment is
captured through reducing use of non-renewable resources, reducing emissions associated with
burning fossil fuels, reducing synthetic waste to land-fill.
4. Deliver functionality, rather than ownership

- Definition: Provide services that satisfy users’ needs without having to won physical products.
- Why selected: this archetype is about shifting substantially towards the pure service model. The
product is still important, but the customer experience is fundamental to the offering or value
proposition.
- Examples: Xerox Inc’s provision of photocopiers and services
- Value proposition: provide services that satisfy user needs without users having to own physical
products. Business focus shifts form manufacturing ‘stuff’ to maximising consumer use of products,
so reducing production throughput of materials, and better aligning manufacturers’ and
consumers’ interests.
- Value creation and delivery: Delivery through product-service offerings require significant changes
within the firm to deliver this and may incentivise redesign for durability, reparability and
upgradability. Potentially, more direct consumer contact and consumer education to shift away
from ownership. Supply chains become more integrated.
- Value capture: Consumers pay for the use of the service, not for ownership of products. Cost of
ownership of physical products are borne by the company and/or partners. This can enable
consumers to access previously expensive products, so expanding the market potential of new
innovations.
5. Adopt a stewardship role

- Definition: Proactively engaging with all stakeholders to ensure their long-term health and well-
being
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- Why selected: This archetype seeks to maximise the positive societal and environmental impacts of
the firm on society by ensuring long-term health and wellbeing of stakeholders.
- Examples:
o Upstream stewardship examples: often a supplier accreditation programme that drives
more ethical or sustainable business practices at the grass-roots level
o Downstream stewardship examples: proactively tackling the health issues of consumers
- Value proposition: Manufacture and provisions of products and services intended to genuinely and
proactively engage with stakeholders to ensure their long-term health and well-being. Broader
benefits to stakeholders often become an important aspect of the value proposition by better
engaging the consumer with the full story of production and the supply chain.
- Value creation and delivery: Ensuring activities and partners are focused on delivering stakeholder
health and well-being. Production systems and suppliers selected to deliver environmental and
social benefits. Network reconfiguration may require alternative suppliers. To achieve scale, use of
third-party certification may facilitate implementation and monitoring.
- Value capture: Stewardship strategies can generate brand value and potential for premium pricing.
Stakeholder well-being and health generate long-term business benefits for the company. Healthy
customers are good for the firm and for society, healthy happy workers may claim less sick days
and may be more productive, and secure suppliers ensure more resilience.
6. Encourage sufficiency
- Definition: Solutions that actively seek to reduce consumption and production.
- Why selected: Academics and NGOs argue that radical reduction in consumption and fundamental
changes in Western economic models are the only solution for a sustainable future.
- Examples:
o Energy saving companies
o Product durability and longevity
o Market places for second-hand goods
o Frugal business models
- Value proposition: Product and service solutions that seek to reduce demand-side consumption and
hence reduce production (e.g. durable, modular, education about reduced consumption). The focus
of such innovation is on the customer relationship and influencing consumption behavior.
- Value creation and delivery: Ensuring activities, partners and customer relations are focused on
consuming less, wasting less and using products longer. This may involve product redesign for
durability. It will require a fundamental shift in promotion and sales (no discounting, overselling);
supplier selection based on durability; and incentive systems to discourage
‘over-selling’/obsolescence.
- Value capture: Profitability (premium pricing), customer loyalty, and increased market share
realised from provisions of better products (longer lasting, durable). Societal and environmental
benefits captured: educated society, using less product, reuse across generations.
7. Re-purpose the business for society/environment

- Definition: Prioritizing delivery of social and environmental benefits rather than economic profit
maximisation, through close integration between the firm and local communities and other
stakeholder groups. The traditional business model where the customer is the primary beneficiary
may shift.
- Why selected: This archetype could contribute to changing the fundamental purpose of businesses
to deliver environmental and societal benefits, and therefore drive global, economy-wide change.
- Examples: social enterprises
- Value proposition: Prioritising delivery of social and environmental benefits rather than economic
profit maximisation, through close integration between the firm and local communities and other
stakeholders.
- Value creation and delivery: Creating societal benefits and environmental benefits through
activities, channels and partners. Integrating business with stakeholders through participatory
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business approaches, which may include non-traditional business partnerships and embracing
employee ownership.
- Value capture: A meaningful enterprise, which delivers nutrition, health, and educations at a low
environmental cost, while being embedded in community and employment rich. This may provide
resilience by supporting stakeholders in times of growth and downturn.
8. Develop scale-up solutions

- Definition: Delivering sustainable solutions at a large scale to maximise benefits for society and the
environment
- Why selected: consider the scale-up and widespread presence of business models for sustainability
- Examples:
o Franchising
o Licensing
o Collaborative models
- Value proposition: Scaling sustainability solutions to maximise benefits for society and the
environment
- Value creation and delivery: Ensuring a sustainable business model solution can achieve scale by
employing the right channels, and partnering with others. New, and potential unusual partners
(e.g. government for infrastructure change) and business relationships are required to scale the
business.
- Value capture: Ensuring a variable (e.g. franchising, licensing) or fixed (mergers and acquisitions)
fee is paid for scaling up a solution/venture and that other mutual benefits between partners are
achieved through scaling up (e.g. market penetration)
4. Discussion
This paper provides an approach, through the categorisation of eight archetypes, for linking the theoretical
concept of business model innovation to the practical transformation mechanisms emerging for delivering
industrial sustainability.
The research process identified emerging themes in the study of sustainable business models. There are
some limitations to the proposed categorisation:
1. The approach of using business model archetypes is reflective
2. The archetypes currently have a stronger emphasis on environmental innovations reflecting the
state of practice to date
3. As the area of sustainable business models is emerging in academia, an inherent issue with the data
collection was the dispersion of journal articles, which necessitated and iterative approach of
adding additional search criteria.
This paper defines a research agenda for sustainable business models by bringing together what are
currently fairly disparate silos of literature in the various areas of sustainability research.
5. Conclusions
The archetypes aim to categorise and explain business model innovations for sustainability, provide
mechanisms to assist the innovation process for embedding sustainability in business models; define a
clearer research agenda for business models for sustainability; and provide exemplars for business to de-
risk the SBM innovation process.
The sustainable business model archetypes are viewed as a starting point to broaden and unify the
research agenda for sustainable business models.
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Week 4 Social Value
5. Zahra, Gedajlovic, Neubaum, Shulman – A typology of social entrepreneurs: Moti ves,
search processes and ethical challenges
Abstract
Social entrepreneurship has been the subject of considerable interest in the literature. This stems from its
importance in addressing social problems and enriching communities and societies. In this article, we
define social entrepreneurship; discuss its contributions to creating social wealth; offer a typology of
entrepreneurs’ search processes that lead to the discovery of opportunities for creating social venutres;
and articulate the major ethical concerns social entrepreneurs might encounter. We conclude by outlining
implications for entrepreneurs and advancing an agenda for future research, especially the ethics of social
entrepreneurship.
1. Executive Summary
Social entrepreneurs make significant and diverse contributions to their communities and societies,
adopting business models to offer creative solutions to complex and persistent social problems. We
propose that social entrepreneurship ‘encompasses the activities and processes undertaken to discover,
define and exploit opportunities in order to enhance social wealth by creating new ventures or managing
existing organizations in an innovative manner.
We highlight social wealth as a metric for measuring the contributions of social entrepreneurship within the
context of total wealth maximization. To us, total wealth comprises both economic and social wealth.
We identify three types of social entrepreneurs:

- social bricoleur: focus on discovering and addressing small-scale local social needs
- social constructionist: exploit opportunities and market failures by filling gaps to underserved
clients in order to introduce reforms and innovations to the broader social system
- and social engineer: recognize systemic problems within existing social structures and address
them by introducing revolutionary change
We propose that these three types of social entrepreneurs vary in how they discover social opportunities,
determine their impact on the broader social system, and assemble the resources needed to pursue these
opportunities. We also discuss ethical issues to each type of social entrepreneur.
Key contribution: highlighting key ethical concerns encountered when uniting economic thinking with the
desire to generate social wealth. Because the goals of social ventures are deeply rooted in the values of
their founders, balancing the motives to create social wealth with the need for profits and economic
efficiency can be tricky.
Social entrepreneurship is an important topic that has sparked ongoing discussion and debate. Objectives
of this article:
We build on the work of Hayek, Kirzner and Schumpeter to advance a typology that identifies three types of
social entrepreneurs.
We used the proposed typology of social entrepreneurs to explore various ethical issues encountered in
practice.
2. The importance and domain of social entrepreneurship

Despite the growing scholarly interest in social entrepreneurship, there is no clear definition of its domain.
Most existing definitions imply that social entrepreneurship relates to exploiting opportunities for social
change and improvement, rather than traditional profit maximization.
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In reflecting on the 20 definitions presented in table 1, we believe any definition, measurement or

evaluation of social entrepreneurship should reflect both social and economic considerations. We therefore
propose the broader term ‘total wealth’.
The total wealth standard illustrates how entrepreneurial entities can have various gradations or
combinations of both economic and social wealth generation. At one extreme, an entrepreneurial entity
may focus purely on economic wealth creation without regard to social wealth creation. At the other
extreme, a social entrepreneur may dedicate his/her resources exclusively to social wealth generation,
ignoring economic wealth creation. The total wealth standard, with its demarcation of economic and social
wealth, can be useful for scholars, donors and practitioners as they evaluate both economic and social
opportunities and ventures.
Defining social entrepreneurship require appreciating the motivations of individuals and groups who take
the risks associated with conceiving, building, launching and sustaining new organizations and business
models. This means certain individuals with particular values, capabilities and skills will be attracted to
social entrepreneurship, search for opportunities, and innovative organizational responses to create social
wealth. By integrating these observations, we suggest the following definition:
Social entrepreneurship encompasses the activities and processes undertaken to discover, define, and
exploit opportunities in order to enhance social wealth by creating new ventures or managing existing
organizations in an innovative manner.
3. Typology of social entrepreneurship

Our proposed definition of social entrepreneurship underscores the diverse motives, the types of ventures
created, and organizational activities (or strategies) designed to enhance social wealth. Our typology sets
the stage for recognizing the potential antecedents, processes and consequence of different types of social
entrepreneurship.
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4. Ethics of social entrepreneurship

Concerns persist over the ethics of social entrepreneurship. While an entrepreneurial orientation can
produce desirable change, its effects could also leave clients with compelling needs unserved, marginalized,
or force some to pay for services that others may get at a lower rate. While social entrepreneurs are driven
by an ethical obligation and desire to improve their communities and societies, egoism can drive them to
follow unethical practices. Each of the three types faces unique ethical challenges. These depend on: their
motives, the resources required to pursue their ambitions, and the governance and control mechanisms in
place to regulate their behaviours.
4.1 Social Bricoleur

Generally noble motives. Their small-scale operations and limited resource needs reduce the pressure to
revert to unethical practices to obtain the resources necessary to sustain their operations.
One of the most serious ethical concerns is the efficiency of the allocation process they use in creating a
public good. Also, what are the implications of sub-optimal prcing on the quality, availability and delivery of
services rendered?
4.2 Social Constructionists

The motives and ambitions of social constructionists are complex and multi-faceted. The need for greater
resources to accomplish their objectives, matched with the goal of transforming social institutions, may
prompt some social constructionists to cut ethical corners.
4.3 Social Engineers

Social engineers may place their egos and needs ahead of their ventures or the constituents they serve.
Many social engineers are motivated by the highest ideals of ‘doing good’. But what happens when this is
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not the case? or when the values of the social engineer differ radically from prevailing societal morals and
norms?
5. Discussion
In this article, we have defined social entrepreneurship, explained the major reasons for the growing
interest in it, defined it, and identified three major social entrepreneurial types. We have also discussed
some key ethical issues that arise from the practice of social entrepreneurship.
5.1 Managerial implications

Our article encourages social entrepreneurs to keep the goal of maximizing social wealth in mind and urges
them not to get caught up in the elegance or novelty of their own creation. Further, even though the
pursuit of opportunities to increase income might be alluring, these activities should not be undertaken if
they diminish the social venture’s ability to serve its constituency.
The lack of oversight and the potential for unethical actions should also encourage social entrepreneurs to
adopt effective mechanisms that help to monitor their ventures.
Given the fundamental differences in the strategic intent and organizational needs of particular social
entrepreneurs, we have underscored the need for distinct managerial styles in each of the three types.
This article also reinforces the importance of opportunity recognition in the realm of social
entrepreneurship. It encourages social service providers and nascent social entrepreneurs to explore and
integrate models of discovery and entrepreneurship into their operations.
5.2 Future research directions

- This article highlights a further need to articulate the domain of social entrepreneurship and outline
several criteria by which this delineation could be achieved. Definitions of social entrepreneurship
should incorporate both economic and social outcomes. Future researchers should clarify the
meaning and dimensions of the concept of social wealth.
- Social entrepreneurs and their ventures need to be studied closely in future research.
- The antecedents of social entrepreneurship require careful analysis which might include societal,
organizational and individual variables.
- Future research would also benefit from studying the contextual variables that influence different
social entrepreneurial types.
- Ethical transgressions can hamper entrepreneurs’ ability to create social wealth. As a result, the
ethical issues associated with different social entrepreneurial types deserve thoughtful analysis.
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6. Stevens, Moray and Bruneel – The Social and Economic Mission of Social Enterprises:
Dimensions, Measurement, Validati on, and Relati on
Abstract
Social entrepreneurs have a dominant social mission and generate revenue to ensure financial viability.
However, most research treats the extent to which social entrepreneurs actually adhere to social and
economic mission as a black box. Performing higher order confirmatory factor analysis on a sample of social
enterprises, this study identifies dimensions and validates measures for understanding and delineating
social and economic missions, and shows how two constructs relate to each other. The theoretical
untangling and the empirical validation of social and economic missions as distinct construct – and multiple
potential constellations of attached relative importance – opens up opportunities for quantitative
hypothesis testing research in social entrepreneurship.
Introduction
Scholars, governments, media and NGOs increasingly recognize the importance of social entrepreneurial
approaches to problems the world is facing today.
Social enterprises explicitly focus on creating social value. Social enterprises place high value on the
creation of social value and vary in their ambition for economic value creation.
The question to what extent the social and economic missions indeed refer to distinct constructs and how
they relate to each other has not been investigated to date.
We argue that the tension between the social and economic missions of social enterprise is reflected in the
organization’s goals values and identity.
This research is important and contributes to the literature in several ways:
- It contributes to the existing discussion about the qualification of the social at the organizational
level
- By revealing the relation between the social and economic missions, we go beyond merely defining
and measuring. We provide insights into how the two constructs relate to one another – as
opposing forces or complementary aspects of the organization.
The Social in Social in Social Entrepreneurship

There is a general consensus that social enterprises focus on the social mission or the creation of social
value and consequently scholars define social entrepreneurship as ‘entrepreneurship toward creating social
value’. However, we found only a few social entrepreneurship paper, specifying the concept of social value,
which seem to indicate a tautological problem. How can we conceptualize the characteristic features of a
social enterprise if we do not clearly delineate what we mean by social and economic value?
Researchers have aimed to resolve this tautological problem in two ways:
- A group of researchers have taken a pragmatic approach by being specific in defining social value in
their particular research context.
- Entrepreneurs have adopted generic conceptualizations of social value which is supported by the
idea that ‘social’ means very different things to different people.
Building on the generally accepted theoretical assumption that social entrepreneurs have a dual social and
economic mission, this paper identifies and validates measures for capturing the social mission and
economic mission in a social entrepreneurship context. To deepen our understanding of these mission, we
are further interested in how both constructs relate to each other.
Understanding Social and economic mission

We conceptualize the social and economic missions of social enterprises as multidimensional constructs: it
consists of a number of interrelated attributes or dimension and exists in multidimensional domains.
Four conditions have to be met to achieve the construct clarity of the social mission and economic mission:
1. Reaching construct clarity requires a clear definition of the construct
2. The scope conditions of new constructs have to be established because organizational constructs
lack universality and tend to be highly sensitive to and contingent on contextual conditions
3. Studies that develop new constructs should establish the relation with other constructs.
4. The construct, its definition, its scope conditions and its relationship to other constructs must all
make sense in a logically consistent manner.
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Values
A key dimension that informs on the social and economic missions of a social enterprise, is the level of
other-regarding and self-regarding values of the social entrepreneur. In other words, to what extent is
behaviour ultimately self-interested or do individuals act in ways that benefit others, even to their own
disadvantage? Individuals who place a strong weight on others’ interest will tend to associate together in
the context of organizations focused on maximizing the benefits for others in society.
We argue that the level of self- and other-regarding values informs us about the social and economic
missions of social enterprises.
Organizational Identity
Researchers define organizational identity as member’s’ shared perceptions about their organization’s
central, distinctive, and enduring qualities. Basically, organizational identity is the answer to the question
‘who are we?’
The literature acknowledges that the social in SE can be reflected in the organization and its characteristics.
A key dimension of organizations that informs us about the social and economic mission of the social
enterprise is the level of normative and utilitarian identity. Many organizations are hybrids composed of
multiple identities.
We argue that the level of normative and utilitarian identity can reflect the social and economic missions of
social enterprises.
Attention to Social and Economic Goals

Social entrepreneurship is an approach to understanding social needs. The attention to social and economic
goals in SE informs us about the social and economic mission of the social enterprise.
Carroll represents four distinct types of responsibilities for firms to consider, giving insight in their attention
toward social and economic goals:
1. Economic: the production of goods or the delivery of services society expects and to sell them at a
profit.
2. A business has to fulfil its economic mission within the framework of legal requirements
3. Ethical responsibilities refer to society’s expectations over and above legal requirements, which are
considered to be intrinsically good
4. The discretionary social activities are of a no enforced, philanthropic nature referring to those
responsibilities for which society has no clear-cut message for business
This study theorizes that the social and economic missions are distinct reflective or latent higher order
constructs encompassing the dimensions organizational identity, values and goals.
Methodology
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Population and Sample
Sample Characteristics
Measures
- Other- and Self-Regarding values
- Normative and Utilitarian Identities
- Attention to Social and Economic Goals
Pretest
Data analysis
Model Fit and Construct Validity
Structural model
Discussion, Limitations and Further Research

This paper set out to conceptually capture dimensions for the social and economic missions in social
enterprises as they are inherently established to achieve both missions at the organizational level.
The significant negative relation between the social and economic mission suggest that the constructs are
at wo ends of a continuum. This result may have various explanations.
- Future research should empirically examine the performance implications of treating the
relationship between the social and economic missions of social enterprises as a continuum or
orthogonal.
- Future research should also address some of the limitations inherent in this first study of the social
and economic missions of social enterprises.
1. it is important to test the wider generalizability of these constructs in more demographically
diverse samples and in diverse organizational settings, going beyond social enterprises.
2. understanding and measuring the social and economic missions as latent constructs is
potentially useful for studying the impact beyond values, identity, and attention to goals
3. an important limitation of the study is that the measures capture the perceptions of CEOs or
their delegates about the social and economic mission of their enterprise, which does not
necessarily reflect reality
4. it is important to note that one of the measures, the attention to social and economic goals,
employs a forced choice or ipsative scale format
5. longitudinal research is clearly needed to assess whether the relationship between social and
economic missions remains the same over time.
Conclusion
In its development and validation of dimensions and measures of social and economic mission, this paper is
a step in the direction of disentangling the relation between the social and the economic missions of social
enterprises. In this perspective, the proposed dimension of values, identity, and attention to organizational
goals and measures are not to be used in a normative sense. Investigating the degree to which social and
mainstream entrepreneurs adhere to the social and economic missions in relation to other organizational
and institutional level characteristics are the challenges ahead. Our hope is that this study may inspire
entrepreneurship scholars to embark on substantive research addressing these challenges.
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Week 5 Environmental value and the circular economy
7. Gast, Gundolf and Cesinger – Doing business in a green way: a systemati c review of the
ecological sustainability entrepreneurship literature and future research directi ons
Abstract
In line with an intensified call for conducting business in a greener and more sustainable way, sustainability-
related entrepreneurship has become an important subfield of entrepreneurship research. The variety of
terms, such as ‘sustainable entrepreneurship’, ‘ecopreneurship’, ‘environmental
entrepreneurship/enviropreneurship’ and ‘green entrepreneurship’, reflects the fragmented and
inconsistent finding of this research field. Based on the one-pillar model of sustainable development, i.e.
ecological sustainability, we present the first systematic review of the literature on ecological sustainable
entrepreneurship. This analysis of 114 scientific articles reveals a strong focus on the drivers of engagement
in ecological sustainable entrepreneurship, the drivers of conducting business in an ecological sustainable
way, the strategic actions taken by ecological sustainable enterprises, and the outcomes, enabling factors
and challenges of ecological sustainable entrepreneurship. Based on this thematic clustering, we develop
an integrative framework for ecological sustainable entrepreneurship and a coherent agenda for future
research. This work may help researchers to take stock of the existing literature and advance this research
field.
1. Introduction
Today’s consumers and producers attempt to make the world a cleaner and greener place to live in and
growing commitments to sustainable principles as well as higher demand for green products and services
can be observed. Society has recognized the need to incorporate sustainability and environmental concerns
into ‘considerations of the bottom line’. Beyond traditional economic concerns, societal and environmental
issues should be taken into account.
Brundtland Report: starting point of attention paid to environmental dilemmas, introduced three-pillar
model of sustainable development. The one-pillar model of sustainable development, which prioritizes the
ecological dimension, is gaining momentum.
Since the entrepreneurship literature on ecological sustainability is rather young, emergent and
fragmented, scholars do not yet agree on a definition of this phenomenon. The literature proposes several
labels for the concept of ecological sustainable entrepreneurship:
- sustainable entrepreneurship
- ecopreneurship
- environmental entrepreneurship/enviropreneurship
- green entrepreneurship
 all refer to entrepreneurs and businesses that base their activities on sustainable, environmentally
friendly, and green principles, searching to minimize their impact on the environment.
Our systematic review presents a comprehensive analysis of the state of the field of ecological sustainable
entrepreneurship and develops an integrative framework. This framework is based on core principles of
entrepreneurship and will thus help achieve convergence among scholars.
2. Foundations and state of the research field

2.1 Delineating sustainability and sustainable development
Brundtland: sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs. This definition rests on the three
pillars: ecology, society, economy.
In the concentric circles approach, these three pillars are replaced by three concentric circles depicting the
environmental sphere in the outer, the social sphere in the middle and economic sphere in the inner circle.
For our study, we acknowledge the concentric model’s idea that economic activities should be in the
service of all human beings while at the same time safeguarding the biophysical systems necessary for
human existence, but rely on the three pillar approach introduced by the Brundtland report. Brundtland:
economic, social and environmental needs need to be balanced.
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The economic domain has means to influence the social as well as the environmental pillar while the
concept of needs, in particular related to public goods, gives priority to environmental protection. The
economic pillar is considered as given and we primarily analyse the effects of this domain regarding the
environmental one while it can also affect the social domain. We follow the suggestion that entrepreneurial
actors in the economic domain are described to be driven by their motivation to earn financial benefits by
contributing to solving environmental problems and ecological degradation. Our approach is linked to the
concentric circle model, but we do not isolate the different spheres as strict as this model does and we do
not treat the social sphere as in-depth.
2.2 Motives to engage in ecological sustainability

Literature distinguishes four major motives for ecological sustainability: regulation, public concern,
expected competitive advantage, and top management commitment.
Expected competitive advantage is an internal and external economic force for ecological sustainability
because it arises from the management’s belief that the company can outperform its competitors by
introducing an environmental strategy.
Environmental orientation: the recognition by managers of the importance of environmental issues facing
the firm.  impact on corporate environmental responses.
2.3 Ecological sustainable entrepreneurship as a field of research

Entrepreneurship is generally accepted as the process of opportunity discovery, creation and exploitation.
Ecological sustainable entrepreneurship: ‘the process of identifying, evaluating and seizing entrepreneurial
opportunities that minimize a venture’s impact on the natural environment and therefore create benefits
for society as a whole and for local communities’.
Scholars and practitioners have asserted that entrepreneurs need to take an active role in seeking to
balance economic goals with sustainability and environmental goals.
Relationships between entrepreneurship, the environment and sustainable development have been
examined by various streams of thought, and addressed by several different terms. Distinguish:
- Ecopreneurship
- Environmental entrpeneurship/enviropreneurship
- Green entrepreneurship
- Sustainable entrepreneurship
Existing literature is either primarily

- Environmentally-oriented: follow their motivation to earn financial benefits by helping to decrease
environmental problems and ecological degradation
- Sustainability-oriented: explore the relationship between sustainable development and
entrepreneurship and focuses on entrepreneurs’ efforts and achievements towards sustainability
like definitions of sustainability and sustainable development, definitional consensus on environmental-
and sustainability related entrepreneurship has not been achieved.
Given our definition of ecological sustainable entrepreneurship, the four motives for ecological
sustainability may also apply to the entrepreneurship context.
So far, existing literature has not yet analysed prior research from such an integrated perspective of
ecological sustainable entrepreneurship. Existing conceptual frameworks have concentrated either on
environmental or sustainability issues. Further, research has not yet attempted to synthesize the existing
body of literature focusing on both, entrepreneurial startups as well as established entrepreneurial SMEs.
To contribute to a better understanding of ecological sustainable entrepreneurship, we thus present the
state of the field and provide insights into present and future research directions.
3. Methods
3.1 Research approach
We conduct a systematic, evidence-informed literature review.
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3.2 Data collection, preparation and analysis

To identify all publications within the scope of ecological sustainable entrepreneurship, we defined the
following search terms and combinations to identify relevant publications: green, sustainable, ecological,
environmental, entrepreneur, ecopreneur, environpreneur.
To cover the full range of scientific articles, we searched databases. Next, we collected and organized all
relevant info. To identify main topics: searching for similarities in content and subsequently interpreting
these similarities.
To increase the validity, reliability, and overall quality of the analysis, we applied the multiple assessor
method.
4. Results
4.1 Overview of ecological sustainable entrepreneurship research
Increase in the number of publication per year mirrors the increased attention paid to ecological
sustainable entrepreneurship in specific academic journals.
The reviewed studies use a variety of methodological approaches.
4.2 State of the field of ecological sustainable entrepreneurship research

We identify six main clusters and 10 subthemes.
1. Drivers of engaging in ecological sustainable entrepreneurship
Cluster 1 centers on why some individuals intend to become ecological sustainable entrepreneurs
and the factors that stimulate the creation of such ventures (N=17).
The entrepreneurship literature commonly distinguishes between
- opportunity entrepreneurship: start a business to pursue and entrepreneurial prospect
- necessity entrepreneurship: start a business to make a living
Ecological sustainable entrepreneurs identify a need for a green product and/or service that is
presently unmet in the market.
Ecopreneurs’ motivations to start ecological sustainable enterprises are closely linked to their
individual values. Not all ecologically sustainable entrepreneurs strive to change the world, they do
not all exhibit a defined ecological orientation.
Institutional context also affects ecological sustainable new venture creation
2. Drivers of conducting business in an ecological sustainable way
The drivers of doing business in an ecological sustainable way can take various forms. In cluster 2,
we grouped these drivers into three categories.
a. Micro-level drivers
Triggers such as the entrepreneurs’ personal values and ideas. Typically, family background
has influenced these entrepreneurs’ environmental awareness. These value-driven
entrepreneurs tend to be female and to engage voluntarily in sustainable and
environmentally friendly business practices.
b. Meso-level drivers
Drivers related to markets and industries. Market-driven enterprises do not actively engage
in environmental management practices but react to external pressures from other market
players, such as customers, suppliers, investors or competitors. These are typically old,
large and incumbent firms in which economic objectives are prioritized.
c. Macro-level drivers
Drivers that result from politics, legislation and other institutions. Firms engage in
sustainable business practices as a reaction to external pressures form a variety of
stakeholders demanding environmental or social improvements.
3. Strategic actions of ecological entrepreneurship
Cluster 3 addresses the strategic actions of ecological sustainable firms.
a. Business practices
Personal values and passion for sustainability influence the conduct of business in an
ecological sustainable way. Research has presented several examples of how
environmental concerns impact business practices.
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b. Networking with external stakeholders
The extant literature on ecological sustainable entrepreneurship also argues that ecological
sustainable entrepreneurs need to create and alter their relationships with external
stakeholders. Another important goal of ecological sustainable entrepreneurial networks is
creating a favourable institutional context for sustainable development.
4. Outcomes of ecological sustainable entrepreneurship
Cluster 4 includes studies that address the outcomes of ecological sustainable entrepreneurship.
a. Micro-level outcomes
Profits frequently represent a means to solve environmental problems
b. Meso-level outcomes
Proactive, small, and innovative ecological sustainable ventures can develop new markets
for green products/services or introduce these products/services to niche markets.
c. Macro-level outcomes
Ecological sustainable firms and their entrepreneurs can contribute to socio-economic
development. Although some firms do not attempt financial success, they create value for
the environment and society.
5. Factors that enable ecological sustainable entrepreneurship
Cluster 5 is concerned with the factors that enable ecological sustainable enterprises.
Sustainability-oriented entrepreneurship education can play a role in promoting ecological
sustainable entrepreneurship and sustainable development.
6. Challenges for ecological sustainable entrepreneurship
Cluster 6 addresses the factors that inhibit ecological sustainable entrepreneurship.
a. Financial challenges
It is always difficult for startups to obtain the necessary financial resources. Particular
challenges: finding investors who share the entrepreneurs’ environmental ideals and
believe in the ecological sustainable entrepreneurs’ vision. Investors tend to question
ecological sustainable entrepreneurs’ knowledge of the investment community.
As a consequence, ecological sustainable ventures may not be able to grow as much as
ventures with sufficient financing.
b. Market challenges
Ecological sustainable ventures face barriers to market entry as well as to success in the
market. The public still discredits environmental and sustainable business practices and
sustainable entrepreneurs and businesses lack technical expertise, skilled human resources
and top management team commitment.
These firms face market barriers related to inefficiency, such as the nature of public goods,
inefficient resource use, monopoly power, externalities and imperfect information.
Accordingly, ecological sustainable start-ups may face more challenged than traditional
start-ups, including the not only financial barriers but also significant market barriers which
they have to overcome in order to be successful in the long run.
5. Discussion and Conclusion

To determine the current state of research on ecological sustainable entrepreneurship and to present a
complete picture of this field, we conducted a comprehensive and systematic literature review.
The major scientific value and contribution of our paper lies in laying the groundwork for scholars and their
future research efforts. As such, this work helps to advance our understanding of the emerging and
fragmented research field of ecological sustainable entrepreneurship.
5.1 The state of ecological sustainable entrepreneurship research

Reichers and Schneider: theories and concepts evolve in three stages:
1) Introduction and elaboration
2) Evaluation and augmentation
3) Consolidation and accommodation
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Research on ecological sustainable entrepreneurship is presently between the first and second stage. The
field is still emerging. So far, studies have explored and described the field of ecological sustainable
entrepreneurship, which explains why in-depth qualitative analyses are used. Researchers have defined the
field and have started to synthesize and critically review the existing theoretical and empirical knowledge.
Researchers should stive for a higher degree of convergence in the terminology used to address
entrepreneurs and firms engaging in sustainable entrepreneurship. Ecological sustainable entrepreneurship
has to rely on well-accepted concepts and principles of entrepreneurship and then elaborate and develop
its distinct characteristics.
5.2 Development of an integrative framework for ecological sustainable entrepreneurship

To synthesize existing research on ecological sustainable entrepreneurship and to advance the
development of this research field, we propose an integrated framework for ecological sustainable
entrepreneurship. The six clusters identified indicate that research in ecological sustainable
entrepreneurship mirrors the well-established process of entrepreneurship: opportunity discovery, creation
and exploitation.
This process involves all the functions, activities and actions associated with perceiving opportunities and
creating organizations to pursue them. In light of these essential characteristics of entrepreneurship as a
process, we limit the discussion of our framework and suggestions for future research to linkages that
reflect these characteristics but tailor them to our definition and to the research field of ecological
sustainable entrepreneurship as the process of identifying, evaluating and seizing entrepreneurial
opportunities that minimize a venture’s impact on the environment and therefore renders benefits for
society as a whole and for local communities.
The first cluster reveals that entrepreneurs are not necessarily opportunity driven in creating ventures.
Rather, entrepreneurs are intrinsically motivated by sustainability. Value-driven ecological sustainable
entrepreneurship has received the most attention in this cluster and refers to the voluntary adaptation of
ecological sustainable practices. Personal values will determine whether ecological sustainable
entrepreneurs achieve the primary goal of their endeavour.
The existing literature underlines the need for collaboration between ecological sustainable enterprises and
external stakeholders, such as formal or informal institutions, because entrepreneurs’’ abilities to influence
public policy in their favour are limited. We suggest that strong ties may mitigate the financial and market
challenges faced by ecological sustainable entrepreneurs.
According to our framework, educational providers play a fundamental role because of their responsibility
to create awareness of entrepreneurship and sustainability, to encourage participant to consider ecological
entrepreneurship as a career, and to support the creation of new enterprises and re-orientation of existing
small businesses.
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5.3 Future research directions

- Future research should aim to clearly identify the potential similarities and differences between the
different streams of thought and definitions described in this research field so far.
- Scholars should develop presently known conceps, such as sustainable entrepreneurship and green
entrepreneurship.
- Future research should analyse how ecological sustainable entrepreneurs and their ventures, as
well as value-driven firms, influence communities and society.
- The specific values that drive ecological sustainable entrepreneurs and whetehr these values differ
in contexts remain unexplored.
- Research should compare the three types of enterprises to determine which achieve higher
performance and/or growth.
- The qualitative and quantitative dimensions of networks and how they mitigate the market and
financial challenges of ecological sustainable startups and established SME should be investigated.
- We still have a limited understanding of how ecological sustainable entrepreneurship can be
taught.
- Assess whether individuals who participate in such programs show a higher intention to start
ecological sustainable ventures.
5.4 Limitations
1) The inclusion and exclusion criteria used in the systematic literature review can be criticized.
2) Concerns should be raised regarding the objectivity of the data analysis.
3) The framework could be criticized for being insufficiently comprehensive.
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8. Murray, Skene and Haynes – The Circular Economy: an Interdisciplinary Explorati on of the
Concept and Applicati on in a Global Context
Keywords: Circular Economy, Closed-loop economy, Sustainability, Sustainable Development
Abstract
There have long been calls from industry for guidance in implementing strategies for sustainable
development. The Circular Economy represents the most recent attempt to conceptualize the integration of
economic activity and environmental wellbeing in a sustainable way. This set of ideas has been developed
by China as the basis of their economic development, escalating the concept in minds of western
policymakers and NGOs. This paper traces the conceptualisation and origins of the Circular Economy,
tracing its meanings, and exploring its antecedents in economics and ecology, and discusses how the
Circular Economy has been operationalized in business and policy. The paper finds that while the Circular
Economy places emphasis on the redesign of processes and cycling of materials, which may contribute to
more sustainable business models, it also encapsulates tensions and limitations. These include an absence
of the social dimension inherent in sustainable development that limits its ethical dimensions, and some
unintended consequences. This leads us to propose a revised definition of the Circular Economy as ‘an
economic model wherein planning, resourcing, procurement, production and reprocessing are designed
and managed, as both process and output, to maximize ecosystem functioning and human well-being.
Introduction
In 1983, Brundtland was asked to head a Commission, independent of the UN, to explore ‘a global agenda
for change’ with the intention of formulating ‘long-term environmental strategies for achieving sustainable
development by the year 2000 and beyond. But the publication coincided with the period of neo-liberal
economic policies. There seems to be little urgency in many quarters to respond to the challenges we face
in the 21C.
Concerns endure that for many, corporate responsibility reporting remains a mask behind which ‘business
as usual’ continues, unreconstructed. Yet while business appears to drag its feet, the people of the world
look on at successive sustainability conferences and wonder when any of Brundtland’s recommendations
might be adopted.
If we accede to the view that a lack of alternative business models may constrain the transition to a
sustainable future, then there seems to be some urgency in identifying the most prospective of the
alternatives. In this context we examine a new approach to sustainability: the ‘Circular Economy’. There is
still little formal academic debate on this, yet it is a highly relevant concept to examine given the academic
debates on sustainable and socially responsible business.
Purpose of this paper:

- Trace the conceptualisation and origins of the Circular Economy, bringing to bear theoretical
concepts from environmental economics, ecological economics, and industrial ecology to the
business and sustainability relationship.
- Critically evaluate the potential of a circular economy for an improved and applied
conceptualisation of sustainable business.
The paper addresses the following research questions:

- What are the theoretical origins of the Circular Economy in its application to sustainable business?
- How is the Circular Economy being operationalized in sustainable business?
- What tensions and limitations are inherent in the conceptualisation and application of the Circular
economy?
Relationships with Previous Research

Brundtland Report: call for a holistic approach to be taken by societies (including businesses) toward issues
of consumption in general. That aspect is largely ignored in the response of researchers who still tend to
look at individual companies, and their immediate stakeholders, by taking an ‘entity’ focus, and often an
economic focus.
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We wish to examine the literature on the circular economy, surveying the current range of definitions, and
exploring the potential for adding something of substance to the debate.
Conceptualisations and Definitions of the Circular Economy

Meaning of circular economy:
- Linguistic: antonym of a linear economy. Linear economy: converting natural resources in to waste.
Circular is the antonym of linear. A circular economy is envisaged as having no effect on the
environment.
- Descriptive: relates to the concept of the cycles. Two important cycles: biogeochemical cycles and
the idea of recycling of products.
The Biogeochemical Cycles

Many basic molecules and atoms pass through cycles on the planet, e.g. cycle of water. The length of time
that it takes to complete a lap of a cycle varies. Flux is a very important issue in biogeochemical cycles.
Almost every biogeochemical cycle has been altered by human activity. The Circular Economy is concerned
with slowing or managing flux.
Recycling
By increasing longevity of products through better manufacturing and maintenance, the rate of
replacement decreases, and so resource use is reduced. The ‘waste-as-food concept’, wherein unwanted
outputs of the industrial process are used as raw materials in another industrial process, and the three Rs
(reduce, reuse, recycle) have become central to the concept of Circular Economy.
The Origin of the Circular Economy term

The origins of the term ‘Circular Economy’ has been debated and therefore, it has been linked with a range
of meanings and associations by different authors. What they generally have in common is the concept of
cyclical closed-loop system.
Antecedents of the Concept in Economics and Ecology

The circular as a concept has its antecedents in broader historical, economic and ecological fields. Industrial
Ecology and the Circular Economy have a shared lineage, with much overlap.
- A separate line of thinking began in the 1970s, inspired by the OPEC oil crises: environmental
economics, with its emphasis very much on economies, sought to examine how the environment
could be managed in order to allow economic growth to continue.
- By the 1980s, frustration with progress led to a second school of thought: ecological economics,
developing a more ecologically centered approach.
- From this emerged a third school that felt that the social aspects of sustainability were not
sufficiently recognized. Socio-ecological economics
The relationship of the Circular Economy to Sustainable Business

Brundtland definition of sustainable development assumes that resources are not infinite and have to be
managed to sustain future generations. This is also recognized within the definition of the Circular
Economy.
In its most basic form, a circular economy can be loosely defined as one which balances economic
development with environmental and resource protection, and in this form it appears to be inseparable
from industrial ecology and close to the three pillars of sustainable development.
Uniqueness of the Circular Economy:
- The closed-loop economy
- Design to re-design thinking
A true circular economy would demonstrate new concepts of system, economy, value, production, and
consumption, leading to sustainable development of the economy, environment and society.
Hu et al: the focus of the Circular Economy is on resource productivity and eco-efficiency improvement, and
they adopt the 4R approach: reduce, reuse, recycle, recover.
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Applications of the concept of Circular Economy in Practice and Policy
The nation that has most fully embraced the implementation and development of circular economy
concepts thus far is China. While China may have taken the lead in implementing the concept of the
Circular Economy in practice, its application has also been seen in western economies.
It is clear that, faced with evidence that finite resources are being depleted, that we are using more than
we can replace, that things do not look like they will improve and that climate change is likely to worsen the
situation for many peoples of the wold. Business models have to change toward a more sustainable form of
living, manufacturing and consuming. In face of this evidence, any initiative that might make the transition
should be welcomed. The circular economy represents one way of conceptualizing and operationalizing this
process. However, there are tensions and limitations in the application of the circular economy in
contemporary business practice.
Tensions and Limitations Within the Circular Economy

Confusion with Semantics
The uses of linear and circular, in conjunction with economics, is potentially confusing, as both
combinations already exist, but in very different contexts.
The Missing Social Dimension

The three pillar of sustainability explicitly include the social dimension, in terms of human stakeholders,
human well-being, and human rights. The circular economy is virtually silent on the social dimension,
concentrating on the redesign of manufacturing and service systems to benefit the biosphere.
Unintended Consequences and Over-Simplistic Goals

The circular economy approach can be critiqued for having unintended consequence and over-simplistic
goals.
- Many apparently positive sustainable activities have very negative environmental outcomes.
- The anthropomorphism of nature is another worrying trend.
- The idea that we can design much longer-lasting products appears useful, but design may be
compromised and, in nature, appropriate flow is important.
- The circular economy has embraced biomimetics as an important principle. However, mimicry itself
may not go far enough and implies that we need to pretend to be biological rather than actually
being biological
Conclusion
The intention of this paper was to bring the debates surrounding the Circular Economy to a wider audience
and increase its impact within the business ethics literature, where despite corporate engagement with the
concept, there has been little theoretical development.
A sustainable future for the human race will demand system-based thinking that involves: society,
environment and economics (three pillars, in equal measure).
The Circular Economy is an important and significant new school of thought in sustainable development,
having been adopted by China as its main framework for environmental change and economic
development over the next 10 years. As a young field, it needs careful definition in order to provide a
meaning that will allow real benefit to emerge for both environment and society.
It may be necessary to re-evaluate how the circular economy should actually be defined. Suggestion: The
Circular Economy is an economic model wherein planning, resourcing, procurement, production and
reprocessing are designed and managed, as both process and output, to maximize ecosystem functioning
and human well-being.
Future research should begin to incorporate the latest ecological knowledge into our understanding of
naturalistic economic models and systems, without silencing the social and human dimension.
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Week 6 Entrepreneurial eco-systems and institutions: coordination for circular economy business models
9. Neumeyer and Santos – Sustainable business models, venture typologies, and
entrepreneurial ecosystems: A social network perspecti ve
Keywords: Entrepreneurial ecosystems, sustainable business models, social networks
Abstract
The successful adaptation and creation of sustainable entrepreneurial ventures significantly influences the
ability to create more environmentally and socially integrated economic systems. Sustainable business
models are a critical component towards this goals. However, the development of sustainable business
models is a complex process that requires a supportive entrepreneurial ecosystem. Integrating literature on
sustainable business models, network theory, and entrepreneurial ecosystems, we analyse the influence of
organizational-level (venture types and venture tenure) and individual-level factors (types of network
actors and their demographic characteristics) that influence the social network connectivity of ventures
with sustainable and conventional business models. To this purpose, we modelled two municipal
entrepreneurial ecosystems in the Southeast United States through a complex network of stakeholders
(e.g. entrepreneurs, investors, institutional leaders) and analysed the resulting social connectivity
measures. Our results indicate that sustainable entrepreneurs were underrepresented when compared to
conventional entrepreneurs, but that their networks were more densely connected. We also found that
different social clusters emerged, based on type of venture and business model, venture tenure, type of
network actor (e.g. entrepreneur or investor), or demographic characteristic. With this study, we contribute
to the literature on entrepreneurial ecosystems and sustainable business models.
1. Introduction
In the last decade, interest in alternative economic systems that balance environmental, financial, and
social outputs has steadily increased. One of the main criticism of traditional economic models is the
exclusive focus on efficient resource allocation. To address the unsustainable rate of consumption and
natural resources, the development of new (economic) systems with an emphasis on sustainable practices,
technologies and processes is necessary. Such a transition is inherently tensional and requires the
participation of all relevant stakeholders to modify the existing transaction and coordination devices.
The sustainable business model in one such device: helps describing, analysing, managing and
communicating:
- A company’s sustainable value proposition to its customers and all other stakeholders
- How it creates and delivers its value
- How it captures economic value while maintaining or regenerating natural, social and economic
capital beyond its organizational boundaries
Growing interest in business models by researchers and practitioners  multitude of definitions,
conceptualizations and new questions. Business models coevolve through interactions between founder(s)
and their social environment.
Although the network perspective has gained traction over the last decade, research on how (social)
networks affect the development of business models in entrepreneurial ventures is still in its infancy.
Address this shortcoming  two research questions:
- What are the differences in social connectivity between sustainable and conventional business
ventures in an entrepreneurial ecosystem?
- How do organizational and individual level factors, including business model archetypes shape the
emergence of social clusters in entrepreneurial ecosystems?
To answer these questions, we combine insights from literature on sustainable business models, network
theory, entrepreneurial ecosystems and venture typologies to explore the social constructivist nature of
sustainable business models.
We argue that entrepreneurial ecosystems are more than just high-growth/high-technology clusters, but
complex adaptive systems of interdependent actors that engage in entrepreneurial activities to create
economic, social, as well as environmental value.
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To empirically assess the complex system of different stakeholders, we employ a social network lens. Our
data analysis methodology combines individual-, and network-level metrics to socially reconstruct an
entrepreneurial ecosystem related to sustainable entrepreneurial ventures. This approach will allow us to
examine the social connectivity of sustainable businesses, but also detect the emergence of social clusters
and how organizational and individual level factors influence their configurations.
2. Theoretical background
2.1 Sustainable and conventional business models
Sustainable entrepreneurship is broadly defined as the recognition, evaluation and exploitation of
opportunities by individuals who create future products and services that have economic, social and
ecological gains. Similar to traditional entrepreneurship, the core component of a sustainable venture is its
business model.
Subsequent studies emerged trying to clarify the attributes and components of sustainable business
models, taking primarily a corporate point of view. Nowadays, definitions of sustainable business models
are aligned with the triple bottom line approach.
The increased scholarly attention to sustainable business models has led to the conceptualization of
different archetypes.
Many areas of interest remain underdeveloped. Specifically, the question of how sustainable ventures and
their business models are (socially) connected to their surrounding entrepreneurship (eco)system requires
more attention.
2.2 Entrepreneurial ecosystems

Entrepreneurial ecosystems is a promising theoretical framework that has been widely contributing to
understand the context of agglomeration of individuals, businesses and other regulatory bodies in a given
geographic area. Nevertheless, sustainable business models have been relatively under-research in
entrepreneurial ecosystems.
Entrepreneurial ecosystems are the adequate framework to study the interdependence and connection
between the different actors interacting in the complex economic system.
Common components identified are a supportive culture, capital, active networks of entrepreneurs, local
government officials, and investors, the presence of universities and support services. One critical but
understudied aspect is the relational structure between the different stakeholders in an entrepreneurship
ecosystem.
A promising avenue to analyse the complex system of stakeholders is social network theory. The structure
and composition of networks will vary as a function of factors between the different levels in an
entrepreneurship ecosystem.
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Traditional high-growth entrepreneurial ventures with highly scalable business models, often require the
financial support of venture capitalists, who in turn require a set of verbal and written indicators of
satisfactory product/market fit, customer growth, and return on investment.
In contrast, sustainable entrepreneurial ventures will differ with respect to the types of measures of
venture impact. Therefore, organizational level factors are expected to be relevant to understand the
network connectivity of sustainable and conventional business models in an entrepreneurial ecosystem.
Individual level factors, such as gender, race and ethnicity are also relevant in this picture.
To analyse the relational schema of the different stakeholders, network theory offers a multitude of
measures, such as network density, multiplexity, modularity, degree centrality, betweenness centrality and
K-step reachability.
2.3 Factors influencing sustainable and conventional business models

2.3.1 Organizational level factors: venture types and tenure
There have been various conceptual and empirically-based attempts to characterize entrepreneurial firms,
but these generally suffer from lack of inclusivity or comprehensiveness, and/or fall short in terms of
descriptive detail, relevance and applicability. This is also pertinent to sustainable entrepreneurial ventures
and their business models that are often overlooked in entrepreneurship studies. To address this deficit, a
recent study on venture typologies posited that entrepreneurial ventures can be separated along four
different types: 1) survival 2) lifestyle 3) managed growth, and 4) high growth or aggressive growth.
We expect to see differences in the social network connectivity in an entrepreneurial ecosystem between
sustainable and conventional business models.
Another relevant organizational level boundary is venture tenure. Venture tenure was found to moderate
the relation between entrepreneurial orientation and new venture performance, as well as to influence a
new venture’s technological learning and international business activities. Previous research points towards
the fact that venture tenure has a relevant role on explaining new venture performance, growth and
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adaptability. As such, we expect that venture tenure will have an impact on the social network connectivity
in an entrepreneurial ecosystem between sustainable and conventional business models.
2.3.2 Individual level factors: types of network actors and demographic characteristics
Despite the organizational level factors that might influence the social connectivity of social businesses,
individual level factors are also relevant to be considered.
The types of actors that are part of a network are important. We postulate that one of the individual
business models is the access to different types of network actors. That access often depends on
demographic characteristics such as gender, that are proxies for socioeconomic status.
The literature offers a set of justifications that support the influence of gender on sustainability
(entrepreneurship):
- Demographic characteristics such as gender have been found to influencing founder identity, which
in turn influences the type of venture an entrepreneur will build
- Women are particularly proficient in problem solving, dealing with ambiguity, conflicts and
uncertainty, have a greater orientation towards supporting and maintaining relationships, are more
willing focusing on the needs of others rather than their own need, and thus might be better
equipped to represent the needs of non-business stakeholders than men
- Entrepreneurial networks can also differ across racial and ethnic lines.
In summary, we drew from three strands of literature – sustainable business models, network theory, and
entrepreneurial ecosystems – to get a better understanding of how conventional and sustainable
entrepreneurs socially mesh. Fig 1 presents our conceptual model, including the organizational level factors
(venture types and venture age), and the individual level factors (types of network actors and their
demographic characteristics) that impact the social network connectivity of sustainable and conventional
business model. In contrast to previous studies that framed sustainable business models as a part of an
alternative economic system, we examined how sustainable entrepreneurs are positioned socially in two
different municipal entrepreneurial (eco) systems, which are described in the next section.
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3. Methodology
3.1 Context of the study
This study was conducted in two municipalities in the Southeast US, hereinafter referred as municipal
ecosystem 1 and 2. The two municipalities are geographically proximate and have similar demographic and
economic characteristics
3.2 Sampling strategy

Following a respondent-driven sampling procedure, we collected a total of 45 in-depth interviews from
each municipality, comprising a total of 90 interviewees.
3.3 Measures and data analysis procedure

The interview protocol included the following set of variables relevant to our conceptual model:
- Sustainable business models
- Venture types
- Venture tenure
- Types of network actors
- Demographic characteristics
- Social network connectivity
Each interview resulted in a set of nodes that could be subsequently assembled into a network
representing a proxy for the entrepreneurial ecosystem.
We examined the structure of the two municipal entrepreneurial ecosystems on a network and individual
level using the six social network measures: 1) Network density 2) Multiplexity 3) Modularity 4) Degree
centrality 5) Betweenness centrality 6) K-step reachability.
These measures allowed us to describe the nature and distributions of relations among actors.
4. Results
4.1 General characteristics of MEco1 and MEco 2
Table 5 describes the sample of interviewees and nodes of the two municipal ecosystems and provides an
initial understanding on the distribution of our variables of interest.
4.2 Social network connectivity characteristics of MEco 1 and MEco2

Network density measures the level of connectivity between the nodes in the ecosystem.
Overall, MEco1 and MEco2 showed comparable distributions of their first and second clusters with respect
to sustainable business model archetypes, as well as organizational level and individual level variables. The
emergence of a third cluster in MEco 2 shows that this municipal ecosystem is more compartmentalized
than MEco1. Once possible explanation is the difference in geographic area which can subsequently lead to
more dispersity and segregation.
5. Discussion
5.1 Theoretical and empirical contributions
Entrepreneurial ventures with sustainable business models are still more of a prospective value than a
reality. The new focus on sustainability serves as both a source of competitive advantage and as a liability
for new ventures. Sustainable ventures address challenges and create environmental and societal value
where other market participants often fail, thereby occupying a ‘defendable’ market niche. But
sustainability orientation is also a liability because the lack of familiarity with what constitutes a sustainable
business model serves as a burden when acquiring resources form potential stakeholders in the ecosystem.
To overcome this validity burden, sustainable entrepreneurs engage in various approaches including
partnering with a diverse set of better-known organizations, resource leveraging, value creation, creative
problem solving, and building and using networks.
There is a shortcoming in the studying of social connectivity. This study addresses this by examining the
social network connectivity of sustainable and conventional ventures.
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Our results indicate the emergence of different social clusters within each of the municipal ecosystem we
examined. Sustainable and conventional business models were not in different clusters a priori, but were
segregated based on the types of venture, venture age, type of actors they are connected with, gender, and
ethnicity and race. Ventures with different sustainable business models archetypes are segregated by
organizational and individual level factors:
- Technologically-oriented sustainable business model archetypes as well as archetypes that develop
scale-up solutions were mainly associated with aggressive- and managed-growth ventures as well
as incubators, higher-education institutions and risk capital.
- Socially-oriented sustainable business archetypes and archetypes that repurpose for
society/environment were predominantly associated with lifestyle and survival ventures.
Female and minority entrepreneurs are faced with an access gap when it comes to ventures with
technologically-oriented sustainable business model archetypes and archetypes related to developing scale
up solutions. No such gap could be found for sustainable business model archetypes related to repurposing
for society/environment, adopting a stewardship role and encouraging sufficiency.
Gendered norms surrounding entrepreneurship can marginalize the perspective of female and minority
entrepreneurs and ultimately hinder the adaptation rates of technologically-oriented sustainable business
model archetypes. Prior research attributed this gap to the lack of (social) access to venture capital. We
suggest that access is also limited ot other parts of the high-growth venture “supply-chain”, such as
incubators or accelerators.
Another interesting finding was that female stakeholders showed significantly higher scores of
betweenness-centrality than their male counterparts, indicating that they could serve as a ‘bridge’
connecting different parts of the entrepreneurial ecosystem. Providing more targeted resources for female
stakeholders to develop sustainable businesses could help support the transformation of conventional to
sustainable entrepreneurial ecosystems.
The results of our density and multiplexity analyses showed that the social networks of entrepreneurs that
engaged in sustainable business models showed a higher degree of density than entrepreneurs with
conventional business models. Suggest that sustainable ventures operate in stronger-tie networks than
conventional ventures.
Our results depict entrepreneurial ecosystems as an agglomeration of social clusters with deviating
compositions and properties, expanding current conceptualizations. This would suggest that
entrepreneurial practices and beliefs in these clusters vary significantly from the normative underpinnings
described in the research literature.
Our choices about study design and methodology provided a bridge between scholarly work on complex
systems, sustainable business models and entrepreneurial ecosystems. The empirical development of
entrepreneurial ecosystems is still at an early stage. Our approach offers empirical insights to develop an
assessment framework that is not exclusively relying on macroeconomic date. Our approach offers the
possibility to examine how hard-to-reach entrepreneurial networks interface with other areas of the
entrepreneurial ecosystem.
5.2 Limitations and future research avenues

1) The sample is limited in size and geographic scope  expand geographic scope to provide critical
insights into social connection of sustainable business model archetypes.
2) Our sample data was collected using respondent-drive sampling, which is time-consuming, not
scalable and strongly dependent of the quality and quantity of information that can be extracted
from the initial set of seed notes. Our data is cross-sectional and does not contain multiple time
points  future studies need to create longitudinal social network datasets.
3) The emergence of sustainable business models in an entrepreneurial ecosystem is still an
underdeveloped research stream, and thus we took an exploratory perspective  future research
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should focus on other relevant domains of the sustainable entrepreneurial ecosystem, and include
variables such as human capital, culture, markets, policy and finance.
4) Research on sustainable entrepreneurial ecosystems that are defined as ‘an interconnected group
of actors in a local geographic community committed to sustainable development through the
support and facilitation of new sustainable ventures’ is still in its infancy  future research
suggestions:
a. Components: do sustainable and conventional entrepreneurial ecosystems share the same
components?
b. Norms and values: what are the formal and informal rules that define membership in
sustainable entrepreneurial ecosystems?
c. Success factors and measurement: how can we define success in sustainable
entrepreneurial ecosystems?
d. Digitalization and online sources: digitalization opens new pathways for sustainability that
will affect the characteristics of sustainable entrepreneurial ecosystems.
6. Conclusions
The model linking sustainable business model archetypes with social connectivity as well as individual- and
organizational-level factors presented here incorporate ideas from the sustainability, entrepreneurship and
network theory literature. The integration of ideas from these different literature lays a foundation for a
more nuance understanding of the way different types of sustainable business models are socially
embedded in entrepreneurship ecosystems. The model allows us to consider how different individual- and
organizational-level factors such as gender, ethnicity, race, or venture types affect the role and position of
stakeholders in SE.
Although the model was tested exclusively in the Southeast US, it can be applied to any geographical
context, providing policy makers with a tool to assess sustainable entrepreneurial activities in local and
regional ecosystems and foster economic diversity and inclusion.
Our model supports the implementation of public policies that target a broad spectrum of sustainable
ventures and their business model archetypes. Entrepreneurship is strongly shaped by its social context and
we put forward that the same is true for sustainable business venture.
Our study calls for the social integration of sustainable businesses by actively supporting the formation of
bidirectional ties between stakeholder networks of conventional and sustainable businesses.
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10. Zahra and Nambisan – Entrepreneurship and strategic thinking in business ecosystems
Keywords: Business ecosystem, Entrepreneurship, Strategic thinking, Innovation
Abstract
Success in business ecosystems that include well-establihed companies and new ventures requires
collaboration and competition, a task that demands strategic thinking to leverage a firm’s resources and
capabilities. Strategic thinking and the entrepreneurial activities in an ecosystem influence one another in a
cycle that perpetuates and even sparks innovation. These interactions vary significantly across four types of
business ecosystems – Orchestra, Creative Bazaar, Jam Central and MOD Station – and determine the
success and failures of new ventures and established companies. The nature and effect of the dynamic
interactions in a business ecosystem can have profound implications for organizational outcomes.
1. Competing in business ecosystems

Once defined by time, space, and resource bundles, competition is increasingly determined by the quality
of strategic thinking about the firm’s opportunities, challenges, core competences, capabilities and
competitive arena.
Networks provide the firm with resources, alliance partners, and important information about market
conditions. Referred to as ‘business ecosystems’, the networks are the product of a long and evolutionary
process that defines relationships among industry players. Creating, shaping, navigating, and exploiting
business ecosystems requires entrepreneurial insight, coupled with strategic thinking.
Competing in ecosystems demands the synchronization of strategic thinking and entrepreneurship, a

process that further creates new knowledge supporting entrepreneurial activities and strategic thinking.
We explore the dynamic interplay between entrepreneurship and strategic thinking in different types of
business ecosystems and how that interplay affects the ways companies compete. A business ecosystem is
a group of companies – and other entities including individuals too perhaps – that interacts and shares a set
of dependencies as it produces the goods, technologies, and services customers need.
2. Thinking strategically
A typical business ecosystem usually houses both well-established companies and new ventures. Some
ventures are corporate-sponsored, while others are launched by independent entrepreneurs. Established
companies and new ventures play different but often complementary roles that position them to exploit
particular areas of the ecosystems. Along with their diverse entrepreneurial activities, the interactions of
these companies – both established and new – determine the speed of the ecosystem’s evolution to keep it
vibrant, offering plenty of opportunities for its members. Established companies and new ventures need to
engage themselves in thinking strategically about the ecosystem in which they exist, their place within it,
and how to develop and cultivate relationships with its other members. Strategic thinking focuses on
visualizing the future before it happens, a process that entails building and considering different scenarios.
Strategic thinking often requires reconciling competing hypotheses about the future and integration of
divergent views into a coherent whole. This integration requires creativity and intelligence. Strategic
thinking is also systemic in that it builds on the linkages among different components that form a vision for
the future.
Strategic thinking requires creativity, as well as foresight and insight. Foresight means shadowing the
future: forseeing its shape before it materializes. Insight revolves around uncovering ways that give birth
and meaning to the future. It embodies creativity, inventiveness and proactiveness in changing the
competitive arena and inducing new dynamics. It often entails revising the boundaries and complexion of
the competitive arena, as well as challenging and sometimes revising the assumption that underlie market
forces.
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In today’s organizations, strategic thinking is not the sole responsibility of senior managers. Some of the
most creative ideas that stimulate strategic thinking come from middle and lower level managers, as well as
employees who interact with customers, suppliers, and other stakeholders.
2.1 Strategic thinking in new ventures

Ecosystems host independent and corporate-sponsored new ventures, companies 6 years or younger.
These two venture groups have several things in common, but they usually pursue different goals, occupy
different niches within the ecosystem and have different time frames.
2.1.1 Independent new ventures

New ventures working on the fringes of their respective industries are able to develop in ways that allow
them to grow from niche players to value dominators, or even industry leaders – also known as keystones.
These companies have shown considerable adeptness in restructuring their organizations and reconfiguring
their business models, which made it possible for them to develop and succeed.
Many entrepreneurs rely on intuition when making decisions regarding their new companies. It has been
suggested that one consequence of this is that new ventures do not always use formal planning, as
entrepreneurs tend to be ad hoc in their decision making. These entrepreneurs are prone to
overconfidence, optimism, generalizing from small numbers and rigidity.
While countless entrepreneurs in the high-tech industry have strong technical training and experience, just
as many tend to ignore the organizational side of competition: how organizations are built, decisions are
made, resources allocated etc.
The nature of entrepreneurial activities is determined by the role a new venture aims to play in its
ecosystem. While many are content with being niche players, others focus on being physical or value
dominators, or even evolve into the central node that connects participants and develops rules of
engagement – that is, being a keystone company
2.1.2 Corporate-sponsored new ventures

Many of the new ventures that populate an ecosystem are created by well-established companies. These
corporate-sponsored ventures are launched to probe or exploit opportunities within the ecosystem,
especially those parts experiencing technological change coupled with high growth. The domain of these
corporate ventures is usually established by their corporate parents, who often also control operations.
Corporate ventures typically pursue higher rates of growth and profitability than their independent
counterparts. They also benefit from the resources, skills and connections of their parent corporations.
Corporate ventures face the dual challenge of building credibility with their parents and establishing market
legitimacy. They might be constrained by the ambitious gaols their parents establish for them and controls
placed on them. While corporations grant their ventures varying degrees of autonomy, these ventures’
decisions are subject to major review by corporate planners and staff. Corporate venture managers,
therefore, have to work within the confines of their official mandates, budgets and timetables.
Winning the support of the corporate parent management staff is an ongoing, consuming strategic
challenge
3. The dynamic interplay in an ecosystem

Dynamic interplay occurs between strategic thinking and entrepreneurship in a business ecosystem.
Strategic thinking requires attention to, and consideration of, the linkages that exist among members of the
ecosystem.
The outcomes of these processes are hard to predict and take time to materialize.
Entrepreneurship plays three interrelated roles:

- A source of strategic initiatives
- A lever in positioning the firm
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- A set of activities that actualize firm’s strategic moves, thereby creating value
This ongoing cycle highlights the importance of learning, another source of knowledge that defines the
different types of entrepreneurial opportunities of the firm.
To illustrate the dynamic link between entrepreneurship and strategic thinking, we consider four different
models of ecosystems that differ in terms of the nature of innovation space they inhabit and the nature of
governance.
46
3.1 The Orchestra Model

This ecosystem model typically involves a group of firms coming together to exploit a market opportunity
based on explicit innovation architecture/platform that is defined and shaped by a dominant firm or the
keystone player. This ecosystem closely resembles the organization and structure of a typical symphony
orchestra: a conductor holding sway with her wand, directing a group of musicians, each a specialist in a
specific musical instrument. The dominant firm provides strong network leadership by envisioning and
clarifying the innovation architecture which offers a basis for structuring the activities of the individual
players within the ecosystem.
The primary challenge for the established company, the keystone player, is to maintain the relevance of its
innovation architecture/platform. Some dominant firms create corporate ventures that explore new
technological frontiers and help them build competencies in emerging technological fields while preserving
their existing skills.
Another aspect of strategic thinking relates to the keystone player’s relationship with its ecosystem
partners. This requires taking into consideration the benefits of all ecosystem partners before making
decisions, even those that seemingly involve only the company’s internal technologies or capabilities.
For independent and corporate ventures, the key challenge is to identify new opportunities within the well-
defined innovation space: one bounded by the keystone player’s innovation architecture. Entrepreneurial
activities can be considered as ‘market pull’, as well as ‘technology push’.
3.2 The Creative Bazaar Model

In this ecosystem, a dominant firm shops for innovation in a global bazaar of new ideas, products and
technologies. It then uses its proprietary infrastructure to build on these ideas and commercialize them.
Companies adopting this model use these different types of mechanisms to source new ideas and
technologies from investors with implications on innovation risk, reach, speed and cost. Regardless of the
approach employed, the dominant company offers its commercialization infrastructure for developing
innovative ideas and getting the finished product/service to the market.
Here, a dominant firm’s strategic thinking usually centers on the diversity of ideas that the company is
interested in sourcing; the wider net, the more diverse the ideas it can source.
Strategic thinking by a keystone also involves redefining the openness of the firm’s commercialization
engine. The more closed that engine, the more difficult it will be to embrace external ideas and get them to
the marketplace quickly and efficiently.
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Entrepreneurial activities in new ventures usually evolve around seeking opportunities to marry innovative
ideas with the commercialization opportunities offered by existing companies. To a great extent, this
implies creating new dependencies for commercialization rather than pursuing opportunities alone.
Sometimes the traditional, founder-centered new venture model has to be replaced with an established
company-centered model in order to quickly and successfully commercialize the venture’s discoveries and
technologies.
Corporate ventures are sometimes created to facilitate commercialization activities by side-stepping

corporate routines and bureaucracy. These ventures may also serve as partner ‘relationship hubs’ by
simplifying access to corporate recognition and support, and further reinforcing loyalty to the dominant
parent.
3.3 The Jam Central Model

This model involves a collection of independent entities, such as research centers, collaborating to envision
and develop an innovation in an emergent or radically new field. The term ‘jam’ signifies the
improvisational nature of innovation and the lack of centralized leadership in the ecosystem. In this type of
ecosystem, new ventures play a primary role in creating new knowledge and ushering in new paradigms.
Established companies often have limited understanding of the new knowledge or expertise generated by
new ventures. They face a key challenge in thinking beyond existing industry/market frameworks and
imagining commercialization possibilities based on radically new knowledge.
In this Jam Central ecosystem, fundamental discoveries and innovations are usually made by independent
ventures. As established companies become better acquainted with these innovations, some of them
develop a corporate venture that allows it to draw alongside industry development and capitalize on the
parent firm’s learning. These companies may be created or acquired from the pool of existing independent
ventures. Once launched, these ventures join others to assemble different types and skills, and focus on
building unique market space for their corporate owners.
3.4 The MOD Station Model
The term ‘mod’ originates from the PC-based video game industry where some companies allow their
customers to create modifications, or mods, of existing games and distribute them to customers. The MOD
Station model follows such an approach, exploiting existing and often proprietary innovation architecture
or product/platform. As such, companies focus on new markets or technological issues via a community of
innovators with established companies largely playing the role of catalyst by providing the innovation
architecture for ‘modding’.
As in the Jam Central model, independent new ventures typically provide much of the creative energy in
this ecosystem, albeit within the parameters defined by an existing innovation architecture/platform.
Coporate ventures play an important role in connecting their parent with changes in the ecosystem,
identifying promising applications, negotiating access to other’ intellectual property, and leading effort
intended to market and distribute products. While there may be considerable gains to be realized by the
established company, these gains may only accrue in the long term. More- over, they will have to be shared
with other ecosystem partners; indeed, in many instances, short-term benefits may flow largely to the
new ventures. In addition to a long-term perspective in making decisions about the ecosystem, established
companies need to adopt a more open approach. Further, established companies need to develop and
provide access to tools and capabilities that make modding or knowledge transformation easier and cost-
effective for their partners, thus attracting a wider range or diverse set of partners.
48
4. Transformation in an ecosystem: implications for managerial practice

Understanding the linkage between thinking strategically and entrepreneurship sets the stage for exploring
how managers exploit entrepreneurial activities for market leadership and value creation. A firm’s
ecosystem both inspires entrepreneurship and promotes strategic thinking. While there are things about
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the ecosystem that should be taken as ‘givens’, there is considerable room for entrepreneurship in framing,
revising and transforming an ecosystem for competitive advantage. The critical importance of connecting
entrepreneurship and strategic thinking becomes evident when we consider different types of ecosystems.
Entrepreneurship can stimulate the emergence of growth and evolution by revising assumption about
boundaries and resources, which sets the stage for redefining the competitive arena. Entrepreneurship also
requires the building of new relationships and linkages within an ecosystem, revising the dynamics of
competition. It becomes a knowledge creating activity where the outcomes are thoughts, models and new
ways of organing the firm’s operations.
Boundary spanning activities are important: it is essential to connect and capture knowledge from the
multiple sources. This task requires creativity and entrepreneurial orientation.
Strategy making and implementation becomes a constant managerial and entrepreneurial challenge,
necessitating deliberate moves in some situations while emphasizing improvisation in other cases.
Being an integral part of an ecosystem has several advantages:

- Overcoming gaps in knowledge/skills
- Gaining access to critical resources, incl. financial capital
- Building important relationships, or social capital, that firms can use in allying to commercialize
new technologies.
- The vision and the rules set by keystone companies within the ecosystem enable effective and
profitable engagement with other partners.
Being part of an ecosystem requires constant adaption, adding layers of complexity to decision-making.
Besides, retaining membership in an ecosystem demands compliance and conformity, which could lead to a
lack of edginess.
Business ecosystems offer their members opportunities to simultaneously collaborate and compete
through radical and continuous innovation. Ecosystems vary considerably in their organization and business
models, thereby influencing the strategic choices made by both established companies and new ventures.
These choices require entrepreneurial activities that create, shape, and transform the competitive
landscape. These changes ignite rivalry that stimulates innovation and alters the nature of the ecosystem
itself. Companies that capitalize on this dynamic cycle among innovation, entrepreneurship, and strategic
thinking in ecoystems are especially well-positioned to succeed.
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Strategy Reading Notes

Week 2 Sustainable Strategy and Shared Value

What is shared value?

Blurring the profit/non-profit boundary

The connection between competitive advantage and social issues

The role of social entrepreneurs

Creating shared value: implications for Government and Civil Society

Government Regulation and Shared value

Moving beyond trade-offs

The Roots of Shared Value

How Shared Value is Created

Reconceiving Products and Markets

Redefining Productivity in the Value Chain

Enabling Local Cluster Development

Creating Shared Value in Practice

The Next Evolution in Capitalism

Shareholder Value is a Multidimensional Construct

Four dimensions of performance:

Global Drivers of Sustainability

Connecting the Dots: the Sustainable Value Framework

- Growing Profits and Reducing Risk Through Pollution Prevention

Toward Sustainable Value

Sustainable Value: a Huge Opportunity

2. What is a business case for sustainability?

3. Drivers of business cases for sustainability

3.2 Drivers of business cases

Core drivers for the business case for sustainability:

4. From business cases to business models for sustainability

5. The role of business model innovation

7. Discussion and outlook

1.1 What is a business model?

1.2 Why are business models important for sustainability?

1.3 What is business model innovation for sustainability?

1.4 Research gaps and objectives

2. Method for categorising the mechanisms for delivering sustainability

2.1 Criteria for selection and categorisation of innovation examples

2.3 Identifying (sustainable) business model examples from practice

2.4 Development of archetypes based on literature and practice (coding)

3. Results: the sustainable business model archetypes

2. Create value from ‘waste’

3. Substitute with renewables and natural processes

4. Deliver functionality, rather than ownership

5. Adopt a stewardship role

7. Re-purpose the business for society/environment

8. Develop scale-up solutions

We identify three types of social entrepreneurs:

2. The importance and domain of social entrepreneurship

In reflecting on the 20 definitions presented in table 1, we believe any definition, measurement or

3. Typology of social entrepreneurship

4. Ethics of social entrepreneurship

4.1 Social Bricoleur

4.2 Social Constructionists

4.3 Social Engineers

5.1 Managerial implications

5.2 Future research directions

The Social in Social in Social Entrepreneurship

Understanding Social and economic mission

Attention to Social and Economic Goals

Discussion, Limitations and Further Research

2. Foundations and state of the research field

2.2 Motives to engage in ecological sustainability

2.3 Ecological sustainable entrepreneurship as a field of research

Existing literature is either primarily

3.2 Data collection, preparation and analysis