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Introduction to Business Models for Sustainability Transitions



The persistent problems confronting contemporary modern societies necessitate a sustainability transition through radical transformation and new business models towards a sustainable society. In this chapter and throughout the book we combine the two research streams of sustainability transitions and business models for sustainability to offer new insights into how business model innovation may act as a catalyst for system-wide sustainability transitions. In this chapter we introduce a ‘spiral’ analogy to illustrate the continuum between micro level considerations of phenomena related to business models and business model innovation, and meso and macro level issues of sustainability transitions to be considered in developing business models for sustainability transitions. While the spiral framework motivates thinking systematically about the scope of a transition phenomenon across time, as well as the dynamics between boundary conditions and business models, it also provides a structure in terms of micro level phenomena and those to be located at meso and macro levels.
Introduction to Business Models for Sustainability Transitions
By Annabeth Aagaard, Florian Lüdeke-Freund, & Peter Wells
Can innovations in business change society? Can innovations
in society change business? These two questions have
become critically urgent in recent years, but are rarely
considered together. ‘Business Models for Sustainability
Transitions’ therefore asks, can contemplating both concepts
together result in a flourishing, sustainable future?
Technology alone cannot save us. We cannot consciously
consume our way out of trouble. This book represents a start
at bridging the dynamic world of business model innovation
with the constant and unprecedented transitions underway
in the world around us. For researchers, practitioners, and
policy makers, the coupling of the two questions has the
potential to unlock answers to our grand global challenges
with responses that are at the same time rapid and enduring.
This work offers unique and considered glimpses into what it
may take to harness wide-ranging innovations for the
collective good.
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“This book is an important stepping-stone in a much
larger journey toward more sustainable modes of
production and consumption.” Jochen Markard
“This book provides a unique pathway forward for
theory and practice on sustainability transitions and
the potential positive role of business.” Nancy Bocken
“A much needed step to understand how business models can
contribute to a sustainable development of markets, the economy,
society and the planet!” Stefan Schaltegger
Reference to the book:
Aagaard, A., Lüdeke-Freund, F., & Wells, P. (Eds.) (2021). Business Models for Sustainability Transitions
How Organisations Contribute to Societal Transformation. Palgrave Macmillan.
Reference to this chapter:
Aagaard, A., Lüdeke-Freund, F., & Wells, P. (Eds.) (2021). Introduction to Business Models for Sustainability
Transitions. In A. Aagaard, F. Lüdeke-Freund, & P. Wells (Eds.). Business Models for Sustainability
Transitions How Organisations Contribute to Societal Transformation. Palgrave Macmillan.
Unedited pre-print version. Part of a forthcoming edited volume published by Palgrave Macmillan in late 2021.
Introduction to Business Models for Sustainability Transitions
By Annabeth Aagaard, Florian Lüdeke-Freund, & Peter Wells
The persistent problems confronting contemporary modern societies necessitate a
sustainability transition through radical transformation and new business models towards a
sustainable society. In this chapter and throughout the book we combine the two research
streams of sustainability transitions and business models for sustainability to offer new
insights into how business model innovation may act as a catalyst for system-wide
sustainability transitions. In this chapter we introduce a ‘spiral’ analogy to illustrate the
continuum between micro level considerations of phenomena related to business models
and business model innovation, and meso and macro level issues of sustainability transitions
to be considered in developing business models for sustainability transitions. While the
spiral framework motivates thinking systematically about the scope of a transition
phenomenon across time, as well as the dynamics between boundary conditions and
business models, it also provides a structure in terms of micro level phenomena and those
to be located at meso and macro levels.
About the authors/editors
Annabeth Aagaard is an Associate Professor and the founding Director of Interdisciplinary Centre for Digital
Business Development at Aarhus University, Denmark. She has authored or edited fourteen textbooks, e.g.,
“Sustainable Business Models - Innovation, Implementation and Success”, Palgrave MacMillan.
Florian Lüdeke-Freund is Professor for Corporate Sustainability at ESCP Business School, Berlin. He serves on
the editorial boards of different journals, and authored or edited four books, including “Sustainable Business
Model Design”. He founded
Peter Wells is a Professor of Business and Sustainability, and Director of the Centre for Automotive Industry
Research, at Cardiff Business School, UK. He is author or editor of 11 books and is frequently quoted in the
New York Times, Forbes, Bloomberg, the BBC and other international news sources.
Unedited pre-print version. Part of a forthcoming edited volume published by Palgrave Macmillan in late 2021.
1. Why a Book on Business Models for Sustainability Transitions?
The prevalent literature on sustainability transitions has primarily been concerned with the
long-term transformation towards sustainability of socio-technical systems of provision
(e.g., transportation, water, electricity supply) with the aim to satisfy basic human needs
(e.g., food, heating, access to water) (Smith et al., 2010). A related strand of research
focuses on the role of business models for sustainability, but with a strong emphasis on
short-term and firm-level development and implementation of new business models to
create sustainable value (e.g., Boons and Lüdeke-Freund, 2013). Recent years have
witnessed a growing interest in exploring how these two research strands might be
combined to offer new insights into how business model innovation may act as a catalyst for
system-wide sustainability transitions (Loorbach et al., 2010; Hannon, 2012, Hannon et al.,
2013; Wells, 2013; Foxon et al., 2015; Bolton and Hannon, 2016).
Thus, this book brings together in one volume the two streams of research that have
hitherto been largely separate: sustainability transitions and business models for
sustainability. These two realms of research and, increasingly, policy have their conceptual
and epistemological roots in distinct and diverse traditions. Yet, there is scope for each
tradition to learn from the other. This book therefore seeks a benign and mutually beneficial
confluence of ideas, thereby contributing in an exploratory manner both to accelerated
sustainable transitions and to flourishing business models for sustainability. The search for
contributions to this book was guided by the question whether business models and
business model innovation can contribute to sustainability transitions, i.e. fundamental
change at a societal level; and whether change at the societal level can in turn contribute to
the emergence of fundamentally different business models. This book is meant to offer
exemplary studies of transformational and transformed business models, which we simply
call ‘business models for sustainability transitions’. In contrast, business models may be
contributory to transition failure (Turnheim and Sovacool, 2021), while influences from
societal and system levels may inhibit more sustainable business models (Bidmon and Knab,
2018). Furthermore, the roles and behaviours of customers and users in collaborative value
co-creation of sustainable business model innovation (Aagaard & Ritzén, 2019) are also
critical to sustainability transitions in practice. However, as this book incorporates a
business focus and emphasises successful sustainability transitions, these aspects are
beyond the scope of this book. However, they all point to important avenues for future
Sustainability transitions, understood as “… fundamental changes in socio-technical systems
… to address grand challenges in a way that meets the needs of the present without
compromising the ability of future generations to meet their own needs (Markard et al.,
2020, p. 1), are an increasingly important concern for policy-makers, business, and wider
society. Today, humanity uses the equivalent of 1.6 Earths to provide the resources we use
and to absorb our waste. This implies that it takes the Earth one year and eight months to
regenerate what we use in just one year. Current resource use is only possibly because of
the continued depletion of finite stocks. Thus, continuing the current population and
consumption trends will require the equivalent of two Earths by the 2030s (Global Footprint
Network, 2020). There are multiple indicators of planetary system stress in which
boundaries are being exceeded (Stoknes and Rockström 2018). Governmental policy
interventions together with the adoption of sustainability strategies by corporations and
recurring wake-up calls for more sustainable consumption led to some improvements in
terms of eco-efficiency gains and socio-economic progress, at least in some parts of the
world. However, these improvements are constantly overwhelmed by population growth
coupled with increased material prosperity, again, in some parts of the world. This very tight
connection between humanity’s production and consumption activities and the pressure it
puts on Planet Earth becomes, once more, very visible in the COVID 19 pandemic. Many
countries around the globe were locked-down, which reduced the industrial production,
land and air travel, and consumption of all sorts.
Sustainability transitions are characterised by fundamental changes in the man-made
systems of production and consumption (e.g., the socio-technical system of energy
provision), an orientation towards grand sustainability challenges (e.g., climate change), and
typically in hindsight radical innovations and the emergence of struggles within existing
paradigms and system characteristics (Markard et al., 2020). Those fundamental innovations
include, for example, novel technologies (e.g., solar energy), business models (e.g., product-
service systems), and changes in social practices (e.g., sharing instead of owning), which
implies that business has a role to play in sustainability transitions. It is just one force among
many which make up today’s socio-technical systems, yet it is a critical one. The way
business is done has a fundamental influence on how goods and services are produced and
consumed. Business also influences other system elements, including lifestyles, how the
environment and other living species are treated, how policies are made, and so on. Hence,
there are good reasons to dedicate a book to the question how business activities here,
mainly seen through a business model lens relate to sustainability transitions, and vice
versa. How business models can drive and inhibit sustainability transitions, and how, in turn,
sustainability transitions can drive and inhibit new business models. In fact, various authors,
at least implicitly, call for more research at the intersections of business model and
sustainability transitions studies (e.g., Bidmon and Knab, 2018; Boons et al., 2013; Köhler et
al., 2019; Markard et al., 2020).
2. Business Model for Sustainability Perspective
Over the recent decades, research on business models and business model innovation has
received substantial attention from both academics and practitioners (e.g., Massa et al.,
2017; Wirtz et al., 2016b; Zott et al., 2011). Taking a business model perspective offers
holistic and systemic insights into how value is created, proposed, delivered, and captured
by organisations (Massa et al., 2018; Teece, 2010), which, depending on the underlying
theory or framework, includes strategy models, market models, or network and value chain
models (Wirtz et al., 2016b). Acknowledging the fact that organisations are per se complex
systems, respectively systems of (sub-)systems, Massa et al. (2018) argue that a business
model is a system level concept centered on activities spanning the boundaries of a
focal organisation to include exchanges with a network of partners , and overall trying to
describe how that organszation functions in achieving its goals (p. 60).
This systems perspective invites looking beyond single organisations and considering their
embeddedness in value chains, stakeholder networks, and inter-organisational
collaboration. In other words, it invites going beyond the micro level of single organisations
into spheres of more complex social phenomena at meso and macro levels (cf. Starik et al.,
2016). This offers various innovation opportunities, including new business infrastructures,
customer offerings, and ways of connecting to stakeholders (Foss and Saebi 2017; Lüdeke-
Freund et al., 2018; Remane et al., 2017; Wirtz et al., 2016a), which can have effects far
beyond a single organisation. Hence, it is reasonable to assume that business models and
business model innovation offer promising pathways for incumbents and new entrants to
develop and introduce more sustainable ways of doing business and, in the best case, create
positive effects for the natural and social systems surrounding them (Aagaard, 2019;
Lüdeke-Freund et al., 2020; Schaltegger et al., 2016b; Wells, 2013), and hence contribute to
sustainability transitions.
Although growing circles in academia and business as well as at the political and societal
levels are discussing sustainability (Dryzek, 2005), its influence on the ways that production
and consumption are organised is still rather weak (Bansal 2005; Stubbs and Cocklin, 2008;
Schaltegger et al., 2016a). There are motivating success stories such as a growing number of
green and social start-ups, the sustainable business model transformations of incumbents
(e.g., US carpet manufacturer Interface), and even paradigm shifts in whole industries (e.g.
Germany’s exit from using nuclear power). However, there are also overwhelming
indications that the ‘greening of industryand the proliferation of corporate social
responsibility have failed to deliver substantial and enduring sustainability benefits.
The new quest for business models for sustainability transitions can be seen as a reaction to
these (indeed dissatisfying) developments, which call for fundamental change at all levels
and increasing transformation dynamics to leave business-as-usual behind (Markard et al.,
2020). This quest integrates two dynamically growing, yet hardly connected, research fields:
on the one hand research on responsible, inclusive, and circular business models, more
broadly speaking business models for sustainability (e.g., Aagaard, 2019; Boons & Lüdeke-
Freund, 2013; Lüdeke-Freund and Dembek, 2017; Wells, 2013); and on the other hand
research on socio-technical and sustainability transitions (e.g., Geels, 2005; Grin et al., 2010;
Geels et al., 2016; Köhler et al., 2019; Markard et al., 2020; Sovacool et al., 2020). Enabling
both research communities talk to each other was also part of the motivation for this book.
Maybe the most important part.
3. Sustainability Transitions Perspective
The grand sustainability challenges we encounter are global, multi-dimensional, multi-actor,
and systemic in nature. Therefore, to achieve global long-term sustainability goals, the core
systems of our societies will have to change dramatically (EEA, 2019). Our assumption is that
business models for sustainability transitions have the potential to contribute to this
transformation of economy and society. First, by enabling change within business
operations, practices, and strategy (transformed business models), and second, by new
ways for business to interact with markets (Boon et al., 2020a; 2020b), supply chains, policy-
making, regulation, consumers, and many more (transformational business models). The
latter speaks to the core issue of sustainability transitions studies, defined as long-term,
multi-dimensional, and fundamental transformation processes through which established
socio-technical systems shift to more sustainable modes of production and consumption
(Markard et al., 2012, p. 956).
In theories of socio-technical transition an important question is that of how socio-technical
systems change. That is, transitions are changes from one socio-technical regime to another,
respectively from one dynamic equilibrium to another. Subsidiary questions then revolve
around the cause of the ‘failure’ of existing regimes, and of the emergence to dominance of
new regimes. In this case, socio-technical transitions are conceptualised as the status of
regimes in socio-technical systems that emerge as a result of the interrelationship of two
modes: change and stability. This theoretical framing developed out of systems theory,
evolutionary economics, and innovation studies. In consequence, Geels and Schot (2007)
developed the concept of transition pathways, as a typology of ideal types, to describe
pathways as more or less coherent sequences of change events over time. Constituent
elements of a socio-technical regime exhibit a co-evolutionary dynamic that may alter under
conditions of change along these pathways (Berkhout et al., 2004; Geels, 2005). The ‘ideal
types’ identified by Geels and Schot (2007) comprise the following categories:
1) Reproduction in which the regime is said to be dynamically stable, changing but not
so far as to disrupt the socio-technical system as a whole.
2) Transformation under which moderate external pressures for change may lead to
modifications of development pathways and enhanced levels of innovation.
3) De-alignment and re-alignment in which large scale and rapid changes in external
pressures can undermine an existing regime (causing ‘de-alignment’) and, in the
absence of a candidate nascent set of niche practices, can create the space for re-
4) Technological substitution. Under this pathway a pre-existing niche can rapidly
flourish when there are large scale and rapid changes in external pressures.
5) Reconfiguration. Here the established regime at the heart of the socio-technical
system may seek to capture symbiotic innovations and thereby adjust the regime to
changed circumstances without being destabilised.
Importantly, transition pathways are not regarded as simply conforming to these ideal
types, particularly as regime transitions are considered to be highly contextualised and
contested with uncertain outcomes. Contestation is played out within and between all the
regime constituents (both incumbent and emergent). Pathways of change thus emerge out
of market interactions (supply and demand, price signals, organisational competition)
including of course businesses (Boon et al., 2020b). However, transition is also is an
emergent property of technological innovation, regulation and governance, behavioural,
cultural and attitudinal norms, environmental imperatives, and political contestation. In
consequence, the ideal type pathways or sequences are less coherent in practice than the
ideal types suggest.
4. Business Model Innovation and Sustainability Transitions
As Sovacool et al. (2020, p. 7) note in their wide-ranging review, which referenced 447
publications from science and technology studies (STS): Research of whole system
transition, however, requires a broader approach that simultaneously analyses multiple
niche-innovations (including business model and social innovations)”. The diffusion of
innovations is thus considered a process of societal embedding (Geels and Johnson, 2018) of
which business strategies are a part. Business actors may perceive that technological
innovations offer a new set of ways to define and then realise expectations. Yet
complementary roles of business models may impact transition dynamics in multiple ways
as stressed by Bidmon & Knap (2018): (1) As part of the socio-technical regime, existing
business models hamper transitions by reinforcing the current regime's stability; (2) as
intermediates between the technological niche and the socio-technical regime, business
models drive transitions by facilitating the stabilisation process of technological innovation
and supporting their breakthrough; and (3) as non-technological niche innovation, novel
business models drive transitions by building up a substantial part of a new regime without
relying on technological innovation.
It is probable that sustainability transitions theorisation such as that offered by Sovacool et
al. (2020) underplays the power of corporate actors, who are often more than mere
expendable niche experimenters. Businesses are, after all, the predominant mode of
resource allocation in capitalist society, having privileged access to government, finance,
and other key resources that need to be mobilised to enact societal change. The authors,
considering the broader field of studies of technology and society with respect to energy,
conclude that:
The STS community needs to also reach beyond academic research as a whole to
engage with other key stakeholders, ranging from business firms and governmental
organisations to user groups, trade unions, and marginalised populations.” (ibid: 27)
Neither is business a monolithic single vested interest, and the outcomes sought by business
may not be realised. Firms may fail to capture the benefits of their own innovations, for
instance (Teece, 2006). Equally, changes in the regulatory framing of, for example, electricity
generation and supply in many countries, were largely undertaken to ‘liberalise’ the energy
market, break up state monopolies, and reduce costs to consumers. One consequence,
however, has been to open the space for alternative technology suppliers with innovative
market propositions and business models.
Each individual moment of business model innovation is one tiny data point in the grand
history of socio-technical transition, a bit of ‘noise’ in the signal. However, each moment of
business model innovation is also potentially contributory to a transition pathway or,
alternatively, to continuing inertia enabling incumbents to resist change (Wells and
Nieuwenhuis, 2012). From a transitions perspective, it could be argued that transitions
pathways help to create the ‘space’ for innovative business models. This space can be
understood as the consequence of disruptive technological innovations that enable business
model innovation, or as shifts in regulatory, governance, and market opportunities that then
become accessible via business model innovation (Bolton and Hannon, 2016). Hence,
transitions processes may underwrite business model innovation, and simultaneously be a
product of that innovation, by virtue of the business model design space that they enable
(Huijben et al., 2016; Wesseling et al., 2020). Considering the above discussed characteristic
of business models as complex systems of (sub-)systems which can interrelate in various
ways with other business models, organisations, stakeholders, and further system elements
makes us realise that identifying, studying, and understanding how business model
innovation, sustainability, and socio-technical transitions interrelate is anything but trivial.
It is a task of some urgency, therefore, to engage in research that helps in understanding
whether and how business model innovation for sustainability is also contributory to the
societal challenge of achieving sustainability transitions. A fundamentalist perspective is to
see the entire episode of capitalist market expansion over more than 200 years as one
‘deep’ transition (Schot and Kanger, 2018). In this view, it is unlikely that business
organisations embedded in neo-liberal market economies can possibly also be participants
in the end-state of a transition to a sustainable economy and society. However, it is possible
that even if such a post-capitalist world was to emerge, business organisation
transformations might still be a constituent part of the mechanisms by which that end state
is achieved. Rare examples, such as the business experiment going on at Welsh car designer
Riversimple, offer insights into how businesses can help to change the system from within.
In the case of Riversimple this is attempted by combining an eco-designed product with a
business model that promotes using instead of owning cars and that is governed by a
radically stakeholder-inclusive system of stewards and management board (Wells, 2018).
Key to understanding the contribution of business model innovation then becomes an
understanding of context within specific domains of production and consumption relations,
as these are key to determining the design space available to business model innovation (
Huijben et al., 2016; Wesseling et al., 2020). Extant research into business model innovation
for sustainability has tended to emphasise the significance of issues beyond the narrow
boundary of the firm, compared with neo-classical economic treatments (a pioneering and
still up-to-date paper in this regard is Stubbs and Cocklin, 2008). This ‘beyond the
boundaries’ understanding of the firm also extends to a ‘beyond profit’ understanding of
the business logic. Hence the location of the firm in this sense is within a constellation of
related participants, interest groups, and social actors that rather reflects the
characterisation of a regime in socio-technical transitions albeit on a micro scale. Here,
again, the ‘system of (sub-)system’ characteristic of business models, which is typically
neglected in business model studies, but can be very useful in combination with a
sustainability transitions perspective, comes to the fore (Massa et al., 2018). There are
intersections with concepts such as business networks, business ecosystems, extended
producer responsibility, circular economies, and others. There is an almost fractal quality to
the respective theorisations, even though the temporal and societal scales are widely
different, and even though the epistemological foundations of the respective schools of
thought are also widely distanced. Indeed, it is evident that many individual actors within
business organisations have a distinct social vision of the alternative, more sustainable,
future they are seeking to create.
The theoretical and empirical opportunity therefore is to envisage business model
innovation for sustainability and sustainability transitions as two ends of a continuum in
which there are multiple possible intermediary concepts that act to bridge between these
extremes. From a business model innovation for sustainability perspective, those concepts
might include aspects of boundary crossing or redefinition that relate to the business
ecosystem, actor networks, supply chains, and other constellations of corporate activity that
are greater than one individual business. From a sustainability transitions perspective,
intermediate or related macro-societal and political economy concepts might include
degrowth, the circular economy, deep transitions, or green growth.
The following ‘spiral’ analogy is a first conceptual attempt to illustrate the continuum
between micro level considerations and phenomena related to business models and
business model innovation, and meso and macro level issues of sustainability transitions.
5. The Spiral of Business Models for Sustainability Transitions
The ‘spiral’ was motivated by several observations made while reviewing and discussing the
chapters in this book as well as our reading of the current literature on business models for
sustainability and sustainability transitions. These observations include the following:
Authors typically struggle to consider, conceptualise, and investigate micro, meso,
and macro level phenomena simultaneously with sufficient depth and grounding in
the respective bodies of literature. This may be due to the ‘natural limitations of
their respective disciplinary backgrounds, including the epistemologies and
ontologies they typically apply.
The resulting studies are either weak in terms of business model theory and analysis,
which is an admittedly very heterogeneous field, or they show weaknesses in terms
of how they connect to major assumptions and insights from the field of
sustainability transition studies, which is no less and maybe even more
The preceding two points lead to an interesting observation: Many authors tend to
turn their attention to meso level phenomena, including inter-organisational
phenomena such as networks and collaboration, multi-stakeholder issues, or other
phenomena that provide insights about how organisations connect to and interact
with their environments.
While contributing new approaches to the study of meso level phenomena and of
what is going on between organisations and their socio-technical environment,
understanding business models for sustainability transitions requires embracing the
duality of system structures and patterns of action or, in other words, the
boundary conditions shaping business activities and how business is trying to
influence and change these boundary conditions.
Time is crucial in studying transitions. However, time is hardly considered. Influential
transition studies typically take a historical point of view and reconstruct transitions,
their causes, dynamics, and their consequences. But sustainability transition studies
are to a large extent looking into the future, hence showing a tendency of
preconstructing a sustainable future. Time must be considered in relation to the
phenomena under investigation, but also in terms of its methodical, epistemological,
and ontological consequences.
Further, business model innovation is characteristically short-term while socio-
technical transitions permeate society over decades, and yet the temporal dynamics
must intersect.
The following ‘spiral’ framework includes several theoretical assumptions and conceptual
components that, as we think, are important to consider when studying business models for
sustainability transitions, i.e., transformational and transformed business models. It is
meant to be an initial framework responding to the aforementioned observations. In a next
step, we will also use this framework to characterise the contributions in this book.
The spiral represents how the scope, or sphere of influence, of business activities extends
over time. It begins with a rather narrow focus on an existing or new business model, which
is connected to networks, collaborating partners, and other meso level entities. Finally, its
influence (e.g., new ways producing and consuming) reaches the system level. This is, of
course, a theoretical ideal. Although companies may aim to come up with influential
business models for sustainability transitions, their influence may be very limited, or even
negative in the case of unintended consequences.
The duality of (current and anticipated) system structures and (current and planned)
patterns of action requires considering the boundary conditions under which companies
develop and implement their business models (e.g., current and anticipated regulations,
consumption trends), and at the same time the business models themselves. The latter may
be developed to both adapt to current boundary conditions or to try to influence and
change these, which reminds of the different transition pathways defined by Geels and
Schot (2007) discussed above.
Figure 1: The ‘spiral’ – Framework connecting business models to sustainability transitions
While the spiral framework motivates thinking systematically about the scope of a transition
phenomenon across time, as well as the dynamics between boundary conditions and
business models, it also provides a structure in terms of micro level phenomena and those
to be located at meso and macro levels. This can help in providing clarity when it comes to
studying phenomena on different levels simultaneously. Appropriate theories and methods
of investigation can be systematically selected to fit with the respective framework
elements and their interrelations.
In the following, the main themes and contributions contained in this book will be
introduced and, where appropriate, connected to the spiral framework.
6. Themes and Chapters Contained in this Book
With the aim to assist this transition, we have initiated, developed and edited this book on
‘Business Models for Sustainability Transitions’ with chapters co-authored by researchers
and practitioners working at the interface between business model innovation and
sustainability transitions. In so doing, the book seeks to bridge between these two large and
vibrant research communities, with a view to informing future research, as well as
practitioners and policy makers, on the neglected but vital contribution that businesses can
make to societal transition to sustainability. Underpinning the book is the core question of
how can business contribute to wider systemic change? This edited book answers to this
research question through three themes with related chapters as presented below.
Part I: Crossing the Chasm: Integrating Business Model and Sustainability
Transition Perspectives
Part I presents new frameworks that integrate micro-, meso-, and macro-level concepts and
phenomena. New perspectives are offered that allow considering current and anticipated
system states and conditions (boundary conditions such as given industrial practices) while
at the same time using a business model perspective to discuss current and planned
activities of organisations that are both transformative and transformed.
“Transformative Business and Sustainability Transitions: A Framework and an Empirical
by PJ Beers, Marjo Baeten, Erwin Bouwmans, Bram van Helvoirt, Jos Wesselink, Ruud
New business models have been widely touted for their promise of sustainability. However,
conceptual approaches to new business models largely fail to connect to sustainability
transitions. In this contribution, we draw upon sustainability transitions research to
introduce a transformative business model framework. Given the radically incremental
nature of sustainability transitions, we propose that the radicalism and potential of new
business models should be assessed in relation to their capacity to influence wider
institutional settings and to the transition to which they belong. We report on an
exploratory study of six transformative business cases in the context of the Dutch agri-food
transition. Our results suggest that, in order to be transformative, businesses need to
coevolve with specific wider institutional, discursive, practical and relational developments.
“The Networked Business Model for Systems Change: Integrating a Systems Perspective in
Business Model Development for Sustainability Transitions”
by Julia Planko and Jacqueline Cramer
To realise sustainability transitions, firms need to collaborate in networks and carry out
system-changing activities. In this way, they pro-actively build a more sustainable system
and change the environment in which they operate. This in turn will help them to market
their own sustainable product or service. Partners in a network can co-develop a ‘networked
business model’, which takes on a systemic perspective and helps them to align their
sustainability efforts. This latter model comprises transition goals, system building activities,
system resources, benefits created for stakeholders, and costs to the network. The
networked-business model feeds into each network member’s individual firm-centric
business model and vice versa. The business models at the firm level and the system level
are interconnected and mutually influence one another.
Sustainable Value Creation for Advancing Sustainability Transition: An Approach to
Integrate Company- and System-Level Sustainability
by Minttu Laukkanen, Kaisa Manninen, Janne Huiskonen, Nina Kinnunen
While a sustainable business model is recognised as providing a link between an individual
company and the larger socio-technical system to which it belongs and as leveraging wider
sustainability transition, relatively little integration between business and management
research and system transition research has been done to explore how companies enable
wider sustainability transition through their business models. Based on a review of the prior
literature on sustainable business models and sustainability transition and a single in-depth
case study, this study proposes sustainable value creation, which is a central part of any
sustainable business model, as an approach to integrate company level sustainability into
broader system level sustainability transition. This study contributes to the literature by
describing how companies make their business sustainable, leverage wider sustainability
transition and advance system level sustainability through sustainable value creation. For
managers, this study offers five key recommendations, which highlight the most crucial
points to be considered for adopting a sustainable value creation approach.
“Building BoP Business Models for Sustainable Poverty Alleviation: System Tips and
System Traps”
by Jodi York, Krzysztof Dembek
Sustainable development requires both long-term and large-scale changes to production
and consumption patterns, and the eradication of extreme poverty. In this study we argue
that pursuing these goals independently can result in business models that tie poverty
alleviation to increased environmental degradation, and thus work at cross purposes to
sustainability transition. We explore how three types of business models for addressing
poverty at the bottom of the pyramid (BOP) delivering, sourcing, and reorganising models
can either impede or support sustainability transition in the global south by enacting
different business model roles. We use examples from 17 business models from Indonesia
and the Philippines to explore the sustainability mis-alignment risks each model type is
prone to, distil key business model design features and enablers that support their
alignment with sustainability transition by enabling them to avoid common system traps.
Part II: Beyond Business-as-Usual: Alternative Value Creation Logics Driving
Sustainability Transitions
Sufficiency, sharing, and non-commercial approaches to creating value for stakeholders are
discussed in Part II. The business model perspective offers a micro-level lens that helps in
understanding the niche dynamics of these approaches and how actors try to change
industries and society. Their potnetial to influence meso-level constellations (such as inter-
organisational cooperation and networks) and even macro-level structures (e.g.,
consumption trends) is discussed).
“The Business Model of Enough: Value Creation for Sufficiency-Oriented Businesses”
by Maren Ingrid Kropfeld, André Reichel
In this chapter we conceptualize a generic business model for a transition towards a
sustainable economy and society as an ideal-type by (a) focusing on sufficiency in order to
highlight a more radical perspective on sustainability transformations in line with the notion
of strong sustainability, and its implications for changing business models and the
environment of business, as well as (b) undertaking a reconstruction of the business model
concept from the viewpoint of social practice theory, which will give us a much clearer
theoretical framework to infer connections between business and consumer practices. We
show how such a ‘Business Model of Enough’ can constitute the core for communities of
sufficiency practice, thus enabling institutional change within the political-economic
background of business, and we discuss which role sufficiency-based business models and
consumers play in transition pathways, e. g. by introducing and supporting boundary
spanning practices and including the perspective of fundamental transformations in
everyday consumer practices.
“Collaborative Business Models and Platforms in Shared Mobility Transitions: The Case of
Bikeshare Integration”
by Brett M. Petzer, Anna J. Wieczorek, Geert P.J. Verbong
Collaboration between organisations plays an increasingly fundamental role in a growing
number of sectors, including Mobility-as-a-Service (MaaS), and has given rise to the
Collaborative Business Model (CBM). A review of literature on CBMs provides an overview
of CBM interpretations, and finds that tensions between collaboration and competition, and
those related to the commons, are major emerging tensions. A further review of MaaS
business model literature, and a case study of 3 platforms attempting to deliver bikeshare-
inclusive MaaS, focuses on these tensions. The means by which commons resources are
made available to MaaS CBMs is found to be a significant determinant of how far these
CBMs depart from conventional business model logic and morphology, in part because they
determine the leverage that city governments can bring to bear on MaaS CBMs.
“Upscaling Sustainable Niches: How a User Perspective of Organizational Value Logics Can
Help Translate Between Niche and System”
by Alexandra Palzkill and Karoline Augenstein
A great variety of business organizations, environmentally or socially motivated
entrepreneurs aim to contribute to the development of more sustainable societies. A key
question is how these organizations can move beyond isolated, protected niches and
increase their impact on the mainstream without compromising their sustainability-oriented
core mission and values? In the following chapter, this question is approached by focusing
on the organizational value logics of sustainability-oriented entrepreneurs and how these
are related to, translated, and defended against dominant regimes built around market and
commercial logics. It will discuss how a user perspective of organizational value logics can
shed light on the process of niche-regime interaction and the upscaling potential of
sustainable niches or provide a way to manage different logics using an outside-in-
perspective. The chapter presents a case study of a civil society initiative’s entrepreneurial
activities and reflects on the question of how organizations can contribute to sustainability
transitions while confronted with different and often fundamentally incompatible niche and
regime logics.
Part III: Being the Change: Transformative and Transformed Business Models
in Selected Industries
The chapters contained in Part III present exemplary cases in industries such as textile
services, clothing, energy services, and smart technologies for buildings. While new
technologies are important drivers for change, boundary conditions such as regulation,
stakeholder expectations, social acceptance, and also the limits of technology itself are
critical drivers and barriers. The case studies presented in Part III provide insightful and fresh
examples of how organisations try to be the change and to extend the scope and effects of
their transformative and transformed business models.
“IoT-driven Reuse Business Models: The Case of Salesianer Textile Rental Services”
by Andres Alcayaga, Hanna Geyerlechner, Erik G. Hansen
Service business models such as rental, leasing, and performance contracting can contribute
to a circular economy by keeping products, components, and materials longer in use and
thereby preserving their value over time. These business models are, however, subject to
higher complexity and information demand. Smart products and the Internet of Things
facilitate the optimisation of such closed-loop value creation processes. We present an in-
depth case study of a textile rental firm, in the business-to-business domain, that has
recently become a front-runner in using textiles equipped with RFID chips. The firm has used
smart textiles to improve the transparency of the product life cycle, raise awareness on
textile losses, and improve procurement decisions. We show that combining smart textiles
with a rental business model could accelerate the transition towards circularity and
“Business Models for Smart Sustainability: A Critical Perspective on Smart Homes and
Sustainability Transitions”
by Lara Anne Hale
This chapter examines the sustainability of smart technologies in the housing segment of
the building sector critical perspective. It considers the prerequisites for digital technologies,
business models, and user practices to support a sustainable trajectory of the housing
segment. This research adopts socio-technical and practice-based perspectives to
investigate the interrelated dynamics of individuals, organisations, and institutions for
sustainable socio-technical transitions. It is based on an organisational ethnography of the
VELUX Group and the Active House Alliance, as well as interviews across the building
industry, centring on two demonstration projects in Brussels, Belgium and Toronto, Canada.
The chapter points towards the following prerequisites for a sustainability trajectory of
smart homes: integrated building performance that can deliver measurable sustainability
results; balancing personal data usage with the personal significance of digital technology
uses; and considering housing sustainability as a joint responsibility between producers and
consumers. Altogether, the chapter outlines both the basis of these prerequisites and how
business models can interlink the changes needed on multiple levels for sustainable socio-
technical transitions.
“Business Models for Energy Efficiency Services: Four Archetypes Based on User-
Centeredness and Dynamic Capabilities”
by Ruth M. Mourik, Carolina Castaldi, Boukje Huijben
Energy Efficiency Services (EES) represent a promising solution to increase energy efficiency
and contribute to reducing emissions. Unfortunately, they are still underdeveloped and
companies delivering them are struggling to remain viable. In this study, we study EES
through the lens of business models. We propose that business models of companies
delivering EES can be analyzed along two conceptual dimensions: how user-centered they
are and what dynamic capabilities they require. We use this framework to analyze 46 cases
in five European countries and South-Korea. Four business model archetypes emerge, with
varying degrees (low, medium, high) of user-centeredness and a focus on different dynamic
capabilities. Based on the insights from our qualitative analysis, we discuss the opportunities
and barriers for further market uptake of EES and possible policy interventions.
“Reverse Logistics Process for Business Transition: An Example from the Clothing Industry”
by Ignes A. C. Contreiras de Carvalho, Pascale Schwab Castella, Marcos Queiroz
The negative environmental impact of clothing industry is well-known and requires the
effort for redesigning one of the world’s most polluting industries. Its image is tied up with a
strong production of textile waste and a large amount of use of chemicals, energy, water
and other essential resources. However, some actors are demonstrating opportunities for
the development of sustainability transitions using new business models. This research
focuses on the drivers of social technical transitions integrating a life-cycle perspective and
open innovation in the design of sustainable business models. The applications of
conceptual frame-works reveal possibilities for the promotion of slow fashion practices
through a case study.
7. Summary and Outlook
Research at the intersections of business models and socio-technical transitions towards
sustainability is emerging as a new, yet nascent research field. Over the last decades,
sustainable development has become a priority in some parts of the world where it holds
the potential to cause fundamental shifts in many industries, markets, and lifestyles. Thus,
knowledge on how to drive transitions to sustainability and how to deal with them becomes
critical. Consequently, this edited book attempts to answer how business models and
business model innovation may contribute to sustainability transitions (i.e., fundamental
change in socio-technical systems) and whether change at systems level can contribute to
the emergence of fundamentally different business models.
The book offers exemplary studies of transformational and transformed business models,
which we have presented as ‘business models for sustainability transitions. Thus, the aim is
to explore how these two research strands might be combined to offer new knowledge of
how business model innovation can be applied as a catalyst for system-wide sustainability
transitions, and vice versa. The new knowledge, inspiration, and frameworks presented in
this edited book provide new knowledge of both the socio-technological transitions as well
as the unique role of business, networks, and collaborations in making sustainable
transformations and transitions happen. We therefore hope that this book will 1) inspire
academia in progressing research in the field of business models for sustainable transitions
and 2) provide knowledge and models for businesses and society to pursue the necessary
transformations in their domains and at large.
In referring back to Wells (2013), we conclude that the conceptual integration of business
model and sustainability transition research can indeed contribute considerably to a “more
structured contextual explanation” of business models and complement transition theory
with explanations of “more detailed causal mechanisms (p.42)”. This book integrates
research on business models and sustainability transitions to acknowledge the interrelation
between organisations and their wider environment, respectively the systems in which they
are embedded, while they try to contribute to sustainable development.
This edited book touches upon a number of key areas in understanding and leveraging
business models for sustainability transitions through three themes: Part I: Crossing the
Chasm: Integrating Business Model and Sustainability Transition Perspectives, Part II:
Beyond Business-as-Usual: Alternative Value Creation Logics Driving Sustainability
Transitions, and Part III: Being the Change: Transformative and Transformed Business
Models in Selected Industries
The research gaps identified through the studies and discussions in the books chapters
address several interesting questions for future research. For one, we need to explore the
role of time on business models for sustainability transitions. Second, we need to explore
how business models may assist us in understanding the interaction patterns between
organisations and society in transition processes. Third, how do the transition pathways, as
described in the transition literature (e.g., Geels et al., 2016), impact business models, and
vice versa? And finally, we have to open the black-box of public policy and its role for
motivating business models for sustainability transitions and socio-technical system change.
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... There is a great need for business models that foster prosperity rather than growth, quality of life in the place of mere consumption (Pickering and Persson, 2020). The call for change (Rockström et al, 2021) and the search for new business models are not new (Seelos and Mair, 2005), but theory is still struggling to pace it (Aagaard et al, 2021;European Commission, 2016;Johnson and Schaltegger, 2020). ...
... It is a popular unit of analyses in the social entrepreneurship literature. However, it usually mentioned but not described nor operationalized (Aagaard et al, 2021;Boons and Lüdeke-Freund, 2013). To deal with this limitation, complementary literature was consulted (Van Der Have and Rubalcaba, 2016). ...
... However, Lüdeke-Freund et al (2018) found that a major theoretical limitation tends to result from widely dispersed knowledge that needs synthesis and consolidation. To achieve progress, the research must balance multidimensionality (Aagaard et al, 2021;Macke et al, 2018). Following what was done in strategic theory, building taxonomies is a feasible way to deal with multitude of concepts (Carneiro et al, 2011). ...
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Purpose: To offer a -necessarily non-exhaustive- analysis of the meaning and significance of the notion of a complex system for research on the Business Model (BM). Design/Methodology/Approach: Conceptual paper Findings: Drawing from early research in complexity and debates that have inspired work in General System Theory, system thinking and cybernetics, we identify four insights, notably i) modeling of complex systems, ii) interdependencies, iii) nested hierarchies and iv) information processing that, we contend, have the potential to shed light on novel possibilities for understanding BMs. We offer an analysis. Research Limitations/Implications: Limitation: exclusive focus on early interpretation of the notion of complexity as referring to a characteristic of a system. The paper does not explore the implications of the more modern under- standing of complexity as referring to the ‘behavior’ of a system (complex system vs. complex behavior) Practical Implications: we may be attempting to represent a system which is very complex, the BM and the organization behind it, at the level of the anatomy, only reflecting its main components. This is subject to inherent limitations. Originality/Value: To show that, within the line of inquiry understanding the business model (BM) as some reality existing at the level of the firm, a BM may resemble what students of complexity refer to as a complex system. To explore the meaning and significance of the notion of complexity and of a complex system for research on the BM.
Increasing numbers of reports reveal that planet Earth is at significant risk. There are mounting calls to address the damage caused by the unprecedented demand for land, energy and water and environmental destruction, which is attributed to escalating population growth and unparalleled, rising rates of economic growth. Society and its organisations now are expending the Earth’s resources much faster than they can be replenished. Consequently, over the past two decades, sustainability has become an important business issue; growing attention is being paid to organisations’ ecological and environmental performance; and to their impact on the climate and on local and global communities. A number of researchers broadly claim that organisations need to move from Traditional Business Models and adopt Sustainable Business Models, and to deliver a sustainable value proposition aligned with stakeholders’ economic, environmental and social expectations. To achieve this, organisations should expand their perceived stakeholders from customers and shareholders to include all other stakeholders who may be directly or indirectly affected by the organisation’s activities, such as the broader society and the environment. Organisations’ cultures have considerable influence on their attitudes to environmental and social sustainability; their commitment to sustainability; and their environmental and social performance. In order to develop and implement Sustainable Business Models, organisations need to understand their underlying cultural values and develop sustainability-related cultural characteristics. This chapter explains the role of organisational culture and its desired characteristics and discusses actions organisations can take to change their culture. It also discusses steps for embedding sustainability principles across the organisation.
Whereas research acknowledges the potential of business model innovation (BMI) to destabilize an existing regime, the impact of a socio-technical system in transition on BMI remains under-conceptualized. To advance work in this direction, this study expands the concept of a business model design space (BMDS), which describes the opportunities and constraints to design novel ways of creating and capturing value from niche technologies available at a given point in time in a transition. Illustrated with the case of electric vehicles in the Netherlands, we show how BMI are affected by and, in turn, affect this design space. We find that the policy and the science and technology dimensions of the socio-technical system form hard boundaries to the BMDS that niche actors cannot directly overcome via BMI. Yet, BMI can push the softer industry, market, and cultural boundaries of the BMDS by supporting niche expansion via coupling novel technologies to business models that (i) conform to the current regime, or that (ii) attempt to transform the regime. This paper offers an analytical framework that connects firm-and system-level to support the exploration of questions like how much novelty niche actors can introduce into a ST-system at specific points in a transition.
Research on sustainability transitions has expanded rapidly in the last ten years, diversified in terms of topics and geographical applications, and deepened with respect to theories and methods. This article provides an extensive review and an updated research agenda for the field, classified into nine main themes: understanding transitions; power, agency and politics; governing transitions; civil society, culture and social movements; businesses and industries; transitions in practice and everyday life; geography of transitions; ethical aspects; and methodologies. The review shows that the scope of sustainability transitions research has broadened and connections to established disciplines have grown stronger. At the same time, we see that the grand challenges related to sustainability remain unsolved, calling for continued efforts and an acceleration of ongoing transitions. Transition studies can play a key role in this regard by creating new perspectives, approaches and understanding and helping to move society in the direction of sustainability.