Academic journal article The Journal of New Business Ideas & Trends

Exploring Integration of Non-Economic Goals into Business Models of Small Regional Food Enterprises: Embedded Value Creation

Academic journal article The Journal of New Business Ideas & Trends

Exploring Integration of Non-Economic Goals into Business Models of Small Regional Food Enterprises: Embedded Value Creation

Article excerpt

Introduction

Small regional food enterprises (SRFEs) are important in many regional economies because of their prevalence and contributions. While many SRFE owners do not seek rapid or significant growth, holding a combination of both non-economic and economic goals (Ilbery & Maye, 2005; Bosworth & Willett, 2011), they are nevertheless important contributors to a stable and resilient economic community through local employment, revenue generation and contribute to communities' social fabric (Stickel & Deller, 2014). Understanding how they are most likely to be successful as competitors in the changing food landscape is important for policy and practice in the sector.

Within their industry, pressures from increased globalisation and sophistication of conventional long food supply chains heighten the need for attention to SRFEs, many of whom face challenges to their survival. Rather than trying to develop new ways to participate in traditional food supply chains, some SRFEs have responded to an opportunity to compete in a different segment of the food system - alternative food networks (AFNs) - which has arisen through the emergence of consumer demand for regional food (Bloom & Hinrichs, 2011; O'Neill, 2014). Examples of these AFNs (see Renting et al., 2003; Paül& McKenzie, 2013), which entail short supply chains (Kebir & Torre, 2013; Sini, 2014), include farmers' markets and other regular local markets featuring artisanal producers, farm-gate operations, food boxes and cooperatives, as well as local independent grocers.

On the surface, there appears to be an external fit between SRFE resources and a strategy to participate in alternative food networks. The size and regionality of SRFEs, combined with the non-economic goals (NEGs) of many of their owners, appear naturally congruent with values that customers seek in AFNs-local, authentic, regional, real food, being close to the producer and being part of community (Kebir & Torre, 2012; Visser et al., 2013). At the same time, a strategic choice of this nature also requires a tailored and coherent business model focused on value creation, delivery and capture in that segment (Margretta, 2002; Morris et al., 2005; Osterwalder et al., 2005; Teece, 2010; Heinerth et al., 2011; Saebi & Foss, 2015; Zott & Amit, 2015).

However, little research explicitly links business models to participation in AFNs. Such strategies differ significantly from strategies for SFREs that are supplying to conventional long food supply chains, on several dimensions, including: size, customer characteristics (e.g. industrial vs consumer) and expectations of quality, appearance, conformity, availability and customer experience. But little is known about how SRFEs need to design their business models to support such strategies. For this reason, SRFEs may mistakenly think of AFNs as simply another channel for selling their products that can be implemented as an add-on to or direct substitute for existing practices.

Since the design of the business model has been empirically established as central to value creation (Zott & Amit, 2015) and since the influence of SME owners on all aspects of their business is well established (McCartan-Quinn & Carson, 2003; Blankson et al., 2006), the goals of SRFE owners need to be taken into account in business model design. One of the dominant business model frameworks used for entrepreneurial firms, proposed by Morris et al. (2005), highlights this by including owner goals as one of their six elements of consideration for SME business models. While their framework notes that owner goals may not all be related to growth or increasing profitability, it does not develop this in detail. A significant proportion of SME owners give equal or higher prominence to non-economic personal goals over economic ones such as growth and increasing profitability (Stokes, 1995; Dunkelberg et al., 2013). For example, SME owners often value embedding personal objectives in their product or service by way of their interaction with customers, maintaining a certain organizational size and operating under particular personal philosophies (Burns & Harrison, 1996; Blankson et al. …

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