The relevance of business models for corporate performance in general and corporate sustainability in particular has been widely acknowledged in the literature while sustainable entrepreneurship research has started to explore contributions to the sustainability transformation of markets and society. Particularities of the business models of sustainable niche market pioneers have been identified in earlier research, but little is known about the dynamic role of business models for sustainable entrepreneurship processes aiming at upscaling ecologically and socially beneficial niche models or sustainability upgrading of conventional mass market players. Informed by evolutionary economics, we develop a theoretical framework to analyze co-evolutionary business model development for sustainable niche pioneers and conventional mass market players aiming at the sustainability transformation of markets. Core evolutionary processes of business model variation, selection and retention, and evolutionary pathways are identified to support structured analyses of the dynamics between business model innovation and sustainability transformation of markets.

1. Dr. Florian Lüdeke-Freund
University of Hamburg | Faculty of Business, Economics & Social Sciences
Leuphana University | Centre for Sustainability Management (CSM) Research Fellow
Business Models for Sustainability
A Co-Evolutionary Perspective on Sustainable Entrepreneurship,
Innovation, and Transformation
UN PRME Mini Conference
Jönköping International Business School, Sweden, 10 May 2016

2. www.SustainableBusinessModel.org 2
Based on:
Schaltegger, S.; Lüdeke-Freund, F. & Hansen, E. (2016, in press):
Business Models for Sustainability: A Co-Evolutionary Analysis of
Sustainable Entrepreneurship, Innovation, and Transformation,
Organization & Environment, online first February 25, 2016.
[ResearchGate, Organization & Environment]

3. www.SustainableBusinessModel.org 3
Business as usual is over …

4. www.SustainableBusinessModel.org 4
… but how to change the game? One against the world?

5. www.SustainableBusinessModel.org 5
A co-evolutionary perspective
Values
Technology
Organization
Environment
Knowledge
Based on Norgaard, 1994
Business model A
Business model B Business model N

6. www.SustainableBusinessModel.org 6
 Markets
- Complex, adaptive systems
- Susceptible to changes by single actors/entrepreneurs
- Not deterministic, predictable or mechanistic
- Process-dependent, organic and always evolving
 Sustainable entrepreneurs
- Deliberately (co-)creating markets
- Often starting in protected learning environments
- Develop the micro behaviours that change macro patterns
“… the elements [sustainable entrepreneurs] adapt to the world – the
aggregate pattern [the market] – they co-create”*
A co-evolutionary perspective
Based on *Arthur, 1999; Foxon, 2011

7. www.SustainableBusinessModel.org 7
Market transformation through sustainable entrepreneurship
Schaltegger et al., 2016
Upscaling
Upgrading

8. www.SustainableBusinessModel.org 8
Market transformation through sustainable entrepreneurship

9. www.SustainableBusinessModel.org 9
If “processes generating variation and retention are present in a system, and
that system is subject to selection processes, evolution will occur.”*
Evolutionary processes
*Aldrich & Ruef, 2006; Schaltegger et al., 2016

10. www.SustainableBusinessModel.org 10
Retention is decisive for market transformations. It is a precondition for the
diffusion of business models created by variation and affirmed by selection
Evolutionary processes
Schaltegger et al., 2016

11. www.SustainableBusinessModel.org 11
Market transformation through sustainable entrepreneurship
Schaltegger et al., 2016
Growth
Replication
M&A
Mimicry

12. www.SustainableBusinessModel.org 12
The challenge: achieving growth and replication – upscaling – without
sacrificing the original sustainability qualities.
From sustainable niches to sustainable mass markets

13. Repn.
Gr.
M&A
Mim.
Integratability
Replicability
Imitability
Scalability
Entega Entega
Bionade (as part of
Radeberger group)
Carlsberg, Oettinger
RWE Innogy, E.ON ClimRen
Lichtblick Lichtblick
GP Energy, Energrün, etc.
Bionade
Stadtauto Berlin StattAuto, BookNDrive, etc.
Replication
Growth
Merger &
Acquisition
Mimicry
Int.
Repy.
Im.
Sc.
Abbreviations: Sc. = Scalability; Repy. = Replicability; Int. = Integrability; Im. = Imitability
Gr. = Growth; Repn. = Replication; Mim. = Mimicry; M&A = Merger and/or acquisition
* Not illustrated further.
RWE Eprimo, etc.
Car2Go
DriveNow, etc.
Evolutionary Processes of Sustainable Entrepreneurship
Variation Selection* Retention Variation Selection* Retention
Initial occurrence of new business models Further variation and co-evolution

14. www.SustainableBusinessModel.org 14
The challenge: engaging in M&A and mimicry – upgrading – without losing
credibility and market shares.
From mass market offers to sustainable mass markets

15. Repn.
Gr.
M&A
Mim.
Integratability
Replicability
Imitability
Scalability
Entega Entega
Bionade (as part of
Radeberger group)
Carlsberg, Oettinger
RWE Innogy, E.ON ClimRen
Lichtblick Lichtblick
GP Energy, Energrün, etc.
Bionade
Stadtauto Berlin StattAuto, BookNDrive, etc.
Replication
Growth
Merger &
Acquisition
Mimicry
Int.
Repy.
Im.
Sc.
Abbreviations: Sc. = Scalability; Repy. = Replicability; Int. = Integrability; Im. = Imitability
Gr. = Growth; Repn. = Replication; Mim. = Mimicry; M&A = Merger and/or acquisition
* Not illustrated further.
RWE Eprimo, etc.
Car2Go
DriveNow, etc.
Evolutionary Processes of Sustainable Entrepreneurship
Variation Selection* Retention Variation Selection* Retention
Initial occurrence of new business models Further variation and co-evolution

16. www.SustainableBusinessModel.org 16
Summary
 Market transformation through sustainable entrepreneurship …
- … involves different strategies of upscaling and upgrading the business
models of niche and mass market players.
- These strategies depend on the initial market position of a company.
- … is a co-evolutionary process involving business model variation,
selection, and retention.
- Retention is crucial for market transformation and it depends on the
scalability, replicability, integrability, and imitability of business models.

17. www.SustainableBusinessModel.org 17
THANK YOU!
More about SBMs on
www.SustainableBusinessModel.org

18. www.SustainableBusinessModel.org 18
Additional case: Aravind Eye Care Systems

19. www.SustainableBusinessModel.org 19
The “freemium” model
http://www.klgadgetguy.com; http://assets.slate.wvu.edu
Free
basic service
Charged
premium service

20. www.SustainableBusinessModel.org 20
The “social freemium” model
http://www.aravind.org; http://assets.slate.wvu.edu
Free
basic service
Charged
premium service

21. www.SustainableBusinessModel.org 21
Inclusive business model innovation : Aravind Eye Care Systems
http://www.aravind.org

22. www.SustainableBusinessModel.org 22
Appendices

23. www.SustainableBusinessModel.org 23
Business model for sustainability
“A business model for sustainability helps
describing, analyzing, managing, and
communicating (i) a company’s sustainable
value proposition to its customers, and all
other stakeholders, (ii) how it creates and
delivers this value, (iii) and how it captures
economic value while maintaining or
regenerating natural, social, and economic
capital beyond its organizational boundaries.”
Schaltegger et al., 2016, p. 6

24. www.SustainableBusinessModel.org 24
 Latest news on BMfS publications, projects, events
 16 researchers from 10 countries
www.SustainableBusinessModel.org
?

25. www.SustainableBusinessModel.org 25
Organization & Environment, Vol. 29, No. 1, March 2016
 Schaltegger, S.; Hansen, E. & Lüdeke-Freund, F. (2016): Business Models
for Sustainability: Origins, Present Research, and Future Avenues,
Organization & Environment, Vol. 29, No. 1, 3-10, DOI
 Roome, N. & Louche, C. (2016): Journeying Toward Business Models for
Sustainability: A Conceptual Model Found Inside the Black Box of Organisational
Transformation, Organization & Environment, Vol. 29, No. 1, 11-35, DOI
 Wells, P. (2016): Economies of Scale Versus Small Is Beautiful: A Business Model Approach
Based on Architecture, Principles and Components in the Beer Industry, Organization &
Environment, Vol. 29, No. 1, 36-52, DOI
 Randles, S. & Laasch, O. (2016): Theorising the Normative Business Model, Organization &
Environment, Vol. 29, No. 1, 53-73, DOI
 Abdelkafi, N. & Täuscher, K. (2016): Business Models for Sustainability From a System
Dynamics Perspective, Organization & Environment, Vol. 29, No. 1, 74-96, DOI
 Upward, A. & Jones, P. (2016): An Ontology for Strongly Sustainable Business Models:
Defining an Enterprise Framework Compatible With Natural and Social Science, Organization
& Environment, Vol. 29, No. 1, 97-123, DOI
 Gauthier, C. & Gilomen, B. (2016): Business Models for Sustainability: Energy Efficiency in
Urban Districts, Organization & Environment, Vol. 29, No. 1, 124-144, DOI
Special issue on “Business Models for Sustainability”

26. www.SustainableBusinessModel.org 26
 Slide 3
- Forest: http://solfront.org/wp-content/uploads/2014/04/environmental-disaster-rainforest1.jpg
- Ships: http://greenerideal.com/wp-content/uploads/2010/05/05-24-aral-sea-disaster.jpg
- Woman: http://i.dailymail.co.uk/i/pix/2014/04/30/article-2616932-1D78902E00000578-358_964x640.jpg
 Slide 4
- Chess: https://japnamsingh.files.wordpress.com/2015/05/one-pawn-against-the-world.jpg
 Slide 8
- Elon Musk: http://t3n.de/news/wp-content/uploads/2016/04/2016-04-01-08_43_17-Tesla-Unveils-Model-3-
YouTube-595x337.png
- Model 3: http://cdn.slashgear.com/wp-content/uploads/2016/04/tesla-model-3-25-1.jpg
- Nissan: http://bestcarmag.com/sites/default/files/1358911Nissan-Leaf.jpg
- GM: http://buyersguide.caranddriver.com/media/assets/submodel/5535.jpg
- BMW: http://cdn.macrumors.com/article-new/2015/07/bmwi3.png
 Slide 12
- Whole Foods: http://www.wholefoodsmarket.com/sites/default/files/styles/large/public/media/Stores/D-
M/LNF/TeamPhoto2013.jpg?itok=e03MHORN
 Slide 14
- Coal: https://gyemgh.files.wordpress.com/2013/07/coal-plant.jpg
- Coal: http://blogs.scientificamerican.com/media/inline/blog/Image/coal-power-plant%282%29.jpg
- Solarwind: http://www.nrcm.org/wp-content/uploads/2013/09/solar-wind-high-res-1150x400.jpg
Photo credits