To account for the triple bottom line in the manufacturing sector, we investigated the literature to understand different classifications of sustainable business models. We used the archetypes originally developed by Bocken et al. (2014), who used them to “describe groupings of mechanisms and solutions that may contribute to building up the business model for sustainability” (Bocken et al., 2014, p. 45). These archetypes were updated in 2016 as seen in Figure 1 to include a broader scope (Bocken, Weissbrod, & Tennant, 2016) (see Appendix for complete framework). They broke down the broad nature of approaches in sustainable business modeling into a substantial framework.

Figure 1
Sustainable business model dimensions and archetypes.
Source: Ritala, P., Huotari, P., Bocken, N., Albareda, L., & Puumalainen, K. (2018). Sustainable business model adoption among S&P 500 firms: A longitudinal content analysis study. Journal of Cleaner Production, 170, 216–226. https://doi.org/10.1016/j.jclepro.2017.09.159

Most of the discourse around sustainability places heavy focus on the environmental dimension of sustainability. The environment is one of the most exploited resources during the course of human development and traditionally, industries considered the environmental sustainability agenda as one with extra costs that dampens financial profitability, competitive growth, and market advantage (Kemp & Andersen, 2004; Porter & Van Der Linde, 1995). Industries undertook reactive strategies because they were obliged to do so by regulation and policy. However, proactive measures have risen slowly and steadily over the years. During the last decade, these measures have been recognized as important drivers of competitive advantage and economic development (Andersen, 2015; Maçaneiro & Cunha, 2014). Regarding value creation, this dimension focuses on maximizing material and energy efficiency, closing resource loops, and substituting fossil fuels with renewables and natural processes (Bocken, Weissbrod, et al., 2016).

In the 1950s, social audits attempted to make businesses more accountable to society by communicating economic and non-economic impacts to the community they serve (Hazarika, 2015). Over time, different approaches to doing good for society have emerged. These approaches are seen as responsible but they were criticized for not resolving an underlying core issue or contributing to sustainable development - especially in developing societies (McLennan & Banks, 2019). Sustainability advocates have instead called for industry to focus on creating and delivering social value if it wishes to contribute to sustainable development. A lot of the input on sustainable social value deals with poverty alleviation, community development, diversity and equality, amongst others (Freudenreich, Lüdeke-Freund, & Schaltegger, 2020). These values center around delivering functionality rather than ownership, adopting a stewardship role and encouraging sufficiency (Bocken, Weissbrod, et al., 2016). They are hard to measure and as a result, a lot of the work regarding the measurement of the social dimension of sustainability is still ongoing (Geibler, Liedtke, Wallbaum, & Schaller, 2006; Yunus, Moingeon, & Lehmann-Ortega, 2010).

Firms aim to be economically sustainable. The traditional view of economic sustainability is profitable growth, return on investments, and long-term viability and stability of the business (Freudenreich et al., 2020). This has improved the wellbeing of humans through industrialization and production efficiency. Ultimately, the pursuit of profit and wealth maximization for shareholders has led to the overexploitation of natural and human capital. This approach has also been criticized for having a skewed view of judging societal success (Anand & Sen, 2000). With the turn of the decade, firms have understood that it is necessary to provide economic value to a wider sphere of entities besides shareholders. In this regard, sustainable economic values center around repurposing for society/environment, engaging in inclusive value creation, and developing sustainable scale up solutions (Bocken, Weissbrod, et al., 2016).

Research done on sustainable business models has been steadily increasing. This review is based on sustainable business model activities in empirical studies. We investigate sustainable business models using the following research question: What is the trend in empirical literature on how different industries in the manufacturing sector implement sustainable business models?

To answer this research question, we developed the following questions to guide the analysis: (a) What archetypes do researchers report when empirically investigating how various industries in the manufacturing sector lean toward implementing sustainable value?; and (b) What challenges are observed in the literature when industries move toward creating and delivering sustainable value in manufacturing?

Due to the nature of these questions, we chose to use a qualitative analysis of the results reported in the empirical studies. The results in the empirical studies are primarily qualitative by nature, therefore requiring a corresponding data analysis and synthesis approach.

To search adequately and ensure traceability, we used relevant keywords associated with the scope of the article and our research questions. We choose these keywords to capture relevant papers dealing with business models while accounting for sustainability. We enabled wildcards to avoid issues regarding variants and plural forms, and search results were limited to papers published in English. The string (as shown in Table 3) was adapted for each database as the search mechanisms behind them are slightly different. The search was last conducted in April 2020.

Table 3
Selected databases and search strings.

Sustainability is a trending concept and, hence, the discourse on sustainable business models can be found in different types of documents. For this review, we included peer-reviewed articles and reviews in scholarly journals, conference papers, and proceedings.

We used the UN International Standard Industrial Classification system to place the papers in different industries. We extracted our data using the ‘initial architecture’ and conducted further synthesis. We fit them into the sustainable business archetypes developed by Bocken, Weissbrod and Tennant (2016) (see Appendix for full archetypes) in line with the best fit framework by Carroll, Booth, and Cooper (2011). Subsequently, we further investigated the evidence to understand emerging challenges in the literature. This way of working made it possible to get a cumulative picture of the activities described in the different empirical papers. The formulation of these activities is presented in Stage 3.

By closing resource loops (Table 4), manufacturing companies identify and create value from the loop between post-use and production (Bocken, Pauw, Bakker, & Van Der Grinten, 2016). Jiao and Evans (2017) studied the secondary use of electric vehicle (EV) batteries at their end of life (EOL). They identified unsustainable issues plaguing the EV industry such as inconvenience, high prices, and pollution and stated that although repurposing EOL EV batteries will not immediately solve these issues, it is a promising approach to reducing EV cost hurdle. If stakeholders collaborate, this will improve the sustainable performance of the technology. Their findings indicate second life batteries have a wide potential for application, but on one hand, EVs need to be adopted by the mass market to reduce their prices. On the other hand, however, a reduction in price of EVs is needed to cater to the mass market and this challenge feeds into the business model of EOL EV battery reuse.

Table 4
Closing resource loops.

García-Muiña, Medina-Salgado, Ferrari and Cucchi (2020) and Wanniarachchi, Dissanayake and Downs (2020) studied circular economy in local contexts of manufacturing. Wanniarachchi et al. (2020) investigated the sustainable and ethical manufacturing practices of Sri Lankan textile manufacturer. The companies focused on employing fair trade practices and using 100% of textile waste to create various by-products for export. This approach enabled product and market diversification. In this context, structural barriers and lack of access to markets and innovation hinder growth. On the other hand, García-Muiña et al. (2020) evaluated the transition to a sustainable model for ceramic tile production in Italy. They noted that this transition was facilitated by industry 4.0 tools, enabling increased efficiency and monitoring of manufacturing processes, hence, the environmental benefits could be quantified. If the technological performance of the product is not considered when implementing sustainable business models, there is a risk of creating a subpar product.

Jacques, Agogino and Guimaraes (2010) characterized the sustainable product development initiatives in footwear industry to show how the product development process could enable sustainable products. They compared case studies in America and Brazil from the cradle-to-cradle perspective. Their findings indicated that initiatives taken by footwear companies involve materials reutilization, resource consumption, and social responsibility. Although companies follow different strategies to tackle their sustainability problems, the industry still has a long way to go with regard to sustainability. A common challenge in achieving closed loop production is that consumers seldom return apparel items after use for recycling. In addition, take-back initiatives in the footwear industry were met with limited success. They suggested offering incentives to encourage consumer participation.

When companies do more with fewer resources, less waste, emissions, and pollution are generated (Bocken et al., 2014). Kiel et al. (2017) studied a range of companies in machinery, electric, and motor vehicle manufacturing to understand the prevalent benefits and challenges brought about by the adoption of industrial internet of things (IIoT). They found that creating sustainable value through IIoT was perceived to enable lean manufacturing while enhancing competitiveness and resource efficiency, improving financial standing, and enabling new business models. They observed a range of challenges faced by companies implementing IIoT with the most frequent being technical challenges. González-Varona et al. (2020) also made a case for additive lean manufacturing in making electronic spare parts. They argued that by combining cloud connections and internet of things (IoT), spare parts for damaged electronic components in high-tech furniture and medical devices could be 3D printed at a localized point before distribution. They identified that although challenges might occur in certifying the quality of the manufactured part, such a business model would benefit SMEs, customers, and the environment.

Dematerializing products packaging can also improve resource efficiency. In Bogers et al. (2020), they illustrate how sustainability challenges in packaging can be addressed through open innovation in the beverage industry. The cooperation between beverage and package manufacturers resulted in the development of a fully biodegradable beverage bottle made from paper. To fully realize the potential of the project, the beverage company was open to collaboration with others - including competitors. In this context, the challenge was branded waste, where discarded products have the company’s logo. This strategy might also compete with well-functioning methods of glass collection and recycling.

Hogevold and Svensson (2012) examined a European furniture manufacturer. The case company had gone through a complete overhaul to reduce its carbon footprint in all aspects of its value and supply chain. They hint that applying this strategy across the whole chain might be challenging but requires a genuine long-term commitment.

Table 5
Maximize material and energy efficiency.

Table 6
Substitute with renewables and natural processes.

While improving resource efficiency and creating value from waste focus on reducing environmental impacts, Bocken et al. (2014) argue that these do not consider the potential benefits from renewable resources and natural processes where environmentally sustainable value is created in a more significant manner. Lyytinen (2017) explored sustainable business models of small-scale bioenergy solutions in high- and low-income contexts. In the high-income context, wood chips were utilized in a fully automated solution targeted to wealthy customers while in the low-income context, organic waste were utilized in a low-cost solution targeted to the poor. The findings indicated that promoting sustainability in different parts of the world requires radically different design and manufacturing approaches. However, the solutions required high financial requirements with the low-income context requiring high level of maintenance. Lin et al. (2018) analyzed sustainable business models in the new energy vehicles through a single case study of a car manufacturer in China. In this case, the case company uses this approach to target a combination of mass market and the public sector. They noted that a large impact of this application of renewable energy was large energy consumption during the use stage of the vehicle. These challenges from both studies correlate with Bocken et al. (2014), who stated that moving from non-renewables to renewables is not yet economically viable or cannot be made efficiently at volume. Nonetheless, progress is being made.

Rajala et al. (2016) studied the business model of a textile manufacturer. The authors wanted to improve the understanding on how a manufacturer can implement sustainability-driven change in its business model. The case company changed some of old practices to leverage the green vision. It started with a cradle-to-cradle concept before re-evaluating its business model to eliminate any negative impact the company and its partners might have on the environment. The challenge in this context was that because this involves overhauling traditions, managers might be ill-equipped to handle such transformation if they have little understanding of how sustainable business models work.

Carayannis et al. (2015) and Hankammer et al. (2018) discuss encouraging sufficiency. Products and services under this archetype aim to reduce production by the manufacturers and consumption by customers/end-users (Bocken et al., 2014). The articles deal with product longevity and contribute to the discourse about the effects of overconsumption and overproduction of electrical and electronic goods. In the case presented by Hankammer et al. (2018), mass customization of smartphones was presented to improve product longevity in the smartphone market. Their findings indicated the social value of such a solution being high especially when specific features required by the user could be integrated. They claim that case product failed due to reasons including economic, organizational, and technical difficulties. In the case presented by Carayannis et al. (2015), the company was a success due to an overhaul of the business model at an organizational level. The case company, being the first to introduce LED lighting into Thailand, found itself able to compete at the level of quality by switching to producing customized lighting solutions that lasted longer than the competition.

Table 7
Archetype: Encourage sufficiency.

Table 8
Archetype: Deliver functionality rather than ownership.

Bocken et al. (2014) postulate that value can also be provided by providing services, satisfying users’ needs without them having to own physical products. The articles by Fargnoli et al. (2018), Homrich et al. (2017), Kiel et al. (2017), and Yang et al. (2017) study how functionality can be delivered via a result-oriented product service system. Their findings indicate that for products to be servitized, businesses should prepare for a higher level of competition. Nonetheless, it is possible for small businesses to receive value from their bigger competitors in this context. In the study by Homrich et al. (2017), result-oriented PSS enabled new business opportunities previously limited to producers with large investment possibilities. In that case, olive farmers who had equipment oversized for their production sold the olive oil extraction service to smaller farmers during reduced production period. They hint that by employing PSS, satisfaction is not restricted to consumer use, but expands to community participation or knowledge/information sharing. By studying changes adopted in a product’s lifecycle, Fargnoli et al. (2018) observed customer satisfaction and reduced negative effects on the environment. Their study concerns a regulated biomedical device environment, and due to this, it is noted that managing issues associated with PSS becomes more complex. Yang et al. (2017) argued that in manufacturing, customer needs are usually complex, hence, PSS business models provide companies with more opportunities to communicate with customers and understand their needs. They provide insight on how companies, when transitioning to providing services, can use the perspective of value uncaptured - “the set of benefits that could be captured but have not yet been captured” (Yang, Evans, Vladimirova, & Rana, 2017, p. 1801) to create sustainable business models. Kiel et al. (2017) posit that by introducing internet of things into the value chain, manufacturers can collect large amounts of data to provide sustainable value. Businesses should be able to foresee technical complexities involved with this.

Lindstrom (2016) and Reim et al. (2017) studied how equipment can be servitized with a use-oriented PSS. In Lindstrom (2016), a business might be innovative in offering its products and services via functional products. These have the potential to provide sustainability-oriented value for customers and the business. Reim et al. (2017) that in addition to taking over responsibilities from the customer, operational activities can also be handled by the supplier. Both articles note that due to the long duration of contracts, unpredicted risks come into play but there might be managed effectively and those outside the control of the supplier can be covered through risk-sharing contracts between both parties.

Marcus (2018) studied the impact of HRM on fashion firms employing PSS in their business models. The study showed that compared to others, firms that employed PSS focused on a higher spectrum of HRM components such as human capital, employee commitment, and people management. The findings also indicated that in firms that implemented PSS, the employees demonstrate a higher level of affective commitment to co-create value, as well as build and maintain trustful relationships with collaborators and customers.

Table 9
Archetype: Adopt a stewardship role.

Bocken et al. (2014) selected adopting a stewardship role because it “maximizes the positive societal and environmental impacts of the firm by ensuring long-term health and well-being of all stakeholders.” (Bocken et al., 2014, p. 51) In Pinna et al. (2018), sustainability KPIs were collected to show how soft drink manufacturers can maximize positive impacts along four sections: materials and packaging, water and energy, emissions, and other general aspects. Here, critical issues soft drink companies focus on are mainly connected to material reduction and recycling, or resources conservation. Challenges occur in applying sustainability KPIs in practice, as it is not an intuitive process along the whole supply chain.

Economic value creation

Bocken, Weissbrod, et al. (2016) added inclusive value creation to the archetypes to encompass value creation for a broader base. These are business models based around resource sharing as well as knowledge, ownership, and wealth creation. Li et al. (2020) investigated how co-creation can deliver sustainable value through a digital twin platform network. Such a platform can provide a comprehensive overview of products, manufacturing processes, supply chain, customer experience, and profitability. In the case study, this enabled the manufacturer to provide smart solutions based on specific customer needs. The challenge here involves a difficulty in adjusting from an enterprise-focused strategy to a user-focused strategy.

Table 10
Archetype: Inclusive value creation.

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