Exploration of an emerging sustainable business model: the B Corp model
Introduction and background
The dominant business model is rooted in neoclassical economic theory (Brenner & Cochrane,
1991; Key, 1999; Stormer, 2003), according to which the primary obligation of corporations is to
maximize profits for shareholders. Typically, social and environmental goals are subordinate to
the primary goal of creating economic value (Freeman & Gilbert Jr, 1992). The patterns of
economic growth have resulted in severe environmental and social issues (for e.g., climate
change, environmental degradation, poverty). These problems are systemic and can only be
solved by replacing the dominant model with an alternative model (Eckersley, 2004; Harman,
1995; Jacobs, 1996). As Jacobs (1996, pp10-11) argues “… what has now become clear is that
further economic development on the pattern of the past will continue to exacerbate these
problems. For they are not, as supposed, symptoms of the model's failure, but of its success. The
conventional wisdom needs to be exactly reversed; the better the model performs, the worse these
problems will get. They are endemic, not incidental. Moreover, since each is related to the others,
they cannot simply be dealt with separately and incrementally”.
The traditional management paradigm was developed for the industrial society and is inherently
limited in its ability to effectively address ecological degradation (Shrivastava, 1995). The
current business models are increasingly outmoded in the twenty-first century (Kelly & White,
2009) and “unavoidable structural inhibitions in contemporary business models” prevent
companies from becoming sustainable (Birkin, Polesie, & Lewis, 2009, p278). Fundamental
change to traditional business models is needed to respond to societal, natural, and business needs
of sustainable development (Birkin, Cashman, Koh, & Liu, 2009; Stubbs & Cocklin, 2008a). In
addition, the majority of effort of organizations to address sustainability issues (such as reducing
emissions and waste, recycling, reducing energy usage, using alternative and more benign
sources of energy, and developing greener consumer products) is considered an “add-on’’ to what
remain essentially unsustainable business operations (Markevich, 2009). Metcalf and Benn
(2012) suggest that the dominant business model now threatens human survival.
New business models are required to move beyond the neoclassical ‘business-as-usual’ model,
where organizations are perceived as economic entities (Stubbs & Cocklin, 2008a), to models
where sustainability concepts (such as environmental stewardship, respect for persons and nature,
and social equity) “play an integral role in shaping the mission or driving force of the firm and its
decision making” (Wicks, 1996, p104). Although there have been several attempts to define a
business model that prioritizes sustainability, Birkin, Poleis & Lewis (2009, p288) conclude that
the initiatives do not involve a radical change to the prevailing economic-focused business
model, and they “are not integrated by a comprehensive new understanding that could be
identified as a new business model.”
While there is some evidence of investor-owned organisations adopting new models of business
to address social and environmental problems (see, for e.g., Interface (Stubbs & Cocklin, 2008b)
and Bendigo Bank (Stubbs & Cocklin, 2007)), new hybrid “common-good mission-centred”
(Boyd, Henning, Reyna, Wang, & Welch, 2009, p9) models of organizations are emerging that
“employ market tactics to address social and environmental issues” (Hoffman, Badiane, & Haigh,
2012, p133). Examples of these hybrid models include: blended value organisations, chaordic
organisations, civic and municipal enterprise, common good corporations, community
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development corporations, community wealth organisations, community interest corporations,
ethical social institutions, new profit companies, social enterprises, social economy enterprises,
and sustainable enterprises (Sabeti & Fourth Sector Network Concept Working Group, 2009). In
particular, one form of hybrid model that has emerged in the last few years is the ‘B Corp’. B
Corps have a dual social and economic purpose, as opposed to the single profit maximisation
purpose of business-as-usual. The aim of this paper is to explore how B Corps differ to businessas-usual, and whether they provide a viable alternative. The paper aims to prompt discussion
about the different theoretical lenses that could be used to analyse the B Corp model, as it is still
an emergent area of research and little theorisation has taken place (Pache & Santos, 2013).
Hybrid business models and the emergence of B Corps
Hybrid organisations address the issues identified in the Introduction using the free market
system. They “employ market tactics to address social and environmental issues” (Hoffman et al.,
2012, p133). While still emergent, the number of hybrid organisations is rapidly growing, gaining
prevalence in the business sector (Hoffman et al., 2012; Le Ber , Bansal, & Branzei, 2010; Pache
& Santos, 2013). Hybrids incorporate, often incompatible, institutional logics and are “by nature
arenas of contradiction” (Pache & Santos, 2013, p972). The integration of market and social
logics poses unique challenges for hybrids, and it remains to be seen if they constitute a viable
organisational form (Pache & Santos, 2013) to challenge the dominance of business-as-usual.
B Corps are for-profit, socially obligated, corporate forms of business, with traditional corporate
characteristics but also with societal commitments (Hiller, 2013). B Corps need to be
distinguished from ‘benefit corporations’. While they share much in common, a benefit
corporation (BC) is incorporated as a BC under a state statute and is “legally obligated to pursue
a public benefit in addition to its responsibility to return profits to the shareholders” (Hiller, 2013,
p287). In the USA, twenty states have enacted BC legislation. In contrast, B Corps are not a
different legal entity, but a member of a voluntary association subject to an assessment and
ratings standard. B Corps are certified by B Lab, a non-profit organisation founded in 2007 in the
USA. B Corps are certified as having met a high standard of overall social and environmental
performance (B Lab, 2013). To become a B Corp, a business must complete an Impact
Assessment, which assesses the overall impact of the company on its stakeholders, be assessed by
B Lab, submit supporting documentation, complete a disclosure questionnaire, revise articles of
incorporation or governing documents as necessary, sign the B Corp Declaration of
Interdependence and Term Sheet, and pay an annual fee based on annual sales of the company.
To be certified, the business must earn a minimum 80 points out of a possible 200 points in the
assessment. B Corps recertify every two years and ten percent of certified B Corps are randomly
selected each year for an on-site review. B Lab claims that “B Corp certification is to sustainable
business what LEED certification is to green building or Fair Trade certification is to coffee … or
USDA Organic certification is to milk” (B Lab, 2013), and it is proposed that B Corps and BCs
will become mainstream (Bice, 2013); “a new corporate model for a new century” (Sargsian,
2012). This is in response to the most recent financial crisis and low levels of trust in
corporations (Bice, 2013; Hiller, 2013; Sargsian, 2012)
Research approach
This research is in the early stages. Contingent on B Corp participation in the study, data
collection is anticipated to occur in March-May 2014, with data analysis commencing May. The
aim of the discussion session is to share preliminary findings and discuss theoretical/conceptual
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frameworks to interpret the findings, as while there is a growing practitioner literature, little
theorizing has occurred (Pache & Santos, 2013). The discussion session will enable me to gain
insights and perspectives from those present in the session.
As B Corps are an emerging phenomenon and little academic research has been undertaken, a
qualitative exploratory study will be conducted to investigate the B Corp business model. The
objectives are to:
 examine the structural and cultural attributes of the B Corp business model;
 compare and contrast the B Corp business model to business-as-usual and a
‘sustainability business model’, drawing on previous research (Stubbs, 2010; Stubbs &
Cocklin, 2008a); and,
 explore the potential scalability of the model to become mainstream.
Data selection, collection and analysis
B Corps in Australia and New Zealand (A&NZ) will be approached to participate in the research.
Currently there are 15 certified B Corps in A&NZ and up to 150 undertaking the assessment
process (Edwards, 2013). The aim is to interview one-two people from the 15 A&NZ B Corps.
Interviews are considered the most appropriate data collection strategy for exploratory research.
In-depth semi-structured interviews will be held with the CEO and the person/people responsible
for driving the B Corp agenda in each of the 15 companies.
The interviews will be taped and transcribed (with permission) to aid the analysis process. The
transcribed interviews will be coded and refined into categories to draw out key themes (Strauss
& Corbin, 1998).
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