Sustainable Business Models in Building Long-Term Value,
Taking their Corporate Social Responsibility into Account
This blog post is a summary of the main results of Adam’s extensive research on sustainable business models. His book is currently available in Polish only (reference see below). Therefore, this post and attached PDF offer an English summary and introduction to Adam’s research results.
The main objective of research
Research objectives that have been set in the book focus on issues that are not fully described in the relevant literature and examined empirically.
They are used to answer the question: Which strategic factors and their relationships in adopted business models have the greatest impact on building the long-term value of a socially responsible company? What should be the structure of such a business model?
This research is expected to result in a sustainable business model becoming a source of building the long-term value of a socially responsible company.
Sustainable business models in building socially responsible companies – summary of major research findings
The author’s research is summarized as a graphical structure of a sustainable business model, which allows for a clear and transparent understanding of the cause-effect relationships between the factors in this model (network of stakeholders, relationship of customers, corporate social responsibility factors, value based management factors, corporate governance rules, company resources, reducing risk of value destruction, balancing internal factors, sustainability instruments, financial dividend, social dividend). It also makes it possible to understand the strength of individual factors constituting a sustainable business model and their impact on the increase in the value of the company. A sustainable business model in the presented structure, together with the determined values and mutual correlations, can be an important source of knowledge for managers in business decision-making processes. The figure below presents a holistic sustainable business model.
The graphical structure of a sustainable business model, its new definition and interpretation in light of the research findings
The logic of building the model was based on using and examining the correlations between the defined factors using statistical methods. In this way, the grid of relationships between the factors that are essential for building the long-term value of a socially responsible company has been developed. The main components of a sustainable business model built in a subject-object arrangement are strategic factors related to:
- The combined implementation of corporate social responsibility and value-based management concepts.
- Balancing the potentials of the company.
- Combining the concept of stakeholders with the concept of shareholders, which are also strongly associated with corporate social responsibility (stakeholders) and value-based management (shareholders).
- A sustainable dividend policy.
The holistic sustainable business model is strongly associated with its driving forces:
- Strength of conscious application of corporate social responsibility principles.
- Strength of economic sustainability of the company.
- Strength of conscious application of the corporate governance principles.
- Strength of stakeholder value and the dynamics of their migration processes.
- Strength of the consensual relationship: company’s board- shareholders-stakeholders.
- Strength of implementing a sustainable strategy based on the principles of a balanced scorecard.
- Strength of the management style based on the logic of conscious decision-making”
The relationships between the seven forces of a sustainable business model have been calculated based on statistical correlations and presented in the graphical structure of a sustainable business model.
A holistic sustainable business model (source: Jabłoński, 2013)
Based on the graphical structure of a sustainable business model using proved hypotheses, its new definition has been developed:
A sustainable business model building the long-term value of a socially responsible company is a model built by the combined use of the corporate social responsibility and value-based management concepts that guarantees that the needs of shareholders and other stakeholder groups are met, by skillfully balancing the potentials of the company towards generating value allocated in a sustainable way, enabling the continuity of company management.
A sustainable business model is a hybrid model, i.e. a model built in a subject-object system. The components of this model are entities gathered around the company forming relationships, influencing value drivers of the business and strategic factors related to the theories of corporate social responsibility and value-based management, the stakeholder theory and the shareholder theory functioning in the mutual relationship based on the principles of sustainability.
This model is a holistic model of the reduced nature, which could be used in various sectors of the economy treated as a subsystem of the whole ecosystem. This means that the model and its design are located in the medium range theory.
Strategic recommendations for entrepreneurs and managers as regards the application of sustainable business models
Based on the review and analysis of literature and conducted research with a holistic design of a sustainable business model, 31 recommendations for entrepreneurs and managers have been formulated. The full synopsis of Adam’s research can be downloaded here.
Jabłoński, A. (2013): Modele zrównoważonego biznesu w budowie długoterminowej wartości przedsiębiorstw z uwzględnieniem ich społecznej odpowiedzialności (Sustainable Business Models in Building Long-Term Value, Taking their Corporate Social Responsibility into Account), Difin, Warszawa.