Innovative and sustainable business models in the fashion industry: Entrepreneurial drivers, opportunities, and challenges

Abstract

New and existing companies are looking for ways to thrive in a competitive environment with innovative business models while respecting society and avoiding actions that harm the planet. Trends such as circular economy, fair trade, lowsumerism, and sharing economy are some of the many emerging entrepreneurial approaches that address this issue, but there is still a gap between what theory argues and the levels of environmental and social sustainability realized when theory is put into practice. In fact, most research on the topic of sustainable business models is still exploratory and does not fully acknowledge these emerging approaches, whose definitions, boundaries, and defining characteristics are still somewhat vague. This study seeks to contribute to the understanding of the inner entrepreneurial dynamics of innovative sustainable business models. In particular, we focus on the fashion business, a resource-intensive industry in which opportunities to reduce environmental impacts and to innovate business models abound. The aim of our research is to investigate innovative business models in the fashion industry that have sustainability as their defining characteristic, especially in terms of value proposition. In order to do that, we combine a systematic review of the literature with empirical research comprised of six interviews with specialists in sustainability, business model innovation, and the fashion industry, along with eight case studies on innovative fashion startups we define as 'born sustainable.' As a result, we propose a synthesizing framework that discloses trends and drivers of innovative and sustainable business models in the fashion industry. We also highlight opportunities and challenges for researchers and entrepreneurs interested in this topic.

Strategies, practices, and tensions in managing business model innovation for sustainability: The case of an Australian BCorp

“…BMfS are (re‐)designed to pursue sustainable outcomes from the outset (Bocken et al, ). Todeschini, Cortimiglia, Callegaro‐de‐Menezes, and Ghezzi () refer to these as “born sustainable” business models that are originally conceived to leverage sustainability at their core. Similarly, Jolink and Niesten () describe “green‐green businesses” that are designed to be green from the start, giving equal priority to making money, and solving environmental problems.…”

Exploring barriers to implementing different circular business models

“…Earlier studies on CBM barriers have opted for a geographical focus (e.g., China (Geng and Doberstein, 2008), Spain (Ormazabal et al, 2018), Sweden (Whalen et al, 2018), the Netherlands (Kok et al, 2013), European Union (Kirchherr et al, 2018). Other studies focus on specific sectors (e.g., textiles and clothing (Todeschini et al, 2017), construction (Adams et al, 2017), electronics (Kissling et al, 2013) and manufacturing (Ritz en and Sandstr€ om, 2017). In addition, some comparisons have been made across sectors, regions, and countries: for example, Rizos et al (2016) presented an overview of barriers across sectors and countries, and Ranta et al (2018) performed a cross-regional comparison of barriers for the CE between China, the US, and Europe.…”

“…Geng and Doberstein (2008);Preston (2012);Kok et al (2013);Rizos et al (2016); De Jesus and Mendonça, 2018;Ormazabal et al (2018); Ritz en and Sandstr€ om (2017);Todeschini et al (2017);Kirchherr et al (2018); Govindan and Hasanagic (2018) External Supply chain Lack of partners and low availability of materials Higher dependence on external parties Lack of information exchange between supply chain actors Conflicting interests between actors in the supply chain Lack of consideration on circular design from supply chain actors Bad re-use practices/reluctance of third parties Preston (2012); Kok et al (2013); Kissling et al, (2013); Rizos et al (2016); Adams et al (2017); Ritz en and Sandstr€ om (2017); Todeschini et al (2017); Govindan and Hasanagic (2018); Mishra et al, (2018) Market Low virgin material prices Lack of consumer interest/non-acceptance of CBMs Resistance from stakeholders with vested interests in the linear economy (for instance original equipment manufacturers) Geng and Doberstein (2008); Preston (2012); Kok et al (2013); Kissling et al, (2013); Planing (2015); Ormazabal et al (2018); De Jesus and Mendonça, 2018; Kirchherr et al, 2018; Todeschini et al (2017); Govindan and Hasanagic (2018); Mishra et al, 2018 Institutional (hard and soft) Hard institutions Ineffective recycling policies Incentives that promote material consumption above services, such as V.A.T. (value-added tax) Specific current accounting rules and management systems that are inappropriate for to the circular economy Lack of standards and guidelines for quality of refurbishment products Geng and Doberstein (2008); Preston (2012); Kok et al (2013); Kissling et al (2013); Rizos et al (2016); Ranta et al (2018); Ormazabal et al (2018); Kirchherr et al (2018); Govindan and Hasanagic (2018) Soft institutions Lack of awareness and sense of urgency within society Geng and Doberstein (2008); Kok et al (2013); De Jesus and Mendonça, 2018; Adams et al (2017); Ranta et al, (2018); Kirchherr et al, (2018); Mishra et al, (2018); Govindan and Hasanagic(2018)…”

Sustainable Business Models: A Review

“…Todeschini, Cortimiglia, Callegaro-de-Menezes, and Ghezzi [66] by synthesizing the current literature have developed an innovative circular business model in which the value propositions are sustainable and reduce environmental impacts. By conducting eight case studies on innovative fashion startups, they identify the concept of 'born sustainable' which assist the entrepreneurs to design sustainable value propositions to accomplish the circular economy objectives.…”