Abstract
This paper examines the relation between bank profit performance and business models, using a machine learning–based approach. The analysis contributes to the literature on this relation by considering the bank portfolio’s ability to yield profits as the identification criterion of strategic profiles and by including all the components of the business model simultaneously in the identification process. Our research strategy is applied to the European Union banking system from 1997 to 2021. The paper’s primary finding indicates that specialization seems to be a strategy that results in banks adopting business profiles with better profit performance, particularly if the banks specialize in the standard retail-oriented model.

Introduction

      What characteristics of bank business models enhance profitability? The search for answers has been among supervisory authorities’ priorities since the end of the Great Recession and is likely to maintain its relevance in the aftermath of the COVID-19 pandemic. The reasons for such interest lie in the fact that the relation between business models and profitability can reveal the viability of banks’ strategic plans and, hence, the viability of banks themselves. In this regard, the Anon (2016) links poorly adapted business models to low bank profitability in advanced economies, identifying the former as an eroding agent of bank resilience over time. However, concern about the profitability of banks’ business profiles has been especially strong in the European Union (EU), as reflected by the fact that the European Central Bank launched a thematic review in 2016 to assess the relation between profitability and business models (European Central Bank, 2018).

      Banking research has examined this relation in two broad and different ways, using regression analysis to explore the effects of the characteristics of the bank business profile on profitability or grouping banks into business models by means of clustering techniques.

Conclusion

     The ability of business models to generate profits is an ongoing concern for banking authorities, especially in the EU. Closely related to this concern, we propose a new methodological strategy to identify business models and to assess their relation to profit performance. Previous works on business models have assumed the business models as a given or have identified them using similarities in balance sheet components. In either of these cases, profit performance is a byproduct of the business model. By contrast, in our identification strategy, profitability is at the core of the definitions of banks’ strategic choices. In particular, business models are obtained using the contributions of the bank portfolio components to profitability as the instruments of clustering analysis.

      The empirical exercise focuses on the EU banking system in 1997–2021. According to the classification of business profiles based on their overall contributions to profit performance, the best profile is a standard retail-oriented model, the second-best one is a standard wholesale model, and the worst profile, which has only equity as a characteristic component, does not match any standard model. Therefore, specialization seems to be a strategy that results in banks adopting business profiles that perform better in terms of their contributions to profitability, particularly if the banks specialize in the standard retail-oriented model.

Abstract

     This paper develops an ordonomic approach to the governance of sustainable business model innovation (SBMI). We clarify the distinctive roles of optimization and governance for the management of sustainable value networks and develop a sustainability cube as a new management tool for the governance of SBMI. Our cube helps management to identify and overcome social dilemmas within value networks, i.e. to form and reform relevant business relationships, thus creating and tapping second-order win-win-win potentials. Furthermore, our cube encourages management to interpret negative externality problems as “missing markets”, i.e. as an entrepreneurial challenge and as a business opportunity to serve as yet unmet needs. Finally, our cube offers an avenue to develop and strengthen the specific management competencies that foster a successful governance of SBMI.

Introduction

     After having promoted the sustainability concept of a “triple bottom line” (TBL) for 25 years, Elkington (2018) is rather disillusioned and (self-)critical of what, in effect, has become an accounting concept. Looking back, he clarifies his initial goal—and identifies what went wrong (para. 8, emphasis in original): “[T]he original idea was wider still, encouraging businesses to track and manage economic (not just financial), social, and environmental value added—or destroyed. … [T]he TBL wasn’t designed to be just an accounting tool. It was supposed to provoke deeper thinking about capitalism and its future, but many early adopters understood the concept as a balancing act, adopting a trade-off mentality.” He further elaborates (para. 13, emphasis in original): “TBL’s stated goal from the outset was system change—pushing toward the transformation of capitalism. … It was originally intended as a genetic code, a triple helix of change for tomorrow’s capitalism, with a focus … on breakthrough change, disruption, asymmetric growth (with unsustainable sectors actively sidelined), and the scaling of next-generation market solutions.” Looking ahead, he states (para. 16 f.): “[W]e need a new wave of TBL innovation and deployment. … Hence the need for a ‘recall.’ I hope that in another 25 years we can look back and point to this as the moment [we] started working toward a triple helix for value creation, a genetic code for tomorrow’s capitalism, spurring the regeneration of our economies, societies, and biosphere.”

Conclusion and outlook

     This paper develops an ordonomic approach to the governance of SBMI. We clarify the distinctive roles of optimization and governance for the management of sustainable value networks and develop a sustainability cube as a new management tool for the governance of SBMI. Our cube helps management to identify and overcome social dilemmas within value networks, i.e. to form and reform relevant business relationships, thus creating and tapping second-order win-win-win potentials. Furthermore, our cube encourages management to interpret negative externality problems as “missing markets”, i.e. as an entrepreneurial challenge and as a business opportunity to serve as yet unmet needs. Finally, our cube helps management to develop and strengthen the specific competencies that foster a successful governance of SBMI.

     As an outlook, we would like to emphasize several limitations of our contribution in this paper, which may stimulate further research.

     First, we deliberately skipped an important aspect. Since we wanted to concentrate on sustainability opportunities beyond the organizational boundaries of the firm, we edited out the ordonomic strategy of individual self-commitments. We therefore concentrate on perceiving the organization and its interior structures as a monolithic block. On the one hand, this assumption needs to be highlighted as a serious limitation of our tool, but on the other hand it provides a vital starting point for complementary further research on intra-organizational challenges such as culture, mind-set, etc. (see e.g., Evans et al., 2017; Geissdoerfer et al., 2018) and tensions’ management in SBMI (see e.g., Schultz, 2022a). Hence, managers using the cube must be constantly aware of this blind spot. Further research could explore the possible interplay between the three commitment strategies (external relations management) embodied in the cube and the one we left out (internal relations management). For the latter, we would like to hint to an initial ordonomic contribution along those lines cf. Will and Pies (2018).

Abstract

The recent banks’ failures have highlighted the importance of improving banking sector supervision, emphasizing the need to adopt a holistic approach to risk assessment based on an evaluation of a bank’s business model (BBM) that combines financial (e.g., bank’s balance data) and non-financial information (e.g., bank’s ESG performance). In this study, we explore the joint effect of BBM and their environmental (ENV), social (SOC), and governance (GOV) pillars performance on banks’ riskiness profile. The study uses a sample of 639 EU banks from 2013 to 2022 and applied a random effects model. Our findings suggest wholesale and retail banks could mitigate default risk, enhancing their ENV pillar performance. Differently, investment banks are encouraged to improve their governance best practices and structure to take advantage in terms of riskiness reduction. These results remain consistent after a series of robustness tests, including the 2SLS model and the Arellano coefficient estimation. Our paper offers practical implications for banking supervisory authorities and practitioners, encouraging to adopt a diversified ESG investment strategy according to bank-specific business models.

Introduction

Since the end of the financial crisis, supervisory authorities and policymakers have strengthened banking regulation to assess and monitor the vulnerabilities that have affected the financial system (FSB, 2023). Following these regulatory requirements, the bank business model (BBM) has been a topic of interest in the banking literature to understand better business models characteristics and their divergent impact on performance, efficiency, riskiness, and solvency (BIS, 2022). To stress the importance of business model analysis (BMA), some scholars have shown how business models (BMs) contain information that extends beyond the traditional indicators of bank risk and return, providing regulators and supervisors with better insights into the sustainability of bank profits and stability (Lartey, James, Danso, & Boateng, 2022). Focusing on the risk side, some authors (Marques-Ibanez & Scheicher, 2010) have highlighted how business models can signal a firm’s risk-taking propensity, facilitating incentives to hedge risk.

The recent medium-size banks’ demises (e.g., the SVB bank crisis) have also emphasised the importance of BMA and converging on a compressive evaluation of financial stability. Consequently, supervisory authorities encourage implementing a holistic approach to bank risk assessment to minimize these adverse events and contagion effects in the banking industry (BIS, 2019). Given the evolving market and business environments, supervisors do not look solely at capital adequacy at a single point in time, but rather, they assess BBM viability on longer time horizons.

Indeed, when conducting BMA, supervisors rely on various sources, including banks’ financial reporting; business plans; and internal reporting. BMA is conducted by examining banks’ business environment and dialogues with internal and external stakeholders. In assessing banks’ riskiness, supervisors should consider financial data and non-financial information disclosure (EU, 2014 Non-Financial Reporting Directive – NFRD) to detect risk drivers and crisis determinants not yet investigated in their current analysis models (EU, 2014).

Conclusion, limits, and implications

n this study, we provide empirical evidence concerning the banks’ business models capabilities to differentiate their risk mitigation effect through investment in individual ESG pillars.

Our findings show that regarding the environmental dimension, wholesale banks display a negative association between environmental (ENV) score improvement and default probability. Regulatory responses (EU, 2020) to global environmental challenges further amplify the potential default risks for banking institutions. Although, to a lesser extent, retail banks are also negatively associated with environmental issues. This differentiation arises due to the inherent customer-focused nature of retail banking (Liu & Wan, 2023). As the public’s environmental consciousness increases and regulatory frameworks develop with a concentration on consumer protection, retail banks’ risk profile undergoes slight transformations.

Regarding the social dimension (SOC), investment banks exhibit a strong initial positive relationship, which transitions into a negative one over a longer time horizon. The nature of investment banking activities, characterized by extensive stakeholder interactions and often tied to complex financial ventures, makes them particularly sensitive to social considerations. This susceptibility affects their risk assessments, influenced by social perceptions and stakeholder reputation. Additionally, retail banking, inherently rooted in direct interactions with individual consumers, emerges as exceptionally responsive to social factors. The intricate weave of societal norms, community sentiments, and individual consumer preferences plays a pivotal role in shaping the default risk profile for these banks.

Abstract

For over a decade, sharing economy companies (“sharecoms”) have been operating on an international stage with novel digital platform-based business models that create and capture value through unique dimensional configurations. However, the relationship between these business models and the international expansion of sharecoms remains under-theorized. This longitudinal study addresses this gap and presents new empirically driven insights. Based on a cross-border, cross-sector case study of six sharecoms, we investigated the evolution of the business model in relation to internationalization. The results showed that multidimensional changes took place within the business models, impacting the sharecoms’ internationalization in terms of speed, scale, and scope through circular causality. Moreover, by creating virtuous cycles of business model change and internationalization, sharecoms were able to achieve network effects and unlock value.

Introduction

In an era driven by technology and globalization, the development of a firm’s business model and its international endeavors often go hand in hand, especially in the case of young entrepreneurial firms, which are both highly innovative and highly international (Onetti, Zucchella, Jones and McDougall-Covin, 2012). One such firm type operates in the sharing economy; referred to hereafter as “sharecoms” (Thornton, Campbell and Owusu, 2019).

Sharecoms are characterized by innovative business models and accelerated internationalization (Parente et al., 2018, Thornton and Sandberg, 2020). Their value proposition facilitates access to and redistribution of individual peer-to-peer (P2P) users’ tangible and intangible assets delivered via digital platforms (Frenken and Schor, 2017). The asset-light, internet-mediated nature of sharecoms’ business models provides them with increased scalability, meaning that they can reach a global audience with low transaction costs and limited capacity constraints (Täuscher and Kietzmann, 2017, Zeng et al., 2021). As such, they can internationalize immediately (Van Alstyne, Parker and Choudary, 2016) and, typically, do so.

According to Teece, “the right business model is rarely apparent early on in emerging industries” (2010, p. 187). Sharecoms innovate and develop their business models to align with the flourishing environments in which they operate. This strategy often begins early and proceeds rapidly, similar to their international expansion.

Discussion and conclusion

In this study, we sought to answer two research questions: (1) How do sharecom business models evolve during internationalization? and (2) How do changes in the business model affect internationalization? In doing so, new insights emerged regarding how business model change and internationalization relate to one another and evolve. This study also meets the calls for research on sharecom business models (e.g., Täuscher and Laudien, 2018, Bohnsack et al., 2021), aswell as the nexus between business models and internationalization (e.g., Onetti et al., 2012, Bohnsack et al., 2021). Thus, the purpose of this study — to explore cases of internationalized sharecoms over time to enhance the present knowledge of business model changes and internationalization in the sharing economy — has been fulfilled.

Abstract

Newly established enterprises in China face significant challenges and opportunities, with persistently high mortality rates. Navigating market challenges and establishing sustainable competitive advantages are pressing issues for contemporary businesses. This study delves into the bridging role of business model innovation between entrepreneurial bricolage and entrepreneurial performance, with market orientation influencing the relationship boundaries. We examined 288 Chinese small and medium-sized enterprises, investigating the relationships among entrepreneurial bricolage, business model innovation, market orientation, and entrepreneurial performance. Empirical results indicate: (1) Entrepreneurial bricolage positively influences business model innovation, and business model innovation positively impacts entrepreneurial performance. (2) Business model innovation plays a fully mediating positive role between entrepreneurial bricolage and entrepreneurial performance. (3) Market orientation positively moderates the impact of entrepreneurial bricolage on business model innovation and entrepreneurial performance, and it also positively moderates the impact of business model innovation on entrepreneurial performance. (4) Market orientation positively moderates the impact of entrepreneurial bricolage, mediated by business model innovation, on entrepreneurial performance. The study results contribute to a more effective understanding of the mechanisms through which entrepreneurial bricolage and business model innovation influence entrepreneurial performance, as well as how market orientation moderates their relationships and how enterprises sustain competitive advantages.

Introduction

In recent years, entrepreneurship has become a new focal point for economic and social development worldwide, seen as a new driving force for promoting economic and social progress. In today’s highly competitive business environment, new startups face significant challenges and opportunities. While there have been many successful new startups that have achieved brilliance through business model innovation, such as Didi, Xiaomi, and Xiami Music, the mortality rate of new startups remains high. For instance, in the bike-sharing industry, apart from the leading companies Mobike and Ofo, almost all second and third-tier companies’ financing processes have been concentrated around Series A or A+ rounds, with many experiencing a wave of closures since the second half of 2017. In the complex and rapidly changing environment, due to inherent “new” and “small” disadvantages, new startups generally have a higher failure rate [1]. Therefore, how new startups can address market challenges and build sustainable competitive advantages is a pressing issue for enterprises today and will continue to be a research hotspot in the field of strategic management for a long time (see Table 12).

Entrepreneurship can undoubtedly contribute significant value to the economy and society [2]. For new startups, enhancing entrepreneurial performance becomes a practical challenge. Read points out that the success of most startups often stems from initially overlooked idle resources [3]. Entrepreneurial bricolage is a way of rationalizing the allocation of these idle (or redundant) resources, allowing startups to obtain enterprise value at the lowest cost, thereby contributing to performance improvement [4]. Entrepreneurial bricolage also facilitates entrepreneurs in innovating and adjusting business models [5]. Therefore, entrepreneurial bricolage, as a precursor to business model innovation, can provide new business opportunities and innovative ideas for enterprises [6]. However, startups are constantly in a predicament of resource constraints, and to build novel business models, they have no choice but to creatively combine existing resources [7]. Business model innovation also has a positive impact on entrepreneurial performance [8]. It is an essential means for enterprises to achieve performance, but this innovation process continually evolves in overcoming market uncertainty [9]. Thus, enterprises must be market-oriented, continuously adjusting and optimizing their products, services, and market strategies [10]. Market orientation is a culture that emphasizes creating excellent value for customers, creating more value for customers through shared value concepts, behavioral norms, and effective process combinations, thereby achieving outstanding organizational performance [11]. In the early stages of entrepreneurship, startups face the problem of resource constraints. A market-oriented strategy that focuses on customer needs and actively captures market opportunities is an effective way to gain competitive advantages for enterprises [12]. Research indicates that market orientation can enhance entrepreneurs’ sensitivity to market demand, thus promoting entrepreneurial bricolage and business model innovation [5,8], ultimately boosting entrepreneurial performance.

Conclusion

This study links entrepreneurial bricolage, business model innovation, and entrepreneurial performance through the regulation of market orientation, and uniquely constructs and explores a moderated mediation model. The study reveals several important findings: (1) Entrepreneurial bricolage significantly and positively impacts business model innovation. (2) Business model innovation, in turn, has a significant and positive effect on entrepreneurial performance. It also serves as a complete mediator between entrepreneurial bricolage and entrepreneurial performance. (3) Market orientation plays a crucial role in regulating the impact of entrepreneurial bricolage on business model innovation. It also positively regulates the impact of business model innovation on entrepreneurial performance. (4) Market orientation further exhibits a significant regulatory effect on the impact of entrepreneurial bricolage on entrepreneurial performance, acting as a mediator in this relationship. In summary, entrepreneurial bricolage, business model innovation, and market orientation are interconnected factors that influence entrepreneurial performance in a positive and significant manner.

Abstract

     Recent literature suggests entrepreneurs struggle to pivot—or fundamentally change aspects of their venture—due to identity-based resistance to change. Yet, when entrepreneurs receive negative feedback, overcoming this resistance may be important to pivoting their business model. We adopt a convergent, mixed methods research design to explore when and why some entrepreneurs overcome resistance to change in response to negative feedback during early-stage business model experimentation. Building upon qualitative data that we gathered and analyzed, we theorize entrepreneurs may resist pivoting their value proposition relative to other business model components despite receiving negative feedback on this aspect of their business model. However, we find three factors – entrepreneurial experience, startup mentoring, and team size – may enable entrepreneurs to pivot in response to negative feedback. We theorize that these factors broaden a startup team’s perspective, enabling value proposition pivoting during early-stage business model experimentation. We test these relationships with quantitative data from 80 startups engaged in business model experimentation and find support across hypotheses. We contribute to understanding when and why entrepreneurs pivot aspects of their business models in response to negative feedback during early-stage business model experimentation.

Introduction

     The entrepreneurship literature suggests startups may benefit from experimentation and pivoting business model components in response to negative feedback from stakeholders (Andries et al., 2021; Blank and Eckhardt, 2023; Camuffo et al., 2020; Ries, 2011). In early stages of a new venture, a business model refers to a cognitive schema of a potential activity system designed to create and capture value (Massa et al., 2017; Shepherd and Gruber, 2021; Snihur & Eisenhardt, 2022). Business model experimentation is the process of testing assumptions underlying a potential business model schema and pivoting aspects of the business model in response to negative feedback (Andries et al., 2013; McDonald and Eisenhardt, 2020; Leatherbee and Katila, 2020). Building upon prior literature, we define business model pivoting as a fundamental change to a business model component (Berends et al., 2021; Shepherd et al., 2023; Shepherd et al., 2023). Yet, startup founders often struggle to change business model assumptions in response to negative feedback. Identity-based motives to preserve beliefs and assumptions related to founders’ self-concept may conflict with the capacity to change aspects of an emerging business model in response to negative feedback (Grimes, 2018; Kirtley and O’Mahony, 2023; Zuzul and Tripsas, 2020). Despite the general understanding that founders struggle to change their ideas, however, the entrepreneurship literature currently lacks precise insight into when and why some founders can overcome resistance to pivoting distinct business model components during early-stage business model experimentation.

     In this research, we use a convergent, mixed-methods research design to explore when and why startups pivot different aspects of their business model. We do so within the context of early-stage business model experimentation, wherein startup founders explicitly state business model assumptions, test those assumptions against stakeholder feedback, and are encouraged to pivot business model components in response to negative feedback. Through an exploratory qualitative analysis in Study One, we observe that founders are more willing to pivot when negative feedback relates to peripheral aspects of their business model—the activity system designed to deliver value. By contrast, founders resist pivoting the value proposition of their business model despite receiving negative feedback from stakeholders. This finding is important because the value proposition may be critical to pivot in response to negative feedback during early-stage business model experimentation to realize value creation (Camuffo et al., 2020; Danneels, 2007; Marvel et al., 2020; Zellweger and Zenger, 2021; Zott and Amit, 2007, 2008).

Conclusion

     Our research explored how startups experiment with and pivot their business models in response to negative feedback. Using a mixed-methods research design, we highlight founders are more likely to pivot certain aspects of their business model as opposed to other aspects of their business model. To overcome this resistance to change, startups can gain entrepreneurial experience, engage frequently with startup mentors, and expand the size of their team. We suggest these factors enable pivoting because they increase breadth of perspective, which in turn allows founders to consider more alternative solutions when facing negative feedback. Overall, we contribute to understanding the social psychological mechanisms that enable startups to pivot different aspects of their emerging business model schemas during early-stage experimentation.

Abstract

     A growing body of scholarship has examined circular business models as a pathway towards sustainability. However, employee skills to support such business models have been largely overlooked. Addressing this research gap, this article proposes a comprehensive skill taxonomy for start-ups embracing circular economy transition. As the first large-N effort to develop a comprehensive skill taxonomy for circular business model implementation, this study uses a clustering analysis of self-reported skill profiles for 2407 staff working in circular start-ups. The taxonomy outlines 40 skills across six categories: business innovation, operations, social dimensions, systems, digitization, and technical issues. Findings suggest that circular business model implementation requires a set of general, sustainable, and circular skills, but some of these skills have been neglected in scholarship. Promoting circular narratives as a framing device for skill development can help advance CE towards mainstream uptake, and this study’s taxonomy offers a practical framework for using talent to accelerate CE transition.

Introduction

      Businesses and policy-makers often view the circular economy1 (CE) as a promising way to reconcile economic growth and sustainable development (Corvellec et al., 2021; Geissdoerfer et al., 2017; Kirchherr, 2022). Years into conceptual development and refinement, CE has been seen in a variety of ways ranging from holistic and comprehensive to only partially beneficial (Corvellec et al., 2021; Geissdoerfer et al., 2017) and even detrimental (Harris et al., 2021; Zink and Geyer, 2017). While the conceptual foundations of CE remain contested (Blomsma and Brennan, 2017; Korhonen et al., 2018a, 2018b; Skene, 2018), the topic is receiving growing scholarly interest (Ehrenfeld, 2004; Kirchherr and van Santen, 2019; Lüdeke-Freund and Dembek, 2017).

      Sustainability transitions research suggests that socio-technical transitions involve systemic changes in multiple dimensions beyond technology, including organizational and human decision-making. Such changes are expected to yield innovative products, services, and business models (Geels, 2004; Markard et al., 2012). CE transition is one type of socio-technical transition (Jurgilevich et al., 2016) and scholars have highlighted transition and innovation as conceptual elements of CE (Suchek et al., 2021) – both of which are seen as relevant to circular business models (CBM) (Antikainen and Valkokari, 2016; Bocken et al., 2016; Lewandowski, 2016; Santa-Maria et al., 2021). Relatedly, scholars have proposed various typologies of CBM (Henry et al., 2020; Urbinati et al., 2017) and have focused on CBM strategies, related experimentation (Bocken et al., 2016; Kane et al., 2018; Konietzko et al., 2020), and enablers and barriers around implementation (Hartley et al., 2021; Ünal et al., 2019; van Keulen and Kirchherr, 2021). While scholarship on CBM is growing (Ferasso et al., 2020; Lüdeke-Freund et al., 2019; Rosa et al., 2019), practical uptake remains limited (Centobelli et al., 2020; Kirchherr et al., 2018b; Urbinati et al., 2017).

Conclusion

     The CE concept has gained substantial momentum in the 21st century as a key facilitator of sustainability efforts. Given the influence of business decisions not only on environmental conditions but also on consumer preferences and habits, the private sector is recognized as a key catalyst for society-wide CE transition. Nevertheless, substantive progress towards CE transition remains limited. While refashioned strategies and supportive infrastructure provide businesses with some pathways, skills for CBM are an often-overlooked topic in the academic literature and in practice. A modestly sized literature offers some useful insights (e.g., Janssens et al., 2021; Sumter et al., 2021) but a systematic understanding about the relevance of employee skills to CBM implementation has yet to be fully researched or integrated into practice. This study has sought to fill this gap not only by outlining skills in circular start-ups but also by presenting a way to refine understandings about these skills and help businesses identify and cultivate them.

This study proposes the first comprehensive skill taxonomy for CBM implementation in start-ups in the literature, as far as the authors can determine. The taxonomy includes 40 skills for CBM implementation and finds that CBM implementation requires a set of general, sustainable, and circular skills. It also finds that some skills, such as digital skills, have been neglected. Skills declared as specifically circular are not as common in circular start-ups as the literature suggests. Given that CBM is not an entirely new concept, some skills identified in this study have existed in the workforce for decades. Thus, the novelty of skills for CBM implementation lies in the shifting context of their application and in their utilization as microfoundations of organizational capabilities. Circular start-ups might need to develop existing employee skills in novel or differentiated circular application contexts. Consequently, using circular narratives as a framing device for skill development can promote understanding and recognition of those skills in efforts to mainstream CE.

Abstract

     Regeneration has become a debated topic in organizational studies, yet its characteristics and distinctions from sustainability and circular business models remain unclear. This study aims to provide an initial framework for regenerative business models and differentiate them from sustainable or circular models. Employing literature reviews, six focus groups with international and indigenous participants, and comparisons with seminal articles on sustainable and circular models, this study finds that organizations with regenerative business models focus on planetary health and societal wellbeing. They create and deliver value at multiple stakeholder levels—including nature, societies, customers, suppliers and partners, shareholders and investors, and employees—through activities promoting regenerative leadership, co-creative partnerships with nature, and justice and fairness. Capturing value through multi-capital accounting, they aim for a net positive impact across all stakeholder levels. Regenerative business models share some design approaches with sustainable and circular models but differ in their main goals and systemic perspectives. Achieving regenerative business models requires strong and contested policy frameworks, including animal and nature rights and true pricing. Further research is needed to explore how organizations can incorporate intrinsic notions of value beyond capital and avoid new forms of greenwashing when adopting regeneration and net positive impact narratives.

Introduction

     The goal of sustainability has been to meet the needs of present generations without compromising the ability of future generations to meet their own needs (WCED, 1987). But the prevalence of a linear and degenerative economy has weakened the planet’s regenerative capacity, making it harder and harder to achieve this ambition (Dasgupta, 2021). Sustainability has become a necessary but insufficient condition for long-term human welfare. Next to sustaining, there is a growing need to regenerate our and the planet’s ability to meet present and future needs. This has given rise to the field and idea of regeneration.

Regeneration is a key process of biological systems and refers to “the capacity to bring into existence again” (Munoz and Branzei, 2021 ˜ , p. 509). It lets cells, organisms and ecosystems recover from and build resilience against external shocks (Carlson, 2011). The term regeneration has increasingly been used in diverse fields such as agriculture, architecture, design, energy, nature conservation or tourism, to promote healthier natural ecosystems and thriving human societies (Munoz and Branzei, ˜ 2021; Robinson & Cole, 2015; Rhodes, 2012, 2017; Hahn and Tampe, 2021; Bellato et al., 2022).

Conclusion

     This study sought to answer two research questions. First, what are regenerative business models? Second, how do regenerative differ from sustainable or circular business models? The answer to the first question is that organizations with regenerative business models focus on planetary health and societal wellbeing. They create and deliver value at multiple stakeholder levels—including nature, societies, customers, suppliers and partners, shareholders and investors, and employees—through activities promoting regenerative leadership, co-creative partnerships with nature, and justice and fairness. Capturing value through multi-capital accounting, they aim for a net positive impact across all stakeholder levels.

     The answer to the second question is that regenerative business models add to the sustainable and circular business model literature with a focus on social-ecological systems (Berkes et al., 2000), based on an understanding of the planet as a living system, the so-called Gaia hypothesis (Lovelock, 1988). They also propose the new goal and framing of planetary health and societal wellbeing and advance a motivating narrative that aims not merely at the reduction of negative impacts (net zero) or the balance between economic, social and environmental value creation (triple bottom line), but at a redefinition of the relationship between humans and nature. Regenerative business models also add a focus on individual purpose and meaning, questions of leadership and spirituality, as well as nature and animal rights and the role of indigenous communities in helping to reconnect humans and nature. The three concepts of regenerative, sustainable and circular business models have overlaps in their design foci. Regenerative and circular concepts intersect where design efforts are aimed at the regenerative biosphere. Sustainable and circular connect on the circular technosphere; and sustainable and regenerative business models connect through the sustainable humansphere. This study intends to help advance organizational efforts to evolve humanity towards planetary health and societal wellbeing.

Abstract

The current planetary crisis and the perceived urgency necessitates more sustainable production and consumption patterns. Businesses, particularly the multinationals, play a key role in transitioning to a circular economy, which provides a promising approach to achieving the UN Sustainable Development Goals. Industry 4.0 technologies can theoretically support this transition and enable circular economy through, for example, data-driven and smart business processes. However, merging these new technologies with a circular economy is not a straightforward and well-established process and it fundamentally changes the business value chain. Therefore, this paper provides a systematic overview to help better understand the transition process to circular business models and the enabling role of industry 4.0. Merging these concepts underlines that many factors are interrelated and should be investigated in a holistic way instead of siloes. The findings imply that changes transcend business boundaries, including new value chain characteristics and operation models and indicate the interconnected nature of certain factors along the product lifecycle, including service-based models, circular design, reverse flows, consumers and users, and collaborations. This paper proposes a conceptual transition framework to address how new circular business models can integrate digitally adaptive transformations and proposals for future research are reflected upon.

Introduction

Our world is currently facing numerous environmental, social and economic challenges and the consequences of these challenges can be seen in climate change, pollution, biodiversity loss and resource degradation (Okorie et al., 2018). We have reached a tipping point in what our Earth can sustain and the current living standards are not sustainable in the long-term. The problem can be tied back to the first industrial revolution and the logic our economy is built on. 91% of the world still follows this traditional, linear economic ‘take-make-use-dispose’ system, which is a driver of our production and consumption patterns (Nobre and Tavares, 2020). While innovations of the industrial revolutions have induced growth, with the growing population and the throwaway consumption patterns, products remain underutilized, are prematurely wasted, and their end-of-life is not generally considered (Rosa et al., 2020).

Therefore, it has become inevitable for production to transition to a more sustainable system and the search for solutions a priority for the social and political agenda globally (Ajwani-Ramchandani et al., 2021b; Bjørnbet et al., 2021). The United Nations Member States have summarized an action plan in the 2030 Agenda for Sustainable Development, articulating 17 transformative Sustainable Development Goals (SDGs) (United Nations, 2015). This initiative shows that there is an interest in finding a balance between human and nature to support the more efficient use of our resources and encourages us to do more and better with less (Tunn et al., 2019). Multinationals are particularly well-positioned to tackle this issue due to their overarching footprint (Ajwani-Ramchandani et al., 2021a).

Conclusion and limitations

This SLR has conceptualized the CE–I4.0 epistemology through current literature, synthesizing and providing an overview of the CE transition process through a business model lens. Our framework depicts which directions businesses should innovate to and it pinpoints specific I4.0 tools that enable the elements of service-based models, circular design, reverse flows, consumers and users, collaborations and product lifecycle management.

This framework contributes by bringing together relevant sciential and business factors into a single study. Although there has been an increasing number of studies in the field of CE–I4.0 (Bjørnbet et al., 2021), investigating the interconnected nature of elements along the business transition process to a CE has not yet been fully understood and conceptualized. The framework shows the transition to a CE as a paradigm shift (Campbell-Johnston et al., 2019), which transcends siloed solutions and requires a holistic, ‘embracing all’ approach and consideration of different stakeholder interest and expectations (Awan et al., 2021). With the proposed conceptual framework, we embrace a holistic approach, demonstrate which business elements influence each other and how within the same ‘circular system’, and we underline the role of specific I4.0 tools along this transition.

This study examines the process and mechanisms of realized international scaling of born-digital firms through the business model lens. In an explorative multiple-case study of Finnish firms in cultural industries, it finds that born-digital firms adapt their business models through an iterative process to achieve practically scaled operations. The research unpacks the mechanisms guiding the process of business model adaptation and highlights the role of dynamic capabilities in their employment. The findings extend existing theorizing on scaling by offering a conceptualization of realized international digital scaling and the role of the business model in its implementation.

Introduction 

Scaling is increasingly considered a key strategic objective of digital firms across the globe (Financial Times, 2021; Sullivan, 2016). The importance of this real-word phenomenon has attracted the interest of scholars in international business (IB) and entrepreneurship (IE) fields, leading to increased efforts to develop its theoretical foundations (Giustiziero et al., 2021; Reuber et al., 2021; Shepherd & Patzelt, 2022).

International scaling is related to topics that have already been studied in extant literature, such as the expansion of high growth ventures (Durufl´e, Hellmann & Wilson, 2017; Rasmussen et al., 2018), internationalization of lean entrepreneurial firms (Autio & Zander, 2016), and the speedy expansion of born-global firms (Hennart, 2014). Yet only recently have works initiated a dialogue on international digital scaling as a phenomenon that has unique mechanisms, challenges, and organizational context condition (Piaskowska et al., 2021; Tippmann et al., 2022b). Digital technologies have triggered unprecedented possibilities for international scalable expansion by decreasing transportation and production costs and developing platforms enabling instant global expansion and connectivity (Adner et al., 2019; Autio et al., 2018). Born-digital firms, or firms that are fully digital from their inception (Monaghan et al., 2020) are assumed to be readily scalable due to their ability to achieve economies of scale in core business processes. In other words, digital firms are believed to have scalability that depicts “how the value derived from a firm’s resource bundle in a focal activity changes as the size of the bundle increases” (Giustiziero et al., 2022: 2). Yet, despite the enabling power of digital affordances, and global “by default” mindset of born digital firms (Birkinshaw, 2022), some studies highlight that digitalization does not automatically guarantee occurrence of scaling and there is a variation amongst digital firms in achieving wide international presences (Stallkamp et al., 2022). There are also indications of organizational challenges associated with international scaling. While young firms often struggle with managing the organizational design during the scaling process (DeSantola et al., 2022), MNEs experience pressures of conflicting strategic demands in implementation of replicable innovation scaling strategy (Tippmann et al., 2022b). The extensive evidence also indicates that many digital firms fail to scale (Gulati & DeSantola, 2016; Kutcher et al., 2014; Scale-Up Europe, 2016).

Conclusion 

This research enriches knowledge in the scaling and business model fields by offering empirical insights into the concept, process and mechanisms of realized international scaling of born-digital firms through the lenses of the business model and dynamic capabilities. The research framework shows how the dynamic process of business model adaptation takes place after market launch and leads to scaled operations of born-digital firms. While scholars often define born-digital firms as being readily scalable (Monaghan et al., 2020), this research uncovers the ‘work’ behind practically scaled born-digital firms and offers an empirically based definition of realized digital scaling.

Abstract

Purpose

     Sustainable business model innovation (SBMI) is a change in the way a firm operates in order to create positive impacts or to reduce negative consequences for the environment and the society. The aim of this paper is to explain what pathways a firm can take when it implements a sustainable business innovation process in line with Sustainable Development Goals (SDGs).

Design/methodology/approach

     The article starts with the analysis of the existing literature about BMI and SBMI in order to extrapolate the main elements of these topics.

Findings

     Thanks to the combined information from academic and nonacademic sources, the study proposes a new framework. It is divided into three sectors: value proposition, value capture delivery and value capture according to the main studies about the business model.

Research limitations/implications

     Regarding theoretical implications, this study contributes to developing a theory of both BMI and sustainable innovation. Indeed it helps in the understanding of the dynamic vision about how the business model changes in order to incorporate triple sustainability.

Practical implications

     From a practical view, the paper can serve as a guideline for corporate reorganization.

Originality/value

     The new framework differs from some recent academic efforts first of all for its theoretical characteristics: BMI construct and not business model concept is the core of the framework. The business model represents the subject of innovation, not its vehicle. Another unique aspect that can be derived from the approach adopted is that it links theoretical with practical sources.

Introduction

     Business model innovation is a widely known topic and one of the most recurring keywords in managerial studies. It deals with a new way to do business aiming at prosperity in a dynamic environment through the reconceptualization of the underlying logic behind the value creation, capture and delivery (Richardson, 2008; Teece, 2010).

     Firms increasingly need to innovate by modifying their business model by initiating changes, improvements and replacements in various organizational elements (Mitchell & Coles, 2003). It is relevant to understand these elements to facilitate the analysis of organizational processes and planning of transformation from one business model to another and to increase the firm’s resilience and the probability of success (Geissdoerfer, Vladimirova, & Evans, 2018).

Discussion and conclusion

     Subject-matter experts consider the SBMI a complex process that changes the core elements of the firm’s logic to create new value for all their stakeholders.

     The radicality of organizational change makes the adoption of a sustainable orientation easier for new entrants (start-up) and riskier for incumbents – the existing companies that have been operating their business for a long time. Indeed, the start-up does not transform an existing business model but creates new ones without a history to respect or a tradition to maintain. At the same time, incumbents’ firms must start revising their current business model. The ambiguity of the situation also can bring uncertainty.

Abstract

     Business model exists within business ecosystems, and stakeholders can exert a key influence on a firm’s business model innovation. Drawing insights from the business ecosystem perspective and resource-based view, this study examines how ties with stakeholders can affect a focal firm’s business model innovation and how the relationship is contingent upon the firm’s learning types. Analyses of 210 Chinese firms reveal that the relationship between intra-industry stakeholder ties and business model innovation is inverted U-shaped, while extra-industry stakeholder ties have a positive effect on business model innovation. The relationships between both intra-industry and extra-industry stakeholder ties and business model innovation are weakened by exploitative learning but strengthened by exploratory learning. Theoretical and practical implications are discussed.

Introduction

     Business model innovation (BMI), which involves holistic alterations to the structure and architecture of firms’ boundary-spanning activity systems for creating, delivering, and capturing value, has recently attracted considerable scholarly attention due to its ability to increase a firm’s competitive advantages (Bouncken and Fredrich 2016; Foss and Saebi, 2017). Nowadays, the locus of value creation and value capture has shifted to the business ecosystem (Adner and Kapoor, 2010) composed of interdependent stakeholders (e.g., customers, competitors, suppliers, social organizations, and other institutions) and the relationships between all stakeholders (Moore, 1993; Wei et al., 2017). Firms are relying increasingly on stakeholders in the business ecosystem to jointly create and capture value by redesigning their business models (Amit and Zott, 2015).

     An increasing number of scholars have realized that the business model, despite being often studied as a firm-centric concept, is an ecosystem-embedded construct (Amit and Zott, 2015; Frishammar and Parida, 2019). They acknowledge that BMI extends the dyadic relationships involving multiple ecosystem stakeholders (Sjödin et al., 2020). Hence, BMI is not only constrained by firms’ internal factors, but also affected by ecosystem-level factors, particularly stakeholders. Despite this, the literature exploring the antecedents of BMI has been guided mainly by the firm-centric view that focuses on the effects of firms’ internal factors (e.g., McDonald and Eisenhardt, 2020; Wei et al., 2017), leaving the role of stakeholders largely underexplored. However, given business model researchers’ growing interests in the business ecosystem, one intriguing question is what role ecosystem-level factors, particularly stakeholders who constitute the principal subjects of a business ecosystem (Lu et al., 2014), play in driving BMI? Unfortunately, the answer remains unclear.

Analysis and results

Results

     The descriptive statistics and correlation analysis results for all variables, including the mean values, standard deviations, and correlation coefficients, are presented in Table 3. To assess multicollinearity, we calculated the variance inflation factors (VIFs). The maximal VIF value in all of the models was 2.309, below the cutoff of 10. To further minimize multicollinearity, we mean-centered the independent and moderating variables before generating interaction terms (Aiken and West, 1991). We adopted multivariate regression analysis and the moderated method (Baron and Kenny, 1986) to test our hypotheses. The steps performed to test the hypotheses are detailed in Table 4.

     H1 predicted an inverted U-shaped relationship between intraindustry stakeholder ties and BMI. We followed the suggestions of Haans et al. (2016), who pointed out that tests of an inverted U-shaped relationship should meet the following conditions: a) coefficients must be significant and of the expected sign, b) the slope of the curve must be sufficiently steep at both ends of the data range, and c) the turning point of the curve must be located well within the data range. First, Model 3 shows that intra-industry stakeholder ties have a positive and statistically significant effect on BMI (β = 0.105, p < 0.05) and that the squared term of intra-industry stakeholder ties have a statistically significant negative effect on BMI (β = − 0.171, p < 0.01). Second, we split the data in half based on the turning point, computed as 0.307. We ran two multivariate regression analyses on the split data sets. The coefficient estimate of intra-industry stakeholder ties for the values less than or equal to 0.307 was positive (β = 0.149, p < 0.05) and the coefficient estimate for the values greater than 0.307 was negative (β = − 0.238, p < 0.1), indicating that both the positive and negative slopes of the curve were statistically significant (Chuang et al., 2018). Third, we plotted the inverted U-shaped relationship as shown in Fig. 2. The turning point of 0.307 fell well within the data range of the centered intra-industry stakeholder ties (− 1.712 to 1.287). Thus, the conditions were satisfied, supporting H1.

Abstract

Keywords

1. Introduction

2. Conceptual background

3. Methods

4. Results

5. Discussion

6. Conclusion

Declaration of Competing Interest

Acknowledgement

Appendix.

References

Abstract

Many companies have innovated their business models in their attempts to transition towards a circular economy. However, the label ‘circular’ does not necessarily mean better for the environment. How do companies measure the environmental performance of their business models? And as they alter them for a circular economy, how do they forecast the potential environmental impacts? These questions are important to better understand the impacts of circular business models. This study sets out to answer these questions through 29 semi-structured interviews and 39 survey responses, with business developers, managers, product designers and consultants from more than 10 industries. The results reveal that while most participants measure the impact of their current business models, they do not forecast the future impacts of their circular business ideas before implementation. The most popular measurement method was rules of thumb, followed by life-cycle assessment (LCA) or LCA-based tools. A lack of data, increased uncertainty during experimentation and a lack of knowledge are the common barriers that keep the participants from measuring environmental impacts.

1. Introduction

The need for a more circular economy is increasingly being recognised by both governments and the private sector (European Commission, 2020; Government of Canada, 2019; Government of the Netherlands, 2016; Lewandowski, 2016). Businesses are trying to become more sustainable by trialling circular business models (CBMs) that aim at longer product lifetimes and production of less waste (Bocken and Antikainen, 2018; Geissdoerfer et al., 2020). Companies often do this through business model experimentation (Bocken and Snihur, 2020), which tends to follow the – ‘build, measure, learn’ – Lean Startup approach (Blank, 2013; Ries, 2011). This is an iterative approach, where different business strategies are repeatedly trialled to find the best product-market fit (Chesbrough, 2010). In the circular economy context, business experimentation also focuses on addressing pressing sustainability issues, in particular to narrow, slow, close, and regenerate resource loops (Bocken et al., 2016a,b; Konietzko et al., 2020a).