Scalability and robustness of business models for sustainability: A simulation experiment

Abstract

An increasing number of entrepreneurial ventures aim at developing viable business models for solving societal or ecological challenges. Such business models for sustainability (BMfS) build on reinforcing mechanisms of value creation and capture that allow to simultaneously achieve financial and sustainability objectives. To date, we do not know much about the successful design of such business models for new markets with highly uncertain dynamics. Hence, this research aims at advancing the understanding about two key characteristics of successful BMfSscalability and robustnessand their impact on performance of entrepreneurial BMfS in uncertain environments. Toward this aim, it uses simulation modelling of an entrepreneurial BMfS under different future scenarios. The simulation represents the case of Coursera, an entrepreneurial venture with the social mission of making high-quality education globally accessible through Massive Open Online Courses (MOOCs). Rooted in the literature on business models (for sustainability), innovation adoption and System Dynamics, the simulation model integrates the four value dimensions of BMfS and allows testing different hypotheses about its sustainable performance. The simulation experiments show that the business model is scalable, but not sustainable in a scenario of high competition. We discuss the implications of the simulation results for the effective design of entrepreneurial BMfS.

Dynamic business modeling for sustainability: Exploring a system dynamics perspective to develop sustainable business models

“…Within this context, as BMs will ultimately moderate the relationships among actors across a complex value network in a constantly changing setting, simulation tools are necessary in order to reflect accurate decision‐making processes (Evans et al, ; Rodrigues, Pigosso, & McAloone, ; Täuscher & Abdelkafi, ). Moreover, the integration of sustainability considerations in the design of BMfS raises its dynamic complexity considerably (Iandolo, Barile, Armenia, & Carrubbo, ; Rodrigues, Morioka, Pigosso, de Carvalho, & McAloone, ; Täuscher & Abdelkafi, ).…”

“…Within this context, as BMs will ultimately moderate the relationships among actors across a complex value network in a constantly changing setting, simulation tools are necessary in order to reflect accurate decision-making processes Rodrigues, Pigosso, & McAloone, 2017;Täuscher & Abdelkafi, 2017). Moreover, the integration of sustainability considerations in the design of BMfS raises its dynamic complexity considerably (Iandolo, Barile, Armenia, & Carrubbo, 2018;Rodrigues, Morioka, Pigosso, de Carvalho, & McAloone, 2016;Täuscher & Abdelkafi, 2017). In such a setting, simulation-based approaches are able to capture multilevel systems FIGURE 3 Adapted sustainable business model canvas (Bocken et al, 2018, p. 82;Bocken, 2015) [Colour figure can be viewed at wileyonlinelibrary.com] and reduce its complexity towards a proper understanding of the fundamental characteristics and relationships between the elements of BMfS, together with an adequate account of the main performance outputs and outcomes that are generated (Bianchi, Cosenz, & Marinković, 2015;Davis, Eisenhardt, & Bingham, 2007;Schwaninger & Groesser, 2008).…”

“…Recent studies prove that SD modeling may provide a valuable methodological support to design BMs (Cosenz, 2017;Cosenz & Noto, 2018;Groesser & Jovy, 2016), including those for sustainability purposes (Abdelkafi & Täuscher, 2016;Täuscher & Abdelkafi, 2017). SD was developed in the late 1950s and early 1960s at MIT by Jay…”

Sustainable Business Models: Literature Review of Main Contributions and Themes

“…The next category in Table 8 concerns the various life cycle stages through which every BM goes, from the initial phase through to maturity, similar to the life cycle models proposed in the management literature for products or firms (Jabłoński, 2016;Short, Bocken, Barlow, & Chertow, 2014).Two other themes emerged with lower frequency: first, scalability of BMs (Dobson et al, 2018;Jabłoński, 2016a;Täuscher & Abdelkafi, 2018), which is the distribution of sustainability innovations to bring greater benefits to the environment and society while simultaneously assuring economic sustainability; and second, education, or how to disseminate awareness and information about SBMs through student engagement and the implementation of new university courses (Karlusch, Sachsenhofer & Reinsberger, 2018).…”

Exploring Value Creation in Sustainable Entrepreneurship: Insights from the Institutional Logics Perspective and the Business Model Lens

“…The business model design-defined as the sum of the decisions that weave together activities performed by the venture and its stakeholders-constitutes a key set of practices for the entrepreneur [62,63]. This is even more the case when different logics are at play and the creation, exchange, and capture of multiple values are pursued [64,65]. Thus, the business model specifies how the actions of the entrepreneur under multiple institutional logics influences the development of the entrepreneurial venture.…”