Systemic change challenges traditional business models of forest-based bioeconomy

Abstract

Systemic change challenges traditional business models of forest-based bioeconomy

In this paper, we introduce the ongoing systemic change among forest-based bioeconomy in Finland and discuss about the effects of this change on sustainable business models. For this purpose, we adopt the multi-level perspective (MLP) framework. On the level of socio-technological landscape, many factors indicate that in the forest sector the forthcoming decades will not be similar to the past. For example, climate, energy, and forest policies are converging because of international attempts to avoid the effects of climate change, and forest and environmental policies are also converging due to the observed decrease in biodiversity. Furthermore, digitalization has decreased the use of paper for printing in Europe and North America, and on the other hand, new digital technology has facilitated interaction among companies and thus increased network collaboration while enabling the transition to a service economy. At the same time, the world’s population is still growing, resulting in growing needs for ecosystem services, i.e. energy, nutrition, fiber, and many other products and services that can wholly or at least partly be obtained from forests. Socio-technical regime of Finnish forest sector has been liberalized. The present forest legislation allows a large variety of forest treatment options, and on the other hand, forest service markets have been genuinely opened up also for SMEs. Furthermore, new technology in forest related information systems, open data and digital service platforms have become increasingly important. Socio-technolocigal niches can be found inside and outside of the traditional forest sector. For example, modern pulp mills have been introduced as biorefinery concepts, developing many kinds of new products and versatile business ecosystems. However, more radical innovation might be found outside of the traditional forest sector. For example, novel solutions related to entertainment, health, recreation and nutrition have been already developed. Anyway, business models of forest-based bioeconomy have a special requirement of adopting forest resources as a part of them in a sustainable way. Value creation in novel business models – including the ideas of networking, digital platforms, open data etc. - typically operate with abstract and intangible concepts, but in the case of including ecosystem services into business models crucial questions concerning sustainability and externalities arise. These include, among others, biodiversity protection, effects on climate, role of forest owners in the business models and effects of business on citizens’ welfare. So far, these questions have been approached in the context of sustainability of fixed value chains in forest-based sector emphasizing linear value adding production