The economics of sustainability for a companynew product development, innovation and sustainability

Résumé

We present a dissertation on sustainable operations to impede a common belief among managers, that sustainability performance is nothing but a mere addition to production costs. Motivated by the notion of the "triple bottom line" we devise different models that attempt to demonstrate that improved environmental and social performance of a company is expected to lead to improved financial performance. The dissertation consists of three parts. We first answer the question: What is the right sustainability performance a product should reach in response to existing conditions regarding available technology, legislations and customers expectations? We, then, go a step further, by examining how does customers¿ awareness regarding sustainability influence a new product design and, in turn, how can a product in influence people¿s awareness? Finally, we propose an alternative path to sustainability, by studying whether the transition to a service provider business model can be coupled with increased sustainability performance. The results of the study indicate that if sustainability considerations are incorporated into the business model, the financial performance of the company is prompted to improve; furthermore, we conclude that if sustainability is not considered the manufacturer is exposed to increased risk of bearing large costs, such as the cost of clearing a pollution or as a lost revenue because of CSR incidents, the cost of generated emissions and poor market acceptance.