Companies increasingly implement innovations that tackle sustainability challenges such as climate change [1
], for example, by replacing fossil fuels with renewable energies, implementing zero-emission transport, and upcycling waste [2
]. Yet with increasing levels of greenhouse gas emissions and a growing global population, sustainability transitions need to be accelerated. Sustainable business models (SBMs) become increasingly relevant to drive transitions by taking a holistic view of the impact of how business is done [4
]. SBM is defined as “how an organisation creates, delivers and captures value for its stakeholders in a way that supports a safe and just operating space for humanity and all living entities to flourish” [5
] (p. 2). Studying how SBMs with positive commercial, environmental, and societal impact can be developed and implemented has become increasingly relevant [4
]. Within this, the role of intellectual property (IP) is important, but remains underexplored.
Generally, there appears to be some ambiguity about the role of IP as either a barrier or a catalyst to widespread access and use of innovations that also benefit the environment and society [7
]. The UN climate negotiations have involved debates regarding the importance of IP issues to use and spread sustainable innovations [7
]. Previous research suggested that companies pursue SBMs based on innovations (e.g., innovative products or green technologies), which typically involve some combination of formal (e.g., patents, trademarks) and informal IP (e.g., know-how, data, trade secrets) [8
]. Research at the intersection of IP and “conventional” business models with a dominant profit and shareholder focus [8
] is still under development and the role of IP is scarcely investigated for SBMs with a focus on sustainable value (people, profit, and planet) and broader stakeholder value [4
]. An improved understanding of the linkages between IP strategy and SBMs can support companies to make better decisions for creating sustainable value.
While the debate around IP and sustainability is often framed around open sharing to speed up innovation and market diffusion and closed approaches to create competitive advantage [10
], businesses may have a more differentiated approach. For example, Nutriset, a French company treating malnutrition in African countries, has patent-protected its method of producing peanut butter paste and decided to selectively license the patent to local manufacturers in Africa for a minimal royalty fee, but uses the patent rights to block large developed-country manufacturers from entering the market and competing with local producers [11
The body of literature on IP strongly indicates that companies can strategically use their IP to foster structural changes in industries and economies, such as through shaping the appropriability regime it operates in [12
], but with hardly any focus on sustainability-related changes. Appropriability regime denotes the “environmental factors, excluding firm and market structure, that govern an innovator’s ability to capture the profits generated by an innovation” [13
] (p. 287). Companies’ attempts to strengthen or weaken the regime to their advantage can alter industry structures [12
]. In the “business as usual” context, IP is widely conceived as an enabling mechanism on how to use innovations [15
] and diffusion in management research, whereas in economics the benefits and issues of the monopoly that IP rights provide is contested (e.g., [17
In the context of sustainability however, whether IP can facilitate or hinder the transition towards sustainable business largely remains unexplored. Although there is a substantial body of SBM literature in relation to, e.g., patterns, archetypes, structure and governance, and network interactions [2
], how the use of IP can be effectively aligned with SBMs is little understood.
This paper focuses on the relations between IP strategies and SBMs at the firm level. For the purpose of this paper we define IP strategy as the set of activities and guidance processes for decision-making regarding the exploration, generation/acquisition, protection, exploitation/enforcement, and periodic assessment of all types of IP, including formal IP rights and informal know-how to maximize value from an organization’s inventions, like technologies, products, services, literary and artistic works, design, symbols, names, and images in support of the organisation’s business objectives [19
As part of their strategic decision-making, companies can decide from a set of IP strategies. On one extreme, companies can decide to share IP freely, e.g., through “open source” licensing approaches. On the other extreme they can restrict access and usage of their IP by others through claiming exclusivity (i.e., not agreeing to any licensing) or not even patent inventions, but rather keep IP as trade secrets [20
]. In between these extremes more selective IP strategies exist. Examples include bilateral licensing agreements with selected partners, multilateral patent pools [22
], or patent pledges with more or less restrictive clauses [21
]. Which of these IP strategies will facilitate or hinder the impact of certain SBMs remains to be understood.
Currently, we are not aware of a study that provides reliable insights into whether and under which circumstances particular IP strategies are more or less relevant for companies employing different SBMs to create, deliver, and capture value from sustainable innovations. This study does not attempt to provide a comprehensive framework, which would be nearly impossible due to the many influence factors, such as the institutional framework and rule of law, as well as organizational types and contexts. We rather seek to make a contribution to the research that serves to better understand how IP strategies relate to different SBMs for generating economic, societal, and environmental value. This study thereby seeks to contribute to research focusing on the role of IP for the strategic management of open, collaborative, and distributed innovation processes, also in the circular economy.
We hope that the SBM-IP canvas can serve decision makers to make better informed choices for businesses to generate, select, and utilize IP to leverage the environmental, social, and economic impacts of their SBMs.
The remainder of the paper is structured as follows. Section 2
presents the methods with descriptions of our approach for the literature review and case examples. Section 3
presents the literature analysis, our SBM-IP canvas, and the case examples. Section 4
concludes the paper with discussions and a summary of the main contributions.
4. Discussion and Conclusions
In this paper we conceptualize the relevance of IP assets and their strategic use for the building blocks of the SBM through an inductive and integrative approach using concepts from the IP, business model, innovation, and sustainability literature. As a major result we present an integrated firm-level SBM-IP canvas.
Based on our analysis, we identify IP activities that are relevant for different SBM building blocks, which, however, depend on the specific SBM. While some of these IP activities have been mentioned in previous studies related to conventional business models (e.g., [79
]), they remain largely under explored in relation to sustainable business models. Our paper aims to help bridge the gap by increasing the understanding of linkages between IP activities and SBM building blocks. The proposed framework provides opportunities to further develop this research and increase the understanding of IP activities and the SBM for sustainability transitions. While our analysis suggests that there are different IP rights (IPR) and IP activities rather than a best practice that fits all SBMs, we provide a starting point to further explore what IP activities under which conditions are most appropriate to support and build sustainable business models.
Our contribution is two-fold: First, we contribute to the SBM literature (e.g., [25
]) by integrating IP aspects in the SBM canvas, focusing on the four value mechanisms to address environment, society issues, and profitability in the long term [40
]. Our framework sheds light on the relationships between IP activities and the SBM building blocks to achieve strategic sustainable business objectives. Second, we contribute empirically through a collection of secondary case examples to illustrate the SBM-IP linkages. These examples provide managerial insights into how businesses use IP strategically linked to the different value mechanisms of their SBMs for promoting sustainability.
IP for sustainable value propositions calls for responsible innovations offering positive value to people, planet, and profit [91
] by addressing the needs of society, environment, and business [2
]. Such innovations can embed IP in the form of patents, design rights, copyrights, trademarks, know-how, and data. Some companies, such as start-ups with a strong environmental and social sustainable focus, share this IP with others, making it openly and freely available. They do this to increase the environmental impact of their technology by sharing IP even with competitors. Others, in the cases that we identified, large multinationals and start-ups alike, license IP only to selected organizations in non-competing fields. As it sounds logical that companies need to protect IP to gain competitive advantage [101
], we can only speculate whether more sustainable companies adopt more open IP strategies to support a sustainable value proposition than less sustainable companies. Accordingly, we lack evidence to conclude whether for sustainable value propositions a more open IP approach is more prevalent than a closed IP approach. This would require more analysis of large numbers of sustainable businesses.
IP for sustainable value creation calls for decision-making that considers not only the maximisation of profits, but also social and environment impacts. This relates to the responsible use of IP as a tool for engagement with employees, intellectual resources, open innovation involvement and collaborators, partners, suppliers, in-house R&D, and user innovation. Specific examples include the adjustment of scoring models for the selection of R&D projects to prioritise those with societal and environmental impact. Another example relates to the incentives for R&D teams to work on projects with environmental or social benefits, but also the fair remuneration of inventive engineers, whether internal R&D team members or external collaborators (such as academics or independent inventors), beyond what is required by the law, particularly for inventions with additional societal and environmental impact. We also notice that customers can play the role of stakeholders in the sustainable value creation mechanism, particularly when companies adopt an open IP strategy, thus allowing customers to co-create value, e.g., by improving software or hardware that is shared with them.
IP for sustainable value capture again requires a balanced approach to maximise the appropriation of R&D investments by considering the societal and environmental impact on top of commercial success. This might be linked to considering societal and environmental benefits in IP enforcement and litigation decisions. This could also mean that companies will decide to be more willing to share IP with relevance to sustainability transitions, e.g., through licensing (i.e., adopting a more open IP strategy), such as climate change mitigation technologies, even if a closed IP strategy, such as one based on trade secrets, could result in higher economic returns to the company in the short term. Another example of sustainable value capture behaviour would be for companies to adopt a balanced approach to IP monetisation, such as for IP that can be relevant for emerging economies, the technology transfer of medicines, or green technologies, by offering companies from low-income countries lower (or free) licensing fees (plus additional support to transfer tacit know-how).
For sustainable value delivery, the IP protection of technical product features are typically less relevant to end consumers than the actual product features and often trademark-protected brand. Importantly for sustainability-oriented customers, trademarks act as a tool for qualifying their sustainability choices. For example, customers may prefer products from a particular sustainable brand over others. Trademarks and certifications hence become more important in the context of sustainability. This includes trademarks from third-party organisations, such as certification bodies for fair trade products, child-free labour and responsibly sourced materials. In that regard, it is important for the certification bodies to maintain the value of their trademarks, to potentially enforce them.
Hence, we propose that in the context of the SBM:
Formal IP, such as patents that protect technical inventions, and informal IP, such as know-how and expertise, are of importance particularly for the sustainable value creation and value capture building blocks of the SBM canvas.
Formal IP, such as trademarks and copyrights that protect less-technical creations, is more important for the value delivery building block of the SBM canvas.
By showing this aspect, we expand previous research (e.g., [91
]), as we explicate what IP activities are relevant to different SBM building blocks. We assume that these two general propositions may not be specific to sustainable businesses but may apply as well to business models in general.
Finally, IP can have far-reaching managerial implications when used as a tool to enable collaboration and trust among organizations. From the sustainability perspective, companies’ major motivation should not only be economic growth, but also the provision of environmental and societal solutions [143
]. Organizations need to have common shared goals to synchronize and ensure SBMs that avoid increasing profits at the expense of the environment and society [144
]. However, in practice it is challenging to establish a common ground and collaboration among companies, which takes time and effort [143
]. IP can act as a tool to enable trustworthy collaboration. The control of intangible resources entangles competitive advantage from the resource-based view perspective [145
]. The resource-based view suggests a resource must be valuable, provide opportunities, and be difficult to imitate, reflecting what companies strategically attempt to achieve with IP [145
]. Moreover, it should enable a better utilization of resources for companies, results in efficiency, better marketing strategy, and also more sustainable value. When IP is shared among a larger group of companies with a common goal, this sustainability impact can be accelerated. Yet balancing profitability, IP strategy, and sustainability considerations is not without risk. Through the case examples illustrating the SBM-IP canvas, we have sought to provide companies with inspiration for alternative approaches to IP and SBM innovation and ways to balance questions on openness, collaboration, and sustainability impact.
Future research should continue to explore the linkages of IP activities and IP strategies to the SBM building blocks, particularly the setting in which different IP activities and strategies become relevant within each of the SBM blocks. For instance, the IP strategy that works (or not) in a traditional business model setting may or may not work in an SBM. Our findings show that joint IP generation activities through co-development and open innovation facilitate sustainable value creation and the exploitation of value created can be maximized by strategic IP sharing through open access and licensing. Hence, innovation theories such as open innovation (e.g., degree of openness), continuous innovation including exploration and exploitation concepts, and strategic sharing concepts like selective revealing and licensing become important and future studies integrating these theories to explore the contextual dependence of the proposed SBM-IP canvas will add to the emerging interdisciplinary theory around IP, business model, and sustainability.
The study is not free of limitations. We used discrete short examples to illustrate the SBM-IP canvas, which by itself offers insights about the integration of IP within each SBM building block. However, more in-depth primary data-based comparative case studies with sustainability-focused companies can provide deeper insights and advance our understanding of how companies use IP across SBM building blocks. When comparing different SBM types, further analysis may reveal more specific patterns of IP activities. Nevertheless, this study offers a baseline by showing the different IP assets and activities that are linked to the SBM by developing an integrated SBM-IP canvas, a tool that can be used to contrast with IP for traditional businesses. Further, the study is limited to conceptualizing IP relevance for SBMs in general without considering the variations caused by the influence of factors internal and external to the firm. The choice of specific IP activities within each of the value mechanisms in the SBM canvas may vary depending on factors such as differences in IP regimes across geographies and the corresponding rule of law, market orientation of the business, firm size, firm’s resources and capabilities, innovation systems, and industry structures. The proposed SBM-IP canvas can act as a tool to study such differences in SBM-IP integrations. We are calling for more research along these lines as this will be useful for IP-related innovation and environmental policy making to accelerate sustainability transitions.