Issues of current modification of business models under the influence of socially oriented management

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Issues of current modification of business models under the influence of socially oriented management

Maksym Kolesnyk, PhD in Economics, Associate Professor

of the Department of Management of Foreign Economic Activity

of Enterprises, National Aviation University

Abstract

The article deals with the essence, types and features of modification of business models of enterprises under the influence of socially oriented management. The main universal theoretical provisions on business modeling are considered, applied aspects are studied on the business models of aviation enterprises, both airlines and airports. The purpose of the article is to research the impact of socially oriented management theories on business models of enterprises as incremental innovations. The impact of socially oriented management on the business models of enterprises is studied by analyzing the application of corporate social responsibility of enterprises. The study of enterprises' activities was conducted by analyzing the business models of enterprises, as they reflect the method of doing business in interaction with the external environment, including stakeholder communication. The theoretical and methodological basis of the research are fundamental ideas of the theories of economic competition, strategic management of enterprises, cooperation and business modeling, as well as individual author's positions from the scientific papers of domestic and foreign scientists, in particular on business models of air enterprises. The following methods were used during the research: systems approach and the method of induction to form a new classification of business models by the level of implementation of socially oriented management, and complex approach to find sustainable correlates and differences in business models of enterprises. It is proposed to consider three types of business models of enterprises in the prism of the impact of corporate social responsibility. The hypothesis is also proposed, according to which it is reasonable to consider the impact of socially oriented management on business models of enterprises as a hybrid of social innovations and responsible innovations in the form of open innovations. The factors of their stimulation are investigated. The results of the research will allow continuing the research for the organization of more effective strategic management of enterprises and approaches to state regulation of the objects of research.

Key words: business models, innovations, socially oriented management, corporate social responsibility, stakeholder management, sustainable development.

Максим Віталійович Колесник, кандидат економічних наук, доцент, доцент кафедри менеджменту зовнішньоекономічної діяльності підприємств Національного авіаційного університету

Питання сучасної модифікації бізнес-моделей підприємств під впливом соціально-орієнтованого управління

Анотація

В статті розглядається сутність, види та особливості модифікації бізнес-моделей підприємств під впливом соціально-орієнтованого управління. Розглянуто основні універсальні теоретичні положення в бізнес- моделюванні, досліджено прикладні аспекти на бізнес-моделях авіаційних підприємств, як авіакомпаній, так і аеропортів. Метою даної статті є дослідження впливу теорій соціально-орієнтованого управління на бізнес-моделі підприємств як інкрементних інновацій. Вплив соціально-орієнтованого управління на бізнес- моделі підприємств досліджено шляхом аналізу питань застосування підприємствами корпоративної соціальної відповідальності. Дослідження діяльності підприємств проведено шляхом аналізу бізнес-моделей підприємств, оскільки вони більшою мірою відображають метод ведення бізнесу у взаємодії із зовнішнім середовищем, в том числі комунікації із стейкхолдерами. Теоретичним і методологічним підґрунтям дослідження є як фундаментальні положення теорій економічної конкуренції, стратегічного менеджменту підприємств, кооперацій та бізнес-моделювання, так і використані окремі авторські позиції з наукових праць вітчизняних і зарубіжних науковців, зокрема щодо бізнес- моделей авіакомпаній. Під час дослідження було використано такі методи: системний підхід і метод індукції для формування нової класифікації бізнес-моделей за ступенем імплементації соціально-орієнтованого управління, комплексний підхід для знаходження закономірностей і відмінностей у бізнес-моделях підприємств. Запропоновано розглядати три типи бізнес-моделей підприємств в призмі впливу корпоративної соціальної відповідальності. Також запропоновано гіпотезу, згідно з якою пропонується розглядати вплив соціально-орієнтованого управління на бізнес-моделі підприємств як гібриду соціальних інновацій та відповідальних інновацій у формі відкритих інновацій. Досліджено фактори їх стимулювання. Отримані результати дослідження дозволять продовжити наукові пошуки для організації більш ефективного стратегічного менеджменту підприємств та підходів державного регулювання об'єктів дослідження.

Ключові слова: бізнес-моделі, інновації, соціально-орієноване управління, корпоративна соціальна відповідальність, управління стейкхолдерами, сталий розвиток.

Introduction

Formulation of the problem. In the structure of the factors of today's economic competition, the presence of trust between market participants is of particular importance under the influence of the current global trend towards the introduction of corporate social responsibility (hereinafter referred to as CSR) as a socially oriented component in the management of enterprises.

Considering the evolution of the principles of enterprise competitiveness management, it can be noted that until recently the nature of competition was such that it was enough to apply, for example, the analysis of the five forces of competition according to Michael Porter's methodology to control the competitiveness of the enterprise and its business model. However, the current structure of market relations has become more complicated significantly, so the enterprise faces today a more difficult task of managing relations not only with customers, partners and resource suppliers, but also with a large number of other stakeholders.

Main material

The research of the genesis of the concept of business model shows the content stabilization of the concept and the accuracy of its definition and its application in today's business practice and scientific literature. At the same time, as V.V. Skryl emphasizes, the basis of in-depth analysis, today, when defining the essence of the concept of "business model", there are two main approaches: 1) when the activities of the enterprise are considered in terms of business processes and technologies (focus is directed inside the enterprise) and therefore the business model is aimed at representing business processes within the enterprise; 2) involves focusing on the value that the enterprise creates for external customers, as well as on the results of activities, so the business model is aimed at the external environment of the enterprise [1, p. 491].

However, if we consider the study of Carlos Marquez DaSilva and Peter Trkman, "business models are a certain combination of resources that create value for both customers and the organization through transactions" [2], which simultaneously reproduces both of the above approaches.

The following modern extended definitions of business processes are also of great interest:

1) business model is a description of an organization's structural, operational, financial processes. That is, the way the business processes take place within the company: management system, work regulations, communication between divisions, and ways of monetization [3];

2) business model serves as a logical and visual representation of how the company functions at all its levels, how it creates profitable conditions for customers, how it ensures the necessary level of sales and the corresponding profit [4].

Also, the definition of Joan Magretta is important, who proposes to understand the modern concept of business model as a business architecture, with an element of creativity, because in the knowledge economy consumers have a choice, and to be competitive, you need to provide consumers with not just a product or service, but a solution to their problems [5].

The most successful, in our opinion, given the above, is the following recognition: 'Business models reveal the potential of a business to its essence. A business model answers fundamental questions about the problem you're going to solve, how you're going to solve it, and the potential for growth in that market' [6]. This definition correlates with key elements of the business model of any enterprise in V.V. Skryl's research, which are:

- value to external customers offered by the enterprise on the basis of its products and services;

- value-creation system, which includes suppliers and customers, as well as valuecreation lanes;

- assets used by the enterprise to create value;

- financial model of the company, which determines both its cost structure and the way manner of generating profits:

- value, that they offer should be easy to identify [1; 6].

The above rules for creating a business model may change under the influence of industry specifics and innovations, as well as under the possible influence of additional factors.

The above aspects of business models are universal; they can be adapted by, at least, the following additional requirements for the business model of air companies:

1. There is a fixed amount of resources available for sale, i.e. the available capacity cannot be increased or decreased without significant complications (e.g. the number of seats in a particular aircraft cannot be increased or decreased).

2. The resources being sold are perishable. This means that there is a time limit for the sale of resources, after which they cease to have value. That is, if a particular good or service is not sold, it can no longer be sold (e.g., seats on a particular flight).

3. Fluctuations in demand (with static demand, cost structures and available capacity can be easily adjusted).

4. Effective financial relations involve the optimal use of the willingness to pay for each individual segment based on the application of different fares.

5. An effective marketing strategy of differentiation within one segment must ensure that customers are willing to pay different prices for the same amount of resources [7].

It is worth noting the study of Z.M. Poberezhna, who assessed the current types of airline business models comprehensively. In the study, the researcher describes in detail, based on the analysis of theoretical research and periodical publication in 2020, the components of nine business models of air companies. For example, these are the following business models: Network airlines; Scheduled international airlines; Regional carriers; Charter airlines; Low-cost airlines; Cargo airlines; Mixed model; Isolated airlines; Business (VIP) airlines [8, p. 242].

However, Z.M. Poberezhna does not provide socially oriented components in any of these models. This may indicate the effect of "marketing myopia" of air enterprises in relation to modern trends in sustainable development. Therefore, the research of the specific formation of air enterprises under SOME in the prism of modern social trends is actual.

We should consider the impact of CSR on business models on the example of such world- famous airlines as Ryanair and Qantas, and SEA as Group of airports in Milan (Italy). Social responsibility in the field of air transport is somewhat stricter, for example, than in the food industry, as inaccuracies or errors of the company are manifested in the loss of human lives.

Therefore, in order to determine the current trends in business models of air enterprises, we took three enterprises for analysis:

1. Ryanair as a well-known low-cost airline, a company operating according to the leastcost model;

2. Qantas as a well-known safety airline with more than 100 years of experience and a strong corporate culture of transport service;

3. SEA as the integrated airport Group, which is a modern and growing organization in the aviation field.

Consider Irish Ryanair's business model, which can be interpreted here as a combination of resources (e.g. non-unionized workforce, standard fleet of aircraft) and the way they are used through transactions (e.g. online ticket booking). Low-cost airline Ryanair is a business model that does not declare the development of CSR in its activities [2; 8, p. 240].

In contrast to Ryanair, Qantas and SEA incorporate CSR as socially oriented management in their business models. Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

We should clarify that modern SOME is formed on the basis of the sustainable development paradigm, which is based on the 17 UN Sustainable Development Goals the implementation of which is carried out through CSR.

According to S.Y. Trapitsyn's classification, there are currently three approaches to CSR management, which take into account:

- positions of stakeholders "external" and "internal";

- positions of public relations (in social trends and interaction with both "primary stakeholders" and "derivative stakeholders");

- position of ethical and moral norms, when the management of the company's responsibility can be carried out within the framework of the following institutionalized models: amoral management and moral management [9].

In our opinion, the study of current world trends in the development of business models of leading airlines allows to outline the following indicative differences:

- passenger safety determines the importance of humanization of the airline business, which can be achieved by ensuring the harmonization of industry standards and global requirements for CSR;

- while creating competitive business models due to globalization, enterprises are gradually forced to bring their activities closer to successful world business models, CSR allows to ensure strong business development and has become one of the main indicators of the company's performance, as included, for example, in the stock indices Dow Jones, FTSE4Good, Corporate Responsibility Index (CRI);

- business models on the basis of CSR demonstrate a high level of competence in approaches to solving global and sectoral problems in various areas;

- the generalized data of the CRI index at the London Stock Exchange indicate that the business models based on the CSR ensures a more positive assessment of the stock markets, they exceed the value of analogues (according to various literary sources, today this figure can be from 3.3 to 10% increase in their value) [10].

It is also important to keep the holistic understanding of the impact of CSR on the business models of enterprises, including the aviation industry. According to the impact of the result of changes in business strategies of enterprises, it can be argued with a high level of reliability that CSR in this case is an incremental innovation that can be defined as an open innovation in form, and organizational in purpose.

To generate new ideas, it is important to go beyond the generally accepted concepts and accepted logic of business modeling in the industry. Innovative transformation of the business model occurs according to the following main parameters: value proposition, customers and customer focus, interaction with other stakeholders, profitability of the model [11, p. 46-49].

The term "incremental" here means gradual, step-by-step. In other words, "incremental innovation" is the commercialization of new ideas, the result of which is associated with the buildup of already existing goods or organizations (existing entities and not leaving the market).

From our viewpoint, incremental character shows rate and level of influence of innovation on business model, and in subject matter to change business models it is logical to consider social and responsible innovations.

Six defining components can be considered in the structure of responsible innovation: involvement of business in the processes of science and education: involvement of public values; open access to research results; commitment to ethics should ensure increased social relevance and acceptability of innovation results, management methods should be adapted (for example, responsible politicians are needed to prevent dangerous or unethical developments in research and innovation); gender equilibrium [12].

Within the framework of the objectives of this study, the tasks that can be solved with the help of social innovations are as follows: increasing the efficiency of enterprises and organizations in social sphere; improving the quality of social services by better meeting the constantly changing requirements of society; reducing social inequality by increasing the availability of services provided. Among the factors that influence the development of social innovations are: taking into account social innovations in the formulation of scientific, technological and innovation policy; stimulating research in the field of social innovations [13].

Now we should consider activities of Qantas and SEA. Today the Qantas business model has the following feature: applies the system approach to all types of risks, not just aviation safety. It integrates aviation operational safety, work health and safety, aviation and cyber security, environment (including climate change) and business resilience, learning from collaboration and shared experiences to make the system better.

Qantas was one of the first airlines to introduce an integrated Safety Management System in the 1990s, and it continues to evolve it. A clear social purpose helps attract new generations of customers and employees; a proactive response to climate change gives company the license to grow over the long-term; robust supply chain policies help Qantas expand responsibly into emerging markets [14; 15].

Qantas engages in CSR in four main categories (table 1) [16].

The main stakeholders of Qantas airline are the following: Shareholders; Aviation clients; Non-Aviation clients; Banks/Financing; State Authorities/Bodies; Suppliers; Trade unions; Environmentalists; Local bodies; Consumer associations [17].

In recent years, SEA, unlike Qantas, has increased the range of tools involving stakeholders in sustainable development policies.

modification business aviation