Based on this empirical evidence, innovations in business models to overcome hybridity-related tensions were identified concerning value proposition, value creation/delivery, and value capture. Initially, the cases will be described, followed by the results found according to the categories of analysis.
4.2. Business Models’ Innovations to Overcome Hybridity-Related Tensions
In relation to the value proposition, the higher price of more sustainable products is a tension pointed out in the literature. The twelve organizations studied generated business models in which the price of the more sustainable products/services offered was not above the average. In most cases, organizations offered lower prices, increased convenience to customers by delivering to their homes, or facilitating access by geolocation. Another feature is that most businesses involve multiple stakeholders as end customers. All of the analyzed cases developed a sustainability value fostering the sharing of intangible values beyond their products/services. They sell the idea of the customer being part of a community or movement that promotes social and environmental benefits. To achieve this point, all cases strongly promoted consumer education. The following detailed description of each case helps to understand better their innovation in the value proposition. Table 2
, at the end of the results section, provides the cross-case overview.
C1 focuses on tourists that are in the city or students of the local university. The company’s idea is to support the entire operation in more sustainable actions. In this way, all furniture and items are recycled. For example, towels and blankets are bought as new from luxury hotels that have a periodic policy of purchasing and exchanging these materials. The operations are all carried out online, without using paper. They recycle and compost all of the waste generated. They offer a lower cost to customers. They also promote educational workshops and recycling activities related to sustainability to the community and hostel guests. This is the only case that does not offer convenience to customers.
C2 focuses on people that want to reuse or recycle for environmental, social, or financial reasons. The prices are cheaper for second-hand products. The convenience here is on the opposite side: People who deliver items to resell can leave the products at many collection points and, depending on the product, the company will withdraw it at their homes. They promote consumer education and try to build a community around the idea that second-hand purchase is a “cool” behavior, engaging customers, general citizens, media, and other stakeholders. In the past year, they saved 1500 tons of textiles, avoiding that they go to landfills.
C3 focuses on commercial kitchens with food waste, such as restaurants, hotels, schools, and other commercial kitchens. As they are pioneers in the country and region, it is not possible to compare their prices. They operate as an app that measures the causes of food waste. The use is very fast and intuitive to fit the kitchen’s operations. Based on the identified causes, they promote employees’ education in the best alternatives to reduce food waste. According to their reports, in the previous years, they prevented 217,920 kg of food from being wasted, and these companies saved around 500,000 Euros. Food waste reduction is associated with many environmental benefits. As they are part of many forums and discussions, they perform social work promoting a more critical perception in society about food waste.
C4 operates through an app with geolocation. The company offers solutions for surplus food in restaurants, supermarkets, or grocery stores. The target is customers concerned with environmental issues and/or people with economic restrictions, since the products are offered at a lower price. The offers are based on geo-localization. Customers can find places close to them using the company´s app. They receive a commission for each transaction. On average, every month, they save around 67,000 portions of food, which, if they were not sold, would go to waste. Suppliers save money and avoid food waste. The company also carries out many educational campaigns for its consumers and the general community through news and social media. They sell the idea of a “community of food waste fighters”.
C5 is very similar to C2. In fact, it is a replication of their business model by other people in a different country. The description of the company’s value proposition is the same as C2.
C6 and C7 both focus on retail trying to deal with food waste and seeking to be a socially responsible company on one side, and with disadvantaged people on the other side. They work as mediators, collecting food that would be wasted mostly from retailers (but sometimes also from other supply chain agents and customers). They offer a solution to the waste that would have to be managed by these stakeholders, generating convenience for them, and delivering to organizations that deal with vulnerable people. C6 operates without charging any stakeholders for each transaction. C7 is planning to charge a small fee from retailers and from charity organizations who receive the food, as they understand they provide a service to both. In the last year, 7456 tons of food were redistributed by C6. The company is also part of an important roundtable discussion about food waste solutions at the industry and government level. In the last year, C7 provided solutions and assistance to around 23,000 people.
C8 is very similar to C4. It has the same business model, but operates in a different country. The company’s business is also based on offering lower prices to consumers, associated with strong educational campaigns aimed at the community in general. They make a strong effort to promote their image as the leaders of a “community of food waste fighters”. In total, based on their operations, it is possible to calculate that they provided a new market for 13 million meals, avoiding this amount of food waste.
Both C9 and C10 have the same business models and operate in the same country, each one in different regions, at a distance of around 1000 km. Both develop solutions to connect producers with non-standard compliance and surplus food with consumers through digital solutions. Their price is cheaper compared to regular markets because these products would be discarded. Both promote consumers’ education and have many campaigns on social media. They spread a strong campaign that imperfect-looking foods are “perfection of nature” and that it is “cool” nowadays to buy these products. C9 also focuses on regular media, schools, and private companies. From the beginning of the company, the calculation is that they provided a second market for 600 tons of fruits and vegetables. This food would have been wasted. They also increase the income of producers, which is important to avoid rural exodus, especially in developing countries. As C10 is newer than C9 and operates in a smaller city, their impact is lower; they provided a second market for around 5 tons of food.
C11 has the same business model as C9 and C10; however, the focus is only on oranges. In addition, they focus, in addition to the final consumers, on restaurants, commercial kitchens, and companies in general, accompanied by a reduced-price proposal. The monthly estimation is that they can offer an average of 170 shades of orange to the second market. This reduces food waste and decreases the farmers’ dependence solely on the industry.
C12 is very similar to C4 and C8, with the same business model, but operating in a different country. The app informs users through geolocation about deals in nearby restaurants, whose price reduction in some cases reaches up to 70%. They “saved” over 16,000 meals. They spread a strong campaign that imperfect-looking foods are “perfection of nature” and that it is “cool” nowadays to buy these products. Compared to other similar companies, a percentage of the profit with each transaction is donated to a charitable organization that works as a food bank, promoting food rescue and redistribution.
Concerning value creation/delivery, most of the companies promote partnerships with other stakeholders in their value chain as part of the main business strategy. Ethical issues and individual/corporate social responsibility are the main strategies used to promote it. All companies are highly internet-based in their operations, or at least for the promotion of their activities. Social media and engagement in sustainability discussion forums and practical activities are present in all cases. They also make efforts to be transparent with customers through reports or information in social media.
Specifically, C1 obtains clients through the internet, where they promote the company, especially using social media. They try to promote environmental issues and awareness of a more sustainable life through workshops, which are based on partnerships with other stakeholders from the city and often their guests. C2 tries to make their stores look like regular shops concerning the physical structure and decoration to attract not only people with financial needs, but also the general population focusing on environmental aspects. The shops are also located in central points of the cities. They believe it is a good strategy to create the interest for more people to recycle and reuse. They make strong public campaigns appealing to environmental aspects. They also use social media as a way to attract customers and bring information about sustainability as well as disclose data on the operation of the company. They have partnerships with marketing agencies who voluntarily make posters about recycling and the importance of the company. They also report activities annually to the stakeholders.
C3 makes personal visits to their potential clients to present their product/service, always providing successful examples. They make an effort to explain that their virtual consultancy provides not only environmental benefits, but also helps in business management and cost reduction. The internet is also used to build brand reputation and to disseminate questions related to the importance of food waste. They explain that since their business model is new, it is necessary to make more efforts and spend more money with marketing campaigns to reach potential customers. They also make reports related to their activity, providing information about their environmental and economic impact.
C4 operations are entirely based on partnerships with retailers, restaurants, coffee shops, and other commercial kitchens. Initially, the acquisition of these customers occurred personally, visiting each possible partner (supplier) and addressing consumers on the street. After the dissemination of the business, the internet has become the main form of attracting new partners and customers, mainly through media reports and dissemination of information about their positive impact on environmental, social, and economic terms for many different stakeholders in the food supply chain. The company promotes educational campaigns on social media every day, disseminating information about economic, social, and environmental problems, as well as how consumers can help to solve some of these problems by using company services, but also in the related actions in their daily life activities. They also share customers’ posts talking about the company, focusing heavily on environmental aspects and cost reduction outcomes more than the social aspects. They provide data related to their operation.
C5 operates in the same way as C2. The difference nowadays is that C5 has more than 70% of the team formed by employers that were previously considered as socially vulnerable, i.e., unemployed, alcohol addicts being treated, or criminals, for which they offer training and follow up the evolution in the professional trajectory.
C6 and C7 promote value creation and delivery in very similar ways. In fact, they practically do the same activities, but in different countries. There is a kind of informal partnership and exchange of information on the best management practices between them (C6 and C7). In addition, they participate in the same international support network. Communication is completely internet-based, using instant message applications and social media, both for communication and business promotion. Both seek to establish partnerships and to network with other stakeholders that carry on corporate social responsibility initiatives to make joint efforts. Recently, they started to share successful case stories to recruit new partners, together with the idea of promoting brand image as socially responsible, as well as tax deductions, which, in some situations, are provided by the government. In addition to conventional workers, they also rely on volunteers, but at a rate that does not compromise operations. These actions help to promote consumers’ education. They also report activities annually to all stakeholders.
C8’s value generation can be described as equal to that of C4. The only difference is that the company (C8) has a larger structure and operates in more countries. C9 and C10 follow the same lines as C4 and C8 with a view to be strongly internet-based, as regards the acquisition of customers initially and, later, the promotion of educational campaigns on the internet, social media, and regular media. All of them strongly participate in sustainability events and discussions. C9 and C10 also disclose sales volumes to customers, along with estimates of social and environmental impact. The difference is that both C9 and C10 have farmers as suppliers and business partners. In addition, C9 holds a partnership with other companies to share the same distribution system, promoting local trade and campaigning for oil collection at consumers’ homes.
C11 is strongly internet-based but a bit more “closed” in terms of advertising as compared to the others. It acts a lot in the general media and social media, but rarely participates in events and engagement with other stakeholders. Ethical issues and individual/corporate social responsibility are the main strategies used to promote their business, and they make efforts to be transparent with their customers, mainly disclosing information in social media and annual reports.
C12 generates value exactly in the same way as C4 and C8, with the same business model. Compared to these two, it has the smallest organizational structure and it is the youngest company. The only difference is that its engagement in charitable activities is greater than in the other cases.
The main characteristic of value capture is that all organizations avoid hybrid tensions by integrating sustainability in business models, i.e., just by doing business, they fulfill their social/environmental and economic missions and, therefore, positively affect society. This means that promoting sustainability integrates the business strategy and corresponds to the product/service offered. As relevant information, all of the analyzed companies are operating with positive cash flow and with the initial investment paid. They are recognized as successful cases in their areas.
An additional finding is that some of these organizations started their activities with low financial resources available. They overcame this lack of financial resources by making use of creativity, internet-based solutions, manual/intellectual work, partnerships, and/or recycling. For example, C1 started its business with almost no financial resources. They asked the landlord to give them some months of exemption to pay the rent and used recycled furniture that they got by asking for donations or collecting from garbage depots. C2 also started with almost no financial resources. They also got three months of rent exemption from their landlord and looked for volunteer workers. C4 started working from home. Their only additional cost was the website’s fee. They explained that, for them, knowledge was the most important resource, since most of their operations could be made online. C7 was initially a punctual and voluntary action that evolved over the years. C8, C9, C10, C11, and C12 presented similar situations: All of them started with very low operating costs, largely based on technologies and digital platforms as the primary cost, and family/household organizational structure operations. As the businesses consolidated in the market, they began to have more formal and structured organizational structures.
It is very common in the discourse of these entrepreneurs that a creative idea that generates value for society does not necessarily need large financial resources in its initial phase. In the investigated cases, a more robust investment became necessary only after the operation was experiencing some level of success, and the business needed to gain scalability.
presents a summary of the results related to business models’ innovations to overcome hybridity-related tensions, showing that, in general, the cross-case analysis corroborated the same outcomes.