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RESEARCH ARTICLE
The spatial representation of business models for climate
adaptation: An approach for business model innovation and
adaptation strategies in the private sector
Jose DiBella
1,2
1
Department of Geography, King's College
London, United Kingdom
2
The Sustainability Policy Research on Urban
Transformations Lab, Department of
Geography and Environmental Management,
University of Waterloo, Canada
Correspondence
Jose DiBella, The Sustainability Policy
Research on Urban Transformations Lab,
Department of Geography and Environmental
Management, University of Waterloo, Canada.
Email: jose.dibella@gmail.com
Funding information
CONACYT - Mexico National Council for
Science and Technology
Abstract
Climate change adaptation requires organizations to recognize the numerous natural
and social dimensions of climate risk. In the private sector, local adaptation responses
to climate change are observed as changes to the limited capacities of organizational
processes to plan for social aspects of adaptation. This article applies a methodology
to map these connections and presents empirical evidence of a firm's autonomous
adaptation measures along their supply chain in Baja California, Mexico. The spatial
conceptualization of the business model illustrates the potential to identify sources
of climate-related risks, autonomous adaptation actions, and the barriers to improv-
ing the feedback loops to facilitate the integration of local knowledge for business
model innovation. The results suggest that coproduction of innovations is a mecha-
nism for organizational learning that can help to overcome the challenges for busi-
ness strategy to identify the wide array of local factors associated to climate
adaptation and normalize adaptation planning into business models. This approach
might accelerate leveraging the capabilities of the private sector for socially oriented
forms of adaptation that amplify the transformational value of business model
approaches for improved adaptation strategies.
KEYWORDS
business model, climate change adaptation, coproduction, innovation, spatial
1|INTRODUCTION
The Intergovernmental Panel on Climate Change (IPCC) recognized
that “effective national adaptation systems rely on a broad range of
actors playing differential, but complementary roles in climate change
adaptation according to their accepted functions and capacities.”
(IPCC, 2012, p. 347). The report stated that deliberate actions of the
private sector that contribute to adaptation could arise, among other
mechanisms, from business model approaches. What are business
model approaches in the context of climate change adaptation? And
how can these contribute to adaptation?
The main driver in the private sector is the search for efficiency
and profit, where cutting costs and profit maximization are central
aspects informing firms' strategies. The responses of individual firms
to current or expected climate stimuli expectedly focus on protecting
or adapting business processes and models to maintain profit-
maximizing routines. However, aligning business strategies with
socially just adaptation processes requires a renegotiation of the
accepted social functions of these organizations, to enhance both the
capacities of the firm and those of individuals, households, and com-
munities to adapt to the increasing intensity of climate impacts.
In the context of climate adaptation, business model innovation
presents a mechanism for the private sector to leverage its resources
for equitable adaptation processes, which can distribute the opportuni-
ties and costs associated with climate change proportionally (DiBella,
2018). This form of innovation requires reconfiguring relationships,
Received: 24 January 2019 Revised: 16 September 2019 Accepted: 17 September 2019
DOI: 10.1002/bsd2.92
Bus Strat Dev. 2019;1–16. wileyonlinelibrary.com/journal/bsd2 © 2019 John Wiley & Sons, Ltd and ERP Environment 1
recognizing and accepting trade-offs, and engaging in cooperative
adaptation, development, and innovation processes. These processes
might facilitate businesses' strategies based on the interdependent
relationship of the firm and communities and better integrate the social
nature of adaptation into business models. Only then might strategic
investments, in a long-run vision, strengthen local adaptive capacities
and advance fundamental sustainable development objectives, provid-
ing individual firms with increased benefits from adaptation.
This article proposes a conceptual framework that draws on cli-
mate change adaptation and business model literature to clarify the
relevance of this concept, to better understand the role of the private
sector in adaptation processes. It suggests that the benefits of adapta-
tion for individual firms will emerge as they integrate local knowledge
and innovations into their business models. Finally, it presents the
findings of field research undertaken to illustrate the linkages of the
business model to the community and the potential of coproduction
to inform business strategies.
2|BUSINESS MODELS, CLIMATE CHANGE
ADAPTATION, AND INNOVATION
There is no single definition of the business model (Shafer, Smith, &
Linder, 2005; Zott, Amit, & Massa, 2011, p. 5), but some authors agree
that the business model is a vehicle for the creation of value (Morris,
Schindehutte, & Allen, 2005; Teece, 2010). The concept refers to the
set of internal processes by which a firm can create value through ser-
vices or production and capture value by means of deploying market-
ing strategies and increasing sales. These processes are susceptible to
the impacts of external change, for example, changes in market or reg-
ulations and, increasingly, environmental change. The business model
can be understood using a so-called business model canvas
(Osterwalder, & Pigneur, 2010) to understand some of the various ele-
ments in firms and the relationships that they establish to create value.
The business model concept describes what “value a company
proposes to existing and potential customers (value proposition), how
the business is organized to create the value (value creation), with
which resources and infrastructure (value creation infrastructure),
under which circumstances (value creation conditions), and how finan-
cial value is retained for the company”(Schaltegger, Hansen, &
Lüdeke-Freund, 2016, p. 4–5). This is the accepted practice definition,
retaining a firm-centric view value generation, while also representing
the realization of the firm's strategy (Casadesus-Masanell & Ricart,
2010). The value-centred conceptualizations of the business limit the
potential to understand the interactions between the business and the
local communities beyond abstract interactions, and including feedback
loops and exchanges of information, resources, and knowledge that
materialize the firm functions in space can provide explanatory power
to contributions of the firm operations in local adaptation processes.
The business model represents the underlying architecture of the
firm and establishes the relationships that advance the firm's desired
business functions. It is fundamentally a system oriented towards cap-
turing and distributing financial value. The business model has become
a site of study in the knowledge economy, particularly with globalized
supply chains, outsourcing, and the restructuring of the financial ser-
vices (Teece, 2010). However, most recently, international policy
reports such as the IPCC (2012) and the Sendai Framework (UNISDR,
2015) mention business models with a limited explanation or under-
standing on the relevance of business models for climate change risk
and adaptation.
Another approach to understanding business models advanced by
Morris et al. (2005) breaks down business models into three main
dimensions: economic,operational, and strategic, where the search for
profit drives the economic dimension, the operational represented by
the firm's configuration focusing on internal processes to create value
(Morris et al., 2005) including knowledge management, production,
and service delivery methods along with logistical chains, and finally,
the strategic dimension places emphasis on the firm's market position,
interactions across organizational boundaries, and growth opportuni-
ties (Porter, 1979).
The components and linkages among them describe system-level,
firm-centric viewpoints where the business model represents the way
that activities and resources are organized to ensure sustainability and
growth for the firm (Demil & Lecocq, 2010). The prolonged responses
and incremental changes to business models in response to climate
stimuli and their impacts on the firm's systems have not yet been
deeply studied to understand their influence and benefits in engaging
in local adaptation processes. The impacts of climate change have
mostly remained just another factor for risk assessment and rarely a
central concern for firms, but this is rapidly changing as increasing
interest for corporate strategy and planning might be imperative for
navigating future climate uncertain contexts.
The managerial response in businesses is not yet equipped to rec-
ognize or interpret the complex nature of adaptation processes. For
example, Weinhofer and Busch (2013) found that in the energy sec-
tor, firms that restricted knowledge on climatic changes were unable
to determine with precision the potential negative impacts on busi-
ness activities. Therefore, firms deploy climate risk measures that do
not differ from the usual process of managing other business risks.
The firm strategies tend to focus on established forms of assessing
risk and innovation (Wittneben, Okereke, Banerjee, & Levy, 2012),
which rely on cost calculations and market variables to determine
opportunities, costs, and value of investments.
The responses of firms to climate impacts can be understood
from the perspective of organizational learning where the signals
prompting firms to adjust their business routines originate from a
combination of climatic conditions, regulation, and the market
(Berkhout, Hertin, & Arnellll, 2004) but with limited ability to process
signals from climate change, as these become difficult for firms to
interpret because they remain outside their normal operational rou-
tines and strategic planning cycles.
In the private sector, small and medium types of firms generally
tend to have limited capacity and resources to undertake climate risk
assessments or planning, resulting in managers “overlooking distant
times, distant places, and failures”(Levinthal & March, 1993, p. 95),
which become salient barriers to developing adaptive capacity (Winn,
2DIBELLA
Kirchgeorg, Griffiths, Linnenluecke, & Günther, 2011). Similarly, as
foresight and long-term vision are core dimensions to build adaptation
capacities, the geographical dimension of business models is relevant
for adaptation, as adaptation respond to local risks and can also be
understood from its relationship to a global process that intervenes in
the distribution of interconnected winners and losers (O'Brien &
Leichenko, 2000).
Furthermore, firms must also recognize the temporal dimensions
critical for adaptation, which might be understood as entrainment for
firms, which is defined “as the adjustment of the pace or cycle of an
activity to match or synchronize with that of another activity.”This
refers to the initial response of the firm, where one activity in the
cycle occurs in response to climate stimuli (reaction speed), followed
by the speed it takes the organization to synchronize with the exter-
nal activities (implementation speed; Ancona & Chong, 1996, p. 253).
In this complex context, business model innovation provides an
opportunity for incorporating these various dimensions and linking
socio-environmental change derived from climate impacts to business
models. A number of scholars focus on business model innovation as
a vehicle for corporate transformation and renewal (Chesbrough,
2010; Demil & Lecocq, 2010; Zott et al., 2011). The private sector
firms have already demonstrated their capability to incorporate sus-
tainability into core business functions by integrating related practices
into corporate functions such as quality control, strategy develop-
ment, or health and safety (Hall & Wagner, 2011).
According to Afuah and Bahram (1995), innovation should be
viewed from the perspective of a wider social network of suppliers,
customers, and complementary innovators. The capacity for conver-
sion of external knowledge into innovation is derived from the firm's
ability to explore, assimilate, and transform external knowledge
(Camisón & Forés, 2010) to incorporate it into routines embedded in
the business model. The firm's ability to absorb new information is
shaped by routines capable of identifying and acquiring knowledge
about the environment and changing external parameters, which
include routines to analyse, process, interpret, and understand new
knowledge in accordance with internal structures (Schmitt & Klarner,
2015). The routines that alter the existing knowledge structures of
the firm and lead to the identification of strategic opportunities can
be considered transformative with the value derived from the suc-
cessful application of new knowledge into firm operations. These
adjustments allow the firm to refine its business model and adapt to a
changing external environment (Camisón & Forés, 2010; Easterby-
Smith, Lyles, & Tsang, 2008). This points to a capacity to recognize
and utilize information to deploy adaptation actions, which results in
increased likelihood of drawing economic value from these actions
(Camisón & Forés, 2010).
The changes in firms are not solely the function of prices, prod-
ucts, and markets but, more importantly, of the ability to manage
space and time: “What kind of change, who will fight for it and who
will resist depends on historical and geographical conditions”
(Schoenberger, 2000, p. 330). This is a crucial component of under-
standing firm decisions and drivers to develop adaptation spaces that
align with their economic values and views. Taylor and Asheim (2001)
propose that the firm is a “phenotype,”a site where different ele-
ments provide structure to the firm and also react to external condi-
tions where economic and social processes intersect. Yet the firm
remains viewed as separate from the spatial scales of the economic
system and from the locations that characterize its activities.
The dynamic nature of the business model concept opens the
possibility to integrate new ideas and normative directives as desired
to expand the functions of organizations in response to emerging or
changing social, economic, and environmental circumstances. For
example, non-profit organizations structure and map the mechanisms
by which they intend to deliver social rather than economic value
(Dahan, Doh, Oetzel, & Yaziji, 2010, p. 329). In the business models of
for-profit firms in the private sector, these can include aspirational
characteristics: “the business model is not just a description of how
they go on but depicts how they want to be in the future, a model to
strive for an ideal outcome”(Baden-Fuller & Morgan, 2010, p. 165).
The ideal outcomes provide spaces for new drivers for desirable
future results and give important direction towards new forms of
organizing firm relationships. The business model offers ways of dif-
ferentiating firms based on new ideas or new practices that become
central to the firm's functions and prominent in the way firms
operate that the differentiating elements can be analysed individually
(Baden-Fuller & Morgan, 2010). The different relational aspects of the
business model and its routines propose a conceptual rather than a
financial model of a firm (Teece, 2010), which allows business models
to become sites for scientific inquiry.
In linking business model approaches to climate change adapta-
tion, the idea of adaptation in human systems as a “process, action or
outcome”(Smit & Wandel, 2006, p. 282) facilitates examining the vari-
ous elements and relationships of business models. Furthermore,
Biagini, Bierbaum, Stults, Dobardzic, and McNeeley (2014) describe
adaptation actions as the tangible actions that modify institutions, pol-
icies, programmes, or the environment in response to experienced or
predicted climate change impacts. These adaptive actions are best
understood when broken into means-end chains (Eisenack & Stecker,
2012), which facilitate tracing or mapping specific activities, such as
those oriented towards investments and innovations to be identified
in a business model system.
The different types of adaptive actions can be developed or
deployed through social learning (Pelling, High, Dearing, & Smith,
2008), and innovation as a form of adaptation (Rodima-Taylor,
Olwig, & Chhetri, 2012) has the potential to trigger transformational
adaptation processes. The limited analysis on the private sector's role
in adaptation to understand climate risks, technology, and business
models is needed to make climate investments (Biagini & Miller, 2013)
and also to identify firms' strategic preferences in local adaptation
processes. A lesson can be drawn from disaster risk reduction, where
the business model approach pursues the integration and alignment
of disaster risk reduction with the existing operational and strategic
goals of an enterprise (Hori, 2015; Warhurst, 2006).
It further requires firms to engage in a critical process of knowl-
edge exchange for enhancing adaptive capacity, which will emerge as
an outcome of the ability to interpret and organize information
DIBELLA 3
(Williams, Fenton, & Huq, 2015). In the context of adaptation, under-
standing regional climate change risks and adaptation needs might
enable actors to identify minimum thresholds for cooperation,
resource use, experimentation, and feedback, enhancing their ability
to mitigate climate impacts. In a business model approach to adapta-
tion, a firm-centred view of adaptation presents the limited space for
adaptation around an organization, which suggests the options a firm
might have to fit their business strategy in response to changing cli-
mate impacts. The organizational learning model of firms responding
to climate impacts proposed by Berkhout et al. (2004) indicates mar-
ket and climate signals that trigger organizational responses to climate
stimuli and follow a path of organizational learning (see Figure 1).
These processes can result in the deployment of adaptation measures
or correction of organizational routines to cope with climate stressors.
In the first stage, the learning process is initiated by a signalling
mechanism that challenges existing routines as inappropriate or inef-
fective. These signals can arise from climate change, weather
extremes, the market, and/or regulations, triggering an organizational
learning process. The signalling itself results from a stimulus, which
Eisenack and Steckler (2012) define as a change in biophysical vari-
ables associated with climate change, though this could also be a
change in risk tolerance even when biophysical variables remain
unchanged, for example, if new knowledge is made available on the
dangers of climate change. The second stage is characterized by
searching and experimentation (Zollo & Winter, 2002). This learning
process internalizes the stimuli. Success depends on the internal
actions of the firm and its ability to interpret and act on external sig-
nals. The third stage further articulates the newly formed knowledge
and codifies it so that it is normalized into a firm's routines. The firm
selects options from the trial and experimentation stages and dissemi-
nates the new adaptive processes across the organization, which leads
to the establishment of new routines. The fourth and the final stage
focuses on feedback and iteration. This is the ongoing process within
the cycle of validation that examines the firm's response to external
stimuli and confirms the organizational effectiveness of the new, cho-
sen routines.
However, the learning process is a firm-centred approach to man-
aging climate impacts; it fails to recognize the variety of relationships
and activities in which the firm is embedded in a community or with
their suppliers, external organizations, and even competitors that
might go beyond market calculations but be part of a cluster of firms
in a local economy. The mechanisms for dissemination and codifica-
tion of new routines vary according to the range of the stimuli and
the investment in the trial and experimentation stages, which set out
the options for codification into routine operations. These can include
the creation of operational manuals to alter processes, the develop-
ment of communication hierarchies for emergency or disaster risks
identified in field operations, or the integration of technological plat-
forms customized to relay information necessary to undertake adapta-
tion actions.
The feedback loops of the learning process that can be applied to
business model innovation have been accurately framed in the triple-
loop learning in the context of adaptation and extreme weather
events. The organizational learning process in climate change adapta-
tion can draw on the loop learning model detailed in the IPCC special
report on extreme weather events (Figure 2).
In the first cycle, a single loop leads to amendments to specific
organizational instruments that improve the efficiency of an action
(Pelling et al., 2008). In business routines, for instance, these can be
minor adjustments to transportation routes or schedules to avoid
delays or costs from natural hazard-related impacts. The single-loop
actions are procedural adjustments limited to minor corrections using
on-site information. These changes likely would not require additional
resources or coordination with senior planners in the organization.
This limits the ability to recognize and document adaptive actions,
due to the implementation speed of short-term routine corrections in
response to perceived weather or natural hazard impacts. Single-loop
learning is insufficient to undertake significant long-term corrections
to solve growing climate-related stresses.
The double-loop learning challenges fundamental organizational
values and policies. These adjustments result in more profound
changes in a firm's behaviour. For example, in agricultural supply
chains, the firm can establish clear protocols for the use of water sen-
sors or irrigation cycles to manage water resources. These protocols
would include training for onsite coordinators and the establishment
of feedback loops to track the efficiency of these measures. Addition-
ally, incentives for change and monitoring would be introduced into
operational meetings to maintain close collaboration between senior
managers and operations. Double-loop learning is a starting point to
understand climate-related failures in the context of a broader chang-
ing climate system. The experiences of losses, in both productive
assets and opportunities to create value for the firm, might trigger
essential changes in its norms, policies, and objectives through adap-
tation (Argyris, 1977).
Triple-loop learning opens scope for deliberate transformative
change as it is learning that challenges underlying organizing principles
(Pelling et al., 2008), raising issues related to power, relationships, and
institutional arrangements and determining a range of possible course
of actions. In business models, these changes would be those that
FIGURE 1 Organizational learning model.
Source: Berkhout et al. (2004)
4DIBELLA
propose fundamental reconfigurations and transform business drivers,
objectives, business routines, and relationships with associates. Triple-
loop learning in business model framings would imply integration and
recognition of adaptation as a social process and lead to fundamental
changes in the way the firm extracts value and seeks marginal costs.
Although triple-loop learning implies no normative preferences,
there is scope for a progressive trajectory. This would require recog-
nizing the adaptation needs of social actors within the scope of firm
relationships, for example, understanding the limits of agricultural out-
put in certain locations and investing in the relocation of critical assets
or developing common adaptation strategies with local associates.
Thus, triple-loop learning describes pathways through which the firm
might come to better recognize its social embeddedness in local eco-
nomic life and renegotiate its social function within the local produc-
tion system. This would involve implementing longer term adaptation
strategies geared towards enhancing the adaptive capacities of the
organization itself and the local system. Triple-loop learning describes
a relational view of the firm in the context of climate change
adaptation.
In view of the business model, transformative changes will require
innovations that question underlying assumptions about value genera-
tion and long-term ability to maintain business functions under cli-
mate stressors and allow for social and environmental variables to be
understood in the adjustment of business processes and business
strategy. There is evidence of such efforts in sustainable business
model innovation studies (Evans et al., 2017) and the holistic perspec-
tive on business models (Lozano, 2018) that expanded the analysis of
the business model to include different components and actors in a
system, the more robust is the ontology for strongly sustainable busi-
ness models has been proposed to define enterprises in relationship
to their social and environmental contexts, advancing a notion of
boundaries of the model (Upward & Jones, 2016) calling for the inclu-
sion of social relationships as elements of the model with complemen-
tary system dynamics representing the human, social, and material
elements, as well as learning processes to predict or simulate success-
ful sustainability outcomes (Victor, 2008).
This study fills a gap in the literature on business models by con-
ceptualizing spatial and temporal dimensions in the business model
and illustrating through empirical evidence the linkages of the model
to the external systems in the context of adaptation and extreme
weather events, and sources of business model innovation beyond
market and environmental signals.
3|METHODOLOGY
There are different kinds of adaptive actions that emerge from busi-
ness routines. A first stage to categorize these types of actions begun
with analysing the public database of the United Nations Framework
Convention on Climate Change Private Sector Initiative, which con-
tains 100 self-reported adaptation case studies of individual firms
across various sectors and geographical locations.
Each case was manually coded using NVivo qualitative analysis
software to identify individual adaptation actions of firms (Figure 3)
and identify the different components that make up the business
models of these businesses, such as type of suppliers, actors involved
in adaptation projects, type of resources deployed, and value created
for the firm.
The analysis indicated that the agricultural sector had the higher
number of different adaptation actions (68) reported by the different
FIGURE 2 Loop learning model.
Source: IPCC SREX Report (2012)
DIBELLA 5
companies, as well as a great variety of upstream and downstream
relationships. Additionally, the firms in the agriculture sector reported
different types of local innovations and wide-ranging degrees of cli-
mate stressors in their production. The graph below shows the highest
number of adaptation actions reported by individual firms. This was
the sector selected for the next stage of field research. A search for a
focal firm to participate as a research participant was carried out from
opportunity sampling and professional contacts to identify a company
with operations in climate-sensitive region.
A firm which fulfilled all the required characteristics for the study
was identified and invited to become a research participant. The com-
pany is an organic agriculture firm headquartered in California, USA,
with a supply chain of individual farmers, cooperatives, and local busi-
nesses located in the region of Baja California, Mexico. The firm
reported an approximate yearly revenue of U.S. $100 million. The
supply system is composed of approximately 170 farmers across the
Baja California Peninsula, and the senior officers of the company esti-
mated that approximately 3,500 people, including employees,
fieldworkers, farmers, and their families, are directly linked to the
organic production located across several communities in the penin-
sula. The majority of the individual farmers were low-income pro-
ducers supplying the firm either directly with organic produce or
through the local farmers cooperative, which coordinated individual
farmer production and linked them to the firm's supply chain.
In this location, extreme hydro-meteorological weather events
and increasing levels of climate-related stressors such as high temper-
atures, rising sea levels in proximity to production areas, flash
flooding, and drought conditions impacted farming operations along
the supply chain. The methodology to map the business model and
community interactions facilitated local risk mapping and the types of
local autonomous adaptation actions that contributed to the firm's
ability to cope with climate-related impacts. The interviews further
provided depth to characterize adaptive responses according to their
contributions to local adaptation and examples of the strategic use of
resources, information, or skills for adaptation.
A series of semistructured interviews and participatory mapping
sessions were conducted with senior managers of the firm, their sup-
pliers, partners, and local associates of the firm, including their various
internal logistics, transport, sales, production, quality, and strategy
departments. The participatory mapping session was carried out with
directors of the firm to map out the main locations of operations and
the overall value-generating processes in the firm, and then the map
was expanded through direct observation visits to different locations
and semistructured interviews to managers, operations, field coordi-
nators, and external suppliers. The result was a map of the primary
sources of value for the firm and the investments, along with the rela-
tionships of the firm necessary for the organization to function. The
map conceptually represented the business model as a system with
spatial elements that indicate the locations where value, knowledge,
information, and resources were delivered or extracted.
The business model map also outlined the boundary for the
research, which was described by the firm's officers themselves, by
identifying locations where a financial value was deployed or
extracted to perform the firm's functions. A total of 37 interviews
were carried (see Table 1) to understand the nature of the relation-
ships, the types of climate-related impacts and stressors on their oper-
ations, forms of information and resource exchanges, and the type of
cooperative innovations or measures deployed to manage climate
impacts. A methodological choice was made to limit the scope of the
research and create a boundary by focusing on crucial senior planners,
FIGURE 3 Adaptation actions in the United
Nations Framework Convention on Climate
Change (UNFCCC) Private Sector Initiative
(by author)
6DIBELLA
midlevel managers, and field operators. This group included suppliers,
participants in experimental pilot projects, research organizations,
institutions, local guilds, and regional government offices and individ-
ual farmers in their supply chain.
4|KEY FINDINGS AND LESSONS FOR THE
PRIVATE SECTOR
4.1 |A spatial map of the business model and the
relational view of adaptation
The data collected through fieldwork were used to develop a spatial
representation of the business model by integrating the geographical
locations of the firm's operations, value-generating processes, climate
risks, and adaptive actions in each location. This novel conceptualiza-
tion facilitated identifying the barriers and opportunities emerging
from their types of responses to climate stressors and their links to
the value generation processes of the firm in specific geographical
locations, which then could be understood in the broader perspective
of the business model of the firm. The first image below shows the
geographical distribution of the firms' operations (Figure 4) and the
second (Figure 5) the conversion to a visual representation of the pro-
cesses, locations of risk, relationships, and sources of innovation that
make the business model. The map provided clarity on the extent of
the business model system, the processes of investments and the
diverse cycles of investment, harvest and revenues through the year,
and the climate-associated impacts disrupting some of these
processes.
The visual map of the business model revealed compartmental-
ized and hidden information, resources, and practices oriented to
provide adaptation solutions in specific locations, which would be
critical for senior planners in developing long-term adaptation strat-
egies and making decisions based on a wider set of parameters
where climate change impacts would be affecting the business
functions beyond the narrow organizational boundary of the firm.
The spatial representation of the business model allowed for a
more precise identification of the sources of climate risk and impacts
of extreme weather-related events in specific locations and compo-
nents of the business model. For example, in the logistics department,
production disruptions were identified in key roads used for time-
sensitive delivery of produce of some low-performing suppliers, which
remained a source of crop losses. This was particularly problematic in
field operations where certain crops were more vulnerable to temper-
ature variations in anomalous climate events at peak harvest season.
The business model mapping addressed the problem of mod-
ularization of knowledge and information by pinpointing in business
processes the degrees and sources of climate risk.
The inclusion of spatial information revealed the processes and
disruptions of feedback and learning loops in the business model,
preventing the integration of local adaptation solutions to the long-
term business strategy of the firm. For example, the use of custom-
made infrastructure to protect crops from flood and heat stress was
developed by the field operations of the firm and the local farmers,
which were developed using local expertise and knowledge of the
type of topography in specific locations. However, the firm had yet to
integrate these innovations strategically for strengthening the adapta-
tion capabilities of the firm and their wide-ranging stakeholders,
including suppliers, employees, and community members because
they had not yet associated the link between local knowledge and
innovation to the wider business model innovation requirements for
locations of high climate stress.
The integration of these innovations to leverage the capabilities
of the firm for adaptation would require cost value calculations and
the recognition of the use of local knowledge across the production
supply chain to inform strategic innovation processes that might
enhance the firm's ability to cope with long-term climate impacts. The
spatial view of the business model suggested that daily activities of
TABLE 1 List of interviewees
Senior management Field coordinators External actors
Chief Executive officer Coordinator Central Production Zone 14 individual farmers in the supply chain
International Officer Coordinator South Production Zone University researcher working with the firm
Chief of Operations Coordinator Northern Production Zone Local government official in the agriculture
department of the municipality
Director of Operations BCN Research and Development Officer
Financial Director Coordinator Northern Baja California Zone
Sales Director Agronomist
Director of International Operations Field Coordinator Organic Certification
Officer
Coordinator of International Operations Human Resources Officer
Growing Operations Manager—National Hydroponic Project Expert
Greenhouse Operations Manager
Open-field Manager
Open-field Manager
DIBELLA 7
local employees and suppliers addressed issues related to heat stress
or water scarcity issues affecting business processes and the actions
that local field operators had deployed to manage the impacts. For
example, the deployment of magnetic technologies to conserve
humidity on the open fields or time management strategies to protect
the harvester's health from high heat stress were identified in specific
locations of the firms' operations.
The relationships of the firm that contributed to build value for
the firm, a range of individuals, and organizations working to develop
local solutions to different aspects of climate impacts emerged, such
as local researchers and experts monitoring weather patterns through
collaborations with the firm employees and communication strategies
of local firm employees with the farmers to share critical information
for protecting crops during extreme weather events. The identifica-
tion of the processes disrupted or altered by climate impacts within
the firm routines highlighted the types of reconfiguration that certain
investment cycles would be necessary to enhance the “entrainment”
capabilities of adaptation actions. This means alignment of investment
and resources with external environmental conditions to enhance the
conversion into value-generating processes. These in a large supply
chain had remained largely ignored or absent from senior managers
working on business strategies, as they would be considered as local-
ized solutions without proper documentation or integration into larger
corporate planning cycles.
The inclusion of the climate-related impacts on local suppliers and
smaller firms to the firm's business model widen the analytical space
FIGURE 4 Locations of suppliers and
organic production.
Source: Research Participant
FIGURE 5 Feedback loops and spatial
representations in the business model (by author)
8DIBELLA
and revealed the losses in economic value with origin in the lack of
capacities of their associates. For example, Figure 6 shows the loca-
tions of organic farms supplying the firm and also show the elevated
flood risks due to the geographical location near flood area. The
farmers face a high level of vulnerability to pests transported from
local construction debris during the last hurricanes affecting the
nearby urban areas. These losses of production in these locations
impacted the sales, production, and storage departments of the firm
raising the costs significantly but, more importantly, altered the con-
figuration of the business model, as the firm had begun to shift pro-
duction to different locations and considered changing sourcing
locations for certain crops.
The geographical proximity and location of these suppliers is a
critical component of the business model that would otherwise be
solely considered in financial terms, yet the spatial link to the model
provides the opportunity to think about the types of resources and
locations that value-generating activities occur and the potential
approaches to diffusing solutions. These solutions that provide stabil-
ity to the company can become devastating to the local economy
where families and households depend on the production of these
farms. The limited ability to correlate climate impacts in the geograph-
ical locations to the business model processes and investment
plans narrows the future planning and strategies that might be desir-
able for the firm and the suppliers. For example, the relocation or
reconfiguration of the supply chain might result in higher opportunity
costs for the firm and become detrimental to their ability to maintain
trust among the community.
When the production window moves because of
flooding or humidity, they [South BC Cooperative] do
not have harvest in the time they are supposed to in
December and we need to find supply from elsewhere
…but it's not easy, nobody wants to contract for just
some months of produce, supply agreements require
longer commitments. If we buy from somewhere else,
that takes from what we buy from Baja. (Firm Opera-
tions Manager in Charge of the Supply Chain for the
Peninsula of Baja California)
A closer study of the relationships derived from the firms' interac-
tions with external actors is necessary to expand the analysis of the
business model. This examination might support identifying ways for
the business to contribute to socially-oriented adaptation processes by
better understanding the impacts of their decisions in the economic
and social life of their suppliers. Also, providing information for
targeted investments to raise efficiency and build local adaptation
capacities. These are more desirable business adaptation strategies and
tactics than reactive adaptation responses, which might result in higher
costs in the long run. These unplanned responses to climate change
might provide short term solutions. Still, in the future, force the firm to
relocate operations, reconfigure their supply chain, and reinvest in
infrastructure in locations that can be impacted by new types of
extreme climate events and experience sustained climate stressors.
4.2 |Incremental change, reconfiguration, and
transformation of business models
Adaptive actions are forms of innovation. These actions encompass
new processes, technologies, information, and resources that might
facilitate adaptation to climate change and extreme climate events.
The distribution of the value generated by financial resources,
FIGURE 6 Example of locations of
supplier farms.
Source: Research Participant Firm
DIBELLA 9
technology, or information for expanding the firm and associate adap-
tation capabilities will be related to the capacity to recognize adapta-
tion actions as necessary for business processes in those locations
experiencing climate related effects (Table 2).
These actions can prompt different degrees of change in the busi-
ness model, and innovation provides the mechanism for the firm to
overcome forced changes to their business due to climate change, all-
owing businesses to move towards desirable changes through adapta-
tion. The degree of change to the business model generates benefits
to the firm and potentially in different forms to a variety of actors in
the system.
For example, in some supplier locations, the floods and
increasing impacts from hurricanes decimated new infrastructure to
protect agricultural production. The impacts on the business model
of the firm were significant, as the firm absorbed the cost of losses
of investments in the farming cooperative. Through the mapping
process, it was revealed that infrastructure had been deployed
without taking into account the climate-related risk of each
TABLE 2 Types of adaptation actions identified across the business model
Category Actions deployed adaptation Contribution to local adaptation Business model linkages
Financial resources Alternate to food for families crops
during summer months: corn and
beans
These provide alternative sources for
food security during
high-temperature months of
noncrop production and limited
their need to move towards
additional revenue activities or
leaving farming operations
Maintained stability in the supply
chain lowering the opportunity
costs for the firm in finding new
suppliers or formalizing additional
supply relationships
Food and income relief (3 months) Disaster recovery relief and
addressing vulnerabilities from food
security and loss of income
Assured rapid recovery of local
production capabilities and
stabilized supply of products
supporting the sales components of
the business model
Financial investments that allow
farmers to kick-start the season;
buying inputs such as seeds,
fertilized
Increased flexibility and security on
production inputs
Initial investment across the supply
chain assured the firm could track
and maintain harvest deadlines
critical for business model income
generation components
Infrastructure Pilot macrotunnel and microtunnel
projects
Extended the production of crops and
control of humidity and pests for
higher yields of organic crops and
sustains income
Allowed for experimentation and
testing on field innovations, a key
element for business model
innovation through cost reduction
and investment in infrastructure
Meshes (37 installed) Extended production of crops and
control of humidity and pests for
higher yields of organic crops and
sustains income
Minimized losses and introduced
technical innovation into
agricultural production, reduced
losses associated to climate, and
extended the production. These are
critical for the firm's ability to sale
products through the year
Information Weather stations (raw data) Forecasting and risk warning for local
farmers is improved
Would contribute to the logistics and
crop production quotas necessary
to forecast revenue, but the data
had yet to be processed or designed
in a usable format
Knowledge transfer
and exchanges
Genetic improvement on plants and
new varieties being tested to cope
with local environmental conditions
Improving local varieties of crops by
developing context-specific strands
with direct transfers to farmers
Sales department can offer wider
varieties of crops and assure
customers of product availability
during the different seasons
Expert in organic farming and
management to support operations
Growers benefit from expertise and
skills building
Coordinators to advice and supervise
in production on the fields
Growers benefit from expertise and
skills building
Supports remotely located and
low-performing farmers in the
improvement of farming practices
and management of climate-related
stressors, which benefits the firm's
production quotas
10 DIBELLA
individual farmer and the location of the infrastructure in their
farms. In contrast, other locations in the same production system
showed that local field operators of the firm and supplier farmers
engaged collaborative coproduction of infrastructure developing
locally designed protective infrastructures for production, which
were designed and constructed by a combination of firm employee
skills and local knowledge, and material resources of individual
farmers resulting in low cost and a highly efficient infrastructure to
protect crops from disease vectors, frost, and high temperatures at
undesirable times.
The firm was limited in its ability to integrate these innova-
tions into their business models by the limited efforts into docu-
menting these changes and incorporating them into its processes
and business cycles. This would have required the managers to
undertake a preliminary analysis of the locations of operations, but
also into the potential to invest in the local designs. These could
have proved to be lower-cost solutions, which would have yielded
higher adaptation benefits to the firm and the community. The
type of changes to the business model resulting from planned
adaptation activities and experimentation resulted in localized inno-
vations that contributed to niche adaptation in certain geographical
locations.
In gradual, positive forms of transformation of the business model
resolved climate impacts by deploying targeted investments, for
example, by investing in the relocation of critical suppliers where
water had become a limit to production output and providing the
alterative to relocate to various local farmers and their families. This
effectively transferred the transformation process to the network
beyond the firm but provided an alternative to maintain income gen-
eration to the farmers and served as a form of innovative solution to
climate-related impacts for the firm helping it to maintain economic
gains from the skills and knowledge of those producers.
The learning loops capable of allowing the firm to innovate from
the social and economic impacts derived from climate-associated
stressors were limited by the ability of the firm to recognize these sig-
nals or process the information. For example, recognizing the increas-
ing efforts by low-performing farmers to maintain yield output and
contiguous investment into their production in the face of regular
floods and pests in the crops required family operations to force some
family members to alternative sources of income or continually invest
resources to maintain production lowering their profit from the har-
vests. The firm had not recognized the potential to make minor invest-
ments in providing technical support or helping diffuse some of the
types of location adaptation solutions coproduced through collabora-
tion in other locations to raise efficiency protecting both the comp-
any's revenue sources and the community's ability to cope with
climate.
These types of signals, which might lead to learning cycles and
innovations in the firm, can be understood through the learning loops
framework. In the context of business model innovation, the first
learning loop, only the incremental changes to routines in autonomous
responses to climate impacts were observed, for example, changing
irrigation routines or minor actions to control plant disease in the
production fields. The second learning loop actions require reframing,
requiring detailed operational calculations such as changing sourcing
locations for certain crops or shifting the supply chain to focus volume
production on high-performing suppliers.
In the final learning transformational loop, the focal firm made
radical changes when faced with water shortages in certain produc-
tion areas; they offered relocation of farmers and households to dif-
ferent geographical locations where water was available for
continuing to grow certain crops. This is a type of transformational
change for the community, yet the firm business model maintained
the same function. Drawing on Rickards and Howden (2012) of trans-
formative adaptation in agriculture, the degrees of change and bene-
fits from adaptation for business models can be conceptualized as
three degrees of adjustments moving across a continuum (Figure 7).
These can be accelerated through the types of actions and the
sources of innovation considered by the firm and also by the degree
of integration into their business model, which suggest the benefits
and value can yield higher benefits in the long run for the firm in loca-
tions where increasing climate extremes begin to impact their busi-
ness and their associates (Figure 8).
The benefits of adaptation increase as business model innovation
incorporates local knowledge and diffuses the information across the
organization. A strategic integration and normalization into business
routines, processes, and policies could have resulted in greater bene-
fits from adaptation (Table 3).
The benefits of adaptive actions of the firm can be enhanced to
the degree that adaptation planning is considered in their deployment.
This means that moving from autonomous response adaptation
actions to strategic integration would yield higher financial and social
benefits. For example, the firm had deployed water efficiency mea-
sures in their open-field aromatics production in northern California
and area susceptible to drought. However, they had not provided a
proper monitoring mechanism for the changes in efficiency or created
the right incentives for the managers and employees to reduce water
irrigation techniques limiting the potential of the technology to yield
benefits to the firm.
The current types of business models have several challenges for
integration of adaptation planning into their routines that limit the
benefits to the firm and also limit their associate's capacity to plan for
climate impacts, use of resources to create new assets in the long-
term strategies to cope with climate stress, or use information to par-
ticipate in decision making necessary to undertake adaptation actions.
The traditional business models prevent sharing investment or plan-
ning information critical for the ability of individuals and organizations
to maintain profit-generating activities. The benefits from undertaking
adaptation actions driven by collective uses of information and long-
term views of climate-related impacts beyond to the organization can
strengthen suppliers or local stakeholders linked to the business
model ability to develop capabilities necessary for adaptation. This
view represents a radical departure from the accepted business model
practices but provides the type of process innovation that can transi-
tion the firm from incrementally dealing with climate impacts to
transformation.
DIBELLA 11
4.3 |Coproduction as source of business model
innovation for adaptation
The mechanism of coproduction has been recognized as a strategy for
learning and knowledge in adaptation (IPCC, 2012) but has yet to be
applied in business model innovation framings. The firms' understand-
ing of local adaptation needs and the types of local solutions devel-
oped through cooperation and coproduction with associates and
community members can open space for more egalitarian forms of
adaptation by facilitating firms that develop longer range strategies
that align with social adaptation efforts. These business models would
widen the adaptation space by including the signals of climate impacts
derived from their associates, suppliers, and stakeholders' activities
informing organizational learning cycles and bespoke innovations of
the business model.
This alignment with more social views of adaptation move the
firm towards a more egalitarian types of responses to climate stimuli
and also allow the firm to seek out adaptation options that remain
FIGURE 8 Business model and
climate impacts
FIGURE 7 Business model innovation and the
benefits of adaptation
12 DIBELLA
TABLE 3 Business models changes under climate stress
Type of adjustment to the
business model Description Example Community
Increment Adjustments to operational routines,
processes, or business cycles
1. Change logistic routes or
schedules
2. Increase monitoring
3. Deploy internal experts
4. Leverage cross-department
collaborations
Maintain functions, gradual creation,
or erosion of local adaptive
capacities
Reconfiguration Changes to the organization and the
relationships in a system
1. Change suppliers to
different locations
2. Introduce new products and
technology
3. New services
Observable changes in relationships,
practices, and locations
Transformation Fundamental change of organization's
processes, services, assets, or
system in response to climate
change impacts that align to
long-term socially informed
adaptation strategies
1. Modify by-laws
2. Create new organization
3. Integrate social view of
adaptation
Change in livelihoods or location
FIGURE 9 Expanded organizational
learning model for climate adaptation
DIBELLA 13
more cost-effective and stabilize the operations in the long run.
Figure 9 illustrates the original organizational learning model proposed
by Berkhout et al. (2004) and the revised model accounting for the
new sources of signals that includes the external responses or
exchanges coming from different actors in a local community. The
learning cycle of the firm is enhanced by the inputs from a variety of
members and knowledge, triggering innovations in the business model.
Local innovation reduced the cost of the [commercial]
mesh by 30 percent. We could not start from investing
all the retail cost; it started with a local grower. They
started in a ranch with low revenue and losses because
of disease and pests. They provided some part of the
materials and the grower obtained the material for the
structure. That was successful and now all the growers
close to here have it. In the Vizcaino region, growers
considered hurricanes and can roll out the mesh in two
hours to avoid damages …We operate differently, and
in San Jose they invested using government funds and
used commercial meshes. They did not have people
with different skills; we put together a team of
welders, builders, and farmers. We made our own
designs. (Chief Crop Coordinator)
The types of adaptation actions that firms undertake after interpreting
climate and market signals also signal individuals and organizations
linked to their business model a firm's preferences for adaptation.
These choices can indicate what the private sector considers as
acceptable or desirable forms of adaptation behavior expressed by
individual actions related to climate stressors. These signals can
become patterns that can enhance or limit adaptation collaboration
across their supply chain and in the community. The relationships and
collaborative practices of the firm with the local community for devel-
oping local innovations, in turn, provide strong signals for innovation
and organizational learning that the firm can harness to expand their
business model. The business can draw on the sources of innovation
that communities rely on to cope with climate such as social trust, his-
torical ties, and common vision or goals.
The recent studies on the potential for external actors to work
with firms in advancing more inclusive and sustainable business ven-
tures through coproduction (Nahi, 2018) focus on partnerships, which
require a greater scope of efforts to establish, but localized informal
coproduction that provides efficient solutions for climate-related
impacts providing the local associates or less resource actors to have
influence over the solutions and distribution of benefits and value
arising from these local innovations.
Similarly, local innovations coproduced by the firm's field
employees in operations and external actor, such as individual
farmers, provided the inputs to widen the adaptation space. The origi-
nal model of Berkhout et al. (2004) proposes that organizational learn-
ing and innovation in climate adaptation occurs by recognizing market
and environmental signals; however, the findings suggest that signals
from social context and relationships might trigger organizational
learning routines, which themselves might expand the adaptation
space or options for the firm. These could include new assets and
innovations developed in coproduction with the local community of
suppliers, associates, and collaborators. These interactions and rela-
tionships result in the development of complementary skills, acquisi-
tion of new information related to local climate impacts, and local
knowledge of individuals and organizations, which contribute to
developing key foresights and can inform long-term business strate-
gies that widen the adaptation space for the firm and the community.
5|CONCLUSIONS
The analysis of business models as spatial systems provides a novel
conceptualization to pinpoint sources of climate risk and the types of
adaptation actions necessary for firms to contribute to development
and adaptation processes in local communities. The new sources of
information and knowledge for business model innovation in the con-
text of adaptation can improve the firms' insights and foresight into
climate compatible routines by including local actors and associates to
understand the challenges posed by increasing impacts of climate
change on local social and economic processes and identify the exis-
ting actions present in their host communities. These are legitimate
avenues for business to introduce business routines and develop
investment strategies that truly leverage business models for socially
compatible adaptation.
A unique combination of resources, expertise, and knowledge
available to the firm depends on the firms accepted social function
where the private sector has the opportunity to become a diffuser
of information and knowledge broker that helps create and redis-
tribute value from adaptation actions to develop further the coping
capacities of the communities where they are embedded. The
mechanism of coproduction of innovation can draw on local skills,
knowledge, and materials to inform adaptation planning and the
design pilot projects in cooperation by the firm employees and the
local community to solve critical challenges. The firm's planners
and managers need to recognize and to scale up successful solu-
tions to innovate through coproduction and social engagement that
have not been widely applied by the private sector in thinking
about organizational learning, business planning, or configuration of
value-creating business models.
The integration of adaptation into business model thinking is
imperative for business strategy to accurately map and understand
the local efforts across the broader geographical distributions of the
firm's operations in the context of adaptation where solutions begin
at the local level, and local knowledge can enhance the benefits of
adaptation actions. The future business models can learn from
coproduction of innovations and expertise to accelerate the necessary
transition from incremental reactive responses to climate impacts to
planned socially informed routine business configurations that lead to
a transformation of the business models. This transition in the private
sector is necessary for sustainable operations and development in
locations of high climate variability.
14 DIBELLA
The conceptualization of business models in spatial terms pro-
vides lessons for business strategy. The business model is funda-
mentally a spatial activity system with a multiplicity of links to the
local communities, which in the same manner as the firm, are
undergoing rapid environmental, social, and economic changes from
increasing impacts of climate change. The inclusion of information
on the types of climate impacts experienced by the local commu-
nity and actors in their supply chain into business adaptation strat-
egies widens conventional business framings of business models.
This approach accounts for a wide array of current and expected
socio-economic changes in the community derived from climate
impacts, which are critical for maintaining and shaping the firm's
operational context.
The adaptation planning centred solely on the firm's organiza-
tional processes provides a narrow pathway to developing the neces-
sary long-term capabilities to cope with the type of climate impacts
expected in regions of high vulnerability, particularly for firms with
supply chains in the Global South. This means that private sector
adaptation strategies need to consider individuals and organizations
linked to the firm more than stakeholders but as components in a
networked system undergoing climate stress. This framing opens the
boundary of analysis to relational processes beyond the market, and
in doing so, the functions of the individual firms in local adaptation
processes might shift towards making strategic contributions to
socially aligned development and adaptation processes as the magni-
tude of the future effects of climate change requires social forms of
adaptation.
In developing future business adaptation strategies, the busi-
ness model mapping method provides a tool to understand the
complex contexts, pinpoint the linkages to the internal architecture
of the firm, and communicate with senior managers and planners
in the firm. The private sector actors will require an understanding
of the complex social responses to climate change for business
model innovations that lead to adaptation pathways that have real
possibilities of being sustained over time. The local economies will
require diverse actors to share and combine information and utilize
local resources and knowledge that result in practices that
strengthen local resilience.
The firm is a social construct that will be challenged in the future
by the reality of resource-constrained and climate-vulnerable commu-
nities. In theorizing about the potential functions of firms in a climate
uncertain future, the incorporation of time, place, and space is neces-
sary to develop accurate conceptualizations of adaptation processes
that examine economic agency in shaping human systems as they
adapt to climate stress.
As research into social and economic dimensions of climate
impacts continues, it should help to inform private sector strategies
for more accurate “climate-integrated business models”capable of
reconciling business objectives with social contributions to adaptation.
These business models need to develop both internal and external
adaptive capacities to enhance economic and social security, advance
sustainable development objectives, and strengthen local resilience.
The solely bottom-line drivers of business behaviour will likely be less
viable under climate change as the social function of individual firms is
reconstructed to maintain developmental gains and business continu-
ity in the future.
ACKNOWLEDGEMENT
The article was written during funded PhD research at Kings' College
London, England, UK. I would like to thank my doctoral supervisor
Professor Mark Pelling for his ongoing advice and encouragement
during my research, and to all the research participants that kindly
offered their time and assistance during the fieldwork.
ORCID
Jose DiBella https://orcid.org/0000-0002-2348-1789
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How to cite this article: DiBella J. The spatial representation
of business models for climate adaptation: An approach for
business model innovation and adaptation strategies in the
private sector. Bus Strat Dev. 2019;1–16. https://doi.org/10.
1002/bsd2.92
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