Business Models for Sustainable Development: The Case of a Kenyan Sustainable Enterprise

Global warming and the extinguishing of primary energy reserves are just some of the reasons why the world is taking a ‘transition path’ from unsustainable business practices to renewable and sustainable activities (Bansal et al. 2019; Saebi et al. 2019). During the last decades, many governments have acknowledged these issues and several international actions have been undertaken from the establishment of the United Nations Framework Convention on Climate Change in 1992 to the creation in 2015 of the 17 Sustainable Development Goals (SDGs), aiming to end poverty and fight climate change by ensuring access to affordable, reliable, sustainable and modern energy for all (Warnecke and Houndonougbo, 2016; OECD/EU. 2017; Oxfam, 2017). As a result, sustainable development has become a crucial concept for both scholars and practitioners (Hockerts and Wüstenhagen, 2010; Johnson and Schaltegger, 2019). In particular, sustainable development implies that renewable resources should be used wherever possible and that non-renewable resources should be husbanded (e.g., reduced and recycled) to extend their viability for generations to come. This intergenerational aspect of sustainable development suggests a confluence of diverse social, environment, and economic objectives and raises a number of important contributions on entrepreneurial journals as Entrepreneurship Theory and Practice, Journal of Business Venturing, Journal of Cleaner Production, Business Strategy and Environment (among others, Cohen and Winn, 2007; Dean and McMullen, 2007; Hall et al. 2010; Boons and Lüdeke-Freund, 2013; Johnson and Schaltegger, 2019). This vast research on sustainable development focused the attention on climate change and environmental disasters and proposed the importance of enterprises as significant and vital vehicles to promote environmental transformation, as well as contributing to sustainable development (Bansal et al. 2016; Johnson and Schaltegger, 2019; Saebi et al. 2019; Doherty et al. 2020). Among various types of enterprises, hybrid organizations have been recently recognized as leading form to simultaneously pursue different missions and implement also divergent processes (Haigh and Hoffman, 2011; Holt and Littlewood, 2015; Ciambotti and Pedrini, 2019; Saebi et al. 2019). Leading form of hybrid organization are social enterprise and sustainable businesses, which aim to address societal or environmental issues, by also assuring a financial sustainability (Santos et al. 2015; Battilana et al. 2017; Hahn et al. 2018). These hybrid organizations are associated also to green enterprises Social enterprises are associated also to green enterprises and environmental businesses as suitable organizational form to address unmet needs of poor people as well as promote positive environmental impact (Hockerts, 2006; Littlewood and Holt, 2017; Holt et al. 2011). For instance, M-Kopa is a social and environmental enterprise that produce and delivers micro-grid social panels in rural areas of East Africa. While it addresses the extreme shortage of energy access in such area especially for poor people, it also incredibly contributes to environmental transition of such developing context. In fact, poor people, who lack access to cleaner and affordable energy, are often trapped in a repeating cycle of deprivation and limited incomes (Holt and Littlewood, 2017). They are forced to use significant amounts of their very scarce income on expensive and unhealthy forms of energy that provide poor or unsafe services such as dry cell batteries, rudimentary and inefficient kerosene lamps, charcoal and candles (Boons and Lüdeke-Freund, 2013; Hahn et al. 2018). Yet, despite the promise of social and environmental entrepreneurship holds for fostering sustainable development (Warnecke and Houndonougbo, 2016; Johnson and Schaltegger, 2019; Doherty et al. 2020), and the important studies on sustainable (hybrid) business models of the recent years (Boons and Lüdeke-Freund, 2013; Santos et al. 2015), we still need to deepen the knowledge about how these enterprises create, deliver and capture values to address environmental issues in emerging economies. In fact, such contexts are also characterized by lack of resources and lack of formal institutional supports (e.g. infrastructure, regulations, favorable legislative system) which finally constraint the development of successful business model to contribute to sustainable development (Schaltegger et al. 2016; Ciambotti and Pedrini, 2019; Bansal et al. 2019). Our research question, then, is related to how social and environmental hybrid organizations can effectively build business models to contribute to environmental and societal transition in developing countries. To address this broad question, we ground in the literature of sustainable business model, and apply such theoretical lens to the environmental and social hybrids (Teece, 2010; 2018). The business model is suitable for our analysis because allow us to describe the value logics and processes of an organization in terms of how it creates, delivers and captures value and can be concisely represented by an interrelated set of elements that address the customer needs, value proposition, organizational architecture and economics dimensions (Fielt, 2013; Boons and Lüdeke-Freund, 2013; Schaltegger et al. 2016; Hahn et al. 2018; Weerawardena et al. 2019). Our study comprises an inductive-qualitative analysis through comparative case study methodology (Eisenhardt, 1989; Gehman et al. 2018) of 10 cases of environmental and social hybrid organizations based in Kenya. We collected semi-structured interviews between 2017 and 2019, and triangulated with secondary data and report offered online. The sample include enterprises involved with green energy, waste management and more broadly companies with the mission to foster the green economy. Moreover, Kenya as part of the east-African community is suitable for this study as well as relevant for the debates around sustainable development, because it is largely characterized by poverty and lack access to adequate levels of energy services and the modern conveniences (Karekezi et al. 2012; Holt and Littlewood, 2017; Ciambotti and Pedrini, 2019). Our result reveal components of the sustainable business models as well as challenges of environmental and social hybrid organizations has to face in a developing country to foster sustainable development which pursue both social and environmental issues. With our proposed chapter, we intend to contribute to social entrepreneurship and hybrid organization scholarship on Africa, and more widely, providing important and novel insights on how social enterprise business models address environmental transition.