Sustainable Business Model Innovation in Practice : An exploratory case study of a traditional clothing retail company

University essay from KTH/Skolan för industriell teknik och management (ITM)

Abstract: Our world is rapidly being redefined by digitalization and disruptive innovations such as changing customer preferences, demographical shifts, and by putting tremendous environmental pressure including scarce resources and a contribution to climate change. Change under these circumstances often brings traditional business models to lose their competitive edge and in the end fail. Previous research of the specific term successful models is vague with ambiguous definitions of the conceptualization of a sustainable business model. More alarming is the limited research addressing the sustainable innovation process thus explaining the existing organizational management problems, where today, firms are operating blindfolded without any academic- or empirical guidance. Fashion as a part of the world’s economy is undoubtedly considered as one of the areas that urgently requires the adoption of more sustainable business models, bringing all actors within the fashion retail industry into a challenging position. The thesis aims to contribute with theoretical knowledge and empirical evidence to bridge this gap by addressing following purpose: explore and improve the understanding of how traditional clothing retailers within the fashion retail industry innovate their current sustainable business models. The thesis is anchored in an exploratory case study at a traditional fashion retail company focusing on children apparel, namely Polarn O. Pyret. Finding shows that the case company simultaneously performs sustainability practices within their existing model, suggesting that a comparative approach can be appropriate when innovating already commercialized sustainable business models. Furthermore, empirical findings explicitly show five factors that differentiate the conventional concept with the sustainability concept of a business model. Thenceforth, the innovation process is explored from this context involving both advantages and challenges. Hence, the process occurs simultaneously, it is recommended to perform a variety of sustainability practices, to spread out the level of complexity and thereby optimize the utilization of resources. The thesis highlights an existing Pilot Prototype when implementing sustainability practices into the current model. Thereby, risks and uncertainty factors can be mitigated to ensure the implementation of sustainable competitive advantage. The thesis makes up for three contributions. First, a contribution with practical knowledge on how traditional clothing retailers is innovating their sustainable business model. Second, the study contributes with an increased understanding of the innovation process of launching successfully developed- or refined models. Third, the thesis makes an analytical contribution by the conceptual framework of references, forming a consolidation of the ambiguous conceptualization settled in a specific context.

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