Implementing green business models in the UK construction industry : opportunities and challenges

• Main Author: Abuzeinab, A.
• Published: University of Salford 2015
• Subjects: 690.028; Built and Human Environment
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.664997

Green business models (GBMs) have the potential to deliver a much better performance compared to conventional business models (BMs) in this age of sustainability. The question of how construction companies can transform their BMs based on green value propositions is both highly relevant for management and poorly understood to date. This study empirically investigates GBMs transformations in the UK construction industry. The study closely scrutinises how GBMs are defined and understood by adopting a set of defined five elements from business and management literature: namely, green value proposition (GVP); target group (TG); key activities (KA); key resources (KR); and financial logic (FL). It also identifies changes, benefits, and challenges associated with GBMs to ultimately propose a guideline for GBMs implementation. It adopts a qualitative method to provide a diagnostic exploratory study and conducts 19 semi-structured interviews with academics and managers from various construction companies. This study applies thematic analysis as the main data analysis technique and further analyses and validates the findings by utilising interpretive structural modeling (ISM) and interpretive ranking process (IRP) techniques. ISM and IRP techniques are novel contributions to GBMs and construction research. The emergent findings are then validated and refined by conducting structured interviews with 4 academics and 1 director from a contractor practice. A BM is considered to be green when a business changes element (s) of its BM to create and capture a business opportunity or a proposition for TGs that provides environmental improvement coupled with economic benefits. The key findings reveal that GBMs can link environmental sustainability with economic success in a systematic manner. They show that GBMs transformations require strong change capabilities and radically influence the way in which companies conduct business. In addition, they demonstrate the interrelation between the different GBMs elements and show that the GVP and FL represent the foundation of GBMs. The challenges that emerged from this research include: government constraints; financial constraints; industry constraints; company constrains; and lack of demand. However, the ISM analysis demonstrates that government policies are the root challenges that hinder GBMs transformations. Despite the challenges posed, GBMs have the potential to deliver credibility, financial and long-term viability benefits for construction companies. The study proposes and validates a guideline for GBMs implementation for the UK construction industry. The guideline starts with creating top-management receptiveness and support the importance of capturing green demand to be converted into GVPs. It also stresses the importance of out-sourcing of some of the KA and KR and highlights the function of marketing and promotions. In addition, the guideline includes various reviewing and monitoring points to be fed to the top-management. Although the BMs and GBMs are new in the construction discipline, this research, as far as can be established, is one of the few empirical academic works introducing and defining GBMs in the construction context. This study contributes originally to GBMs research by developing a structured relationship between the different GBMs elements and by ranking the elements with reference to benefit areas. The relationship between the GBM elements informs construction managers that the smallest details are not vital in a GBM instead how every element of it fits together as a whole reinforcing system is important matter. Consequently, the different elements of the GBM should never be analysed or developed in isolation. To capture economic benefits offered by environmental sustainability, construction companies need to concentrate on greening the whole BM rather than products and processes only. Finally, the study draws a list of recommendations for increasing GBMs uptake and suggests further research opportunities, particularly in the areas of GBMs elements and networks. Key words: Business models, construction industry, environmental sustainability, green business models, UK.