Linking sustainable business models and supply chains — Toward an integrated value creation framework

Norris, Simon; Hagenbeck, Julia; Schaltegger, Stefan Article — Published Version Linking sustainable business models and supply chains — Toward an integrated value creation framework Business Strategy and the Environment Provided in Cooperation with: John Wiley & Sons Suggested Citation: Norris, Simon; Hagenbeck, Julia; Schaltegger, Stefan (2021) : Linking sustainable business models and supply chains — Toward an integrated value creation framework, Business Strategy and the Environment, ISSN 1099-0836, Wiley, Hoboken, NJ, Vol. 30, Iss. 8, pp. 3960-3974, https://doi.org/10.1002/bse.2851 This Version is available at: https://hdl.handle.net/10419/284817 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ RESEARCH ARTICLE Linking sustainable business models and supply chains — Toward an integrated value creation framework Simon Norris | Julia Hagenbeck | Stefan Schaltegger Centre for Sustainability Management (CSM), Leuphana University Lüneburg, Lüneburg, Germany Correspondence Simon Norris, Centre for Sustainability Management (CSM), Leuphana University Lüneburg, Universitätsallee 1, 21335 Lüneburg, Germany. Email: [email protected] Abstract Extant literature on sustainable business models highlights that value creation stems from resources exchanged in relationships between a focal firm and its stakeholders. In this context, the literature has, so far, focused on direct relationships. However, despite the acknowledged relevance of sustainability issues in supply chains, this relational view of the focal company and its direct stakeholders has not been extended toward value creation for and with indirect stakeholders, such as stakeholders of suppliers. Addressing this gap, this conceptual article integrates a relational view of sustainable supply chain management into the management of sustainable business models. It extends the scope of sustainable business models from relationships between the focal firm and its direct stakeholders to indirect relationships with stakeholders of suppliers. A framework is developed that supports analysis and management of value-creating relationships between the focal firm, suppliers, and stakeholders of suppliers. By extending the conceptualization of sustainable business models to consider relationship chains beyond direct relationships, this article proposes that a focal firm has to actively manage interactions both with suppliers and with suppliers' stakeholders. KEYWORDS business model, corporate sustainability, integrated framework, multi-tier supply chain, relational view, stakeholders, sustainable supply chain management, value creation 1|INTRODUCTION To improve the sustainability of the core business and supply chains of companies, the strategic concepts of sustainable business models (SBMs; Schaltegger, Hansen, & Lüdeke-Freund, 2016; Stubbs & Cocklin, 2008) and sustainable supply chain management (SSCM; Seuring & Müller, 2008b) have been developed in management practice and research. While the SBM concept is concerned with the ecological, social and economic value creation of a focal firm (Evans et al., 2017; Schaltegger et al., 2012), SSCM focuses on managing the flow of goods, information and capital and the relationships between suppliers, focal firm, and customers to improve sustainability performance (Preuss, 2005; Seuring, 2011). SBMs and SSCM thus share conceptual foundations such as the explicit consideration of stakeholders (Lüdeke-Freund et al., 2016). SBMs and SSCM also exhibit functional complementarities. Business models serve as “connecting point”(Ritter & Lettl, 2018, p. 7) for different concepts because they span various business functions (Freudenreich et al., 2020; Wirtz et al., 2016). The comprehensive and systemic ambition of SBMs (Evans et al., 2017; Stubbs & Cocklin, 2008) implies that links between social, environmental, and economic issues along supply chains need to be considered in the Received: 30 November 2020 Revised: 25 May 2021 Accepted: 7 June 2021 DOI: 10.1002/bse.2851 This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited. © 2021 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd. 3960 Bus Strat Env. 2021;30:3960–3974.wileyonlinelibrary.com/journal/bse creation and delivery of the value proposition (Boons & LüdekeFreund, 2013; Stubbs & Cocklin, 2008). This argument gains weight considering the outsourcing to countries with lower social and environmental standards (Clarke & Boersma, 2017; Reuter et al., 2010) that shifts much of a focal firm's impact into the upstream supply chain (e.g., Lueg et al., 2015; Plambeck, 2012). One example for this is the production of electronic products to China, which has been criticized for poor employment conditions (e.g., Xu & Li, 2013). Consequently, the management of an SBM needs to exceed the organization-centric value creation perspective of the focal firm and include the inter-organizational perspective of the supply chain (Gold et al., 2010). According to Lüdeke-Freund et al. (2016), however, the complementarities between the two concepts —SBM and SSCM — have so far only been addressed sparsely in the literature while scholars from either field refer to the each other in a general manner, only (e.g., Boons & Lüdeke-Freund, 2013; Lozano, 2018; Pagell & Wu, 2009). Although agreement exists that an SBM needs to consider all stakeholders involved (Freudenreich et al., 2020), the implicit focus of the literature on direct stakeholder relationships implies that indirect relationships to more distant stakeholders are less relevant for SBMs. This is surprising, considering that sustainability problems often originate from indirect supply chain relationships (Miemczyk et al., 2012). The prevalence of sustainability issues at lower tiers (Miemczyk et al., 2012; Seuring & Müller, 2008a) and the risk of negative exposure (Hofmann et al., 2014; Parmigiani et al., 2011) indicate that indirect stakeholders (e.g., employees of suppliers) could often be even more important to an SBM than direct stakeholders. Furthermore, the potential role of suppliers in value creation (e.g., Dyer & Singh, 1998; Touboulic & Walker, 2015) has so far not been conceptualized sufficiently for SBMs. These limitations may restrict achieving the fundamental goal of SBMs to create value for a comprehensive set of stakeholders with solutions to sustainability problems (e.g., Evans et al., 2017; Freudenreich et al., 2020). The same lack of specificity can be observed in the SSCM literature, where the business model has been referred to as antecedent or influencing factor for SSCM on a general level only (Pagell & Wu, 2009; Schaltegger & Burritt, 2014). In summary, a structured analysis of the intersections of SBMs with sustainable supply chains is missing, so far. This paper addresses this research gap by analyzing linkages between the concepts and answering the following research question: How can sustainable supply chain management contribute to a sustainable business model? To answer the research question, this paper connects the business model concept with SSCM from a relationship perspective. Based on the distinction between direct stakeholders with a direct relationship with the focal firm and indirect stakeholders associated with suppliers, this article discusses the role of suppliers in creating value for their stakeholders. Building on this, an integrated framework is developed that consolidates organization-centric SBM and interorganizational SSCM conceptions (Freudenreich et al., 2020; Gold et al., 2010) from a relational view (Dyer & Singh, 1998). The framework aids academics and practitioners alike in understanding and managing a business model by extending the relational perspective on SBMs beyond dyadic (i.e., two-sided) and direct stakeholder relationships (Freudenreich et al., 2020) toward indirect and polyadic (i.e., multi-sided) relationships. By bridging the currently separate SBM and SSCM research streams, this paper advances SBM research in its role as an “integrative field”for sustainability management (LüdekeFreund & Dembek, 2017, p. 1676). This strengthens the role of SBMs as strategic tool for managing sustainability of the core business of the firm (Evans et al., 2017; Schaltegger et al., 2012). For clarity of argumentation, the paper focuses on the upstream supply chain, the focal firm, and its customers. The next section introduces the concepts of SBMs combining stakeholder theory with a resource-based view and SSCM with the relational view and explicates gaps and complementarities. The third section develops an integrated conceptual value creation framework for SBMs that considers relationships with stakeholders in the supply chain. The framework is illustrated with an example. The final section concludes with implications and directions for sustainability management of supply chains as part of the business model and for future research. 2|CONCEPTUAL BACKGROUND: MISSING LINKAGES BETWEEN SBMS AND SSCM To this date, research on SBMs has stayed relatively isolated from other management fields (Lüdeke-Freund & Dembek, 2017), including SSCM (Lüdeke-Freund et al., 2016). This section introduces the two concepts based on previous literature. Additionally, research gaps about possible intersections are identified. 2.1 |SBMs as organization-centric perspective on value creation The concept of SBMs, also known as business models for sustainability (Lüdeke-Freund, 2020; Schaltegger, Hansen, & LüdekeFreund, 2016; Stubbs & Cocklin, 2008), emerged in part to understand economic value creation from solving social and ecological problems (Schaltegger et al., 2012). SBMs describe a firm's business rationale, taking a systemic and comprehensive perspective that ideally addresses all impacts on and of stakeholders and the natural environment (Evans et al., 2017; Stubbs & Cocklin, 2008). One widely accepted definition is provided by Schaltegger, Hansen, and LüdekeFreund (2016, p. 6): A business model for sustainability helps describing, analyzing, managing, and communicating (i) a company's sustainable value proposition to its customers, and all other stakeholders, (ii) how it creates and delivers this value, (iii) and how it captures economic value while maintaining or regenerating natural, social, and economic capital beyond its organizational boundaries. NORRIS ET AL.3961 Each of these three aspects answers different questions about the value creation of an organization (Lüdeke-Freund et al., 2020). The first aspect pertains to the question of what kind of value is to be created and for whom (Freudenreich et al., 2020). The extension of the conventional focus on customer value (Osterwalder et al., 2005) toward multiple stakeholders in SBMs (Schaltegger, Hansen, & Lüdeke-Freund, 2016), results in a set of idiosyncratic value propositions for various stakeholders, including customers, suppliers, distributors, employees, financial stakeholders, and societal stakeholders (Freudenreich et al., 2020; Harrison & Wicks, 2013; Tantalo & Priem, 2016; Figure 1), and the natural environment. Stakeholder theory explains how the unique needs and expectations of each stakeholder determine their perception of the value offered by the firm (Donaldson & Preston, 1995; Harrison et al., 2010). Stakeholders perceive a particular use value based on both monetary and nonmonetary outcomes, and the quality of the relationship itself (Bowman & Ambrosini, 2000; Brozovic, 2020; Harrison & Wicks, 2013). However, this perspective on stakeholder value has not been extended in the SBM literature to stakeholders who have an indirect relationship with the focal firm through suppliers (i.e., stakeholders of suppliers). This is an issue since stakeholders such as customers also evaluate sustainability contributions of the company (Hörisch et al., 2014), the treatment of other stakeholders (Harrison & Wicks, 2013), and the resources used to create value (Hunt, 1995). The second aspect relates to the question of how and by whom value is created and delivered in an SBM (Freudenreich et al., 2020). Combining stakeholder theory with a resource-based view (Bowman & Ambrosini, 2000; Donaldson & Preston, 1995) suggests that stakeholders contribute resources (e.g., material and labor) to the value creation of business models (Freudenreich et al., 2020). These resources and activities are structured, linked, and transformed through the focal firm's business model (e.g., Osterwalder et al., 2005) to create outputs of higher value for its stakeholders (Harrison & Wicks, 2013; Lüdeke-Freund et al., 2020), such as products addressing customer needs. Additionally, the relationship quality with regard to the just treatment of stakeholders and the social benefits of affiliation to the firm (e.g., reputation) is an important value creator in itself (Harrison & Wicks, 2013). As value is always created with stakeholders, mutually beneficial relationships and reciprocal value flows (Evans et al., 2017; Freudenreich et al., 2020; Harrison & Wicks, 2013) are crucial to support the social and ecological systems the SBM is embedded in (Brozovic, 2020; Cosenz et al., 2020). However, the role of suppliers in creating value (Boons & Lüdeke-Freund, 2013; Evans et al., 2017) for the focal firm's indirect stakeholders has not yet been analyzed in depth. For example, Lueg et al. (2015) find only a symbolic supplier management approach in their case study that does not affect the supply chain's sustainability substantively. Additionally, value delivery explains physical distribution and accompanying communication through which customers receive FIGURE 1 SBM framework of value creation for and with direct stakeholders (e.g., Freudenreich et al., 2020; Harrison & Wicks, 2013; Tantalo & Priem, 2016) [Colour figure can be viewed at wileyonlinelibrary.com] 3962 NORRIS ET AL. the tangible and intangible aspects defined by the value proposition (e.g., Massa et al., 2017). The potential synergistic effects (Jolink & Niesten, 2015; Tantalo & Priem, 2016) of communicating the value created for a firm's direct and indirect stakeholders in the supply chain to customers (Viciunaite, 2020) require more explicit consideration. Figure 1 illustrates the value created for and with direct stakeholder groups typically addressed in the literature, which misses potential indirect stakeholders in the supply chain and value exchanges among stakeholders themselves. The third aspect, value capture, relates to the question of how much value is to be created for each stakeholder, which can be affected by increasing or decreasing the use value offered or the exchange value demanded in return. Business models receive exchange value from stakeholder contributions to value creation (e.g., capital or labor) and distribute other exchange value in return (Bowman & Ambrosini, 2000). An exchange value given by one side has use value for the other, receiving side (Bowman & Ambrosini, 2000), which is incommensurable because of the idiosyncratic, non-monetary outcomes that stakeholders value (Harrison & Wicks, 2013; Lüdeke-Freund et al., 2020). The underlying idiosyncrasies and incommensurability also suggest that value capture is not a zero-sum game where value creation for one stakeholder would be at the expense of another (Donaldson & Preston, 1995). As a stakeholder orientation shifts the focus from maximizing the value captured by the firm toward the maximization of value for stakeholders (Harrison et al., 2010; Jolink & Niesten, 2015), several authors have argued for an equitable balance among all involved stakeholders (Barney, 2018; Boons & Lüdeke-Freund, 2013; Stubbs & Cocklin, 2008). Beyond this, the meaning of equitability and how value capture can be ensured (e.g., Bocken et al., 2014) for all participating supply chain stakeholders remain unclear. In sum, while various authors emphasize that SBMs should address the entire range of social and ecological impacts (Bocken et al., 2014; Stubbs & Cocklin, 2008), the role of sustainable supply chains for managing an SBM is understood insufficiently (LüdekeFreund et al., 2016). To enable a structured analysis of the concepts' linkages, the following section reviews the concept of SSCM. 2.2 |SSCM as inter-organizational perspective on value creation SSCM emerged from research on the impact of supply management on the environmental (e.g., Green et al., 1996; Handfield et al., 2005) and social performance of buying firms (e.g., Carter & Jennings, 2004). Indicated by the number of literature reviews (Seuring, 2011), SSCM constitutes a more matured research and management field than SBMs. Ahi and Searcy (2013, p. 339) reviewed the variety of existing definitions to synthesize the following comprehensive definition of SSCM: The creation of coordinated supply chains through the voluntary integration of economic, environmental, and social considerations with key inter-organizational business systems designed to efficiently and effectively manage the material, information, and capital flows associated with the procurement, production, and distribution of products or services in order to meet stakeholder requirements and improve the profitability, competitiveness, and resilience of the organization over the shortand long-term. SSCM is concerned with material, information, and financial flows and relationships between upstream and downstream actors in the supply chain (Seuring, 2004, 2011). Compared to conventional supply chain management, SSCM considers a wider range of social and ecological issues and additional stakeholders such as non-governmental organizations (NGOs) or communities (Pagell & Wu, 2009; Seuring & Müller, 2008a). In line with much of the SSCM literature, this article takes the perspective of the focal firm, which is frequently seen as initiator of SSCM (Beske & Seuring, 2014). Adoption of sustainable practices throughout the whole supply chain, however, can only be implemented through collaborative relationships with suppliers (Touboulic et al., 2014; Vachon & Klassen, 2006). To explain why collaborative relationships support value creation, Dyer and Singh (1998) complement the resource-based view, which locates value creation within individual firms, with a relational view, where value creation is located in the dyadic firm-supplier relationship (Gold et al., 2010; Touboulic & Walker, 2015). Within collaborative dyadic relationships, the focal firm and its supplier can jointly create value, which neither of them could have created on their own (Dyer & Singh, 1998). Relational advantages, which may also benefit social and ecological performance (Gold et al., 2010; Vachon & Klassen, 2006), are driven by the following four determinants (Dyer & Singh, 1998). First, in contrast to transactional relationships, the firm and its suppliers can invest in relation-specific assets, such as specialized production processes. Second, knowledge-sharing routines support a two-way learning process in the firm–supplier relationship (Solér et al., 2010; Wong et al., 2018). Third, combining complementary resources and capabilities,suchasproduction expertise for products or components, allows for better use of both the focal firm's and the supplier's individual resources. Fourth, formal and informal governance mechanisms (e.g., codes of conduct or informal interpersonal relationships) between the firm and its supplier create mutual trust in the relationship, thereby facilitating the other determinants (Dyer & Singh, 1998; Onofrei et al., 2020; Touboulic et al., 2014). Because of the emphasis on inter-organizational value creation (Gold et al., 2010), the relational view constitutes a useful theoretical lens to explain how value can be created for indirect stakeholders of SBMs jointly by the focal firm and its suppliers. Recently, SSCM studies have extended the focus from first-tier supplier and customer relationships toward a multi-tier perspective to account for environmental and social impacts at n-tier suppliers (Tachizawa & Wong, 2014). This can be attributed to the increased complexity and globalized outsourcing of production (Reuter et al., 2010) that results in many indirect relationships between the focal firm and suppliers at lower tiers (Miemczyk et al., 2012). Here, NORRIS ET AL.3963 information about sustainability issues and preferences of the focal firm's customers is often asymmetrically distributed (Akerlof, 1970) between actors in a supply chain (Sarkis et al., 2011; Solér et al., 2010). Since this obstructs control over sustainability issues and, thereby, invites opportunistic behavior of suppliers, it subsequently exposes the firm to stakeholder pressure (e.g., customers, investors, and NGOs) (Jaegler & Goessling, 2020; Parmigiani et al., 2011; Seuring & Müller, 2008a). Customers and other stakeholders (e.g., NGOs) frequently attribute responsibility for these impacts of the supplier to the focal firm rather than the supplier itself (Hartmann & Moeller, 2014; Parmigiani et al., 2011). In this context, entire relationship chains of firm–stakeholder interrelationships need to be considered that connect the focal firm to its indirect stakeholders on all tiers (Busse, 2016; Tachizawa & Wong, 2014). This requires an extension of the unit of analysis in the relational view from dyads toward triadic or even polyadic relationships not only with suppliers, but also with other stakeholders. Here, the narrow set of direct stakeholders (Figure 1) is extended with the focal firm's n-tier suppliers and the stakeholders (employees, financial, and societal stakeholders) of suppliers. Unless otherwise stated, the direct and indirect stakeholders described refer to the focal firm. This paper, therefore, focuses on relationship chains in an upstream supply chain between suppliers, the focal firm and its customers for the sake of clarity and depth of argumentation. While this perspective fits the comprehensive scope of SBMs, multi-tier SSCM research has so far mainly focused on stakeholders as external pressure (Tachizawa & Wong, 2014; Wilhelm, Blome, Wieck, & Xiao, 2016; Yen, 2018), without explicitly considering them as beneficiaries or contributors. Overall, a focal firm that aims for more sustainable supply chains also needs to establish fit between the supply chain and its business model (Schaltegger & Burritt, 2014). However, authors connecting SSCM to (sustainable) business models usually refer to the general business model concept rather than its specific elements (e.g., Pagell & Wu, 2009). SBM research could benefit from consideration of value creation for supply chain stakeholders and multi-tier relationship chains (e.g., Busse, 2016). Extending the relational view on value creation to indirect stakeholders could explain how an SBM creates value for a variety of stakeholders in collaboration with suppliers. The next sections, therefore, analyze linkages between the two concepts. TABLE 1 Comparison of SBM and SSCM concepts based on Lüdeke-Freund et al. (2016) and potential complementarities between both concepts SBM concept SSCM concept Gaps about potential complementarities Orientation Comprehensive and systemic consideration of economic, social, and ecological impacts of focal firm (e.g., Bocken et al., 2014) Consideration of economic, social and ecological impacts along supply chain (e.g., Seuring & Müller, 2008b) Considering supply chain impacts could support the comprehensive consideration of sustainability impacts in business models. A multi-tier supply chain perspective could support distinguishing direct and indirect supply chain stakeholders in an SBM. Explicit consideration of focal firm's stakeholders (e.g., Stubbs & Cocklin, 2008) Explicit consideration of stakeholders along multi-tier supply chain (e.g., Seuring & Müller, 2008b) Balancing short-term and long-term objectives for focal firm (e.g., Stubbs & Cocklin, 2008) Improving long-term resilience and short-term performance (e.g., Beske & Seuring, 2014) Scope and content Broadly defined boundaries, high-level condensation of various business functions (e.g., Massa et al., 2017) Narrower and clearer boundaries (e.g., Ahi & Searcy, 2013) An inter-organizational supply chain perspective could broaden the organization-centric view with external relationships necessary to create value. Multi-tier SSCM research could inform relationship building and collaboration for stakeholder value creation. Elements of value creation and relationships between them (e.g., Upward & Jones, 2016) Sustainability of forward and reverse material, capital, and information flows across multiple tiers (e.g., Ahi & Searcy, 2013) Organization-centric view: limited consideration of value creation by partners (e.g., Boons & LüdekeFreund, 2013) Inter-organizational view: relationships and coordinating actions between actors in supply chains (e.g., Pagell & Wu, 2009) Function and approach Understanding and improving the focal firm's sustainable value creation (e.g., Schaltegger et al., 2012) Understanding and improving supply chain triple bottom line (e.g., Carter & Rogers, 2008) Understanding the role of supply chain partners and collaboration in SBMs could improve sustainable value creation (for stakeholders). Supply chain could be a lever for SBMdriven sustainability transformations. Institutionalizing sustainability collaboratively in socio-economic environment (e.g., Stubbs & Cocklin, 2008) Collaborative paradigm to improve sustainability performance (e.g., Gold et al., 2010) Transforming unsustainable socioeconomic structures (e.g., Schaltegger, Lüdeke-Freund, & Hansen, 2016) Inducing change toward sustainability within supply chain partners (e.g., Preuss, 2005) 3964 NORRIS ET AL. 2.3 |Research gap about the complementarities between SBMs and SSCM Advancing the comparison of SBMs and SSCM by Lüdeke-Freund et al. (2016), Table 1 provides a comparison and overview of the possible complementarities. Both concepts take social and ecological impacts into account and assume responsibility toward stakeholders (e.g., Seuring & Müller, 2008b; Stubbs & Cocklin, 2008). They do so, however, with different scopes and contents: while SBMs reflect an organization-centric view emphasizing value creation for direct stakeholders (Schaltegger, Hansen, & Lüdeke-Freund, 2016), SSCM addresses inter-organizational value creation and relationship chains between the focal firm and supply chain stakeholders (Busse, 2016; Touboulic & Walker, 2015). Furthermore, both concepts entail transformative aspects: Whereas SBMs aim at changing organizational, market, or societal structures (Lüdeke-Freund, 2020; Roome & Louche, 2016; Schaltegger, Lüdeke-Freund, & Hansen, 2016), SSCM diffuses sustainable practices across multiple tiers of supply chains (Preuss, 2005). While SSCM has clearer conceptual boundaries, business models have been described more broadly as “a description of an organization and how that organization functions in achieving its goals”(Massa et al., 2017, p. 73). In this role, the SBM concept acts as “connecting point”(Ritter & Lettl, 2018, p. 7) or “integrative field” (Lüdeke-Freund & Dembek, 2017, p. 1676) for different research fields. Integrating the relational SSCM perspective could support the SBM concept's comprehensive scope (e.g., Stubbs & Cocklin, 2008). However, the complementarities between the interorganizational and organization-centric views on value creation in SSCM and SBMs, respectively, have been insufficiently investigated so far in both fields (Table 1). On the SSCM side of the debate, extant literature suggests that a sustainability-oriented business model is a prerequisite for the management of sustainable supply chains, but only argues that such a “business model then guides decision making” (Pagell & Wu, 2009, p. 51). What is missing in the literature are arguments that explain why or how this is the case. The same applies to the SBM side, where some conceptualizations feature the supply chain as a distinct element of SBMs (Boons & Lüdeke-Freund, 2013; Lozano, 2018), focusing on issues such as partner choice and commodities supplied, or cases where sustainability is not deeply embedded into the business model (e.g., Lueg et al., 2015). Freudenreich et al. (2020, p. 14) suggest “the role of different business functions in managing stakeholder relationship[s]”require more attention, and this includes relational value creation through SSCM. To go beyond the general acknowledgement of the supply chain in the SBM literature, Lüdeke-Freund et al. (2016) call for an integrated framework based on a systematic assessment of the linkages between the organizationcentric and inter-organizational value creation perspectives. In this regard, Freudenreich et al. (2020, p. 15) argue that if “a framework is to be analytically useful, it needs to provide a more differentiated picture of the stakeholders involved in their specific mutual value exchanges with a focal business.”SBM frameworks in the literature are commonly arranged around the focal firm's value creation, be it in terms of components (e.g., Bocken et al., 2014; Joyce & Paquin, 2016; Upward & Jones, 2016) or hub-and-spoke-like dyadic relationships with stakeholders (e.g., Freudenreich et al., 2020). Organization-centric hub-and-spoke arrangements with the focal firm at its center imply that the focal firm can create value with and for stakeholders directly, which is often not feasible considering the chain of indirect stakeholder relationships prevalent in supply chains (Miemczyk et al., 2012). In other words, the SBM concept needs to integrate a relational view (Dyer & Singh, 1998) to explain the role of supply chain stakeholders in value creation (Touboulic & Walker, 2015). This requires the inclusion of relationship chains into the value creation of a SBM. Previous attempts of integrating SBM and SSCM frameworks (e.g., Lüdeke-Freund et al., 2016) do not explicitly consider indirect supply chain stakeholders of a focal firm and, therefore, have limited utility for the analysis of sustainable business models. Thus, a differentiated framework for the description and analysis of SBMs that also considers indirect supply chain stakeholders and polyadic value creation relationships (e.g., Dyer & Singh, 1998) is needed. The following section develops such an integrated framework. 3|DEVELOPING AN INTEGRATED SBM– SSCM VALUE CREATION FRAMEWORK This section analyzes the linkages between the SBM concept and SSCM in more detail, based on arguments from stakeholder theory (e.g., Harrison & Wicks, 2013), the resource-based view (e.g., Bowman & Ambrosini, 2000) and the complementing relational view (e.g., Dyer & Singh, 1998). The following multi-tier SBM framework (Figure 2) is proposed to reflect a more comprehensive setup of relationships and mutual value exchanges between the focal firm and its direct and indirect stakeholders. This framework aligns with the relationship emphasis of SSCM (Pagell & Wu, 2009) and the recent argument of Freudenreich et al. (2020) that mutual value exchanges with stakeholders are the foundation of an SBM. It extends previous conceptions of SBMs through the integration of multi-tier relationship chains that consider indirect supply chain stakeholders. This multi-tier SBM framework describes the default setup of relationships and value exchanges, which can be adapted to the respective needs of a focal firm. While the framework integrates a multi-tier supply chain perspective in a parsimonious manner (similar to Wilhelm, Blome, Wieck, & Xiao, 2016), it is open to extension with additional networked branches of various actors. Next, the framework will be explained with regard to the relationships between supply chain stakeholders in the context of the SBM elements. 3.1 |Value propositions for customers and other supply chain stakeholders Analyzing the value proposition from a supply chain perspective yields two main reasons why SSCM needs to be considered in SBMs: First, value propositions need to address indirect stakeholders of the focal NORRIS ET AL.3965 firm along supply chains and second, customers may perceive higher value if the business model also creates value for these indirect stakeholders. The first relates to the increasing globalized outsourcing (Reuter et al., 2010) that externalizes much of a focal firm's impact on stakeholders and the natural environment onto the supply chain (e.g., Clarke & Boersma, 2017; Plambeck, 2012). The requirement of corporate sustainability to create value for the firm's stakeholders (Hörisch et al., 2014), in combination with the comprehensive nature of SBMs (Stubbs & Cocklin, 2008), calls for consideration rather than externalization of these impacts. The argument that stakeholder interests have an intrinsic value, which warrants consideration of these interests (Donaldson & Preston, 1995), extends not just to direct stakeholders (Figure 1), but also to those in the supply chain. Because of this, sustainable value creation for stakeholders (Freudenreich et al., 2020) reflects the use value from addressing the unique needs of supply chain stakeholders and the natural environment (Bowman & Ambrosini, 2000; Harrison & Wicks, 2013). This paper argues that these stakeholders are direct stakeholders of suppliers (e.g., Busse, 2016) and, therefore, indirect stakeholders of the focal firm's SBM. Suppliers' employees, for instance, are embedded in the work environment managed by the respective supplier (e.g., Egels-Zandén, 2007). While these supply chain stakeholders evaluate the use value of the outcomes and quality of the relationship to the supplier (Harrison & Wicks, 2013), it can also be argued that they may attribute this value to the focal firm of the supply chain (e.g., Hartmann & Moeller, 2014). As the findings of Harrison and Wicks (2013) imply, the perceived value for (supply chain) stakeholders of being affiliated to an organization can extend beyond the direct affiliation to the supplier to an indirect affiliation with the focal firm. Workers at independent contract manufacturers for large electronics brands (e.g., Xu & Li, 2013), for instance, may attribute their treatment by the manufacturer to the focal firm based on their perceived indirect affiliation with the brand. Second, value propositions for different recipients should not only be treated separately from each other, but also with regard to interlinkages, as companies with an SBM should strive to create synergies between them (e.g., Harrison & Wicks, 2013; Schaltegger et al., 2012; Tantalo & Priem, 2016). Harrison and Wicks (2013) argue that stakeholders evaluate the value they receive in the context of the value created for other stakeholders. As the example of fair-trade products like the Fairphone shows (Zufall et al., 2020), customers may hold value-driving expectations regarding the outcomes and relationship quality for other direct and indirect supply chain stakeholders and the natural environment (Harrison & Wicks, 2013). Growing evidence supports that consumer perception of the firm and its value proposition can indeed be affected by the sustainability of the supply chain (Hartmann & Moeller, 2014; Jaegler & Goessling, 2020; Nichols et al., 2019). For instance, customers may consider the working conditions at suppliers (Seuring & Müller, 2008b) and hold the focal firm accountable (Hartmann & Moeller, 2014; Parmigiani et al., 2011). Conversely, the focal firm can embed positive aspects such as the just treatment of workers in the supply chain in its customer value proposition (Harrison & Wicks, 2013; Zufall et al., 2020). The effect on customer value will be moderated by the firm's exposure to stakeholder pressures (Hofmann et al., 2014; Parmigiani et al., 2011). The focal FIGURE 2 Integrated SBM–SSCM value creation framework [Colour figure can be viewed at wileyonlinelibrary.com] 3966 NORRIS ET AL. firm, through its value proposition, can and should actively moderate this relationship between customers and its other stakeholders. In summary, the value proposition in an SBM should consider the needs of the focal firm's direct and indirect stakeholders along the supply chain and integrate these idiosyncratic kinds of value into the value proposition to customers. As these aspects are usually determined early in the supply chain or even require continuous maintenance (Seuring, 2011), they have important implications for value creation. 3.2 |Creating value together with supply chain stakeholders Value creation is concerned with stakeholder relationships, activities, and resources (Osterwalder et al., 2005) required to create the value proposition. Due to the multi-directional and reciprocal nature of value creation in SBMs (Donaldson & Preston, 1995; Freudenreich et al., 2020), it needs to be discussed whether and how value creation differs for indirect stakeholders along supply chains, and how supply chain relationships can contribute to a focal firm's value creation (e.g., Touboulic & Walker, 2015). To remedy the unsustainability emerging from indirect supply chain relationships (Miemczyk et al., 2012), SBMs create value for indirect stakeholders that initially have no direct relationships with the focal firm. The argument that these stakeholders are direct stakeholders of suppliers (e.g., Busse, 2016) suggests that the focal firm needs to manage a triadic relationship chain (Mena et al., 2013) between itself, the respective supplier, and the indirect stakeholder to influence value creation. Suppliers may even feel treated unjustly when bypassed by the focal firm, lowering their perception of the value of their relationship, and thereby, their willingness to reciprocate (Harrison & Wicks, 2013). This shifts the locus of value creation from individual organizations to a triad between the focal firm, supplier, and the stakeholder of the supplier. Similar to the creation of economic value for a supplier–firm dyad (e.g., Dyer & Singh, 1998), value for indirect stakeholders is created from the relationship with suppliers. Therefore, extending a relational view (Dyer & Singh, 1998) of value creation for indirect stakeholders beyond a dyadic to a triadic relationship requires involvement of the supplier in managing the relationship between the focal firm and the indirect stakeholder. As mediator of this relationship, the relationship between the supplier and its direct stakeholders (i.e., indirect stakeholders of the focal firm) becomes in itself a complementary resource for the value creation of the focal firm. The supplier mediates this relationship between the focal firm and its indirect stakeholders. For example, the focal firm cannot implement better working conditions for the suppliers' employees itself, it can only collaborate with suppliers to achieve this (Vachon & Klassen, 2006). While this certainly applies to internal stakeholders of suppliers (e.g., employees, Egels-Zandén, 2007), it also applies when suppliers directly affect external stakeholders (e.g., neighboring communities) or the natural environment. From this perspective, the relationship of the focal firm with its customers may be the complementary resource for the supplier because it allows the supplier to market the value created for stakeholders. This also requires knowledge-sharing routines (Dyer & Singh, 1998) between supplier and the focal firm to share information about the value created for the supplier's stakeholders and consumer preferences (e.g., Solér et al., 2010; Wong et al., 2018), respectively. Knowledgesharing routines and formal and informal governance mechanisms (such as codes of conduct) are thus ideally extended toward the stakeholders of suppliers as well. In turn, the value creation of suppliers for indirect stakeholders contributes to the sustainability of the focal firm's value creation for customers. The sustainability of procured materials greatly affects the sustainability of the focal firm's processes and outputs (Green et al., 1996; Handfield et al., 2005). For instance, if a focal firm offers a fair-trade product, it requires fair-trade inputs from suppliers who created value for their employees and surrounding communities. However, sustainable inputs based on sustainable value creation of suppliers, such as fair-trade or organic materials, are not always readily available (Seuring, 2011). Because suppliers may initially lack the necessary capabilities, resources, and motivation, they may benefit from a focal firm's sustainability knowledge for their own practices. A focal firm may have to develop relationship-specific assets (Dyer & Singh, 1998) with the supplier to support value creation for customers and supply chain stakeholders. This requires both the focal firm and suppliers to invest (e.g., knowledge or resources) into sustainable supply chain practices and processes to address business model specific sustainability challenges (Touboulic & Walker, 2015). In sum, differentiating between a focal firm's direct and indirect stakeholders requires new triadic relationships between the focal firm, suppliers, and indirect stakeholders for jointly creating sustainable value, which neither of them could have created on their own. 3.3 |Delivering customer value based on the value created for other supply chain stakeholders With regard to sustainability in the upstream supply chain, value delivery is concerned with delivering the intangible value based on value for supply chain stakeholders and the natural environment to customers (Tantalo & Priem, 2016). Since the resources used to create the offer, as well as the value created for other stakeholders are evaluated by customers (Harrison & Wicks, 2013; Hunt, 1995), they need to be easily discernable. However, these qualities can in most cases not be physically delivered with the product, which makes them intangible credence qualities: Whereas product-embedded sustainability qualities (e.g., reparability) may be experienced in-use, intangible supply chain-related sustainability qualities are neither observable, nor can they be experienced by the consumer without significant effort and support by third parties (Karstens & Belz, 2006). Information about the value created for supply chain stakeholders and the natural environment is thus asymmetrically distributed between the focal firm and its customers (Akerlof, 1970). Information gaps relating to supply chain sustainability are exacerbated by the geographical distance NORRIS ET AL.3967 Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. Harper and Row. Plambeck, E. L. (2012). Reducing greenhouse gas emissions through operations and supply chain management. 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