Tag Archives: #SharedValue

Sustainable Business Model Research –Time to Leave the Twilight Zone

By Dr. Florian Lüdeke-Freund.

Research on sustainable business models, or “business models for sustainability (BMfS)”, is still a niche topic in both the business model and sustainability communities. BMfS researchers often find themselves in a twilight zone, not knowing whom to address with or involve in their research. After one decade of BMfS research, it is time to develop a joint agenda to strengthen and shape this interdisciplinary field.

Leaving the Twilight Zone

Looking at seminal articles, we see that early work on BMfS deals with organisational and cultural preconditions of business models that contribute to corporate sustainability. Analysing business models is also seen as a means to overcome the technology bias of traditional eco-innovation approaches and move towards system level innovation, e.g. through product-service systems. Others see business models as tools to re-scale and re-localise monolithic industrial infrastructures, while again others investigate the links between business models and business success through corporate sustainability. Research on BMfS is often rooted in ecological sustainability, but some scholars see BMfS also as a means to address social issues.

These perspectives and topics clearly show that we need multiple disciplines, theories and methods to properly study BMfS. But reviewing the BMfS literature, which we have done in different projects and articles (Boons & Lüdeke-Freund, 2013; Schaltegger et al., 2016; Lüdeke-Freund et al., 2016), shows that we, as BMfS researchers, tend to talk to our “sustainability peers” only, in terms of how we frame and work on research problems and the journals we publish in. At the same time we are sitting somewhere in between. We are neither pure management scholars nor ecological economics veterans. We are in a twilight zone.

After one decade of BMfS research, it is time to step back and reflect on the topics we have studied, the theories we have used and developed, and the methods we have applied. We should ask ourselves, who – from outside our community – could help with the problems we are studying? Obviously, this is a multi- and interdisciplinary effort. Therefore, a joint, multi- and interdisciplinary research agenda and mutual exchange are required.

Towards a Joint Research Agenda

Our recent Organization & Environment special issue on BMfS covers a broad range of entrepreneurial, managerial and innovation issues. However, a lot remains to be done with regard to theory development and management support. Here, the original business model and the diverse sustainability communities could and should work together, develop projects and write articles that contribute to theory development and management support and are acceptable to their various audiences – including their respective journals.

The following exemplary research problems were identified in the editorial article of our special issue and could serve as a starting point for a joint research agenda for the original and the sustainability-oriented business model communities:

Theory development

  • How can theories on the organisational level (e.g. dynamic capabilities), individual level (e.g. responsible leadership) or on both levels (e.g. organizational learning) help explain green and social business model transformations?
  • How do BMfS co-evolve and trigger industry transformations both via market interaction and system transitions (e.g. evolutionary economics)?
  • Which learning-action networks and collaborations, but also power struggles between stakeholder groups, are involved in the creation of BMfS (e.g. stakeholder theory)?

Management support

  • Which management frameworks and instruments enable the management of and transition to BMfS (e.g. change management)?
  • Which frameworks and instruments can support innovation (e.g. design thinking, The Natural Step) and strategy implementation (e.g. Business Model Canvas) for BMfS?
  • How can performance and societal impacts be measured and managed on the business model level (e.g. balanced scorecard)?

These are just a few exemplary topics. But it is a starting point. It is also, or even much more, an open invitation to scholars from fields such as entrepreneurship, innovation, design, policy, and transition research, and many more, to develop a joint agenda that allows for true multi- and interdisciplinary BMfS research.

Our dynamically growing communities – e.g. Business Model Community, Sustainable Business Model Blog, Strongly Sustainable Business Model Group, Sustainability Transitions Research Network, Inno4SD – could benefit from such an agenda to progress in a more synergistic way, combining the best of these worlds: up-to-date knowledge about business model and sustainability research.

Such an agenda would shed some light on the twilight zone of BMfS research and would help to establish it as a research field in its own right.

Let’s start the conversation – now.

Florian Lüdeke-Freund is a senior research associate at the University of Hamburg, Germany. He is a research fellow at the Centre for Sustainability Management (CSM), Leuphana University, and the Governing Responsible Business Research Environment at Copenhagen Business School, Denmark. His research deals with sustainable entrepreneurship, sustainable business models, and innovation. Florian founded www.SustainableBusinessModel.org as an international research hub addressing sustainability, business model, and innovation topics.

Pic by Rod Serling’s classic anthology, The Twilight Zone (1959 – 1961)

The Ecosystem of Shared Value – Unoriginal, But Still Likely to Make an Impact

by Andreas Rasche.

The October 2016 issue of the Harvard Business Review contains an article by Mark Kramer and Marc Pfitzer called “The Ecosystem of Shared Value.” Positioned as a follow-up to Porter and Kramer’s very successful essay on “Creating Shared Value” (CSV), the authors suggest that to “advance shared value efforts […] businesses must foster and participate in multisector coalitions—and for that they need a new framework. Governments, NGOs, companies, and community members all have essential roles to play, yet they work more often in opposition than in alignment.” This new framework has a nice new label – Collective Impact.

A big (but unoriginal) idea… 

My claim here is that this new concept – Collective Impact – is oversimplifying and rather unoriginal (but nevertheless will be successful, at least in terms of corporations trying to reproduce the label and academics citing the paper). Much like its predecessor CSV, Collective Impact is old wine in new bottles; a new label for something we have known, studied, and practiced for many years. Talking about Collective Impact ignores the multi-stakeholder nature of many initiatives and partnerships within the field of sustainability and CSR. For instance, multi-stakeholder initiatives, such as the Forest Stewardship Council and the Fair Labor Association, have practiced collective impact for many years.

Also, partnership-based organizations like the Oxford Health Alliance have practiced many of the elements of what Kramer and Pfitzer call Collective Impact (e.g. a common agenda and mutually reinforcing activities). Even most quite simple NGO-business partnerships have these characteristics. Overall, it is hard to disagree with what Kramer and Pfitzer are writing, but it is equally hard to see any groundbreaking new idea here…

Collective Impact is also unoriginal in another way. My colleagues Andy Crane, Guido Palazzo, Laura Spence and Dirk Matten have convincingly argued in an article in the California Management Review a while ago, that CSV is an unoriginal concept and that its core premises have many similarities with well-known ideas in the CSR discourse (e.g., strategic CSR). They also showed that one of the core avenues for CSV – local cluster development – is neither new nor in any way surprising. Local clusters – which essentially are just a way to create collective impact – have been part and parcel of debates around sustainability in academia and practice. Understood in this way, Collective Impact just reiterates a part of the CSV story (which was unoriginal in the first place).

Why will the idea still be successful?

Considering all this, the important question seems to be: Why can concepts such as Collective Impact or CSV still make such an impact, despite their vague and unoriginal nature? One possible answer to this question relates to the so-called Matthew Effect in science. Robert K. Merton (1968) first observed this effect. The main claim is this: the credit for scientific work is distributed unequally. If similar research findings are communicated by a well-known, prestigious scholar and by one who is less widely known, it is the first who usually gets recognition. In other words, scientists with an existing good reputation receive greater increments of recognition, while the contributions of unknown scholars are rendered less visible. This makes science a “sticky”, path-dependent and self-reinforcing business…

Collective Impact and CSV (as well as other management fashions) are not successful because they offer new and innovative solutions. Rather, a significant part of their success can be attributed:

(a) to the already existing reputation of the people who promote the concept (in the case of Collective Impact we can assume positive legitimacy spillover effects of Porter’s work on CSV),
(b) to the perceived legitimacy of the outlet that the idea is published in (in this sense the Matthew Effect would not only be applicable to people but also to outlets), and
(c) to the short and simplifying nature of the message that is being sent.

All of this is not to say that Collective Impact, as framed by Kramer and Pfitzer, is totally useless or that it should not be published. Nobody has a patent on the idea of multi-stakeholder collaboration. It is even likely to spark interesting discussions among practitioners and will (hopefully) motivate more partnership-based initiatives. What I find worrying is that packing well-established ideas into such simplifying concepts may curb the advancement of knowledge in our field.

Andreas Rasche is Professor of Business in Society at Copenhagen Business School and directs CBS World-Class Research Environment “Governing Responsible Business”. More information at: http://www.arasche.com

pic by interactioninstitute

The Decline of Neoliberalism – Implications for CSR?

By Steen Vallentin.

“May you live in interesting times” – so the apocryphal English-language expression goes that people often refer to as ‘the Chinese curse’. Times are certainly interesting. Taken for granted notions of what is up and down and left and right in politics are, if not turned on their head then knocked about in confusing and sometimes frightening ways.

The strange (non-)death of neoliberalism … again?

One of the interesting developments in world politics right now is the crisis of neoliberalism as ideology. A development that some will indeed see as a curse, others as a blessing. It is not the first time that neoliberalism has been declared dead or seen to be in its death throes. Many obituaries of finance capitalism and global free trade were written in the wake of the financial crisis. Nevertheless, neoliberalism has shown itself to be remarkably resilient and has continued – in spite of public criticism – to be a dominant force in public policy around the world. Colin Crouch has referred to this recurring trajectory as ‘the strange non-death of neoliberalism”.

However, Brexit (and the election of Jeremy Corbyn as head of Labour) and the movements surrounding Bernie Sanders and Donald Trump in the United States are each in their own way symptomatic of a turning of the political tide against hyper-globalization and free market capitalism. The benefits of free trade – of goods, services and capital – and outsourcing of labor to low-cost destinations are now being challenged across the political spectrum. Even the Republic candidate for the presidency is questioning, supposedly (who knows with Trump), fundamental tenets of economic liberalism. The crisis of neoliberalism is both an intellectual and a popular one. Leading economists like Joseph Stiglitz, Paul Krugman, Jeffrey Sachs and Thomas Piketty are among its vocal adversaries, and a public/populist movement is revolting against the crises and rising inequality that are associated with it. Even top economist from the IMF have recently acknowledged that neoliberalism has been “oversold”.

CSR as an embodiment of neoliberal ideology?

These developments, seen in isolation, would seem to pave the way for a political climate  more attuned to the wants and needs of working people and to social values and democratic inclusion (as opposed to solutions based on the supposed workings of the sacrosanct market mechanism). How does it relate to CSR, then? What is the relationship between CSR and neoliberalism?

Arguably, the CSR literature has suffered from a lack of political-ideological self-reflection (and -criticism). Ideological reflection is often left to scholars and others who position themselves as outsiders to the field. As a result, rough and sweeping generalizations tend to prevail. As when critical sociologists and political science scholars suggest that CSR is simply an embodiment or reflection of neoliberalism (because it supports voluntary corporate self-regulation as opposed to government regulation etc.). Critical scholarship of the CMS (critical management studies) variety tend to strongly emphasize the hegemony of neoliberal capitalism as an all-pervasive and suppressive ideology and to stereotype/debunk the CSR literature as a supporter of this ideology.

Locating neoliberalism within CSR: Porter & Kramer on shared value

It is ultimately misleading, though, to think of the CSR literature in total as a reflection of a neoliberal mindset and of CSR promoters as suffering from false consciousness if they fail to realize this. A more nuanced and less stereotypical view of CSR allows us to distinguish between different forms of liberal thinking in CSR and to single out those instrumental streams of thought that more accurately deserves the label ‘neoliberal’. Here, pride of place goes to the strategic CSR/creating shared value approach promoted by Michael Porter & Mark Kramer in their series of influential Harvard Business Review papers. Porter & Kramer effectively subject all social action to the tribunal of cost-benefit analysis and economic value creation. Their approach is supposed to ensure that it is economic rationality and economic measures of worth, and not personal values or fleeting ethical, social or environmental sentiments (as promoted by more or less knowledgeable and qualified stakeholders), that hold sway over proceedings. In their view, shared value represents an internally driven and innovative way for businesses to address social problems and needs in ways that are also beneficial for themselves.

Collective impact – shared value as collaboration

However, a new paper on shared value by Mark Kramer and Marc Pfitzer suggests a softening of the neoliberal rhetoric and an opening toward a more inclusive and democratic approach to responsibility. The core concept here is ‘collective impact’ and the case is made for companies to engage in trust-building and mutually reinforcing partnerships with NGOs, governments and competing businesses as this will provide the strongest basis for dealing effectively with social problems and create shared value. The authors even concede that companies cannot be the backbone of such projects as they are not neutral players; instead, a separate and independently funded staff is called for. Indeed, collective impact calls for a new brand of leadership, ‘system leadership’ that involves multiple individuals from different constituencies leading together.

The new paper has already been accused of intellectual piracy on social media, and it certainly does not excel in terms of originality. Its significance rather lies in its ceding of ground to democratic adversaries in the CSR debate. The paper may be read as a reflection of the diminished self-confidence of purely neoliberal thinking about business and society. Whether or how this ceding of ground will make a real difference in the real world of business remains to be seen. At this time, we can see that a concept (shared value) that is rooted in neoclassical economics and has otherwise been associated with a clear corporate bias is now being presented as a collective, democratic endeavor. It is certainly interesting.

Steen Vallentin is Director of the CBS Centre for Corporate Social Responsibility (cbsCSR) and Associate Professor in the Department of Management, Politics and Philosophy at Copenhagen Business School.

Pic by bNation of Change