Sustainable value propositions and customer perceived value: Clothing library case

Abstract

The core of any sustainable business model is a sustainable value proposition, i.e., the benefits a company aims to deliver to its customers and society through its offering. Thus far, most research on sustainable business model innovations has focused on designing sustainable value propositions, but the value perceived by customers through the value propositions has rarely been addressed. However, in practice, it is not self-evident that the sustainable value propositions intended by companies are perceived by customers as such. The present study proposes value perceived by customers as a means to assess the perceived sustainability of business models. This study combines the concepts of the sustainable business model, sustainable value propositions by a company, and customer perceived value. Furthermore, the study introduces a new approach to assess the matches and mismatches between the intended sustainable value propositions by a company and customer perceived value. This approach combines the triple bottom line (the environmental, social, and economic dimensions of value) perspective on value propositions and the PERVAL (the financial, functional, emotional, social, epistemic, and conditional dimensions of value) perspective on customer perceived value. Applying a multi-case study research strategy, the study explores two Finnish clothing libraries which provide customers with a service for borrowing clothes from a collaborative wardrobe through the proposed approach. According to the study's findings, the key message is that customer perceived value assists the design of dynamic sustainable value propositions to respond to market changes and builds an understanding of the expected sustainability impacts. This study proposes that sustainable value propositions and customer perceived value should be managed simultaneously to identify areas for environmental and social impacts and sustainable value creation.