Transformative Business Models for Sustainability Transitions

Abstract

This chapter discusses the role of business models in sustainability transitions. Sustainability-oriented entrepreneurs develop business models that can transform the societal systems they operate in, functioning in this way as a catalyst for system-wide transitions. But what does it take for a business model to be transformative? This chapter introduces Transformative Business Models as a new framework to advance our understanding of how the business model concept can contribute to sustainability transitions as well as how transition thinking supports the prospects of sustainable business models to unlock their transformative potential. Our argument is that the reflexive dynamics that play out between the innovative businesses and the regimes in which they emerge play a critical role in determining whether the emerging transformations will over time lead to fundamental systemic change. Building on insights from a business model perspective and sustainability transitions, the introduced framework enables a systematic analysis of these dynamics. To illustrate its merits, this chapter presents the case of Deltawind, an energy cooperative in the Netherlands. The chapter concludes by proposing three main characteristics of business models exhibiting transformative potential: a broad value orientation, a broad stakeholder network, and a reflexive orientation.