Sustainable Business Model Innovation Within The Automotive Manufacturing Industry - A Comparative Case Study of Volvo Cars and Lynk & Co

Abstract: Title: Sustainable Business Model Innovation Within The Automotive Manufacturing Industry – A Comparative Case Study of Volvo Cars and Lynk & Co Authors: Isak Gunnarsson & Simon Johansson Tutors: Hani Elzoumor & Rick Middle Background: Traditional business models centred on a neoclassical economic focus are being called into question, as demands for sustainable practises that incorporate social and environmental values escalate. This call for sustainability is pushing organisations towards sustainable innovation efforts, aimed at transforming components of their business models and the network in which they operate. The automotive manufacturing industry provides a perfect exemplification of this, as its environmental impact has as given rise to sterner sustainability requirements, technological innovations, and new market entrants. However, the way in which automotive manufacturers manages to create sustainable business models, sustainable practises throughout their value chain and its relationship with innovation remains vague. Purpose: The purpose of this paper is to present a comparative case study that explores to what extent automotive manufacturers are innovating towards a more sustainable business model. Methodology: A qualitative comparative case study was conducted with two Swedish automotive manufacturers; Volvo Cars and Lynk & Co. Wherein 6 semi-structured interviews were performed, and secondary data gathered. The combined data was utilised within a thematic analysis to identify the themes correlating to sustainable business model innovation for each respective case. Results: Automotive manufacturers have either transformed their pre-existing business models through organisational, product and process innovations that incorporate sustainability, or have integrated such innovations in the creation of new business models. Value propositions now include innovative offerings within mobility, car sharing, and electric vehicles, creating direct and indirect social and environmental values. Incremental innovations within the value creation and delivery reduce the environmental effects and increase employee well-being. The value capture measures all sustainability efforts to underlie future decision making. Automotive manufacturer’s role within and control over their value chain and network determine the amount of sustainable value they can foster. Implications: Sustainable values can be included in all components of the business models, through various organisational, product and process innovations. However, social values are dubious due to varied application and unspecific delimitations. Circular economy and retained car ownership may have massive ramifications on the sustainable evolution of business models within the automotive industry. An organisation that seeks to foster additional sustainability within its value chain and network will be restricted by its role and control. Wherein a strong actor can pull others towards sustainability, while a weaker actor is forced to push through other means, such as demand setting and direct partnerships.