Business model change in dynamic environments: The case of distributed solar energy

Purpose: The purpose of this paper is to enrich the debate on business models for sustainability in contingent situations. Approach: We employ literature on business models for sustainability and a contingency framework advanced in previous literature. We apply qualitative methods and investigate multiple cases of business models for sustainability dynamics in contingent situations and examine how four solar companies manage to align their business models with changes in the business environment. Findings: We provide detailed insights into business model for sustainability changes, made to align to dynamic environments, as well as empirical evidence that confirms and supports the contingency framework on business model dynamics and how it can be extended. Adding a conceptual framework helps to understand the roles of the components in more detail, revealing that each component can face multiple environmental dynamics. For example, dramatically reduced policy-supporting schemes and customers wanting to be green led to adjustments to the value proposition and the revenue model. All companies in this study developed sensitivity toward intangible customer values and needs and tried to incorporate the customer experience into their business models. We therefore suggest customer sensitivity as a way to better understand the interaction between the firm and the customer. Originality: Combining contingency theory and business models for sustainability approaches provides a novel way of studying and explaining alternative modes of sustainable value creation. Jointly, our findings provide new detailed insights on business models for sustainability changes in dynamic environments.