Background research for Galapagos

1. Background Research for GALAPAGOS
Excerpts from Marigo’s doctoral research at Monash University
Research question
What new business model is emerging for sustainable competitive advantage in
the food industry?
Importance of the issue
The world’s food system is currently under increasing economic, competitive and
environmental pressures. Many problems and challenges food producers face
today are a product of past business, investment and production practices which
have now been deemed to be unsustainable.
Food producers (all those participating along the value chain, from farmers,
manufacturers and retailers) are now under increasing pressure to reinvent their
business models through more innovative approaches to environmental
sustainability and business strategy in order to develop and maintain sustainable
competitive advantage.
The control and management of organisational resources and the possession of
dynamic capabilities are therefore critical to the effective transition of an
organisation pursuing an innovation strategy to transcend from an old model or
paradigm to the new.
Success in changing markets and sifting economics depends on a firm’s
capability to convert knowledge into innovations and consequently modify their
internal structures, systems and capabilities to enhance performance. The
dynamic capability view of the firm will be used to frame this study. This theory
has been selected due to the emphasis on the dynamic capacity of a firm to
renew resources or practices to align with the changing business environment.
Marigo Raftopoulos ~ May 2009 1

2. I anticipate that this case study will add to this current body of knowledge by
gaining an insight into the capabilities, enablers and constraints experienced by
firms in this industry pursuing a strategy of sustainable competitive advantage.
Description of the research project
The backdrop to the case study is shaped by the following key environmental
developments that affect a firm’s sustainable competitive advantage in this
industry:
Current food systems are not sustainable over the long term
Current agricultural systems are highly productive however this abundance is
based on an unsustainable use of natural resources and fossil fuels. The
developed world has succeeded in developing an inexpensive, efficient food
production and delivery system, however over-consumption and lowered
nutritional value have negative impacts on soil and water resources and human
health.
Furthermore food in the developed world is readily available and inexpensive in
part because we have ignored the cost of natural resource depletion and non-
renewable fossil fuel use while calculating the cost of production. In light of
changing constraints to agricultural production, questions arise as to future
advances in agricultural productivity, not from the standpoint of abundance but of
sustainability.
Emerging technologies will need to address issues of economic and
environmental sustainability, shifts in global population and consumption patterns
and competition for land use. While technology has helped realise abundance
and productivity gains, future advances will require a different mindset to better
balance environmental and production goals and keep production economically
viable.
Dynamic capability is emerging as a key driver of sustainable competitive
advantage
Marigo Raftopoulos ~ May 2009 2

3. The dynamic capabilities view of the firm is the evolutionary extension of the
resource-based view perspective as it explicitly looks at how capabilities evolve
and how organisations deal with environmental turbulence emanating from
technological advances, changes in consumer demand and new regulations.
Dynamic capability is an organisation’s collective ability to create sustainable
competitive advantage by developing, maintaining and renewing its capabilities
through continuous learning buy leveraging individual, organisational and
environmental elements such as resources, skills, systems, structure and culture.
Organisations may possess resources but must display dynamic capabilities
otherwise they will destroy value.
Shifting paradigms for sustainable business development require changes in
business practices
Sustainable view of the firm is based on the need for firms to integrate natural and
social elements due to the fact that the business world is part of a larger system.
The implications for this is the acceptance of the scarcity of natural resources and
the role of business to build & protect social resources. Much of this is driven by
changing social expectations towards business action and responsibilities. The
adaptation of businesses to these changing expectations by developing a more
sustainable development business model will also be a future source of
competitive advantage.
Researchers are now revisiting the importance of triple bottom line approach to
business development and management.
Expected learning outcomes
• Identify the necessary capabilities used by companies to pursue a
sustainable competitive advantage strategy, and how this may have
changed or might change over time (what they have used in the past, what
they use now and what they expect to use in the future).
Marigo Raftopoulos ~ May 2009 3

4. • Identify which environmental (internal or external) drivers have prompted a
shift needed in capabilities of the firm to stay on track with their strategy.
• Gain an understanding of the enablers and constraints experienced by
these companies in pursuing a strategy of sustainable competitive
advantage.
• Describe the models that these businesses have implemented or
‘operationalised’ and compare these to the conceptual models presented in
the literature.
Marigo Raftopoulos ~ May 2009 4