There are different understandings of business models. Some researchers focus on organiza- tional systems, whereas others describe business models as an abstract characteristic of an organizational unit [49]. However, all scientists agree on the basic components. A business model is a story about the proposition, creation, delivery, and capturing of value as well as the interactions between its elements. Furthermore, the elaboration of different methods of value creation is crucially important [50]. In particular, a business model cannot be static; it needs to evolve continuously in an ever-changing environment in order to keep updated on innova- tions and to meet competitive pressure. For instance, in response to growing environmental concerns, more and more companies have introduced sustainable practices and initiatives into their ordinary business models with the aim of improving the sustainability and social respon- sibility of their activities, without disregarding the goal of creating revenue [51].
Nowadays, companies need to meet society’s demands for socially and environmentally friendly business operations and to take care of nature and their surroundings. Their basic operations [4] must also tend toward more sustainable business models. There are many defi- nitions of sustainable business models, which among the most common is that proposed by Stubbs and Cocklin [52], according to which “SBMs use both the systems and firm-level perspec- tive, build on the triple bottom line approach (economic, environmental and social) to define the firm’s purpose and measure performance, including a wide range of stakeholders and consider the environment and society as stakeholders” [52. pp. 121–122]. Therefore, stakeholders play a fun- damental role in this process of deep transformation and orientation toward more SBMs, where innovations play a strategic role [53]. But who are the stakeholders, and what role can they play in the transition process toward sustainable business models? Following Freeman’s [19] first definition, Walker et al. [54] have deepened this determination and formulized it as follows:
“Stakeholders are individuals or groups who have an interest or some aspect of rights or owner- ship in the project, and can contribute to, or be impacted by, either the work or the outcomes of the project.” Therefore, stakeholders can be internal or external and equally important for further development of the industry or field. Internal stakeholders refer to the employees, founders, investors, budget owners, and legal professionals. External stakeholders mostly include sup- pliers, other partners, consumers, policymakers, and the media [55]. Different classifications of stakeholders can be their division into primary and secondary stakeholders [19]. The former intervene in business operations directly, and they therefore have full control over the internal processes, while the latter do not directly influence the business operations; however, they have sufficient impact on companies’ strategies and transactions. Companies often adapt their
418 Current Developments in Biotechnology and Bioengineering
business models to the views and opinions of secondary stakeholders. Hence, they are much more than just interested parties [56]. Stakeholders vary for the different areas, i.e., manufac- turing, provision of services, public goods, etc. However, basically, key stakeholders include suppliers of raw materials, producers of products or services, business partners, competitors, customers and consumers, employees, cooperatives, policymakers and governments, interna- tional unions and nonprofit organizations, research centers and universities, as well as society in general, including the media [53,56–61]. In order to obtain a successful result from any kind of attempt, support from key stakeholders is a prerequisite since their activities are separate and their interaction with each other influences the economic model [62]. Stakeholders especially play a crucial role in the advancement of sustainable business models through the strong influ- ence on companies’ decision-making process. They may impact differently on the companies’
operations regarding diverse circumstances and factors, for instance, their economic or politi- cal power and positions. In any case, a collaborative approach on the part of all stakeholders is important for the entire process advancement and for achieving the scopes of sustainability [63] (Fig. 16.1). An example of the effectiveness of a participatory process is that of the Salcheto winery in Tuscany, in which the involvement of key stakeholders has favored the introduction of sustainable innovations and the development of a sustainability culture along the wine supply chain [1]. In this scenario, more and more importance is given to transparency and “open rela- tionships” in the business models. Information exchange between stakeholders has become crucially important for many organizations in the decision-making process, especially when it comes to having an impact on the environment and society. Therefore, the engagement of dif- ferent public or private sectors, organizations or individuals in the development process seems to be essential, particularly for the establishment of sustainable business models. Sustainable business models execute all the above-mentioned actions and additionally affect positively the environment, society, and the economy through engaging multiple stakeholders [64,65].
Indeed, the attitude toward the management of stakeholders’ relationships with each other has changed considerably. It is not limited to the identification of potential stakeholders, but it includes stakeholders’ active intervention in decision-making processes and a collaborative process of harmonious exchange of information [66,67]. Moreover, stakeholder engagement in decision-making processes is considered to be an additional moral obligation for companies in the framework of Phillips’ [68] cooperative scheme, which includes mutual benefits and fair cooperation. Therefore, companies need to take into consideration the expectations of stake- holders in defining their long-term strategies or everyday operations. They should focus on the needs and demands of key stakeholders since these ultimately create the background and external factors for the companies’ operations. A basic requirement demanded by stakeholders is transparency [26]. In order to obtain this desired result, they press companies either directly or by spreading information [25]. Stakeholders’ interests may be economic, social, environmen- tal, or political, and companies need to meet all the key stakeholders’ needs since their efficient operations in this regard significantly determines their competitive advantage and side effects on the environment as well. The latter increases relatively the external legitimacy of such com- panies [69-71]. These companies seem to be the contractual parties of their main stakehold- ers, where social factors lead the decision-making process. Moreover, the interests, views, and
Chapter 16 • Stakeholder engagement 419
opinions of key stakeholders substantially determine future actions, behavior, strategic choices, and directions of companies’ business [27].
Over time, companies have better understood the importance of stakeholder engagement in activities and consideration of their opinions in strategic planning with the aim of sustain- able development. Stakeholders’ involvement has gradually been gaining relevance over the years [67]. First of all, companies started to identify their primary and secondary stakeholders.
Then they paid increasing attention to issues of sustainability in their business models in order to meet stakeholders’ expectations. Lastly, companies initiated engaging stakeholders directly in their operations through sharing information and exchanging ideas and mutual decisions, which generated common responsibility for the results.
The creation of a strong network based on trust among stakeholders and the exchange of information is crucial for cocreation. Cocreation basically aims at the creation and transfer of
Managers entrepreneur
employees
Suppliers
Business partners cooperatives
competitors
Customers consumers
Society media
Circular business
model Governments
Policy-makers International unions Nonprofit organizations
Research centers universities
The producer firm’s performance
FIG. 16.1 Collaboration of stakeholders—cocreation.
Source: Own elaboration
420 Current Developments in Biotechnology and Bioengineering
internal ideas and knowledge assets through the interaction between companies and external stakeholders in a dynamic way [72,73] (Fig. 16.1). A desired result can be achieved only by work- ing together within the mutual scope and via a harmonized strategy. Companies’ sustainable management strongly depends on stakeholder engagement in strategic planning and business operations. Involving different parties in the decision-making process in a positive and strate- gic manner represents a perfect way to create worth in the medium to long term to establish and advance a sustainable business model and an organization’s strategic orientation [74,75].
Therefore, the right management of stakeholders in order to meet all of their expectations and to simultaneously take care of the environment and sustainability aspects as a whole is increas- ing in importance.
Each stakeholder has a defined role in the economy and business. The honest performance of stakeholders’ jobs and fulfillment of their own responsibilities lead to advancements in sus- tainable growth. Definitely, all the actions of each stakeholder should be in agreement with the other elements of the model so that synchrony is not disturbed and individual actions produce better results both for unity and for each party [76]. To be precise, if the system works in this way, the operational costs of companies are minimized, the costs related to the information flows and knowledge management are significantly reduced, and subsequently the overall level of uncertainty is low [25]. Additionally, tight cooperation between stakeholders, informa- tion transparency, and knowledge transfer lead to open innovation and spread its usage in a wide audience [77]. Moreover, according to Wiesmeth [78], stakeholder engagement and the exchange of information generate additional knowledge that can support further evolution through guidance for actions as well as for the elaboration of industry-adapted and incentive- compatible environmental policies (Fig. 16.2).