Business Models for Sustainability From a System Dynamics Perspective

TLDR

Sustainability requires firms to transform their entire business logic, and a business model for sustainability aims to create value for stakeholders and the natural environment. The article seeks to advance understanding of the basic functioning of a business model for sustainability by applying a systems perspective. The authors develop a system dynamics model that incorporates the natural environment, defines reinforcing feedback loops among customer value, firm value, and environmental value, and integrates partial models of firm, environment, entrepreneur, and customer into a multilevel framework. They generate propositions that combine insights from the model and existing literature.

Abstract

To achieve sustainability, a firm has to transform its entire business logic. A business model for sustainability (BMfS) aims at creating value for various stakeholders and the natural environment. This article advances the current understanding of the basic functioning of BMfS by applying a systems perspective. Our BMfS understanding incorporates the natural environment as an essential element, but does not deal with sustainability from a broad perspective. The core logic of a BMfS is built upon the creation of a reinforcing feedback loop between the created value to the customers, the value captured by the firm, and the value to the natural environment. Consequently, we develop a graphical model based on system dynamics notation. First, we conceptualize the basic feedback loops. Then, we propose partial models for the firm, natural environment, entrepreneur/manager, and customer, and then integrate these partial models within a systemic, multilevel model. Finally, we generate propositions that combine insights from the model and extant literature.