Challenges of implementing social and environmental sustainability in Small and Medium Enterprises

Master Thesis

HALMSTAD

UNIVERSITY

Master's Program in Industrial Management and

Innovation, 120 credits

Challenges of implementing social and

environmental sustainability in Small and

Medium Enterprises

Thesis in Industrial Management and

Innovation, 30 credits

Halmstad 2020-06-30

Abstract

The term sustainability is a topic that has been increasingly acknowledged in the modern business world. This has raised awareness and increased understanding of the different dimensions and how paying attention to sustainability can help to improve different aspects of the organization. The financial dimension is well established in most companies since it has a clear connection to the wellbeing of the organization. The Social and environmental dimensions are however more modern and are not present to such a wide extent. External forces such as governmental influence, organizational competitiveness, and customer expectations gradually push companies towards an increased presence of sustainable activities and many companies to struggle with sustainability implementation while failing to see the potential added value. These struggles are present to a wider degree within small and medium enterprises (SMEs) since they have access to less financial resources than that of established companies. For that reason, this paper is dedicated to investigating and highlight the present challenges that SMEs face in the implementation process of social and environmental sustainability. To answer the research question, five interviews were conducted with managers and employees of four SMEs that currently possess some level of social or environmental sustainability. Also, one interview was conducted with an expert in the field of sustainability implementation. Secondary data was collected in the literature review section that highlights and explains both the social and environmental dimensions as well as appropriate tools that exist to help with sustainability implementation into existing business models.

The method section will investigate the different methods taken to fully answer the research question. The findings section will highlight the new insights about the present challenge separately by reviewing the firsthand data while using secondary data to fill existing information gaps.

Seven challenges are identified in this study, successful supply chain management, lack of financial resources, insufficient practical sustainability implementation, lack of knowledge about sustainability, absence of social and green thinking attitude, simultaneous management in all dimensions of sustainability and governmental and municipalities influence. After identifying the challenges each of the challenges was categorized in the relevant stage of the implementation process which are exploration, installation, initial implementation, and full implementation. These challenges are however heavily dependent on a certain SME characteristic which creates a need for more tailored research towards a specific industry. This has led the researchers to take on a broader approach to create a general overview that lays the foundation for future in-depth studies more tailored to individual companies.

Although treated as separate challenges, the correlation between existing challenges is highlighted and discussed in the findings section based on the collected data from the interviews. This will again be present in the conclusion part followed up by the current limitations and suggestions for further research.

Acknowledgments

We would like to thank everyone that has helped and motivated us to conduct this study.

A very special thanks go to our supervisor Fábio Gama that has gone above and beyond to aid us in making this paper the best it can possibly be. Without him, this study would not have reached its current quality standards. He was always there to guide us, discuss ideas and motivate us through times where that motivation was hard to find, and it has been an honor to work with such a talented thesis writer and supervisor as he is.

We would also like to give a big thanks to the four companies that allowed us to interview them to collect firsthand data. Almost every aspect of the findings and conclusion section arrives from the firsthand data collected. For that reason, this study would not be possible without them. Their willingness to cooperate and provide us with much relevant information about sustainability is much appreciated as is the collaboration and mutual interest and respect showed between all parties in the data collection process.

Other thanks go to our classmates that have helped us with feedback and motivational support throughout the thesis writing process.

Finally, we want to thank Halmstad University and especially our program directors Maya Hoveskog and Joakim Tell for creating this opportunity where we were able to obtain the necessary support needed for a successful project while also working in an environment surrounded with academic talent and likeminded people.

Halmstad, May 2020

Abbreviation

AI: Artificial Intelligence

BMI: Business Model Innovation

B2B: Business to Business

ISO: International Organization for Standardization

SME: Small and Medium Enterprises

List of tables

Table 1 Summary of BMI tools extracted from the literature... 16

Table 2 Summary of challenges extracted from the literature ... 29

Table 3 Company details ... 40

Table 4 Data analysis example ... 47

Table 5 Actions taken to ensure the quality ... 51

List of figures

Figure 1 Sustainable value illustration (Evans et al., 2017) 21

Table of content

2.1 Business model innovation tools ... 14

2.1.1 Challenges of implementing sustainable business model innovation tools ... 19

2.2 Sustainable value ... 20

2.2.1 Challenges of social suitability implementation ... 22

2.2.2 Challenges of environmental sustainability implementation ... 23

2.3 Simultaneous management in all three dimensions of sustainability ... 27

2.4 Implementation process ... 30 3.Method ... 33 3.1 Research design ... 33 3.1.1 Qualitative research ... 33 3.2 Research method ... 34 3.2.1 Deductive approach ... 34 3.2.2 Theoretical sampling ... 35

3.3 Data collection strategy... 36

3.3.1 Primary data collection ... 36

3.3.2 Participants ... 39

3.3.3 Secondary data ... 42

3.4 Data analyzing method ... 43

3.4.1 Thematic analysis... 43

3.5 Quality of the research ... 48

3.5.1 Credibility ... 48

3.5.2 Transferability ... 49

3.5.3 Reliability ... 50

3.5.4 Confirmability ... 50

3.6 Ethical considerations ... 52

4. Findings and Analysis based on the Empirical Data ... 53

4.1 Successful supply chain management ... 53

4.3 Insufficient practical sustainability implementation ... 59

4.4 Lack of knowledge about sustainability ... 61

4.5 Absence of social and green thinking attitude ... 65

4.6 Simultaneous management of sustainability in all dimensions ... 70

4.7 Governmental and municipality influence ... 74

Insufficient practical sustainability implementation ... 78

Absence of social and green thinking attitude ... 78

5. Conclusion and Discussion ... 79

5.1 Statement and contribution ... 85

6. Limitation and suggestion for future research ... 87

7.References ... 88

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1. Introduction

This chapter presents the importance of social and environmental sustainability implementation in small and medium enterprises (SMEs) and the challenges they face while implementing them. This chapter also introduces sustainable oriented business modeling tools which assist in the implementation process. It also focuses on areas where research is lacking within these topics which will influence the final research question and further discussion.

At the end of this chapter, the layout of the thesis is presented with a brief explanation about each chapter to give an overview of what this thesis contains.

1.1 Background

The world's population is growing along with the rate at which the average human consumes resources (Bocken et al., 2017). The excessive global resource consumption has left visible marks on nature in terms of rising global temperatures and endangered animal species by extensive forest harvesting (Bocken et al., 2017). The present climate threats encourage change in the mindset of people in the way resources are consumed and impacts are made (Brundtland, 1987). The excessive global resource consumption has left visible marks on nature in terms of rising global temperatures and endangered animal species by extensive forest harvesting (Bocken et al., 2017). The environmental challenges present strongly encourage people to change their mindset towards more sustainable thinking in the way resources are produced and consumed (Brundtland, 1987) in the business world, these global changes have given deeper importance to the word sustainability (Loorbach and Wijsman, 2013).

Sustainability has, therefore, become a big challenge in the modern business world, especially for SMEs since there are significantly fewer sustainability studies available on SMEs than large organizations (Longoni and Cagliano, 2015). More than 55% of the world population are working in SMEs (Dey et al., 2018), in 2019 it was estimated that around 70% of the industrial waste pollution is made by SMEs (Oliveira Neto et al., 2017). Regarding these numbers, SMEs have a massive impact on the environment (Oliveira Neto et al., 2017).

Due to the negative environmental impacts caused by SMEs today, SMEs that previously focused mainly on personal economic profit begins to widen their view to consider both environmental and social aspects in their activities. However, financial objectives and individual business growth are still considered as the main sources for SMEs to innovate (Daae and Boks, 2015; Eccles and Serafeim, 2013; Keskin et al., 2013; Kiron et al., 2013).

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Moreover, when it comes to resource spending, SMEs are encouraged to change their perception about resource consumption to focus on the added environmental sustainability value more than the benefits of cost reduction (Shibin et al., 2018; Vincenza Ciasullo and Troisi, 2013). SMEs' stakeholders are the driving factor of encouragement for SMEs to be more sustainable because one of the main objectives of SMEs is to satisfy stakeholders by value creation (Hoveskog et al., 2018a; Inigo et al., 2017; Miying Yang et al., 2017). To influence sustainable behavioral change in the minds of SMEs, a deep understanding of the user needs along with a combination of appropriate technologies needs to be adopted (Perini and Tenacity, 2006).

Business model innovation helps SMEs to implement sustainability in their business models. Business model innovation refers to the prose of developing new ideas, activities, services, products, etc. to keep up with the new demand and survive in the long run (Evans et al., 2017). Efforts are constantly undertaken by SMEs to follow regional regulation changes and enhance their social responsibility image from a sustainable perspective (Bocken et al., 2017). To successfully implement these business model innovations, a change in the current SME's business model is many times needed (Teece, 2010). Social and environmental sustainability needs to be implemented into the organization through business model innovation to provide both profit and a positive impact in social and environmental dimensions (Schaltegger et al., 2016; Tyl et al., 2015; Stubbs and Cocklin, 2008).

A change in a SMEs core business model will affect most of (if not every) activity in that company, even those that are not directly associated with sustainability (Teece, 2010). Business model innovation may be neglected due to resources and time required for implementation but is also inviting innovations that require changes in current business models (Teece, 2010) and help to strengthen a company's long-term sustainability in the global business environment. Furthermore, these innovation activities help companies to understand how environmental and social sustainability along with different performance objectives can be integrated into current successful business practices (Inigo et al., 2017).

The act of implementing an increased sustainable environmental and social approach to existing business activities is a sought-after trend and to some extent expected from stakeholders (Inigo et al., 2017). Many SMEs, however, find this implementation challenging since current activities require big changes to become environmentally and socially sustainable. Successful supply chain management, lack of financial recourses, insufficient practical sustainability implementation and lack of knowledge about sustainability (Ngah and Wong, 2020; Breuer et al., 2018; Caldera et al., 2019; Dey et al., 2018; Hoveskog et al., 2018a; Moktadir et al., 2018; Bhanot et al., 2017; Evans et al., 2017; Granly and Welo, 2014; Klewitz and Hansen, 2014; Granly and Welo, 2014; Vincenza Ciasullo and Troisi, 2013; Porter and Kramer, 2011; Teece, 2010; Kerr, 2006). These efforts contradict the mindset of a strictly personal profit-seeking activity approach (Inigo et al., 2017). Different approaches have been taken towards the implementation of these sustainable activities in the business model (Breuer et al., 2018; Evans et al., 2017; Porter and Kramer, 2011; Ness et

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al., 2007). Some SMEs are implementing policies and practices that contribute to shared values in the company and by that, can maintain their competitiveness while moving towards a more sustainable operation (Porter and Kramer, 2011). To create these sustainable business models, a range of tools is available to help managers with the planning and implementation of the model. Existing models have also undergone many new modifications, providing better integration to modern business activities in terms of guidelines, data, and case study experiences (Ness et al., 2007). Existing models have also undergone many new modifications, providing better integration to modern business activities in terms of guidelines, data, and case study experiences (Ness et al., 2007).

Breuer, Fichter, Ludeke-Freund, and Tiemann (2018) have identified six relevant tools to aid in the sustainable business model implementation process. By implementing a combination of these tools, managers have the foundation laid out to appropriately assess the stakeholders, design value propositions, and structure the value streams in all 3 Dimensions (Lüdeke-Freund et al., 2018). This approach will, however, introduce a certain level of uncertainty since there is a lack of practical knowledge about the tools (Breuer et al., 2018).

The main factor to ensure SME's long-term sustainability and business success is to provide value to stakeholders (Osterwalder et al., 2010). Sustainable value is a term used to simultaneously combine the creation and management of economic, social, and environmental value (Evans et al., 2017). Until recently, this topic has been broken down into subsegments for further analysis of the business model innovation process, value proposition, capture, creation, and delivery (Hoveskog et al., 2018a). Recent research has however introduced other concepts within the topic of uncaptured value. Value surplus, value absence, value missed, and value destroyed. These value concepts need to be analyzed in each of the present dimensions for sustainability. By identifying the existing uncaptured value, a firm can modify its existing business model by conducting business model innovation activities to transform the uncaptured value to value opportunities and by that, create higher sustainable value. For instance, in production companies waste streams in production is one of the uncaptured values which can be a captured value by reusing the materials in a different format. Another example is insufficiency in using experiences and knowledge of the staff and labor utilization in this area that can lead to an increased value capture (Hoveskog et al., 2018; M. Yang et al., 2017).

To successfully implement any practices or activities in an organization an implementation process is required. This process is a non-linear, mission-based activity that includes four main stages,

exploration, installation, initial implementation, and full implementation (Metz and Bartley,

2012). The goal of the implementation process is to achieve a sustainable business and keeping up with the new trends in the relevant industry context (Saldana et al., 2012). To fully implement sustainability in an organization continues refining and repeating the stages in the implementation process is required (Metz and Bartley, 2012).

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1.2 Problematization

As mentioned in previous section world is moving toward sustainability with more emphasis on social and environmental value (Bocken et al., 2017, 2015; Loorbach and Wijsman, 2013) and SMEs need to keep up with this transaction in order to satisfy their stakeholders by creating social and environmental value (Perrini and Tencati, 2006). The government as one of the stakeholders is responsible for most of the pressure on SMEs towards the implementation of environmental and social sustainability practices. For instance, in Sweden, there is governmental legislation that pressures different businesses to present a sustainability performance report annually, this report aims to present a clear image on the positive and negative impacts of the SMEs on society and environment. This law emphasizes analyzing the business with their stakeholders for identifying the important areas which should be included in the report. Environment, Social conditions, Personnel, Respect for Human Rights, Anti-corruption are the areas with are included in the sustainability report (“Swedish Legislation on Sustainability Reporting – what is it about and how

to approach it,” n.d.). Other stakeholders and parent companies however, only put minimal pressure on SMEs towards this implementation in their business activities (Dey et al., 2018). The literature suggests that sustainable oriented business model innovation tools help SMEs to create social and environmental value (Hoveskog et al., 2018a; Bocken et al., 2017; Schaltegger et al., 2016; Teece, 2010). There are several existing tools and frameworks in literature for facilitating the development of sustainable oriented business models such as the triple-layered business model canvas, the flourishing business model canvas, the value mapping tools, etc. (Breuer et al., 2018; Joyce and Paquin, 2016). These tools and frameworks have tried to integrate social and environmental perspectives alongside economic perspective into business models to create not only economic value but social and environmental value from both the lifecycle and stakeholder perspective (Breuer et al., 2018; Joyce and Paquin, 2016).

The first gap of this study is the lack of practical implementation of sustainable oriented tools in SMEs (Breuer et al., 2018; Hoveskog et al., 2018a; Moktadir et al., 2018; Evans et al., 2017). Although several sustainable oriented business modeling tools are widely used and modified to modern business activities in literature there is a lack of practical implementations since it is only been tested by managers and stakeholders in a business model workshop environment and not in practice (Breuer et al., 2018). The reason behind this is the lack of knowledge concerning the implementation of sustainable activities which presents challenges for SMEs since they generally feel a responsibility to act ethically and improve the quality of life for the employees as well as the society. The absence of tangible research contributes to the lack of knowledge about how the right combination of economic, social, and environmental sustainability drastically can improve operational efficiency in an organization (Pil and Rothenberg, 2009).

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The second gap of this study is the lack of attention on social and environmental dimensions of sustainability. Apart from a lacking knowledge base, finances and other resources are generally not prioritized towards social and environmental improvements in an organization (Zott et al., 2011). For this reason, many governments around the world work towards enabling environmental management- and social responsibility regulations in local organizations which leads organizations to adopt environmental practices. It does however nothing in terms of clarifying the benefits of these adoptions to managers (Gadenne et al., 2009). This puts governmental legislation as the top reason for the adoption of sustainability, followed by the moral duty managers face to reduce the negative social and environmental impact on the larger society (Dey et al., 2018).

Although some business modeling tools include some or all the dimensions which can vary in the number of results available from previously conducted research efforts. Usually, extensive research exists in the economic dimension while the environmental and social aspect is more narrow within the prospect of value capture, value creation and value proposition (Evans et al., 2017; M. Yang et al., 2017; Ouden, 2012; Teece, 2010). This opens the possibility for researchers within the field of business model innovation to use this perspective to study successful value implementation criteria parallel to existing value perspectives found in business model literature (Evans et al., 2017; Ouden, 2012; Teece, 2010).

Overall these gaps are aligned with Lüdeke-Freund et al. (2018) which stated that filling these” analysis gaps” has the potential to spawn completely new business models that also neglected areas of challenges in sustainable development within the social and environmental dimensions.

In an effort to handle these gaps, the purpose of this thesis is to investigate and understand the challenges SMEs face while successfully implementing social and environmental sustainability in their organizations. All the challenges extracted from the literature will be categorized in the stages of the implementation process due to their relevance.

To this end, the research question is as follows:

“What are the challenges of implementing social and environmental sustainability in SMEs?”

This study contains five sets of contributions:

First, highlighting the challenges that SMEs face during the implementation process of social and environmental sustainability. This contribution provides an overview of the challenges which may occur during the implementation process, and it can serve as a guideline for more preparation by SMEs to deal with these challenges.

The second contribution is to highlight the social and environmental dimensions of sustainability. According to Dey et al (2018) and Zott et al. (2011), there is a lack of attention towards both the social and environmental dimensions of sustainability.

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The third contribution is to classify the challenges in each stage of the implementation process. This is while most of the studies in this field were presenting the challenges in general (Ngah and Wong, 2020; Breuer et al., 2018; Caldera et al., 2019; Dey et al., 2018; Hoveskog et al., 2018a; Moktadir et al., 2018; Bhanot et al., 2017; Evans et al., 2017; Granly and Welo, 2014; Klewitz and Hansen, 2014; Granly and Welo, 2014; Vincenza Ciasullo and Troisi, 2013; Porter and Kramer, 2011; Teece, 2010; Kerr, 2006).

The fourth contribution is to explore and study available sustainable orientated business modeling tools. This contribution aims to aid SMEs with the implementation process of social and environmental sustainability in a more structured way.

Finally, the last contribution is that this study has identified five challenges from the literature and two novel challenges from the primary data which can be added on top of the relevant literature. The primary data refers to the conducted interviews wich have taken place during the process of this thesis.

1.3 Thesis layout

In chapter 1 Introduction, the background and problematization are presented which leads to the thesis purpose and research question.

In chapter 2 literature review is presented, which illustrates the tentative framework of theory’s used to fill the gaps and answer the research question. For this mater resent knowledge upon suitable oriented BMI tools, Sustainable value, integration of social, environmental, and economic dimensions and implementation process has been rewed. At the end of the chapter table of findings has been presented to categorize the existing and non-existing knowledge about the mentioned theories.

In chapter 3 Method is presented to illustrate more about the thesis research design the methodological choices and the reason for choosing it. this chapter also presents an illustration of SME's choices and interview background.

In chapter 4 Findings based on Empirical data are presented. This chapter also gives an elaboration of empirical data alongside the data analysis and its connection to the literature.

In chapter 5 Conclusion and Discussion is presented, this chapter starts with the discussion and is followed by a summary of the essence of this study with theoretical and practical challenges. In chapter 6 limitations and suggestions for the future are presented. This chapter discusses the limitations faced in the thesis and suggests possible future research.

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2. Literature Review

To fully understand and provide the current research about the challenges that SME during the implementation process of social and environmental sustainability in their business models by using appropriate BMI tools, this literature is carried out. The purpose of this section is to provide a stable knowledge foundation on which additional information can be added where more in-depth research about these challenges is carried out. Possessing a wide knowledge base about the topic is also crucial when it comes to identifying existing research gaps within this field.

A brief overview of the most used sustainable oriented BMI tools will be included, followed up by an overview of challenges SMEs face while implementing social and environmental sustainability in their organizations. Furthermore, the challenges of sustainable value in an organization will be discussed where topics such as green thinking, sustainable supply chain management, and costs will be important focus areas. And finally, an overview of the implementation process is presented for a better understanding of the relevance of each challenge to stages of the implementation process.

This knowledge base included in the literature review will act as a foundation on which the method will be built in order to fill the identified research gaps and enlighten the barriers between previously existing and newly explored research provided in this paper.

2.1 Business model innovation tools

Business model innovation is a concept present in all industries and has a foundation built on extensive research. Although many tools can help organizations to conduct business model innovation practices, few tools help to integrate sustainability into the business model. The existing business model innovation tools do not include the aspect of sustainability (Osterwalder et al., 2010) or are not being integrated properly due to that it's treated as an add-on more than a core source of value (Miying Yang et al., 2017).

According to Evans et al. (2017), the current lack of available research’s in the area of sustainable business models makes it challenging for organizations to successfully handle business model innovation activities. This leads to complexity when efforts are made to integrate other dimensions of sustainability and how these implementations affect the organization on a more general level. The topic becomes more complex when accounting for the fact that the term and definition of the word value are highly subjective in terms of Psychology, sociology, and ecology (Evans et al., 2017; Ouden, 2012). SMEs have constant pressure by customers to adopt more sustainable approaches to minimize environmental footprints and increase social values (Walker et al., 2008).

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The few existing tools that can help SMEs to integrate sustainability in their business modeling processes have the potential to open new sources of value and should for that reason be seen as an opportunity to grow, rather than a challenge to overcome. Several sustainable oriented business modeling tools will be introduced further in this section, these tools have been selected from the available suitable sustainable oriented BMI tools in the literature and a summary of them is presented in table 1.

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Authors Stakeholders Relevant findings

Breuer et al. (2018)

Academics and practitioners

In this paper, they identified the tools that can be used to make organization design their business models align with sustainability.

1.Flourishing Business Model canvas 2.The Value Mapping Tool

3.Business Innovation Kit

4.Sustainable Business Model Canvas 5.Triple-Layered Business Model Canvas

6. Business Model Canvas Extended for Infrastructure

Hoveskog, et al. (2018)

Academics Flourishing business model canvas is a visual strategic management tool that can be used to develop a new- or modify current business models and its applications in all businesses.

Yang et al. (2017) Companies and key stakeholders

Sustainable value analysis tool is a sustainable oriented business modeling tool which helps organizations to identify new opportunities to create and capture value through sustainability activities and principles.

Joyce (2016) Different business stakeholder

This article suggested that the original business model canvas created by Osterwalder et al. (2010) can be in three dimensions to integrate sustainability in business models. The tool is called: Triple-Layered Business Model Canvas

Bocken et al. (2013)

Companies and their stakeholders

The value mapping tool is designed to assist the managers for developing a sustainable business model by inventing new sustainable oriented business ideas

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Sustainable value analysis tool

Sustainable value analyzing tool is a sustainable oriented business modeling tool which helps organizations to identify new opportunities to create and capture value through sustainability activities and principles. Miying Yang has developed sustainable value analysis tool during her Ph.D. This tool also helps organizations to provide a wider value perspective by integrating sustainability in the whole process of the sustainability implementation process and provides a framework for both value creation and capture by identifying uncaptured value In the product life cycle from all three dimensions of sustainability (Miying Yang et al., 2017).

Two types of uncaptured value exist in almost all the organizations in general visible and invisible. The visible uncaptured value refers to the tangible and visible things that can be utilized and reduced to crate sustainable vale such as waste streams, co-products, reusable components of broken products, etc. On the other hand, invisible uncaptured value refers to intangible capacities of an organization in which utilization and reduction in them lead to sustainable value, some examples of invisible value uncaptured are over the capacity of labor, insufficient use of expertise, and knowledge (Miying Yang et al., 2017).

Triple-layered business model canvas

The triple-layered business model canvas is a practical tool that is used for addressing economic, social, and environmental concerns in a more holistic way within an organization's existing business model (Joyce and Paquin, 2016). The tool helps to integrate the creation of core values across all dimensions by life-cycle analysis and effective management of stakeholders. The triple-layered BMC tool connects BMI with sustainable business model development (Boons and Lüdeke-Freund, 2013) in an effort to support creativity and sustainability-oriented change for increased competitive strength both on an individual and organizational level (Joyce and Paquin, 2016; Spieth et al., 2014; Boons and Lüdeke-Freund, 2013; Shrivastava and Statler, 2012; Zott et al., 2011; Azapagic, 2003). By re-constructing existing business models using the tool, organizations can overcome barriers in their implementation of sustainability-oriented activities (Lozano, 2013) and help to visualize existing business models, identify information gaps and explore sustainability-oriented business models innovation opportunities (Joyce and Paquin, 2016).

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The value mapping tool

The value mapping tool is designed to assist the managers in developing a sustainable business model by inventing new sustainable oriented business ideas. This tool maps out and transforms existing business models to adopt more sustainable-related activities rather than base decisions around competitors’ actions. This is done by adopting a qualitative approach to sustainable business model values (Bocken et al., 2013). The main goal of the tool is to increase idea generation to provide more sustainability-oriented discussions and by this, give the organization a better understanding about positive and negative aspects of future value propositions, identifying conflicting values and identifying opportunities to improve stakeholder value outcomes (Bocken et al., 2015, 2013; Stubbs and Cocklin, 2008).

Flourishing business model canvas

Flourishing business model canvas is a visual strategic management tool that can be used to develop a new- or modify current business models and its applications in all businesses (Hoveskog et al., 2018b; Evans et al., 2017; Upward and Jones, 2016). The flourishing business model canvas is a modified version of the earlier version of the canvas model which was purposed by Alexander Osterwalder in 2005 in order to aid organizations to develop sustainable business models in the long run and help the planet to flourish for next-generations (Hoveskog et al., 2018b; Kurucz et al., 2017; Osterwalder et al., 2010).

This tool is consisting of 16 different blocks with the following questions, divided into four categories (value, people, process, and outcome). Value co-creation and value co destruction together form the “value” category. Relationships, stakeholders, channels, needs, and ecosystem actors are in the “people” category. The “processes” category consists of biophysical stocks, ecosystem services, activities, resources, partnerships, and governance and finally, costs, goals, and benefits together make up the “outcome's” category (Breuer et al., 2018; Hoveskog et al., 2018; Upward and Jones, 2016).

In simple words, the aim of the flourishing business model canvas can be defined as identifying the required process for creating value for a specific stakeholder to reach a desirable outcomeand by this, improve organizational performance in the economic, social and environmental dimensions of sustainability (Hoveskog et al., 2018).

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2.1.1 Challenges of implementing sustainable business model innovation tools

As previously discussed, moving towards suitability has become one of the main challenges for most SMEs regardless of their nature of business (Moktadir et al., 2018; Bhanot et al., 2017). In this study, several business modeling tools have been introduced to assist SMEs in the movement towards sustainability. Although it seems an easy task, SMEs face many challenges when moving towards suitability and implementing social and environmental suitability in their business models. The main challenges of SMEs will be discussed further in this part:

Lack of knowledge

To implement social and environmental sustainability in SMEs the first step for managers is to have knowledge about the sustainability activities and the tools which can assist in the implementation process. Before implementing sustainable business tools in an organization, it is important to understand which tools are most appropriate for the desired outcome since different tools have different focus areas (Ness et al., 2007). The personal knowledge and competence about sustainability have a direct effect on the managers' willingness to implement sustainability in SMEs, manager with higher academic degrees are more willing to implement sustainability practices in their business models it is also easier for them to improve inhouse competence in their SMEs (Granly and Welo, 2014).

Sustainable oriented business modeling tools are divers for instance some have more focus on past development or prediction of future outcomes, and other tools have roots in policies or integration of environmental, social, and economic systems. Before a tool is implemented in a set of activities within an organization, it needs to be analyzed to see if the tool can assess the current need. For example, if the goal is the integration of nature and society in an organization, the tool needs to be assessed in the capability it possesses to integrate different nature-society systems (Ness et al., 2007).

Lack of practical implementations

Sustainable oriented business modeling tools are used to aid managers to implement sustainability in their business models by giving them an overview of the requirements to develop more sustainable business models not only in economical dimension but also in social and environmental dimensions. These tools are however mostly been used in universities and academic environments to teach students about business model innovation (Hoveskog et al., 2018). They have also been tested and continuously refined by managers and stakeholders in business modeling design

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activities in workshops but the practical implementations of these tools are low (Breuer et al., 2018).

The present lack of data about the results of the implementation of sustainable business modeling tools in SMEs and managers don’t know how to use the available results is one of the challenges of sustainability implementation (Breuer et al., 2018).

Social and Green thinking attitude

The sustainable oriented business modeling tools are limited in their available research about social and green thinking attitude. Having social and environmental attitudes can help SMEs to adopt sustainable business practices in SMEs as well as managing the barriers present for successful implementation of these practices (Klewitz and Hansen, 2014; Kerr, 2006).

As mentioned above the traditional way of implementing an economic dimension in the business model is based on an extremely linear approach of taking, making, using, and disposing of products without regard to either social, environmental, or economic sustainability. This is a flawed and outdated manufacturing approach. it’s for that reason important to implement manufacturing activities that are centered on a more circular approach where all produced waste goes through a value recovery process by either being reused, remanufactured, or recycled. This will demand an increased capability to efficiently utilize the available resources (Caldera et al., 2019).

Social sustainability is one of the sustainability dimensions that can be implemented in SMEs by sustainable oriented business modeling tools (Breuer et al., 2018; Hoveskog et al., 2018). Although many researchers focused on social sustainability in literature, in practice social dimension has been negated the most comparing to environmental and economic dimensions especially in SMEs (Breuer et al., 2018; Hoveskog et al., 2018b; Vincenza Ciasullo and Troisi, 2013). Lack of positive attitude and attention towards social activities is one of the challenges that has cussed the lack of social value implementation in SMEs (Granly and Welo, 2014; Vincenza Ciasullo and Troisi, 2013; Revell and Blackburn, 2007; McKeiver and Gadenne, 2005).

2.2 Sustainable value

Trough the expansion of advertising, online applications and companies expanding to global markets, the world is more connected now than ever, this results in that decisions made by one organization can have effects on other organizations independent of geographic location or business field (Soros, 2003), from this insight, the term “Global sustainability” is an actively discussed topic. This has been defined as the ability to meet the needs of the present without compromising the ability of future generations to meet their needs (Brundtland, 1987) and is achieved by organizations contributing to sustainable development by constantly implementing

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economic, social and environmental value simultaneously within their business models (Elkington and Upward, 2016; Elkington, 1994). In other words, sustainable value implementation refers to implementing all three dimensions in an organization and make a balance between social economic and environmental value (Elkington and Upward, 2016; Granly and Welo, 2014). For more illustration see figure 1.

Figure 1 Sustainable value illustration (Evans et al., 2017)

Constantly updated laws and regulations concerning sustainability as well as the constant pressure from society puts restrains of an organization's financial and material resources (Evans et al., 2017, 2009). This forces companies to develop new technologies that cause less harm to current social and environmental value. Apart from these regulations, there has also been an increase in sustainability-conscious customers that pay more attention to this in their purchases. A failure for organizations to implement sustainability can, therefore, lead to a loss in both market share and competitive advantage (Lacoste, 2016). To implement sustainability in an organization, it’s common for managers to turn to a more service-oriented approach where the organization's main focus is to provide a service instead of delivering a product. Research has shown that this is a

Environmental value forms

Renewable resources, low emissions, low waste, pollution prevention

(air, water, land)

Social value forms Equality and diversity, well-being, community development, health and safety Sustainable value Economic value forms Profit, return on investments, financial resilience, long term viability, business

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promising approach in order to achieve industrial sustainability (Lacoste, 2016; Maxwell and Van der Vorst, 2003). This is due to the fact that by implementing a service-oriented approach, the overall lifetime of the product can be increased and result in a long-term profit from constant services and end-of-life strategies such as remanufacturing, reconditioning, repairing and recycling the product. This leads to less material being used in manufacturing as well as a change in customer's mindsets from buying products to buying services. The service-oriented approach has the potential to increase or transform both production and consumption in a more sustainable way (Information, 2009).

The present challenges of implementing sustainability on a global scale are complex and extensive, organizations face the task of minimizing waste while also innovate and adopt new technologies and skills to support this sustainability approach (Hart and Milstein, 2003). These efforts, however, have the potential to create additional stakeholder value by reduced costs, minimize risks, gaining a positive reputation, and speed up the innovation process (Hart and Milstein, 2003). Some managers see this as a business opportunity where they can lower costs and risks trough innovation (Holliday, 2001). while others see sustainability as a negative economical outcome of conducting a business. Some managers even believe that implementing sustainability results in the organization s sacrificing profits and shareholder value for the common good (Hart and Milstein, 2003). This is due to the fact that managers constantly underestimate the opportunities that sustainable value integration presents; they do this by failing to make connections between the organization’s sustainability to the creation of stakeholder value. Solving the challenges that are present when integrating sustainability can aid a company in identifying strategies and practices that contribute to sustainability on a global level while simultaneously create stakeholder value (Hart and Milstein, 2003).

2.2.1 Challenges of social suitability implementation

Social sustainability refers to the activities within the SMEs which lead them to take a greater responsibility towards stakeholders and society and the environment in their bossiness field. Social suitability not only concentrates on external stakeholders it also increases the attention to SME's internal community. Many studies highlighted that social sustainability has a positive effect on SMEs' economic performance (Vincenza Ciasullo and Troisi, 2013; Waddock and Graves, 1997).

Social thinking attitude

Compared to the economic and environmental dimension, the social dimension is the least tangible and has up until recently been frequently overlooked, this is partly because social sustainability is closely integrated into both the economic and environmental dimensions (Åhman, 2013; Vifell

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and Soneryd, 2012). It is also the dimension that is most challenging to implement in SMEs (Dillard et al., 2008) due to its lack of measurable results (Ajmal et al., 2018) and lack of available data (Weingaertner and Moberg, 2014). The social dimension hasn’t received the same breakdown and explanation as to the other dimensions of sustainability (Cuthill, 2010; Vavik and Keitsch, 2010), and organizations have different understandings of what social sustainability implies (Dixon et al., 2008).

To align the customer values to that of the company, creating economic value is continuously integrated with social value creation for society (Porter and Kramer, 2011). A term called “Value-in-use" introduced by Vargo and Lusch (2008) implies that companies move towards more service-oriented business models that have an increased customer focus and shared value approach (Porter and Kramer, 2011).

Many SMEs use specific criteria’s and various study points to identify the specifics of what social sustainability entails instead of approaching the dimension on a general level (Ajmal et al., 2018). Modern businesses have started to significantly increase social sustainability in the last decade, however (Labuschagne et al., 2005), and have made efforts to implement more social sustainability in their operations in terms of health care, childcare, and educational opportunities. Other social factors to consider are the established millennial goals that focus on human rights and needs in terms of poverty, education, and gender equality. Both education and health care are important social factors along with interactions between people, trust, culture, poverty, and security (Ajmal et al., 2018).

To fully implement social sustainability, public well-being needs to be promoted and not just meet the basic needs and in return, organizations can gain an increased understanding of why sustainable policies do not aid in producing expected results (Ajmal et al., 2018; Goel and Sivam, 2015).

2.2.2 Challenges of environmental sustainability implementation

Many governments worldwide continuously implement sustainability centered legislation to put pressure on organizations, forcing them to adapt. Apart from this, organizations also feel a sense of moral duty, causing them to take steps to minimize negative environmental impacts. These legislations have proven efficient since a study done by NetRegs SME Environment surveys from 2014 shows that the recycling rates in SMEs have increased from 42% in 2002 to 84% in 2016 (“Surveys | NetRegs | Environmental guidance for your business in Northern Ireland & Scotland,” n.d.).

SMEs are a dominating global world economy and have a massive impact on sustainable environmental changes (Oliveira Neto et al., 2017). As of 2019, roughly 70% of the global industrial waste pollution came from SMEs (Oliveira Neto et al., 2017) and roughly 55% of the

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world’s population is hired in SMEs (Dey et al., 2018). It is also estimated that SMEs produce between 60-70% of all pollution released in Europe (Constantinos et al., 2010). These negative environmental outcomes force SMEs to address pollution emission reduction activities more responsibly and integrate sustainable business practices within their existing business model (Oliveira Neto et al., 2017). Accordingly, the challenge for SMEs is not only minimizing their footprints in the environment, but it also goes beyond that. they need to minimize the reassures that is used to make a less harmful and positive impact in the environment (Vincenza Ciasullo and Troisi, 2013).

Green thinking attitude

Green thinking attitude in SMEs refers to managers' and employees’ attitudes towards environmental sustainability. The attitude in the company is directly correlated to the degree of SME's willingness to implement sustainability in their business models. Green thinking attitude can help organizations to implement sustainable business practices in SMEs as well as managing the barriers present for successful implementation of these practices (Klewitz and Hansen, 2014; Kerr, 2006).

Green thinking is a term used in business management environments and is focused on what customers perceive as environmentally sustainable value. Green thinking applies to specific manufacturing processes within an organization (Melton, 2005). This approach combined with Lean thinking commonly referred to as “Lean and green” has the potential to enable successful transitions to sustainable business practices in order to encourage SMEs to implement sustainability to increase environmental suitability (Caldera et al., 2019).

Sustainable supply chain management

Sustainability in supply chain management is defined as managing the environmental, economic, and social impacts to encourage an organization's sustainability practice throughout the life cycle of its product portfolio (Mathivathanan et al., 2018) since the supply chain is a part of the upstream activities. To achieve a higher level of sustainability performance in SMEs, some activities in the supply chain need to be changed or modified accordingly (Moktadir et al., 2018). This adoption of green supply chain management is a useful implementation to maximize the potential of the organization with the available resources (Beske and Seuring, 2014).

When it comes to environmental sustainability in business models sustainable supply chain management is one of the factors which needs to be considered (Shibin et al., 2018). According to Troisi et al. (2012) minimizing negative environmental footprints, it’s not the only challenge for SMEs, the main challenges are to reduce the amount of resource that they are consuming and

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collaborating with the suppliers that are aligned with their sustainability objectives within the organization (Vincenza Ciasullo and Troisi, 2013; Sharma and Ruud, 2003).

Governmental regulations, customer demands, and expectations of environmentally sustainable products or services from SMEs have encouraged them to develop new ways of implementing suitability in their current business models (Moktadir et al., 2018; Bhanot et al., 2017). The word sustainability in the context of supply chain management has become a popular phenomenon in the last couple of decades (Pieroni et al., 2019). Organizations have seen a global increase in competition which has forced the implementation of environmental sustainability (Shibin et al., 2018).

Sustainable supply chain management implementation can, however, prove difficulties since many SMEs believe this implementation comes at a high cost and by that, degrade the overall organizational performance. Some reasons for these beliefs are due to lack of awareness about sustainable raw materials, lack of communication between suppliers and difficulties in reversing the logic that dominates current activity practices Majumdar and Sinha, (2019) and Giunipero et al., (2012) have identified that one of the main reasons for sustainable supply chain management alterations to fail is due to a lack of training among employees in the SMEs towards this cause. Employees have a natural resistance to change which sets mental restriction barriers that need to be penetrated to introduce sustainability to the existing supply chain (Yadav et al., 2020; Majumdar and Sinha, 2019; Giunipero et al., 2012).

According to Silvester et al. (2018), two critical challenges influence the implementation of suitability in supply chains and the outcome of it. Managerial orientation toward sustainability is one of these challenges which refers to how managers or decision-makers view sustainability along with their motivation to implement it in the current activities. The second challenge is the institutional context in which the supply chain activities take place (Silvestre et al., 2018). This means that if the SMEs exist in regions that are more economically advanced like Europe, they have different challenges than the ones in less economically developed regions. Fluctuance in the business environment can have a negative impact on the decision-making process of suitable supply chain adaptation due to a lack of law enforcement mechanisms and opportunistic behaviors (Silvestre, 2015).

Alongside the transition of a sustainable approach, digitalization and the adoption of modern technologies are becoming more present in organizations worldwide. This results in difficulties for SMEs to adjust current supply chains to follow these trends. To overcome the challenge of successfully adjust the current supply chains to follow new trends, both the terms” industry 4.0” (also known as the fourth industrial revolution) and” circular economy” need to be included to some extent in the present industry. These terms will aid the organization to compete on a global level by keeping track of new technological developments and gain a more sustainable organization in general. It is important to manage these activities successfully since the supply

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chain affects an organization’s overall performance (Shibin et al., 2018). Especially industry 4.0 since it is a big driver for future innovation and the rapid digitalization of traditional methods its contribution to increased complexity around products and processes in an organization. This creates challenges for companies that want to stay competitive in their current environment and for that reason, industry 4.0 needs to be considered in the business model innovation activities also digitalization can reduce the number of negative footprints in the environment (Ibarra et al., 2018).

Cost

The cost of implementing sustainability in SMEs business models is generally a big challenge for companies, (Granly and Welo, 2014). SMEs and especially startups often suffer from limited financial resources and a shortage of staff which makes it hard to invest in sustainability, especially in the environment dimension (Granly and Welo, 2014). Many of the managers believe that the implementation of environmental sustainability is just an extra financial cost and does not generate any extra profit for the company. This is due to that SMEs are more relying on short term money generation for survival while investments on sustainable practices usually pay off on middle to long term time scale (McKeiver and Gadenne, 2005; Simpson et al., 2004).

From a human resource perspective, SMEs need to invest money to increase the in-house competences and knowledge regarding sustainability to successfully implement this in their current business model. These training programs also result in extra costs for the company (Granly and Welo, 2014). Companies often tend to focus resources towards lean methods but are unwilling to include green thinking due to that the benefits are less tangible than that of the lean method implementations (Caldera et al., 2019).

Advances in supply chain management can reduce company costs, improve overall organizational performance, and enhance a firm's reputation in the eyes of the stakeholders. By adopting a lean and green mindset, SMEs have the potential to improve overall company efficiency and change the perception of sustainability by viewing it as a value instead of only an extra cost. There is however limited research available about how lean and green practices helps to enable sustainable business practices. When successfully implemented, however, lean and green helps to improve efficiency which results in more sustainable outcomes from SME activities (Caldera et al., 2019).

According to Caldera, et al. (2019) and Dhingra, et al. (2014), achieved sustainability benefits should not only be viewed as an accidental outcome but more as a target by implementing productivity improvements. This new mindset creates opportunities for further research about how to implement economic efficiency and productivity by the creation and implementation of environmentally friendly tools in an organization. Environmental or eco-entrepreneurship is a term used for environmental problem solution while striving to create economic value (Caldera et al., 2019; Dhingra et al., 2014).

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2.3 Simultaneous management in all three dimensions of sustainability

The implementation of sustainability in SMEs is commonly focused heavily only on one of the dimensions environmental dimension or social dimension. Because it is easy to measure the results of one dimension and implementing them is an easier task for SMEs. This, however, causes attention to be drawn from the combination of all dimensions which also make the suitability implementation more challenging (Oliveira Neto et al., 2017).

Lack of knowledge

One of the factors which challenge the successful implementation of all three dimensions of sustainability in SMEs is a lack of knowledge about both sustainability and how to make a balance between them. Researches are conducted about how identified knowledge of awareness gaps in different areas is a contributing factor towards sustainability neglect in organizations. Hjelm & Ammenberg (2003) and Parker et al., (2009) stated that there is a lack of awareness about how organizational activities affect the external environment because outcomes of these activities are usually only considered within the confinements of the organization. This is partly due to a lack of education and expertise in the area (Parker et al., 2009; Ammenberg and Hjelm, 2003).

Cost

Another challenge for SMEs which leads them to reject the implementation of sustainability in all three dimensions is due to insufficient financial resources for the implementation process. Due to the fact that SMEs suffer from the lack of financial resources especially startups allocating money for the implementation of sustainability is a great challenge for them (Granly and Welo, 2014). This, together with the fact that sustainability-related practices and current business activities may not be successfully optimized makes these efforts extremely unattractive for managers to invest in sustainable activities within SMEs (Neri et al., 2018; Bhanot et al., 2017).

Social thinking attitude

SMEs need to acknowledge the public pressure towards sustainability efforts to gain the willingness to implement it is important. The inclusion of stakeholders in sustainable business practice activities is critical for success. This includes both internal stakeholders such as employees, managers, and owners as well as external stakeholders such as customers, society, and government. Six barriers of sustainable business practices have been identified by Caldera et al. (2019) which include a lack of financial resources and time, lack of knowledge, the risks of implementing new sustainable practices as well as current company regulations and existing

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company culture. Giunipero et al. (2012) have also identified a lack of awareness at the CEO level and misalignments of short- and long-term strategic goals as other potential barriers (Caldera et al., 2019; Giunipero et al., 2012).

Sustainable supply chain management

Due to the competitive nature of today's business environment, many organizations start to focus more heavily on the adoption of smart-technologies to gain competitive advantages from increased productivity, reduced risks, environmental protection, and higher quality product manufacturing processes (Koberg and Longoni, 2019; Lu, 2017). It also contributes to a decrease in environmental prolusions in the manufacturing process. Due to this, the concept of industry 4.0 is a topic that has recently been considered more frequently in today's business environment. The rapid developments of communication devices, as well as advances in IoT, puts further emphasis on industry 4.0 implementation. This creates opportunities for an organization to manage and measure the outcomes of sustainable activities using smart technologies. Successful implementation of industry 4.0 is, however, a challenging process .since it requires the development of a strong technological infrastructure to support the smart production activities that arrived from industry 4.0 integration (Hofmann and Rüsch, 2017; Lu, 2017). It is highly advisable for organizations to develop the required infrastructure that supports the implementation of technological changes by adopting an industry 4.0 supply chain (Yadav et al., 2020).

It’s a challenging process to replace traditional business activities with new ways of doing business due to deeply rooted integrated company systems, a lack of creativity in innovation among employees, and a general lack of responsibility (Caldera et al., 2019).

Social and green thinking attitude

A green thinking approach in an organization has the focus on reducing negative environmental impacts and is a part of sustainable business practices that include customer-centered social activities by an adjusted business behavior that has financial impacts in these areas (Moser, 2001). A lean management approach is viewed as a strategy to deliver increased customer value by removing non-value adding activities and improve the efficiency in current businesses (Oliveira Neto et al., 2017). A set of drivers establishes lean thinking as a potential approach to enable sustainable activities within the manufacturing of products within SMEs (Moser, 2001).

Table 2 presents a summary of the challenges that were identified and extracted from the literature.

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Table 2 Summary of challenges extracted from the literature

Autor Type of study Stakeholders Challenge Environmental Social Economic

Ngah et al. (2020)

A quantitative study from 135 SMEs

All types of SMEs Lack of knowledge ✓ ✓

Caldera et al. (2019).

A qualitative study Manufacturing SMEs Green thinking attitude ✓ ✓

Dey et al. (2019) A qualitative study All types of SMEs Social thinking attitude ✓ ✓

Breuer et al. (2018)

Theoretical literature Academics and practitioners Lack of practical implementations ✓ ✓

Hoveskog et al. (2018)

Description of an experimental workshop

Educators Lack of practical implementations ✓ ✓

Moktadir et al. (2018)

Literature review and survey

SMEs

Sustainable supply chain

✓ ✓

Bhanot et al. (2017)

Literature review Researchers, and industry professionals

Sustainable Supply Chain ✓ ✓

Evans et al. (2017)

Literature review Academics and practitioners Lack of knowledge Lack of practical implementation

✓ ✓ ✓

Klewitz and Hansen, (2014)

Systematic literature review

SMEs Green thinking attitude ✓ ✓

Granly et al (2014)

A qualitative research Manufacturing SMEs Cost

Green thinking attitude Sustainable Supply chain

✓ ✓ ✓

Troisi et al. (2013)

An exploratory research Managers in SMEs Social and environmental attitude Cost

✓ ✓ ✓

Porter and Kramer, (2011)

Article Companies Neglecting the importance of social value

✓

Teece (2010) A qualitative research Enterprises Cost ✓

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2.4 Implementation process

A brief explanation about the implementation process and its stages is presented in this section. The reason for choosing this part in the literature review is that this study aims to investigate the challenges that SMEs face in the implementation process of sustainability, the concept of the implementation process and its stages needed to be discussed to prove a better understanding. Several scholars believe that implementation is not just a function or an event that happens in liner order, they believe that implementation is a mission-oriented process which involves multiple actions such as decision making, innovative designs and controlling during a long period (Saldana et al., 2012; Metz and Bartley, 2012; Fixsen et al., 2005; Bierman, 2002). The implementation process is a time-consuming activity that can take between two to four years. This process starts when an organization decides to make a change and ends when the new practices are stabilized and improving results appear.

The implementation process is divided into four main stages with the goal of achieving sustainable business and keep up with the new trends and needs in the context of the world. The stages are not linear and there can be changes in them due to the staff situation, funding, or the collaboration between staff. Exploration, installation, initial implementation, and full implementation are the four stages of the implementation proses (Metz and Bartley, 2012), they will be fully discussed further in this section. For an overview look at figure 2.

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Exploration

Exploration is the first step in the implementation process it takes place before new practices put in place. This stage includes the initial activities that are required for implementation and it’s a critical starting point (Saldana et al., 2012). In this stage the practices that need to be implemented should be identified, the actions that assist in the implementation proses should be considered and the human and financial resources should be allocated. The potential barriers and the challenges which can affect the process should also be assessed during this stage (Metz and Bartley, 2012). The result of the exploration stage is developing a clear implementation plan which includes tasks, timelines, and resource allocation both from human and finance perspectives (Metz and Bartley, 2012; Saldana et al., 2012).

Installation

To implement new practices in an organization several actives need to be done in order to make the infrastructure for successful implementation. After identifying the activities that need to be refined and be newly implemented in the exploration stage it’s time to make them happen. The actions take place in the installation stage.

During the implementation process, a high amount of communication exists between all of the stages, for this matter if a practice in each of the stages needs a base installation stage will providing it according to the requirements. This stage also ensures that the general and specific capabilities are fully delivered for success full communication between stages and implementation.

Initial implementation

The initial implementation stage is the stage that the new practices are put in their places and employees start to work with the new practices and activities. The initial outcomes emerge in this stage, although in this stage the final implementation is not done but based on the outcomes of this stage previous stages can be refined for reaching a desirable outcome. Continuous improvement is the main focus of the initial implementation stage. Since the organization is still learning how to work with the new practices and the old practices are replaced therefore employees may lose their motivations and tent to go back to their old routines for this matter it can be stated that this stage is quite fragile.

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Full implementation

An organization reaches the full implementation stage once the new practices and activities become fully integrated into employees, organizational policies, procedures, and become standard practice. Full implementation happens when more than half of the employees effectively use the new practices and desirable outcomes accrue.

In order to sustain this level and keep up with the changes of the relevant industries organizations need to do continuous quality improvements, measurements and go back to the first stage. As mentioned before the implementation process is not a liner activity and needs to be refined and restructured continuously.