Moving Business Models Forward for Positive Social, Environmental and Economic Outcomes: Managing Externalities (and Internalities) for Sustainability Innovation

Abstract


 
 
 
 Purpose: Organisations are crafting business models to operate and be able to continue operating. While it is now common to mention the importance of the ecosystem surrounding a focal organisation, business models are often considered as internal configurations between resources, organisation and offers. Consequently, the ecosystem is only convoked as a matrix for value creation for stakeholders and value capture for a focal company. In this article, we contend that ecosystems are also the place where externalities of the focal business model operate, eventually destroying value for stakeholders. We suggest that a sustainable business model can only be designed and implemented with a complete account of externalities, and we propose that the business model is the key determinant between externalities and internalities.
 Design/Methodology/Approach: We build on the research about business models and externalities to theorise at the crossroads of this literature. We then draw consequences from our theoretical development and advance business model recommendations for managers, consultants and researchers.
 Findings: We propose to complete the concept of externalities with the symmetrical concept of “internalities” to analyse and design business models. We also offer eight policies to manage (or not) externalities and identify potential consequences of these policies for the business model of the focal organisation and its ecosystem. We conclude that business model thinking allows organisations to decide on what the externalities and internalities of their business model will be and thus induce management responsibilities.
 Originality/Value: Instead of focusing on business models as an internal configuration, we contend that organisations must make decisions on externalities and internalities generated by their business model. We make propositions to design and preserve sustainable business models. Business models’ future should focus on the management of externalities.