EB Freudenrich et al

Stakeholder theory perspective on business models

A view that business models are systems of relationships where value is jointly created and exchanged with multiple stakeholders rather than only delivered to customers

Traditional business model view

Conceptualizes value creation as a one-directional flow from the firm to customers in exchange for financial returns

Core critique of traditional business models

They overemphasize customers and profits and marginalize other stakeholders and non-financial forms of value

Central thesis of Freudenreich et al. 2020

Business models should be understood as devices that organize stakeholder relationships and mutual value exchanges

Value creation in stakeholder theory

A collaborative process occurring within relationships that benefits both the firm and its stakeholders

Value with and for stakeholders

The idea that stakeholders both contribute to value creation and receive value from the business model

Uni-directional value flow

A model where value flows only from the firm to customers while other stakeholders are treated as inputs

Multi-directional value flow

Value exchanges that move in multiple directions between a firm and its stakeholders

Stakeholder value creation framework

A conceptual framework that maps stakeholder relationships and reciprocal value exchanges within a business model

Joint value creation

Value creation processes that involve multiple stakeholders actively contributing together

Joint purpose

A shared objective that motivates stakeholders to cooperate in value creation processes

Importance of joint purpose

It aligns stakeholder motivations and guides coordinated value creation especially in sustainability contexts

Integration thesis

The principle that business decisions always have ethical implications and ethical decisions always have business implications

Ethics in business models

Ethical considerations shape stakeholder relationships and influence the type of value created

Definition of value in stakeholder theory

Anything perceived by a stakeholder as meeting a business or personal need

Types of value

Economic social ecological cultural and symbolic outcomes created through business models

Value portfolio

The combination of different types of value exchanged between a firm and its stakeholders

Customers as stakeholders

Active participants who not only receive products but also contribute data feedback and co-creation

Customer value

Functional and symbolic benefits received in exchange for payment and engagement

Business partners

Stakeholders such as suppliers logistics providers and consultants who contribute to production and service delivery

Value exchange with business partners

Contributions like expertise and resources in return for payment contracts and reputation

Employees as stakeholders

Active contributors who provide skills and knowledge and receive wages security and development

Employee value exchange

Mutual exchange of labor capabilities fair compensation training and social benefits

Societal stakeholders

Actors representing society and the natural environment such as NGOs communities regulators and nature

Value from societal stakeholders

Legitimacy stability regulation knowledge and advocacy

Value to societal stakeholders

Transparency compliance taxes social contributions and environmental responsibility

Financial stakeholders

Investors shareholders and creditors providing financial resources

Value exchange with financial stakeholders

Capital provision in return for financial returns and risk management

Circular structure of the framework

Visual representation of reciprocal value flows rather than linear transactions

Relational view of business models

Understanding business models as networks of human relationships rather than technical systems

Business model for sustainability BMfS

A business model that creates economic social and ecological value while maintaining or regenerating capital

Criterion one of BMfS

Offering multiple value propositions to customers and other stakeholders

Criterion two of BMfS

Creating and delivering a portfolio of economic social and ecological value

Criterion three of BMfS

Capturing economic value while maintaining or regenerating natural social and economic capital

Proposition I stakeholder engagement

All relevant stakeholders must be involved in identifying and solving sustainability issues

Proposition II joint purpose

A BMfS must have a shared sustainability-oriented purpose guiding stakeholder cooperation

Proposition III alignment of interests

Stakeholder interests should be aligned to minimize trade-offs and maximize joint value creation

Proposition IV ethical integration

Ethical and business considerations must be integrated into value creation processes

Stakeholder engagement importance

Sustainability challenges require multi-stakeholder collaboration and shared problem solving

Alignment of stakeholder interests

Coordinating stakeholder expectations to avoid value destruction and trade-offs

Respectful stakeholder relationships

Relationships that are ethically sound and recognize stakeholders as legitimate partners

Key contribution of the article

Reframing business models as systems of stakeholder relationships and mutual value creation

Difference from triple bottom line

Goes beyond measuring outcomes by analyzing reciprocal value exchanges

Overall conclusion

Sustainable business models depend on managing stakeholder relationships and shared value creation processes