A System Dynamics Approach to Sustainable Business Model Transformation: A Manufacturing Case

Document Type : Research Article

Authors

• Ali Hosseini ¹
• Seyed Hossein Hosseini ²

¹ Department of Management, Faculty of Science and Technology, Amirkabir University of Technology, Tehran, Iran.

² Model-based Management Systems Institute (SAMAM), Tehran, Iran.

10.22067/jstinp.2022.76303.1010

Abstract

Corporates and industries must make their businesses work more sustainably to benefit from a sustainable economy. Hence, corporate leaders are in a challenge of decision-making about transforming their business logic through innovative sustainable business models. The involvement of business models and environmental issues requires dealing with complexities that arise from a large number of interrelated actors as well as the dynamic nature of environmental issues. Early in its literature review, this paper summarizes the innovations and strategies for sustainable business model transformation. Most importantly, this paper proposes using System Dynamics (SD) modeling as a decision support tool that could support business cases with sustainability concerns. Later in this paper, a plastics manufacturer trying to utilize recycling and reuse in its production process exemplifies our discussion. The implications are then generalized to support managerial decisions raised by companies and corporations willing to integrate sustainability into their business models. In the case mentioned in this article, System Dynamics modeling and simulation helped managers deal with the uncertainties regarding their decisions, demonstrating how a sustainable business model could be adapted to a working production system. The simulation results show that a 32 percent raise in the recycling and reuse capacity in the manufacturing company could significantly improve the company's green image, and the quality could be controlled above 85 percent. Besides, savings from recycling and reuse will compensate for the investment in the transformation plan in 55 months.

Keywords

• Business Model Innovation
• Sustainability
• System Dynamics
• Decision Support

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