Sustainable Business Model Design: A Multi-Case Approach Exploring Generic Strategies and Dynamic Capabilities on the Example of German Wine Estates

Abstract

Business model design needs to encounter increasing and highly dynamic challenges due to counter-caesural environmental changes. Empirical research on strategic sustainability is expected to provide guidance for needed dynamic transformation and sustainability. The reported research builds on a multi-case research of four German wine estates. The cases each represent a specific generic strategic grouping and distinct business models and are thereby suited to analyse sustainability by leaning on the concept of dynamic capabilities. Sustainability was examined as a strategic vehicle for innovation in the wine industry and a nuanced view of dynamic capabilities. Premium strategist turned out to strongly engage and profile in sustainability with aligned dynamic capabilities as a building block to generate premium products. Quality leadership also leverages product quality with comprehensive dynamic capabilities aiming for sustainability by building on size and a professional structure but less on environmental profiling. The price–value strategy approaches sustainability primarily from a market-based and circular economy view. Niche strategist’s dynamic capabilities in the analysed population illustrated an entrepreneurial and effectuation-based approach with specific dynamic capabilities fine-tuned to exploit market opportunities. The multi-case analyses thereby allowed us to identify strategy-specific and business-model-suiting capabilities.

1. Introduction

Unexpected and far-reaching changes in the environment signpost the need for adaptive organizations and flexible business models [1,2]. The dynamics of change call for entrepreneurial behaviour and stress strategic management through multiple and highly unpredictable environmental challenges in addition to a societal push for environmentalism [3,4,5,6,7]. Strategic sustainability chips in desired strategic action and safeguards it to consider the dependency on and responsibility for the environment [8]. In addition, dynamic capabilities seem to be of paramount importance to nurture resilience and manage entrepreneurial transformation [9,10,11,12,13]. The concepts of strategic positioning, sustainability management, and dynamic capabilities have predominantly been researched separately, though [14,15]. Empirical depth and a cross-concept approach encompassing strategic positioning, sustainability, and dynamic capabilities promise to provide orientation for businesses to navigate in the New Normal [16,17]. The hereby reported empirical study explores the complementarity of the concepts, their interaction, and provides insights into the building blocks examining small enterprises in the German wine industry.

The research builds upon the strategic management approach by deploying the dynamic capabilities framework to observe the transformation process of the German wine industry towards sustainability. Dynamic capabilities for achieving sustainability are analysed and compared by exploring four German wineries with distinctive generic positioning and business models (i.e., ownership, size, value-chain coverage, etc.). This multi-case research allows to compare business models for sustainability in a strategic context.

The analysis consists of two parts. In the first part, the concept of dynamic capabilities was explored in the context of social, environmental and economic sustainability. In the second part, a cross-comparison of business models representing four generic strategies built the basis for evaluation of dynamic capabilities. The analyses indicate a need to appropriately formulate or reformulate sustainability in light of the strategic positioning and adequate business model design. We hypothesize that single wine firms’ sustainability efforts, as well as wine industry sustainability efforts, need to be based on strategic grounds with a special focus on developing dynamic capabilities for sustainability. This approach reflects Esty and Porter’s [18] premise that regulation can force and enhance efficiency only if certain preconditions are present: an existent awareness of the efficiency problems or constraints faced by the organization, society and environment; an existent availability of tools for assessing and resolving the identified problems and tools for mapping the road to fulfilling the requirements set out by the law. Companies need to be incentivised in various ways to change and enhance their own approach to environmental issues in a creative way [19].

The article begins by presenting the importance of a strategic mindset referring to the concept of generic strategies as well as sustainability and innovation. The Californian wine industry serves as an illustration of successful strategic profiling and implementation of sustainability to counter managerial challenges. The wine industry needs broad competencies from different players in order to be able to build an ecosystem for capturing technological innovations beyond formal requirements. The article then explicates a nuanced view of the concepts of strategy and sustainability in the wine industry, where companies first have to differentiate between a market-based approach to strategy and a resource-based approach to strategy to better understand the connections to sustainability. It hereby investigates dynamic capabilities as a managerial instrument for sustainable wine production in Germany. Dynamic capabilities show relevance in dynamic markets, as is the case for the German wine market. Furthermore, the industry’s sustainability strategy requires analytical processes that can evolve as dynamic capabilities and be applicable, especially since the wine market becomes more dynamic. Merging the concepts of dynamic capabilities and sustainability addresses a wide range of actors, information and knowledge in order to create new opportunities. The challenges of implementing sustainability in the wine industry are considered, ranging from expanding business networks of sustainable wineries to individual measures to increase flexibility and adaptability of approaches to local conditions. A resource-based perspective safeguards sustainability ambitions and interest of different social groups and stakeholders [20,21,22,23]. While a certification has become a relevant approach, there is a risk of straining company resources and underexploiting dynamic, individual capabilities as a means of anchoring sustainability in an appropriate manner to suit the strategic positioning and business model specificities, especially nourishing flexible approaches with a focus on the development of the dynamic capabilities for sustainability [24].

2. Literature Review

2.1. Environment, Strategic Positioning and Business Models

Coping with changes in the external environment is a fundamental requirement for companies’ sustainable existence. [25,26,27,28,29,30,31,32]. Opportunities in the external environment nurture innovation and eventually superior strategies to outperform in intensifying competitive landscapes [33,34]. Exploiting the environment causes environmental and subsequently societal problems [35,36]. Strategic entrepreneurship needs to balance opportunity exploitation and environmental impact [26,37,38,39]. The literature reassures the value of strategic profiling as to better position a company in competitive markets, attract customers, and exploit revenue and profits [40]. An ongoing academic discourse highlights the core elements of strategic profiling [41] and business model design [42,43,44,45]. Porters´ two-dimensional model [46,47,48,49] dominates academia and provides orientation for practitioners [50], asking how to compete in regards to market scope and the primary source of competitive advantage. Companies are better off with a clear generic position [51], avoiding being “stuck-in-the-middle” with lower profitability than clear-cut competitors. Generic strategies and strategic grouping has been explored for different industries, e.g., airlines, banks, insurances, pharmaceuticals, or brewing [41,52,53,54,55]. Strategic grouping is less explored for small-sized enterprises [56,57,58] with heterogeneous findings on causal profit impact [59,60]. In the context of agrarian products [61] or experience goods [62], such as wine [63,64], additional research is requested.

A business model can be defined as organizational architecture in order to create value [65,66]. It encompasses all elements to configure a business and the synchronization of the elements, especially critical resources, offer design, value-chain coverage, partnerships, and value proposition [67,68]. Business models’ design has to fit strategic alignment forced by external environmental change [69,70]. Indeed, digitalization and sustainability have been identified as a massive driver for business model redesign [71,72,73]. This study aims to contribute to the research on how to design a sustainable business model in respect to the strategic grouping and how sustainable value can be achieved in regard to the social, environmental, and economic benefits at the same time [74]. The wine industry considered creates an agrarian-based product interacting with nature [75] and depending on climate [76,77,78]. Protagonists are exposed to caesuras in the external environment (e.g., natural disasters, COVID-19) [79] and climate change [80]. The wine industry served as success story for emerging countries to catch-up against old economies via clustering and networked innovation [81]. Michael Porter developed his regarded theory on clusters to create competitive advantage by looking at the California wine industry [17]. The German wine industry is characterized by small and entrepreneurial businesses and intensive rivalry [82]. Therefore, empiric insights on strategic positioning and the role and impact of environmentalism of the SME is of scientific and practical relevance [83,84,85].

2.2. A Strategic Approach to Sustainability Innovation

Sustainability, defined as a parallel and synchronized pursuit of economic, societal, and environmental goals, has become a dominant strategic paradigm [86] in the hope that sustainable management safeguards the future of our planet. Consumers consider ecology in their buying decisions, pushing companies in the direction of sustainable business models [87]. Indeed, sustainability serves as a source to create competitive advantage [88]. Small and medium enterprises (SME) struggle to redesign their business models in their strive for sustainability [8,89] but should be motivated considering their economic importance for societal value creation but also environmentalism [90,91]. Being sustainable is an important strategic choice an enterprise can make, but also increasingly important at the industry and regional levels [92]. Interest in innovation in the context of SMEs and especially in the wine industry is on the rise [93]. Scozzi et al. explore the SME-specific innovation management challenges [94] that Gilinsky assesses for the wine industry [95]. Rama provides empirical evidence specifically for the relevant food and beverages industry [96]. Despite a focus on sustainability, Lubell et al. deliver relevant information on innovation practices in the wine business [97]. High expectations of small entrepreneurs to innovate in order to create sustainable competitive advantage and hence leverage their flexibility, including limitations in regards to resource access and capacity restrictions, require further research [98,99].

The field of strategic management has traditionally been focused on developing tools and theories about the nature and causes of sustained firm performance [100]. Wine grape growers in California have recognized this importance of sustainability as a strategic choice spearheading the sustainability efforts for the whole Californian agriculture: they successfully combine workshops, proactive behaviour of associations, and effective communication flows. They jointly define sustainability goals without neglecting enterprise viability, environmental quality and product quality [92,101,102]. Successful innovation for sustainability in the wine industry depends on technological and market capability, but also on capability to integrate and combine a broad range of heterogeneous competences, knowledge and skills often stemming from unrelated fields such as chemistry, biology, mechanized equipment, and information and communication technology [103,104,105]. The contemporary dynamic processes of competition and technological improvement happen in an ecosystem of changing technological opportunities with fragmented information, organizational passivity and control limitation in contrast to a static view of environmental regulation, where technology, products, processes and customer lifestyles are considered [4,106,107].

Sustainability drew attention in the strategic grouping discussion in the wine industry [76,108,109,110]. Atkin et al. (2011) concluded that sustainability systems enhance strategic performance for cost leaders as well as for differentiators [75]. In the application of the resource-based view, sustainability practices can be regarded as a firm’s capability which contributes to its performance, acts as a potential strategic differentiator by developing unique products, and lowers legal and regulatory risk in the global markets [106,111,112] Mignon provides an overview and illustration that establishes that the sustainable business model is still in its infancy phase but rapidly growing [113].

2.3. Dynamic Capabilities for Strategic and Sustainable Management

Referring to strategic management, an effectuation-based superficial sustainability communication is not sufficient—sustainability needs to be deeply rooted in firm resources or assets and then contributes to the non-imitability of firms’ capabilities [4,114,115]. SMEs need to consider resource-based limitations and manage valuable and unique resources [116,117,118,119]. Especially for small enterprises with limited leveraging capabilities and funding, environmental adaptation requires reflection in light of resource constraints [120,121]. In addition, the market-based perspective regarding environmentalism provides guidance in light of the growing importance of ethical and green consumerism [122,123,124,125,126,127]. Since the first definitions of dynamic capabilities serving in moderately dynamic markets as analytical, stable processes with a high level of detail resemble the traditional conception of routines, less research on dynamic capabilities has been conducted in these markets compared to more dynamic markets, which is why we need to expand the understanding of the dynamic capabilities in more traditional industries as well as in different contexts internationally [58,64,128,129,130,131]. The wine industry in Germany is characterized by a stable environment but with marked signs of transition towards an unstable environment due to increasing competition and massive customer changes [132]. Dynamic capabilities perspective seems to offer a suitable framework to evaluate a strategic shift towards sustainability in the German wine industry as it can be applicable both in the state of moderately dynamic industry, as well as in the state of a very dynamic industry [133]. The more an industry moves from medium to highly competitive conditions towards hyper competition, such as in the case of the German wine industry, the more will dynamic capabilities be relevant [134]. This is why it is very important to start including the dynamic capabilities in the discussion about the sustainability of the German wine industry, as they constitute an important tool of strategic management that will become more and more relevant in order to sustain the whole industry but also sustain a competitive advantage on the world market [135]. In order for this change towards the use of concept of dynamic capabilities for sustainable wine production to happen, firms need evidence and orientation in building highly effective entrepreneurial management capabilities to balance efficiency and agility, as well as public benefits and firm profits in order to create more favourable trade-offs [136,137,138]. Similarly, modern strategic thought views both strategy and sustainability as concepts rooted in the dynamic capabilities because of their long-term focus and inherent ability to continuously change resources, routines and the business model [139,140,141].

Bearing in mind that the origin of all the tangible resources in the dynamic capability theory lie outside of the firm, the major task of the strategic management is the management of the intangible knowledge about the resource through dynamic capabilities [142]. Dynamic capabilities development includes sensing and even shaping opportunities and threats by engaging in scanning, creation, learning and interpretative processes [4]. Opportunity detection can happen either through specific entrepreneurial access to existing information (disequilibrium detection and taking advantage of) or through new information and new knowledge that in turn creates opportunities (creation of disequilibrium) [143,144]. Therefore, a modern winemaker needs to be an eco-preneurial marketer that proactively seeks opportunities in the technology markets (e.g., renewable energy application to solar-powered irrigation systems) and beyond [2,145,146]. This further requires to react in- and externally to potential threats and pressures coming from a wide range of actors: competitors, institutions, customers, associations, environmental organizations, activists and regulators [92,147].

2.4. Implementation of Sustainability in the Wine Industry

Strategic sustainability demands consideration both on the level of innovating for one’s own sustainable competitive advantage as well as for the sustainability of the industry as a whole according to Pitelis and Teece [148]. This also holds true for wine producers. For example, an evaluation of two Italian wineries demonstrated that sustainability in the in the wine production is not only about the improvement of winemaking techniques but also about introducing hospitality services, focusing on branding/labelling, recycling of the used bottles, and considering the needs of the laborers and their families, as described by Benedetto and Corinto [149]. Agricultural adjustments and initiatives that anticipate possible harmful environmental impacts are of enormous importance for sustainability because measures taken to maintain wine grape productivity and quality can have potentially negative impacts [150,151]. In this sense, there is a noticeable trend of increasingly using “soft” policy instruments and specifically designed institutional context instead of “hard” policy instruments (such as laws) in Germany as a shift towards environmental governance, where the goal is to more precisely target the motivation, opportunities and capabilities of firms for environmental innovation [152]. In this context, governance can be seen as a mix of various measures carried out by different social–political actors, both public and private [153]. A growth of the sustainability/green markets nourishes product innovation according to Song and Chen [154]. Hoemmen et al. [150] found that in the case of California, economic benefits of sustainability initiatives in viticulture only occur if a participatory approach to sustainable development is being deployed, while a regulatory approach results in a negative impact on the economy. California’s wineries participating in the program “Certified California Sustainable Winegrowing” perceive that the environmental and economic benefits outweigh the additional costs of participating in the program [155].

The wine industry has witnessed a proliferation of voluntary certification standards dealing with ensuring sustainable practices by wineries: certified California sustainable winegrowing, integrity and sustainability certified in South Africa, and sustainable winegrowing in New Zealand [155]. However, there is no bottom-up customer demand for sustainable wines, which would serve as a driver for the adoption of wider sustainable practices by wineries [156]. Sustainability and climate change have been found to be the primary drivers only for premium and quality-leader wine producers in Germany, while other types of wine-producers (cost-leader, price–value, and niche-targeting) have other priorities, making no strong case for industry-wide sustainability certification in the German wine industry. Standardization/certification risks limiting a flexible approach to sustainability [157]. The term ‘sustainability certification’ has become so omnipresent that it raises a considerable criticism for not always necessarily including concepts that are really sustainable [158]. Sustainability should be about company values [159] and new business practices and innovations [160]. New tools and mechanisms for assessing and advancing the knowledge on sustainability of the wine producers are needed in the category of flexible and “soft” policy instruments directed at the wine producers [161]. The approaches to sustainability implementation have developed away from strictly using government regulation to mostly include certification, but the shift away from certification to a diverse set of tools is also needed on the path towards more sustainable wine production [24].

3. Materials and Methods

Considering the aim of this study to analyse dynamic capabilities in respect to generic strategies, this study applied a multi-case approach as “… individual cases, captured through intensive exploratory interviews … permit shared realities to be reconstructed out of individuals’ perspectival images” [162]. Multi-case analysis is thereby suitable to analyse dynamic capabilities in the context of strategic sustainability [10,163,164]. This multi-case study builds upon different and extensive sources of data retrieval, including interviews, site visits, expert interviews, and secondary data analysis, in order to add comparability and expand the knowledge base with different perspectives and managerial approaches [165,166,167,168]. Data was retrieved using self-reported assessments of winery representatives (i.e., CEOs and employees), accessible reports, and secondary market research. CEOs’ perceptions are considered to be an accurate reflection of corporate strategy because of their good knowledge of their own organization [169,170]. However, case research profits from extensive and in-depth data retrieval for the chosen research objects, allowing the validation of the predominant individual perspectives and generating a holistic dataset [10,171].

Four wineries have been selected in the need to cover different business models of wineries operating in the German market and to enable an analysis of different generic strategies. Prior research identified German wineries to be predominantly positioned via the price–value strategy and quality leadership. Premium and explicit niche strategies make up less than 20% of the population each. Cost leadership is the generic strategy of only 2% of the population [172]. For each of the four dominant strategic clusters (quality leadership, price–value, premium, niche), one winery was chosen for this multi-case study and served in the following to explore their sustainability approach and dynamic capabilities.

The multi-case research thereby allowed us to analyse a cooperative for the strategic profiling via “quality leadership” consisting of many small wine grape growers cooperating with a joint bottling and marketing entity with almost 100 years of existence; one very small and family-owned, relatively new and growing winery served to assess the “niche strategy” profiling; a predominantly stable state-owned winery producing and selling its own wines but also engaged in research served as the protagonist for a “price–value strategy”; a second privately owned winery that belongs to the established premium wineries in Germany run by the fourth generation performs an acknowledged “premium strategy” (see

Table 1. Cases according to generic strategy and business model characteristics.

Generic Strategy	Quality Leader	Price–Value Leadership	Premium Strategy	Niche Player
Ownership	Cooperative	State-owned	Family-owned	Family-owned
Size (hectares vineyard)	866	22	25	14
Value chain coverage	Joint production and sales; individual production	Full coverage plus research institution	Full coverage	Full coverage
Specific characteristics	Rich portfolio of brands; professional sales/CRM	Previous awards for the wines; minimal marketing	Organic and biodynamic certification	Strong growth; CRM and balanced scorecard

).

In order to analyse the case-individual sustainability strategy, data gathering started with an initial open-question interview. The responses were used to derive industry-relevant routines. Following, the wineries´ sustainability measures were gathered in a structured approach examining all the realization of the identified routines. For all perspectives of sustainability (social, economic and environmental), categories routines based on the interviews served to derive dynamic capabilities. A total of 17 dynamic capabilities for sustainability and 86 sustainability routines were created (see

Table 2. Structural model of dynamic capabilities and sustainability routines.

Dynamic Capabilities for Social Sustainability	Dynamic Capabilities for Economic Sustainability	Dynamic Capabilities for Ecologic Sustainability
Positive working climate (6 routines)	Company strategy (6 routines)	Water (5 routines)
Communication inside organization (5 routines)	Key financial data (4 routines)	Energy (5 routines)
Fair pay and equality (6 routines)	Secured successor (7 routines)	Soil and biodiversity (8 routines)
Training and education (5 routines)	Safeguarding against risks (5 routines)	Waste and materials (5 routines)
Social and regional engagement (6 routines)	Future viability (4 routines)	CO2 emissions (4 routines)
Sustainable suppliers and partners (4 routines)		Fungus-resistant varieties (2 routines)

):

The routines served to assess the pertinence of dynamic capabilities [173]. Each routine was assessed on a five-point Likert scale (0 = no relevance/implementation; 5 = guiding principle and fully implemented) or binary data (0 = missing; 5 = implemented) [174]. The ordinal scale was transferred into a spider-web, assigning every point a weight of 25% parameter value [175]. The calculation thereby allowed us to judge the implementation of a routine with 100% compliance in case of having implemented all relevant routines to a full extent (i.e., 5 points) [176]. Therefore, an overall assessment of dynamic capabilities within sustainability category was possible [4,9,177,178].

4. Results

The initial open question, inviting the case protagonists to define sustainability, manifests a diverging and broad understanding of sustainability. For the quality leader, sustainability is a means to “… deliver stable quality each year, while conserving the nature”. The niche player puts emphasis on the basic sustainability definition of safeguarding resilience (“… successful operations throughout generations”). The interviewed price–value strategist interprets sustainability to be “… a fashionable term that serves sales and marketing, while reducing CO₂ emissions, selling vegan wines and biological production with accent on ecology, conservation of the soil and fertility for the next generation as well as a circulatory system consisting of social, biological and business components”. Indeed, the circular economy value proposition increasingly requires a far-reaching business model redesign and to create dynamic capabilities in partnering [179,180,181]. For the representatives of the premium strategy, winery sustainability turned out to be of utmost importance, complementing all strategic measures “… by practical actions being implemented, as the company is already producing all of its electricity (via solar and block heat power plant energy), treats the soil considerately and hopes that a sustainable wine industry future will bring the complete ban of the herbicides”. These definitions indicate that the interviewed wineries synchronize strategic positioning and sustainability and that sustainability is a lever for strategic positioning.

All four strategy representatives addressed all three pillars of sustainability. The data allowed us to profile the dynamic capabilities and sustainability strategy. The profiles disclose that social engagement is most expressive, followed by economic and environmental dimensions. For social as well as environmental sustainability, all clusters scatter around the overall mean. Economic sustainability shows the highest variance. Here, the premium and quality leadership cluster at the higher end, whereas niche and price–value perform at the lower end of the scale. The profiles of the multi-case comparison assigns premium strategy the most expressive sustainability engagement, followed by quality leadership. The gap of the two strategy clusters roots in higher environmental engagement of the premium strategist. Indeed, quality leadership, niche and price–value range at similar levels of environmental engagement.

A more detailed insight into the dynamic capabilities for sustainability of the four wineries can be obtained by comparing the 17 dynamic capabilities that have been built up from 86 routines, with each dynamic capability thus consisting of 5 or 6 routines. The interviews and gathered data allowed us to derive the profiles of sustainability. Strategy-specific sustainability profiles could be identified: (see Figure 1). For most of the dynamic capabilities, the first two ranks are occupied by the premium strategist and quality leader, but there are dynamic capabilities where niche strategy the and premium strategist meet or outperform these.

The data collected demonstrate that the two strategic clusters quality leader and premium strategy interchangeably occupy first and second position in all three sustainability categories: the quality leader scored the best regarding dynamic capabilities for social sustainability, followed closely by premium strategist on second place, while premium strategist heads first place regarding dynamic capabilities for economic and environmental sustainability, followed closely by quality leader. The two other strategic winery clusters, niche strategy and price–value strategy, occupy the third and fourth positions interchangeably on all three categories of dynamic capabilities for sustainability.

4.1. Dynamic Capabilities for Social Sustainability

Regarding the positive working climate dynamic capability, the main weakness of the price–value strategy is the higher sickness rate compared to that of other companies. Regarding the communication inside organization dynamic capability, the price–value strategist fell behind, lacking regular exchanges on professional and organizational topics between all the employees. For the niche strategist, two weaknesses were identified since regular exchange between key employees on goals, strategies and vision of the company was lacking and because of the absence of firmly defined responsibilities for the employees. Regarding training and education dynamic capability, the premium strategist scored best with an extensive engagement. Price–value strategy and quality leader excel with their extensive offering of internships. However, all companies offer regular apprenticeships. In the case of quality leadership, a gap of trainings for superior management and employees was recognized. Regarding social and regional engagement dynamic capability, both niche and price–value strategies score significantly lower when it comes to regional activism, as well as supporting regional social projects. Regarding sustainable suppliers/partners dynamic capability, the niche strategy is more locally rooted as they favour more regional suppliers and socially engaged partners.

4.2. Dynamic Capabilities for Economic Sustainability

Considering the company strategy dynamic capability, niche strategy stood out with more frequent revisions of the strategy. The premium strategist lacked a documented strategy. Regarding the key financial data dynamic capability, price–value and niche strategy underperformed as regards exploiting data and financial steering capabilities. Since the price–value strategist is a governmental institution, financial performance is not their focus. The niche strategist is a very small winery that neither needs to disclose nor calculates a range of financial data. Concerning the securing the successor dynamic capability, all of the four wineries do not have an effective system in place in the case of a sudden dropping-out of the CEO. On the other hand, premium strategist rated measures for company succession to be high, because they just introduced the future successor to the company. Price–value strategy together with premium strategist has regulated the question of a successor when the CEO retires. The niche strategy and quality leader lacked succession planning. Regarding safeguarding against risks dynamic capability, niche strategy is the only wine producer not safeguarding against frost and hail. Its size denies natural risk diversification with plots in different areas. The price–value strategy shows a potential weakness regarding not continuously monitoring and evaluating its insurance policy for natural impact. The price–value strategy scores low, being unsatisfied with their price levels in the last ten years not meeting the high quality of the products. Obviously, missing economic pressure due to being state-owned also impairs the dynamic capabilities reflected in the routines to find new customers for the wines offered on the market.

4.3. Dynamic Capabilities for Environmental Sustainability

In the environmental section, scores for all wineries are, on average, lower than in the economic or social section. Regarding the water-related dynamic capability, the niche strategy better tackles the problem of equipment for enhancing the sewage quality, and price–value strategy is in the first place because of the regular investments in measures that reduce water consumption. Regarding energy-related dynamic capability, the premium strategist scored best, especially regarding the routines for continuous investments in an energy-saving car fleet. The main weakness of the niche strategy winery and price–value strategy is that there is no controlling of the energy consumption, and the price–value strategy also does not use any kind of renewable energy sources. Regarding the waste and materials dynamic capability, the niche strategy stood out for using light and energy-efficiently produced bottles unlike the premium strategist. They also outperformed by relying on recycled materials for packaging unlike the price–value strategy. This entrepreneurial behaviour of the niche strategist also manifests in the CO₂ emissions dynamic capability. The price–value strategy and premium exploit innovation (i.e., new varietals that are fungus-resistant [182]) while the niche strategy has not planted these varieties but plans to, and quality leader has not planted and has no intention of planting fungus-resistant varieties in the near future.

4.4. Additional Cross-Strategy Results

The niche strategy shows an expressive performance on several dynamic capabilities for sustainability. For example, the niche strategy enjoys an inviting and welcoming working atmosphere, pays high attention to the team, is more locally rooted as they favour more regional suppliers and socially engaged partners, and applies an effectuation-driven strategic approach [183,184]. This behaviour illustrates an entrepreneurial compensation of obviously lower financial means. In the need to be flexible, the niche strategist revises the strategy more often; they tackle the investment challenges with creative solutions and are highly resource-aware in order to avoid unnecessary costs. The price–value strategist excels at offering internships as well as regarding having regulated the question of a successor when the CEO retires. They are also in the first place regarding the water-related dynamic capability because of the regular investments in measures that reduce water consumption.

5. Discussion

This study examined the market positioning of entrepreneurial small enterprises, their sustainability management, and dynamic capabilities. A multi-case analysis provided the opportunity to overcome the limitations of a single-firm assessment and to comprehensively investigate the dynamics of strategy [185]. On the basis of the construct of generic strategic grouping, sustainability measures and dynamic capabilities initiatives served an empiric analysis of SMEs in one industry and one country. The identified specific profiles and routines illustrate a strategy-fitting business model design and capabilities. The results contribute to knowledge on the value of dynamic sustainability anchored in strategic profiling of small-sized enterprises (SME) and in strategic entrepreneurship. Strategic grouping in the context of entrepreneurship and SME [59], environmentalism as constituent basis of strategic positioning for SMEs [186], and the virtue and value of strategic flexibility for enterprises that by nature produce natural products (i.e., agriculture and herein wine) find support through the multi-case analysis.

Modern consumer demands regarding agricultural products continue to move the food production towards natural farming and agriculture meeting environmental, ethical, social and health concerns [187,188]. The presented results reflect that no matter what strategic positioning in the wine industry determines the business model, a market- and resource-based approach to sustainability is becoming a hygiene factor and a “strategic must”. Nevertheless, the results illustrate that generic strategies and business model design steer the sustainability profiling and underlying dynamic capabilities. The expressive profiles of premium as well as quality leadership with an emphasis on the ecological and production capabilities underline that wine and the quality of the product are supported by sustainability ambitions. The results further disclose that niche players can draw on entrepreneurial capabilities. The identified relevance of sustainability with specific dynamic capabilities underlines the importance of designing fitting business models.

The primary goal of the study was not to collect the data on a larger scale but to demonstrate the possibilities of online support for wine producers on their quest towards sustainability. The four cases demonstrate the importance of using a tool primarily targeted as a support in developing dynamic capabilities for sustainability and encouraging them to seek further advice on improving the strategies. It is important to understand and support the small wine producers in progressing towards sustainability and in developing dynamic capabilities for using the resources sustainably, that is, in harmony with nature, society and economy. It is, however, even more important to encourage large-scale producers to consult governments, research institutes, and NGOs regarding certain aspects/criteria of sustainability [189,190]. In this sense, cooperative institutions (quality leader here) should particularly consider using one such sustainability evaluation framework to help members evaluate and become more professional in sustainability management.

Sustainable winery management is not about being sustainable or not. There are many different paths and nuances since sustainability has strategic, managerial, organizational and consumer-related implications [92]. This explains why companies that are considering the right way of integrating sustainability into their strategic approach need to reflect on a market-based and a resource-based approach [191]. There are several reasons why a resource-based approach to integrating sustainability into a company’s strategy is deemed suitable. First of all, there is a mutual compatibility of the concepts of sustainability and a resource-based approach to strategy, in the sense that a preference is usually given to careful management of valuable and unique resources to ensure a long-term success of the strategy [116,117]. Hart [192] expanded the resource-based view to include a firm’s environmental practices and create a natural resource-based view of company strategy. Furthermore, the market-based approach to sustainability relies on decontextualized notions of ethical and green consumerism while neglecting the problems of defining the ethical consumer and their apparent survey attitude–real-life behaviour gap [122,123,124,125]. Many consumers associate the eco-certification process with lower quality wine, which is why many wineries choose not to include eco-certification information on their labels [193]. In conclusion, there are food-production strategies that combine both a market-based approach and a resource-based approach to sustainability, as well as those who rely solely on a resource-based approach to sustainability. The abovementioned results underline that strategies are not based solely on market-based approach that can be deemed sustainable. It is therefore important for wine producers to start with a sustainability evaluation of their own resources and business practices before proceeding further to sustainable food markets and sustainable consumers.

6. Limitations and Future Perspectives for Research

Case research methodology, as applied in this research, suffers several limitations [194]. Analysing few entities in depth with access to multiple sources allows one to explore potential causal effects and validate data; however, the results cannot claim to be representative [165]. Few analysed entities, all from one industry and solely from one country, can only generate explorative insights. In addition, the observed business models and underlying dynamic capabilities are transformative.

The approach of analysing four highly different entities—differing in size, strategic positioning, location, business model, etc.—allows us to explore the underlying phenomena of strategic sustainability, dynamic capabilities, and business model design; however, it suffers from limitations. The results are not representative. Searching only one industry limits generic insights, especially since the observed agriculturally engaged population with its dependency on nature and the ecological environment deviates from industrial or service companies. Involving the protagonists and their opinions in the data gathering represents a viable research approach, especially for small business research [195,196,197,198,199,200], but it jeopardizes objectivism [201,202,203,204]. The presented results should either motivate comparable research in other SME industries or allow hypothesis generation and validation in regards to strategic business model design in light of sustainability and dynamic capabilities.

A robust and future-oriented wine industry needs comparability and scientific consistency as to how sustainability is being implemented internationally in order to reduce self-referencing and to expand business networks of sustainable wineries [205]. There is a need for flexibility as different wineries face individual challenges and possess different sets of innovation capabilities related to sustainability, and are thus expected to interpret and implement sustainability in different ways, albeit with some commonalities [149,191]. The reason for this duality in implementing sustainability is that the wine industry needs, on the one hand, more scientific consistency, clarity and transparency in order to hold producers accountable while reducing information asymmetries towards consumers; on the other hand, it also needs flexibility in order to include multiple stakeholders in the decision-making process and recognize regional and international differences in terms of production and consumption risks [205,206]. Therefore, the real question for the future of sustainability in the wine industry is how to stay on a path so diffusive and complex in a constantly evolving environment where adaptation is an imperative [92].

The selectiveness of a case study approach, which provides relevant in-depth information on the basis of exhaustive information on the reality under analysis, asks for further and complementing investigations [130]. Observations across multiple countries would allow the reflection of economic and cultural contextual perspectives, which is highly relevant in the wine market with country-specific wine supply and consumption. In addition, a complementing quantitative approach fosters research streams to better understand the interaction of strategic positioning, dynamic capabilities, and sustainability management. The results of this study might motivate the generation of a typology of dynamic capabilities aligned with strategic grouping in SME. Furthermore, the transformative nature of business model design and dynamic capabilities invites a timely comparison in respect to the driving forces.

7. Conclusions

The presented research aimed to analyse sustainability in the context and interaction of generic strategies and dynamic capabilities. A chosen multi-case approach underlying the empiric approach synthetizes a comprehensive set of routines and dynamic capabilities for wine business sustainability covering all three areas of sustainability. A dynamic capabilities approach to sustainability offers the safeguarding from prescribing any definitive solutions; however, it sees a transformation towards sustainability as a process and developmental path. In order for the transformation towards sustainability to be effective, organization behaviour needs to be altered by developing dynamic capabilities for sustainability with alignment with the strategic positioning. Therefore, this paper considers the sustainability assessment of German wineries from a strategic, resource-based perspective, postulating that dynamic capabilities (especially the asset “orchestration” processes) for sustainability are of central importance for sustainability of the whole wine industry, but also for single wine producers in creating and building competitive advantage in the modern wine market. The sustainability assessment should especially empower small wineries to deal strategically with sustainability issues by identifying important firm resources, dynamic capabilities and routines from a sustainability perspective. The hereby generated insights can help to increase the awareness of business model design components in alignment with strategy and sustainability, and support a creative process of translating sustainability into company strategy. This should help wine producers make better decisions and commit them to targeted investments in order to improve the sustainability of the wine production process.

On the basis of a multi-case analysis with protagonists for the dominant generic strategic groupings, the premium strategist resulted in a leader regarding the sustainability concept as well as supportive dynamic capabilities. The dynamic capabilities allow them to act as first mover in the direction of sustainable development and to back their premium position. In line with this, the quality leader strategy also leverages product quality on the basis of sustainability and dynamic capabilities. Taking first position in the dynamic capabilities for social sustainability and second to premiums strategist positioning for dynamic capabilities for economic as well as environmental sustainability illustrates that it allows to build on its size and a professional structure to secure strategic alignment. The price–value strategy approaches sustainability primarily from a market-based and circular economy view. The niche strategist´s dynamic capabilities in the analysed population illustrated an entrepreneurial and effectuation-based approach for sustainability, also rooted in a lack of size and financial means, so that the dynamic capabilities are fine-tuned to exploit market opportunities and niches.