Sustainable business model innovation in agri-firms

Background The focus of the research in the thesis is the development of sustainable business model innovation in Swedish agri-firms. There are needs on global and national levels for sustainable business model innovation in the agri-sector. More food must be produced to feed the growing world population. Simultaneously, agriculture must become more sustainable even when the sector raises production. Hence, the firms in the agri-sector must become more sustainable even if they are raising production. In order to raise production, the agri-firms need to be profitable. Consequently, this generates the practical relevance and problem: How can agri-firms develop sustainable (economically, socially, and environmentally) business model innovation? Purpose The neglect of theoretical research regarding sustainable business model innovation in the agri-sector is partly dependent on the limited empirical research regarding this phenomenon. Sustainable business model innovation in the agri-sector has not been closely studied, which constitutes an empirical problem. Against this background, the overall purpose of the thesis is to contribute to theorizing regarding the application and use of sustainable business model innovation in agri-firms. To fulfill the overall purpose, two research questions have been formulated. Since the previous research regarding business models and business model innovation in the agri-sector is scarce, recent, and fragmented, there is a need to systematize research within the field. This leads to the first research question: What is the state-of-art research on sustainable business model innovation in the agri-sector? Further, previous research has neglected empirical studies of sustainable business model innovation in the agri-sector. This research strives to contribute to change and empirical studies of sustainable business model innovation in the agri-sector will be conducted. This leads to the second research question: How do agri-firms apply sustainable business model innovation practices? Methodology In order to understand and generate knowledge regarding sustainable business model innovation in agri-firms, different mixed methods assessed as suitable for the focus of the research have been used. The research process started with systematic literature reviews, followed by the conceptual development of a theoretical framework regarding sustainable business model innovation in agri-firms. Following, qualitative semi-structured interviews with agri-entrepreneurs were conducted. A smaller quantitative survey was also carried out. After that, a large quantitative telephone survey of agri-firms was conducted. Finally, eight qualitative cases are conducted based on interviews, financial reports and documentation in different media. Findings and conclusions The value intention of the agri-entrepreneur has been identified as the starting point for development of sustainable business model innovation. Value intention has been added to the three previous building blocks of a sustainable business model; value proposition, value creation and delivery, and value capture. The building block value intention makes it possible to include the actor, the agri-entrepreneur, in the business model construct. Further, sustainability aspects have been added to all four building blocks of a sustainable business model. Stewardship has been identified as a concept which can be used to understand the value intention of agri-entrepreneurs striving for economic, social, and environmental goals. Stewardship can be understood from the interdependency between agriculture and environmental, human and physical resources. The definition of stewardship in this thesis is in contrast with the sustainable business model archetypes framework, where stewardship is one of the eight archetypes. In the thesis, stewardship is a concept of a higher order, a driver of sustainable business model innovation. Stewardship theory is a relevant theory when studying sustainable business model innovation in agri-firms. The manager of an agri-firm is often the owner of the firm, which means that a formal contractual relationship is not at hand. However, the manager/owner has commitments towards family, value chain actors, farm and land. This is especially valid when the agri-firm is conducting sustainable business model innovation, which contains considerations regarding society as well as environment, which can be regarded as the principals. A dichotomization in farmer-producer and farmer-entrepreneur has been conducted. The dichotomization has implications in several dimensions. The dimensions which are elaborated upon are; main focus, value chain position, profit strategy, economics focus, size, logic, environmental and animal welfare laws and regulations, sustainability, innovation, and digitalization. Implications Based on the conclusions of the research presented in this thesis, the farmers ought to regard themselves as entrepreneurs and ascend along the value chain. A practical implication for agri-entrepreneurs is to involve sustainability aspects in all four building blocks more explicitly (i) value intention, (ii) value proposition, (iii) value creation and delivery and (iv) value capture. A practical implication for advisory organisations is that they should not focus on entrepreneur’s knowledge, what the entrepreneur should know. Instead, the focus should be mindsets, strategies for thought patterns and strategies for behaviours, what the entrepreneur should be able to do. For future research, the inclusion of value intention of the owner-manager and the importance of stewardship in further theory building regarding sustainable business models could generate important insights into potential trade-offs and barriers based on social, environmental, and economic aspects. This is important not only for research, but for practice in all sectors of industry due to the current and future societal challenges. Forskningsfinansiärer: KK-stiftelsen, Stiftelsen Lantbruksforskning, Bill & Melinda Gates Foundation.