Digitization and Business Model Innovation in Retailing and Transport: Implications for economic, social, and environmental sustainability
Managing Guest Editor
Professor Pejvak Oghazi
School of Social Sciences
Sodertorn University, Stockholm, Sweden
PD Dr. Maximilian Palmié
Institute of Technology Management
University of St. Gallen
Professor Mats Bergman School of Social Sciences
Sodertorn University, Stockholm, Sweden
Dr. Rana Mostaghel Mälardalen University
Department of Strategy and Innovation
Copenhagen Business School
Background and Motivations
The retail sector constitutes a significant part of the economy and is intensely embedded in a large ecosystem of actors that provide goods as well as complementary products and services to facilitate the transaction of goods. It has traditionally linked manufacturers to consumers and helped consumers make informed choices among products. The retail sector therefore plays an important role in the politically and socially desired shift towards more sustainable consumption and production (UNEP, 2021). Historically, the flows of products, consumers, information and payments underlying the transaction of goods have all converged in the physical store, but this confluence is now dissolving.
As the nature of the retail sector – which is based on distribution and trade – ties it closely to the transport sector (European Commission, 2012), any changes in the flows of products and people rooted in new retail business models have an enormous impact on the transport sector. The changes caused by the retail sector add to a number of challenges that the transport sector is currently facing, such as requirements to reduce CO2 emissions and shifting mobility patterns fueled by the COVID-19 pandemic.
Consequently, the retail and transport sectors are in need of new business models. A business model describes how a firm – or a group of interdependent firms – creates and captures value (Massa et al., 2017; Teece, 2010). Digital technologies – which are increasingly applied by retail and transport firms (e.g., Llopis-Albert et al., 2021; Sohrabpour et al., 2021; Tijan et al., 2021; Toorajipour et al., 2021) – offer possibilities for business model innovation (Parida et al., 2019; Porter & Heppelmann, 2014). For instance, digitization enables retailers to combine traditional retail elements with online retailing and hence to engage in so-called omni-channel retailing (von Briel, 2018). It allows manufacturers to integrate forward with new direct-to-consumer (DTC) business models, bypassing retailers. It also supports the emergence of home-delivery systems and urban air mobility, thereby opening up new opportunities for transport (e.g., Richter et al., 2020). While some emerging digital business model archetypes in retail and transport – such as platforms for online retailing, self-service kiosks, and Mobility-as-a-Service (Mulley & Nelson, 2020; Polydoropoulou et al., 2020; Vakulenko et al., 2018) – have already been studied to some extent, digitally-enabled and innovative business models in retail and transport deserve further attention. Even the business model archetypes that have been studied to some extent offer many opportunities for future research.
An area that is in dire need of more research are the implications of such digitally-enabled and innovative business models for sustainability. While scholars and practitioners have not (yet?) achieved consensus on the measures and indicators of sustainability (Hutchins et al., 2019; Parris & Kates, 2003), considerable agreement exists that sustainability comprises three dimensions: Environmental sustainability, social sustainability, and economic sustainability (Bamgbade et al., 2017; Carew & Mitchell, 2008; Giljum et al., 2001; Kumar & Anbanandam, 2019). These three dimensions or pillars represent the “triple bottom line” to examine a company’s performance and impact (Elkington, 1994, 1997, 2018).
Environmental sustainability can be defined as “upholding or improving the integrity of Earth’s life supporting systems” (Panda et al., 2020, p. 3); it is about securing the long-term protection of the ecosphere and maintaining the buffer capacity of natural systems for anthropogenic influences (Giljum et al., 2001). Social sustainability has been described as “the social dimension of sustainability, which concerns the impact that the organization has on the social systems within which it operates” (Lee & Jung, 2019, p. 1514) as well as “its relationship with various stakeholders” (Hussain et al., 2018, p. 978). It includes such aspects as a fair distribution of possibilities in inter- and intra-generational terms (Giljum et al., 2001), but there is little consensus on the criteria that constitute social sustainability. Consequently, authors compile their own set of criteria as they see fit (Sidhoum, 2018; Staniškienė & Stankevičiūtė, 2018). The Global Reporting Initiative (GRI) defines economic sustainability as “an organization’s impacts on the economic conditions of its stakeholders, and on economic systems at local, national, and global levels” (GRI, 2016, p. 4). Digitization can involve challenges for economic sustainability. For instance, digital retail platforms may be characterized by network effects that can trigger self-reinforcing cycles and magnify first-mover advantages. Taken to the extreme, network effects might produce “winner-takes-all” outcomes (Gawer, 2014). While an extreme concentration of market power may be highly profitable for a few dominant firms, it is problematic in terms of economic sustainability since it can negatively affect the economic conditions of various stakeholders of these dominating firms, including their suppliers, customers, and competitors.
In order to enhance the economic, social, and environmental performance of firms and ecosystems in times of digitization as well as the economic, social, and environmental sustainability of the retail and transport sectors as a whole, this special issue calls for studies of traditional retail and transport firms, new entrants into the retail and transport sectors, and other key actors in their ecosystems. Relevant questions include, but are not limited to the following examples:
· Does digitization alleviate previous trade-offs and create synergies among firms’ economic, social, and environmental performance? If so, how? Does it create new trade-offs?
· How does digitization affect the interdependencies and relationships of firms in retail and transport ecosystems? What are new business models for firms in these ecosystems and what are new business models for such an ecosystem as a whole?
· What business models allow retailers to gain a competitive advantage from incentivizing manufacturers to produce more environmentally friendly products and from incentivizing customers to buy these products? What role does digitization play in such business models?
· Selling consumers more and more products that they hardly ever use can be detrimental from an environmental perspective. What business models allow online retailers to perform well economically without selling more and more products?
· Since digital retailing may favor network effects and “winner-takes-all” tendencies (Gawer, 2014): What are promising business models for players that do not dominate the market (e.g., new entrants, late followers)?
· What strategies allow firms which entertain business relationships with the dominant enterprises to operate profitably in the long run?
· Under which context conditions are business models that do not seek enormous market shares and network effects (e.g., business models driven by niche strategies) more or less viable?
· Business model archetypes, including archetypes of digitally-enabled business models, are not implemented homogenously across firms. Rather, firms need to make certain “design choices” when they implement a given business model archetype (Palmié et al., 2021). These design choices “allow firms to go beyond a ‘one size fits all’ [… business model archetype] and to adapt it” to their specific needs and clients (Palmié et al., 2021, p. 10). What are prominent design choices that firms can make to adopt specific business model archetypes in retail and transport (such as “online-retail platform” or “Mobility-as-a-Service”) to their individual situation and thereby increase their economic, social, and environmental performance?
· Some elements of digital business models in retail and transport may appeal to customers, but may neither be economically sustainable nor environmentally sustainable. An example are free returns in online shopping, which tend to entail higher costs than returns for the seller and increase the number of items that customers send back (Patel et al., 2021). Related to the above notion of “design choices” (Palmié et al., 2021), firms may be able to implement a specific element of digital business models in different ways (for the example of return management, see Hjort et al. ). How do different approaches to implementing specific business model elements vary in their economic, social, and environmental implications and how do they affect the trade-offs and synergies among the three sustainability dimensions?
· What elements of retail and transport business models should not be digitized to avoid economic, social or environmental backlashes? When are business models combining physical and digital activities superior to purely digital activities in retail and transport? What are the limits to digitization? What non-digital business model innovations allow retail and transport firms to compete successfully in the era of digitization?
· How can retail and transport companies use digital technologies to collect information on social and environmental sustainability (e.g., on fair working conditions in their supply chain or on efforts to minimize their CO2 footprint)? What adaptations to their business model allows them to make the most of such information?
· When do “managing for stakeholders” approaches (Bridoux & Stoelhorst, 2014; Harrison et al., 2010) bestow a competitive advantage upon retail and transport firms in the era of digitization?
· How does digitization affect employees in the retail and transport sectors? When and how do firms with a digital business model achieve a competitive advantage from treating their employees better than usual?
· What digitally-enabled business models improve the availability or accessibility of products and services to consumers whose access to these products or services was seriously limited in the past (e.g., people with special needs, consumers with low income)?
· How do the opportunities and challenges that digitization in retail and transport pose for social enterprises, non-profit organizations, and hybrid organizations (e.g., Saebi et al., 2019; Santos et al., 2015) differ from the opportunities and challenges that it poses to “traditional” firms? How can social enterprises, non-profit, and hybrid organizations leverage these opportunities and how can they respond to these challenges?
· What effect do smart city initiatives (Friedrich et al., 2021) have on business model innovation in retail and transport? How do digital business models in retail and transport differ across different geographical contexts? Do these business models yield different social and environmental implications in different cities, states, or countries? If so, why? What actions can local and national governments and non-governmental stakeholders take to improve the social and environmental performance of these business models?
We encourage scholars to adapt these questions and pose further questions as they see fit with the theme of this special issue. This special issue is not limited to specific research methods.
The timeline of this special issue is as follows:
- Submission dates: December 1st, 2021 — August 1st, 2022
- Review process: On a rolling basis from December 2021 to October 2022
- Papers revisions are due December 15, 2022.
- Publication: This is a VSI; accepted papers will be published online immediately once accepted and included in the next available issue of the journal.
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