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Journal of Cleaner Production 45 (2013) 38e49

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Journal of Cleaner Production


journal homepage: www.elsevier.com/locate/jclepro

Expanding bioplastics production: sustainable business


innovation in the chemical industry
Alastair Iles*, Abigail N. Martin
Department of Environmental Science, Policy, and Management, University of California at Berkeley, 130 Mulford Hall, Berkeley, CA 94720, USA

a r t i c l e i n f o a b s t r a c t

Article history: The case of bioplastics illustrates how business models can link producers and customers through the
Received 13 September 2010 development of new technologies and products. Chemical companies have assumed that reducing costs,
Received in revised form increasing yields, and developing better feedstock supplies will guarantee the success of bioplastics in
5 March 2012
the market, yet a number of unconventional hurdles exist. Companies need to build markets for bio-
Accepted 7 May 2012
plastics and to assure customers that bioplastics are indeed sustainably made. We contend that
Available online 22 May 2012
companies are most able to develop business models that bring bioplastics to market effectively when
they develop and mobilize their “dynamic capabilities” around sustainability. DuPont, BASF, and Braskem
Keywords:
Bioplastics
have identified new market opportunities for bioplastics, designed distinctive types of business models
Biopolymers to seize these opportunities, and devised ways to create increased value by communicating performance
Chemical industry advantages and environmental impact reduction to downstream entities. Because they have not included
Business models societal actors in their efforts to define sustainability, the firms face significant risk that their sustainable
Dynamic capabilities value propositions may not endure without further innovations in creating accountability systems.
Innovation Ó 2012 Elsevier Ltd. All rights reserved.
BASF
DuPont
Braskem

1. Introduction market demand, or even create new market demand for innovative,
environmentally-friendly products. A major challenge, then, is to
Sustainable innovation in the global chemical industry can take find ways to integrate sustainable innovation in this vein into the
different forms. Companies may make their existing manufacturing chemical industry’s business models.
processes more efficient, reorganize their research and develop- The case of bioplastics illustrates how business models can play
ment functions to focus on environmentally-friendly technologies a central role in linking producers and customers through the
such as green chemistry, or impose environmental performance development of new technologies and products. Faced with
standards on suppliers. Since the 1990s, many companies have growing environmental concerns from consumers and govern-
moved from pollution prevention to green chemistry as a more ments, as well as unpredictable, high fossil fuel prices, many
fundamental way to achieve sustainability. Green chemistry d established chemical companies have explored producing poly-
a broad term referring to chemical production that aims to reduce mers from renewable biomass feedstock such as corn and sugar-
environmental and health hazards and to advance sustainability cane. Although the use of biomass to produce chemicals is not
(Clark and Deswarte, 2008) d aligns with the industry’s basic novel, scientific advances over the last decade in industrial
business strategy of achieving growth through new products and biotechnology have diminished the costs of converting organic
process technologies (Arora et al., 2001). Companies have focused material into platform chemicals that can supply most other
on green chemistry process innovations that make conventional chemical manufacturing streams, such as polymers (Carole et al.,
chemical production more efficient and less costly (Eder, 2003; 2004). The European Technology Platform for Sustainable Chem-
Radonjic and Tominc, 2007). Yet companies could also concentrate istry estimates that up to 30 percent of raw materials for the
on developing new processes and technologies that meet current European chemical industry could come from renewable sources by
2025 (SusChem, 2005). Yet to date, biobased chemical production is
tiny compared to conventional chemicals. Further, although bio-
* Corresponding author. based product lines could lessen the negative environmental and
E-mail address: iles@berkeley.edu (A. Iles). social impacts associated with petroleum feedstock (O’Rourke and

0959-6526/$ e see front matter Ó 2012 Elsevier Ltd. All rights reserved.
doi:10.1016/j.jclepro.2012.05.008
A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49 39

Connolly, 2003), they can still have significant impacts. Despite the Yet the organizational behaviors and processes underlying how
relatively rapid expansion of biobased chemicals in the 2000s, the companies move toward sustainability are left relatively unspeci-
chemical sector continues to grapple with the implications of fied. Researchers studying the interface of environmental perfor-
switching to a new raw material. mance and competitive advantage in business strategies often
To understand how industry is experimenting with this transi- neglect the ways in which companies shift the focus of their R&D
tion, we investigate bioplastics, the fastest growing biobased capabilities, reorganize their innovation processes around new
product line globally. In recent years, companies have introduced techniques and inputs, collaborate with other industrial sectors and
corn-based cups and packaging, corn-based fibers for use in carpets stakeholders, and build markets around new definitions of
and clothes, and bottles made from sugarcane. These products are sustainability. One approach to developing more applied theory is
marketed as offering potential environmental advantages over to focus on the genesis and adaptation of business models. Whereas
conventional plastics, along with some economic benefits. But like a business strategy is concerned with how a firm will compete,
other biobased innovations, bioplastics have struggled to achieve a business model focuses attention on the “core logic” underlying
market share; according to one estimate, bioplastics constitute less how various “activity systems” in the company can fit together to
than 0.5% of world plastics consumption (Shen et al., 2009). deliver value to its customers and suppliers (Linder and Cantrell,
Conventional plastics continue to dominate the market for several 2000; Magretta, 2002).
reasons. Petroleum-based production benefits from large econo- Chemical companies are recognizing the centrality of business
mies of scale and mature technologies. There are also difficulties in models to meet challenges of taking bioplastics to market.
substituting familiar incumbent plastics with new untried plastics, Companies can innovate not only in technologies but also in busi-
as well as in scaling small-scale biotechnologies to industrial levels ness models (Chesbrough, 2010; Demil and Lecocq, 2010). Estab-
(SBI Energy, 2010). It is still unclear whether bioplastics can be lished companies face decisions about whether and to what extent
profitable for industry despite the sunk costs required to expand they will change familiar products and processes that are already
R&D activities and create new infrastructure. In addition, sustain- profitable to integrate bioplastics into their portfolio (cf. Johnson
ability issues pertaining to bioplastics remain unresolved, calling and Suskewicz, 2009).1 Confronted with uncertain market pros-
into question the bioplastic value proposition. pects for bioplastics, they must imagine how using biomass feed-
This article examines the bioplastic businesses of three major stock can add value to their firm as well as to their customers and
chemical companies to understand how firms are devising business suppliers. As with petrochemicals, companies seek to develop
models to address the challenges of making the business case for superior performance attributes that result in beneficial product
bioplastics and addressing sustainability. We contend that differentiation for bioplastics. However, a more challenging deci-
companies are most able to develop business models that bring sion is whether to substitute incumbent products with bioplastics,
bioplastics to market in a sustainable fashion when they mobilize or make bioplastics alongside conventional plastics. Companies
their “dynamic capabilities” (Teece, 2007). After discussing busi- may choose to adapt their existing business model or to nestle an
ness models for sustainability and the dynamic capabilities experimental biobased business within their existing model to
framework, we contextualize the emergence of the bioplastic minimize risk. They may also create new business entities by
industry within the trajectory of the traditional plastics production acquiring smaller firms, such as biotechnology start-ups. No busi-
system. BASF, DuPont, and Braskem are multi-national incumbents ness model will fit all companies given differences in strategy,
and possess significant resources while continuing to thrive in their organizational history, and societal settings. However, business
conventional plastics businesses. These companies, however, models should reflect a company’s vision for how it will interpret
diverge in how they have mobilized their dynamic capabilities, thus evolving technologies, customer demand, and regulatory
making the role of such capabilities in adapting business strategies requirements.
clearer. By evaluating how firm-level dynamic capabilities inform The development of business models around bioplastics can
business models for sustainable innovation, researchers can gain force chemical companies to consider more complex questions
rich insight into the nature and impacts of business models in around what sustainability means for their value chain. Faced with
advancing industrial sustainability. consumer reluctance to buy dubiously sourced bioplastics or diffi-
culties in obtaining enough biomass from agricultural systems in
2. From corporate environmental performance to business a sustainable fashion, companies need business models that
models for sustainability encompass more than defining competitive strategies, investment
priorities, R&D, commercialization and marketing plans. They need
Over the past 15 years, business and organizational scholars models that to help them foresee and manage obstacles across the
have recognized that adhering to regulation and implementing supply chain, such as integrating unfamiliar technologies,
voluntary pollution prevention programs are not the only critical rebuilding relationships with suppliers and customers, and
factors in achieving better corporate environmental performance. ensuring environmentally and socially beneficial outcomes across
Porter and Van der Linde (1995) hypothesized that businesses both the value chain and the product life cycle. In devising business
could achieve new competitive advantage by viewing environ- models for bioplastics as a more sustainable product than
mental issues as core to their business strategies. Instead of treating conventional plastics, chemical companies may need to decide how
pollution as extrinsic to production, companies could profit from far to restructure their core logic around realizing ecological and
reducing their environmental impacts, or by developing products social value.
with superior environmental outcomes. Hoffman (2000) added Building on Teece (2007), we posit that firms can generate
that companies can lobby governments to recast regulation in more business models for sustainability by (1) creating a higher strategic
stringent terms in order to crystallize markets for products or decision-making process, and (2) mobilizing their dynamic capa-
services that meet the newly identified environmental needs of bilities around sustainability outcomes specifically. Dynamic
customers. Moreover, instead of opposing consumer and NGO
pressures, companies can also help create these new markets by
responding positively to societal concerns (Hoffman, 2000). A 1
Business models may serve different roles and functions in the case of start-ups,
growing body of empirical research suggests that these principles like Genomatica and BioAmber. These firms must evaluate how to compete with
are broadly valid. incumbent technologies, not how to deal with their existing businesses.
40 A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49

capabilities are internal processes creating, replacing or adjusting 3. Methods


a business model in response to changing business environments
and new customer needs (Teece, 2007). The strategic decision- Initially, we investigated why the emerging bioplastics sector
making level (the why) helps drive the capabilities level (the has struggled to establish itself amidst traditional business models
how). The dynamic capabilities framework groups these company- in the petrochemical plastics industry. Whereas business models
wide abilities into three areas: (i) sensing opportunities and for incumbent chemicals are organized by large production scales
threats; (ii) seizing opportunities; and (iii) maintaining competi- and established client preferences, the emerging bioplastics sector
tiveness by reconfiguring a company’s assets. Mechanisms of poses new technical, business, and infrastructure challenges that
dynamic capabilities include practices, policies, organizational companies are still learning to address. To develop bioplastics
units, tools, and incentives for generation and use of data, and product lines, chemical companies must attend to changing
workforce modifications. customer needs, markets, and socio-political conditions together
The framework posits that business strategy involves devel- with the organizational, scientific, and marketing challenges of
oping business models and technologies that achieve competitive integrating industrial biotechnology and agricultural resources
advantage by reshaping the business ecosystem, rather than by into their supply chain in ways that can maximize existing
“coping with competition” (e.g. Porter and Van der Linde, 1995). manufacturing systems and demonstrate ecological value.
From this perspective, successful innovation in a changing busi- To understand how companies responded to these challenges,
ness environment requires a focus on “meta-competence”, as we adapted the dynamic capabilities framework to guide
opposed to operational competence (Teece, 2007). In practice, this a comparative case study of bioplastics adoption. Most research on
can mean discovering new business opportunities by defining dynamic capabilities to date have focused on single company or
markets and reshaping industrial norms, or by developing industry examples. We chose three companies from different geo-
new combinations of knowledge and technologies through political settings e BASF, DuPont, and Braskem, headquartered in
creating cross-functional research teams supported by new Germany, the US, and Brazil respectively e that are industry leaders
product development routines (Teece, 2007; Eisenhardt and in conventional plastics manufacturing. Each of these firms have
Martin, 2000). introduced bioplastics as specific intermediate or platform chem-
By moving from the dynamic capabilities framework to the icals. Bio-propanediol, PDO, (DuPont) and polyhydroxyalkanoates,
question of how business models can help to broaden the research PHAs, (BASF) are now the largest intermediate biobased chemicals
field of sustainable innovation, researchers can evaluate the extent being produced, while the platform chemical bio-polyethylene
to which companies’ meta-competencies engage societal-based (Braskem) may develop into the single largest bioplastic product
definitions of ecological and social value. In this view, the devel- by 2015 (SBI Energy, 2010; Shen et al., 2009).
opment of business models for sustainability in the bioplastics We created a standard tripartite format for gathering data
market depends on whether chemical companies can orchestrate around how companies have been (1) sensing and shaping oppor-
ongoing improvement and accountability for sustainability tunities and threats; (2) seizing opportunities; and, (3) maintaining
outcomes. Bioplastic business models in chemical companies e if competitiveness by reconfiguring a company’s assets. We used
they exist e are often poorly calibrated with sustainability goals. a range of empirical evidence. Using electronic searches, we
Therefore, we adapt Teece’s framework so that it incorporates surveyed the scientific, business, market, and policy literatures
specific processes for making sustainability more valuable to regarding how each company conceived of, developed, and mar-
companies, and emphasizes accountability for actual sustainability keted its bioplastic technology. We also reviewed the corporate
outcomes. policies, reports, statements, and life-cycle assessments that each
To increase the likelihood that a company adopts a business company produced, for both its entire biobased chemical portfolio
model that enhances sustainability, the dynamic capabilities of and the specific bioplastic that we focused on. In addition, we
a firm should focus on fulfilling some or all of the conditions interviewed research and marketing managers at the three
identified by Boons and Ludeke-Freund (2013). That is, dynamic companies, and analyzed their public conference presentations.
capabilities should address how the company will generate its
profitability from making bioplastics ecologically and socially 4. From incumbent plastics to bioplastics production
valuable, how it will engage with societal actors to define and
monitor this value, how it will collaborate with suppliers and In this section, we review the conventional plastics production
customers to create value for them as well, and how the revenues system and the challenges that chemical companies face in
will be shared equitably across the production chain. In this study, manufacturing bioplastics. We then sketch major trends in how
we focus on the dynamic capabilities of using research and devel- bioplastics are emerging. This includes a brief background of the
opment to find novel value propositions, commercializing a bio- industrial context in which individual companies have struggled to
plastic business model, and embedding it widely in the company develop new business models around biobased plastic innovations.
with ongoing improvement. To increase the likelihood of mean- Chemical companies have assumed that reducing costs, increasing
ingful sustainability outcomes, business models should include yields, developing better feedstock supplies, and simplifying
accountability systems (Weber, 2003; Iles, 2007). Accountability production will guarantee the success of bioplastics in the market,
systems connect the ongoing development of technologies with yet a number of unusual hurdles exist.
changing societal, policy, and market pressures for increased Eighty percent of conventional plastics produced today are ther-
sustainability, and make companies accountable to shareholders, moplastics, which can be re-melted and, therefore, recycled. Both
workers, governments, consumers, and communities for substan- thermoplastics and the smaller category of thermosetting polymers
tive progress in achieving sustainability. Increased accountability (stronger, durable molecular structures that cannot be later remol-
for sustainable outcomes can strengthen nascent dynamic capa- ded) are made in tightly integrated manufacturing complexes.
bilities, feeding back into innovation and potentially enhancing Beginning at petrochemical refineries, cracking processes transform
a firm’s competitive advantage. Thus, companies can improve their crude oil and natural gas into platform chemicals like the monomers
prospects by structuring their dynamic capabilities around ethylene and propylene. Polymerization occurs at nearby industrial
achieving both competitive advantage and sustainability within sites where platform chemicals are chemically bonded into polymer
and outside of traditional company boundaries. chains. Once the polymers are compounded into process-ready
A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49 41

pellets, they are sold to customers that transform the pellets into Table 1
plastic products sold further downstream to other manufacturers or Current pathways for biopolymers.

retailers. Excepting historic polymers like Plexiglas, most polymers Current methods for Biopolymers Examples of
are not marketed as brands that are known to downstream manu- biopolymer production marketed biopolymers
facturers and consumers (Meikle, 1997). Modified natural Starch, starch derivatives; Novamont’s starch
Business models for conventional plastics reflect a highly stable polymers from Cellulose, cellulose resin: Mater-Bi
plant material derivatives; Lignin
value chain rooted in mature markets. Over eighty years, the
Polymers made Polyhydroxialcanoates, Metabolix’s PHA: Mirel
various production stages from polymerization to downstream directly by such as Polyhydroxi-
plastics manufacturing have become standardized around partic- micro-organisms butyrate and
ular inputs, processing systems, operating practices, economic or plants copolymers (PHB/PHA);
models, product specifications, and measurements of output and Polylactic acid (PLA)
Polymers made from Polylactic acid (PLA) NatureWorks’ PLA
environmental impacts (Ludwig, 1999). As a result, it is difficult and monomers obtained Polypropylene- DuPont’s PPT: Sorona
costly for companies to gain additional market share by introducing by fermentation terephtalate (PPT)
new polymers (Stevens, 2002). Companies can invest heavily in Polyethylene (PE) and Braskem’s Green PE
developing a new polymer, only to find that customers prefer other ethylene derivatives
incumbent products that perform as expected in their injection
molding, extrusion and casting machinery. Thus, competitive
advantage in large polymer businesses is predominantly achieved feedstock type. It is expected that future biorefineries will switch
by reducing production costs and increasing reaction yields, and between multiple feedstock in concert with agricultural and
product innovation is normally limited by the need to find “drop- economic conditions (Clark and Deswarte, 2008).
in” polymer blends that mirror the attributes of existing plastics. Entering biobased chemical manufacturing is a complex deci-
However, producers can gain new market share through inno- sion for established chemical companies thriving on conventional
vation that satisfies performance expectations while offering some chemical production systems. Firms vary in their approaches: they
additional benefit such as higher quality or better environmental may adapt their existing business model to hedge their feedstock
impacts. One area that has gained attention over the last three sources by developing biobased versions of incumbent plastics, or
decades is degradability. Plastics are valued for their ability to resist they may create a new model by building a distinct biobased
degradation, making plastic waste a serious challenge. The US division to produce new plastics. In either case, companies consider
Environmental Protection Agency estimates that in 2008, the US how trends in fossil fuel prices, evolving regulatory systems (such
alone generated 13 million tons of plastic in the municipal solid as the European Union’s new REACH regime), and greater demand
waste stream (US EPA, 2009). Such waste may persist for decades to for ecologically-friendly products affect the business case for bio-
millennia, and incineration can release toxic fumes. plastics (SBI Energy, 2010).
In the 1980s, several companies responded to this concern by To maintain markets, producers contend that biobased poly-
introducing polymers made in part from plant starches, which mers must meet at least the same processing and performance
would theoretically degrade once in the waste stream. These plant- specifications that exist for conventional polymers (Willems, 2009;
based polymers were made into polyethylene blends for a number Bryndza, personal communication, April 2011). Following this logic,
of throw-away applications, such as agricultural mulch films, food the industry has increasingly focused on duplicating the most
and beverage containers, and shopping bags. With enough sunlight, commonly used families of thermoplastics to make biopolymers
the starch component could biodegrade. However, potentially toxic more attractive as drop-ins to customers. Some biopolymers have
polyethylene residues were left behind (Stevens, 2002). Companies lower material performance compared to their conventional
eager to market the plant-based blends as biodegradable failed to counterparts in terms of melting strength, thermal instability, and
consider the many environmental factors that determine how shear sensitivity (Shen et al., 2009). Polymer producers have
plastics decompose in waste streams. As a result, the emerging resolved this issue by blending biopolymers with petroleum-based
bioplastics industry became associated with misleading environ- monomers or polymers, but reducing the renewable content and
mental claims, impairing market acceptance and contributing to making it more difficult to recycle or reuse the materials.
societal skepticism about bioplastics. To restore credibility, indus- Creating high-performing biopolymers at a reasonable cost
trial standards organizations issued testing guides to distinguish continues to be a key concern. Bioplastics require sizeable resources
between degradable, biodegradable and compostable plastics for R&D and factory construction. Although the fermentation plants
(Krzana et al., 2006). Yet most early starchepolyethylene blends did needed for biopolymer production are less complex and costly to
not meet biodegradable or compostable standards. Despite these build than traditional petrochemical plants (Brice, 2011), incum-
set-backs, polymer producers continued to view biodegradability as bent plastics often benefit from sunk infrastructure costs and
a business opportunity in light of government and retailer policies government subsidies. Scaling up biological processes presents
that encourage biodegradable plastics (Gross and Kalra, 2002). additional challenges. Biopolymer production requires expensive
As scientific developments have grown around biopolymer enzymes that cannot be recycled and must be kept alive. Reducing
science, the emphasis on “bio” has shifted from biodegradable to these costs depends on designing and stabilizing new microbial
“renewably-sourced” (Freemantle, 2005). Table 1 outlines the three metabolic pathways that differ from the reaction optimization
most common routes to bioplastic manufacturing. Not included in procedure that chemical companies understand well (SBI Energy,
this table are pathways currently under development such as the 2010). Moreover, bioplastics compete in a market that is already
genetic engineering of plants like switchgrass to produce polymers inundated with incumbents that have multiple functionalities and
directly in plant cells, which may reduce the costly separation undergo continual performance improvements, offering immense
operation associated with fermentation. Currently, routes that flexibility to manufacturers (Bryndza, 2011).
involve fermentation represent the most active areas of biopolymer Biopolymer production demands that chemical companies
production. These biopolymers are typically produced at bio- incorporate new knowledge and technology from modern molec-
refineries that are constructed near crop collection and processing ular biology, microbial biotechnology and metabolic engineering
points to avoid the costs of transporting biomass over long to lower the costs of biopolymer production. The chemical industry
distances. Currently, most of these complexes process one is fairly insular and most established companies have little
42 A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49

experience with inputs and technologies that differ from traditional models for integrating biobased resources into their polymer port-
production, particularly in the agricultural sector. Companies either folios. In each case, the firm built distinctive business models that
invest building in-house biotechnology capabilities or partner with addressed various sustainability, organizational, scientific, and
agriculture or biotechnology firms, which generally lack the process marketing challenges in adapting new feedstock and technologies to
engineering abilities or resources needed for large-scale polymer their existing chemical manufacturing activities. Table 2 summarizes
production (Bryndza, personal communication, April 2011). the companies and their respective bioplastic technologies, feed-
The challenges of developing bioplastic business models are stock, degree of challenge to incumbent plastics, and markets.
well-illustrated by the case of polylactic acid (PLA), a compostable In the late 1990s, DuPont set out to develop a biomass version of
biopolymer. In 2000, Dow Chemical Company and Cargill, a leading 1,3-propanediol from corn, using genetically engineered yeast, and
corn processor, formed DoweCargill LLC, a joint venture (JV) to designed a completely new plastic product to compete against
produce PLA, from corn at a plant in Nebraska and market it to established polymers with valuable new characteristics. The
manufacturers of food containers. Cargill had developed key tech- product, Sorona, entered the market in the early 2000s, with
nologies for PLA production since it began researching the a biomass version finally arriving by 2007. Around 2003, BASF
biopolymer in 1988 as a potential value-added product from its wanted to substitute its petrochemical-based biodegradable Eco-
corn processing. For Dow, the partnership was an unfamiliar foray flex film product with a biobased chemical to secure access to an
into using industry biotechnology and agricultural feedstocks for ecologically conscious niche consumer market, and chose to test
chemical production (Ritter, 2002). Combining Cargill’s technology novel polyhydroxyalkanoates (PHAs) made from starch. Not long
with Dow’s expertise in polymer production and marketing, the JV afterward, BASF decided to abandon this effort. Since, they have
represented an opportunity for both companies to harness their resurrected their biomass feedstock strategy by using the now-
dynamic capabilities for the emerging biopolymer market. established PLA polymer. In 2007, Braskem decided to produce
Initially, PLA was markedly more expensive to produce than polyethylene from sugarcane, using fermentation technologies, as
conventional polymers. Moreover, it was not a drop-in technology a drop-in replacement for PE made from petrochemicals, to take
and required changes in downstream manufacturing, making advantage of new consumer product company efforts to brand their
potential customers tepid. In marketing PLA, the JV failed to plastic containers as biodegradable.
demonstrate to customers why and how PLA was superior to However, none of the companies have developed business
incumbents such as PET in both environmental and performance models that go beyond traditional formulations of value to include
terms, leading to uncertainty regarding how PLA might perform in sustainability. Sustainable value propositions should incorporate
various applications. Frustrated by PLA’s apparently poor market the concerns of societal actors regarding the “balance of economic,
reception (personal communication, Dow executive, May 2011), Dow ecological and social value.” We argue that companies can develop
sold its share to Cargill in 2005 (Tullo, 2005). In 2007, Cargill part- sustainable value propositions by focusing their dynamic capabil-
nered with Teijin Corporation, a large Japanese chemical company to ities not only on achieving competitive advantage but also on
form NatureWorks LLC. NatureWorks collaborated with its customers driving, and creating accountability for, sustainability within and
to identify new applications and marketed a suite of PLA polymers outside of traditional firm boundaries. This requires developing
under the trademark Ingeo as compostable material ideal for pack- value propositions that are not only in concert with a firm’s oper-
aging and beverage applications. The company also emphasized cost ational capabilities and the immediate business ecosystem, but also
reduction by expanding its scale of production economy. with a larger network of societal actors. Firms may choose from
The case of PLA shows how business strategy for an early a spectrum of values. Unlike traditional value propositions, these
biopolymer evolved when dynamic capabilities informed the dimensions of value are framed through societal discourses and
business model for a biobased chemical. Whereas the DoweCargill behavior. Sustainable value propositions reflect how broader soci-
JV failed to engage business stakeholders, NatureWorks helped etal benefits are defined, for example, whether regulation and
shape the bioplastics ecosystem by staying in alignment with policy demand greater environmental performance from compa-
customer needs. By 2009, PLA had garnered 72 percent of the nies or regional reductions in greenhouse gas (GHG) emissions, or
intermediate biopolymer market (SBI Energy, 2010). However, whether customer behaviors are influenced by their perception of
customers continue to have significant concerns about PLA’s a product’s environmental impact.
performance in containers exposed to heat and its underlying In this section, we use Teece’s tripartite framework to understand
sustainability as a corn-based product. In the next section, we whether and how each firm restructured and mobilized its dynamic
discuss a number of the environmental concerns around bio- capabilities to bring a new product to market vis-a-vis incumbent
plastics. As bioplastics grow from their infancy into more main- polymer businesses, and to devise a sustainable value proposition
stream markets, companies must build business models that can for bioplastics in conjunction with societal actors. Table 3 summa-
assure customers that bioplastics are indeed sustainably made. rizes the dynamic capabilities we discovered across the firms.

5. Comparing dynamic capabilities for sustainability in 5.1. Sensing and shaping opportunities and threats for new
bioplastics business models at BASF, Braskem and DuPont bioplastic businesses

To understand whether and how conventional plastics producers BASF, Braskem and DuPont all perceived opportunities in
are managing the challenges discussed above, we compare the exploring biobased feedstock alongside fossil fuel feedstock. Each
approaches of BASF, Braskem and DuPont to developing business company initially targeted a market segment for conventional

Table 2
Comparison between companies.

Company Polymer Renewable feedstock Production technology Degree of challenge to incumbent plastics Market
BASF PHAs Corn Made by micro-organisms Novel polymer requiring processing changes Niche biodegradable film
DuPont Bio-PDO Corn Fermentation Novel polymer with new properties Major fiber plastics
Braskem Green PE Sugarcane ethanol Purification of ethanol Drop-in substitute for existing polymer Commodity plastics
A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49 43

Table 3
Comparison of dynamic capabilities.

Company Sensing opportunities and threats Seizing opportunities Maintaining competitiveness


DuPont Company-wide life science Backward integration into agricultural feedstock Corporate sustainability goals
policy and R&D
R&D partnership with Development of “renewably-sourced” brand Sorona New acquisitions, notably Genencor
biotechnology firm
Prioritization of bioplastics Collaboration with agri-food firm Internal biobased initiatives such as
within company portfolio Bio-Based Materials business unit
R&D screening process to Engagement with downstream manufacturers
re-evaluate top 10 renewable to design products
materials Creation of a new corporate eco-label

BASF Identification of market opportunities Formulation of a branded biobased Ecoflex by Investment in university research to
in ecologically sensitive consumers purchasing PLA from NatureWorks determine potential for scaling
Research agreement with Metabolix Collaboration with organizations, governments, up bioplastics production
to test PHA in product and industry rivals to set market-shaping standards New acquisitions, notably Cognis
Marketing strategy emphasizing biodegradability
Production of software tool, Ecovio Eco-Efficiency Compass

Braskem Use of global market research Commercialization of ethanol-based PE using Investment in R&D facilities
Combination of existing technologies well-established supply infrastructure Sponsorship of a roadmap for
and ethanol supply chain with some Development of its own bioconversion expertise renewable raw materials
modification for modern manufacturing through partnership with fermentation firm
Negotiation of many contracts with consumer
product manufacturers
Creation of a corporate eco-label, “I am Green”.

plastics in which they already had market share. Yet the cases a brainstorming session was held at the Delaware Experimental
diverged in how each firm mobilized their sensing and shaping Station in which an engineering team proposed manufacturing PDO
capabilities to conceptualize the integration of agricultural feed- from the sugars in corn given the availability and affordability of
stock and bioconversion. This is unsurprising given chemical firms corn in the US (Kurian, personal communication, December 2008).
vary considerably in their histories and internal cultures in terms of DuPont initially invested in bio-PDO to find a cheaper method
their willingness to move into new core production areas for PTT production. However, its motivations for bio-PDO produc-
(Chandler, 2005). Each company’s ability to identify their value tion evolved as the firm realized that polymers made with bio-PDO
proposition for bioplastics is grounded in internal processes to had environmental marketing benefits. Bio-PDO presented an
direct R&D and select new technologies; connect with science and opportunity to build wholly new business models for “greener”
technology developments outside the firm; and identify business polymers with novel performance characteristics that could be used
opportunities throughout their value chain. to manufacture durable and non-durable applications (Kurian,
2005). By constructing a business model around bio-PDO, DuPont
5.1.1. DuPont could link its new life science capabilities with its corporate
Throughout its history, DuPont has repeatedly switched its sustainability goals. Thus, although DuPont lacked a coherent vision
chemistries (Chandler, 2005). Most recently, the company has for introducing biobased materials, the prescience of their internal
grown more adept in life sciences, beginning with the decision to R&D teams and corporate management was critical in a number of
open an $85 million life sciences research complex at its Delaware ways. By combining their emerging life science expertise with
Experimental Station in 1987. The company began recasting itself as a strategic partnership, DuPont was able to successfully experiment
a life sciences enterprise as a new company-wide strategy with using a biobased monomer for PTT production. Faced with this
(Chandler, 2005). Yet DuPont’s bioplastic business model did not development, the company re-calibrated its business model to
emerge wholly from this strategic shift at the corporate level; the focus on bio-PDO as the foundation for new product lines that could
development of bioplastics was also a response to a competitive be marketed as renewably-sourced.
threat to its polymer division. In the early 1990s, Shell Chemical With greater experience in designing and making bio-PDO, the
commercialized a new way to manufacture polytrimethylene firm began institutionalizing its sensing capabilities with an R&D
terephthalate (PTT) polymers. PTT has nylon-like strength and screening process that regularly re-evaluates opportunities to
unique dye-ability and static-resistance properties, but has histor- integrate renewable sources across the value chain from agricul-
ically been heavily neglected since cheaper-to-make nylon-based tural seeds, farming, bioconversion, to intermediate chemicals and
polymers dominated the market. Shell’s competitive advantage biofuels (Bryndza, 2011). DuPont’s business model is based on
was based on their ability to economically produce large quantities deriving sustainable value from not only developing new markets
of the fossil fuel-based monomer 1,3-propanediol (PDO). To protect but also finding ways to control the entire supply chain. DuPont’s
the market share it had acquired through its established nylon business model continues to evolve as an internal team of experts
business, DuPont sought to develop a PTT business model by in biology, chemistry, materials science, process economics, and
researching other economical routes for PDO production. product marketing periodically conducts a company-wide audit to
Drawing on its new capacities in the life sciences, DuPont identify the top 10 renewable raw material opportunities (Bryndza,
created an R&D partnership in 1995 to investigate a sugar-based 2011). This audit allows the company to flexibly evaluate the
route for PDO production with Genencor, an industrial enzyme incumbency and scaling-up challenges that biobased materials
producer with expertise in metabolic engineering. Using Gen- face, and choose only those possibilities where the materials can
encor’s bioconversion technology, DuPont achieved a five hundred- make inroads in the shorter term. As a result, the families of
fold improvement in PDO productivity at a cost competitive with chemicals that DuPont now formulates with Bio-PDO are the first of
Shell (OECD, 2001). To decide what feedstock to source, what may be many biobased products.
44 A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49

5.1.2. BASF Furthermore, PE customers would not need to make adaptations for
Compared to DuPont, BASF has typically taken a conservative PE derived from ethanol; customers would buy the same polymer
stance in adopting new chemistries (Chandler, 2005). BASF did not but pay more for its renewable origins.
mobilize its dynamic capabilities around unfamiliar biobased Using market research feedback from its existing and potential
chemicals and life science expertise. Rather the company built upon customers in Asia and Europe, Braskem confirmed the demand for
its strengths in marketing and standardization. The firm identified “renewably-sourced” PE. The firm also found that customers felt PE
a limited opportunity for integrating biomass resources into its made from renewable raw materials was more desirable than
polymer business as a way to strengthen the marketing of its biodegradable PE because of the existing plastics recycling infra-
Ecoflex packaging film. Sensing that European regulatory changes structure in Europe and Japan (Engelman, 2010). PE is one of the
for package recycling could lead to new market niches, the most established commodity chemical markets. As a polymer, it can
company released Ecoflex in 1998 as a petrochemical-based plastic, be used in around 20 plastics, underscoring a large business
which has the properties of conventional polyethylene (PE), the opportunity in a potentially massive billion dollar market,
most widely used plastics for making plastic bags and other durable assuming demand for renewably-source products continues to
and non-durable products. Unlike PE, Ecoflex is biodegradable grow. As the consultant George Rodriquez, noted: “Green PE
according to standards in Europe, the US, and Japan, where BASF customers plan to get even more value back from the market in the
offered Ecoflex at a premium to environmentally-conscious form of higher profit margins, increased market share, loyalty and
customers. Thus, the Ecoflex business model relied on existing the priceless brand equity associated with higher renewable
distribution channels for PE (Daemmrich, 2009). resource content” (De Guzman, 2010).
BASF did not view biodegradable plastics as a fast-growing Unlike DuPont and BASF, Braskem’s sensing capabilities for
market segment capable of displacing incumbent plastics, and bioplastics were not clouded by questions of whether and how to
was initially uninterested in product differentiation beyond develop expertise in obtaining and processing crops. Moreover, the
biodegradability. However, as it prepared to enter the US market in company would be offering existing customers an identical product
2003, BASF became concerned that customers would not view (PE) with renewable content, thereby reducing risks in market
Ecoflex as “green enough” compared to the increasingly-known acceptance. In addition, it had the benefit of being able to study the
NatureWorks PLA, which was marketed not only as biobased but successes and failures of first-to-market bioplastics, like PLA.
also as biodegradable. The company decided to offer environmen- Each firm mobilized their capabilities to sense new business
tally-conscious customers a biobased version of Ecoflex to compete opportunities in bioplastics despite uncertain market conditions,
with NatureWorks’ PLA (Comstock et al., 2004). Because BASF’s the challenges of innovation, and the presence of strong incumbent
polymer research division lacked experience with using biomass products. DuPont has gone further to imagine the possibility of new
feedstock, it entered into a research agreement in 2003 with markets for biobased chemicals. However, to different degrees, the
Metabolix, a biotechnology start-up spun off from MIT. Metabolix companies’ traditional value propositions hindered the extent to
provided pilot-scale qualities of its starch-based biopolymer poly- which they viewed constructing business models for biobased
hydroxyalkanoate (PHA) for one year. Using PHAs would increase plastics as way to realize ecological and social value. As discussed in
the melting point and biodegradability of EcoFlex, thus expanding more detail below, they developed business models based on
its applications and marketing potential. extracting value from biobased feedstock by marketing chemicals
This partnership enabled BASF to experiment with using as renewable or biodegradable while largely ignoring upstream and
a biopolymer to formulate EcoFlex (Stafford, 2007). However, it did downstream environmental and social impacts.
not result in a new business model that prioritized the use of
biopolymers or in an institutionalized process for sensing future 5.2. Seizing opportunities in developing biopolymers by building
biobased opportunities. Lacking the corporate-level commitment business models for sustainability
to exploring the life sciences and bioconversion exhibited by
DuPont, BASF used its dynamic capabilities in a predictable way: to Having sensed opportunities for making bioplastics, DuPont,
respond to both regulatory changes that could lead to new market BASF and Braskem had to adapt their business models to the
niches and to competition that was marketing bioplastics as both development and commercialization of bioplastics. This required
biodegradable and biobased. Indeed, during this time, BASF decisions about how to approach early and large-scale investments
famously re-branded itself as “the chemical company”. as well as product-specific marketing, distribution and purchasing
networks. Each company also confronted questions of how to
5.1.3. Braskem source their biomass feedstock in predictable quantities and at
Compared to DuPont and BASF, Braskem‘s bioplastics business stable cost. However, unlike conventional plastics, the ability to
model grew from an awareness that substituting a biopolymer for scale up bioplastics production depends on whether skeptical
an existing polymer could appeal to a growing market segment downstream manufacturers (perhaps dissatisfied from previous
interested in depicting itself as “green”. As the third-largest bioplastic experiences) can be convinced that bioplastics add value
producer of thermoplastic resins in the Americas, Braskem noted to their own business model, which is determined in part by
the market for Cargill’s PLA and began considering whether to enter whether those customers can successfully market the products to
bioplastics. One manager, Antonio Morschbacker, had previously their own consumers as “sustainable.” In commercializing bio-
worked for Salgema, making polyvinyl chloride (PVC) from sugar- plastics as renewable and/or biodegradable, each company faced
cane; he proposed to the director of Braskem’s Innovation & the question of what, if any, new configurations of technologies,
Technology Center that PE be made from sugarcane based ethanol customer relationships, and market strategies were needed to
(Grushkin, 2011). Braskem not only had access to an abundant realize sustainability. The companies have all mobilized their
supply of low-cost ethanol in Brazil but also possessed bioconver- dynamic capabilities to these ends but major differences exist.
sion technology, inherited from one of the firm’s predecessor
businesses in the 1970s. With the technology and the raw material 5.2.1. DuPont
supply in place, Braskem’s major challenge was to refine its older To commercialize its economical route PDO using plant sugars,
process with a new purification step to achieve the required DuPont created a Bio-Based Materials business unit to implement
ethylene quality, which took only six months (Grushkin, 2011). a business strategy for backward integration into the agricultural
A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49 45

sector and to aggressively market its first bio-PDO product line: unrecognized status than the company was prepared to tolerate
renewably-source PTT trademarked as “Sorona” (Kurian, 2005). (SRI Energy, 2010). When the Metabolix agreement expired in
Having chosen corn feedstock for bio-PDO production, DuPont 2004, BASF abandoned its strategy to formulate Ecoflex with bio-
collaborated with London-based Tate and Lyle, a leading producer based PHA. Despite its reluctance to invest in developing in-house
of food additives, to produce pilot quantities of bio-PDO. The pilot capabilities in bioconversion, BASF remained interested in formu-
plant was successful and the companies formed a joint venture, lating biobased Ecoflex if the resulting bioplastic products were
DuPont Tate & Lyle Bio Products LLC, to scale up production in “more sustainable than non-biodegradable materials at a perfor-
a commercial-scale plant in Loudon, Tennessee, where corn sugar mance level that is the same or even better” (BASF, 2010).
from a nearby Tate & Lyle corn wet mill could be easily transported In 2005, BASF decided that rather than compete with Nature-
for bio-PDO production. Works in making biopolymers, it would formulate a biobased Eco-
Initially, DuPont was disappointed by PTT’s market reception. flex by purchasing PLA from NatureWorks. The company initiated
The company assumed customers would readily adopt the new a new marketing strategy for biobased EcoFlex by introducing Eco-
fiber because of its superior performance attributes when vio as a “new class of products made of renewable raw materials and
compared to the incumbent polyethylene terephthalate (PET) yet of Ecoflex, the familiar BASF biodegradable plastic on a petrochem-
the uptake of Sorona for new products was low (Personal ical basis” (BASF, 2012). Like Ecoflex, Ecovio is meant to perform
communication, DuPont executives, March 2004). The company similarly to PE, and is certified as 100% biodegradable according to
responded with an unprecedented two-pronged approach. First, three standards organizations (Germany’s EN 13432, GreenPla in
DuPont began engaging with downstream manufacturers to design Japan, and ASTM D6400). Building on its existing strengths of
products with Sorona’s attributes in mind, such as Mohawk collaborating with organizations, governments and industry rivals
Industries, an ecologically motivated carpet manufacturer inter- to set market-making standards, BASF worked with all three stan-
ested in using PTT for its SmartStrand carpets. PTT can also be used dards organizations throughout the process of standards develop-
for clothing fabric, but can require adaptations to customers’ pro- ment to ensure that its products would qualify as “biodegradable”
cessing methods and product specifications. By investing in the (Daemmrich, 2009). Production of Ecovio increased Ecoflex
creation of internal scientific expertise, design tools, training production from 14,000 tonnes in 2006 to 60,000 tonnes in 2010.
support and market development consulting for clothing manu- Although BASF has not been as aggressive as DuPont in creating
facturers, DuPont created key knowledge resources to support the a sustainable value proposition for its customers, the company’s
development of a new customer segment. DuPont has also begun to approach to marketing Ecovio is unique. BASF labels Ecovio as
create an offshore network of customers that license Bio-PDO containing 45% renewably-sourced PLA. In 2012, BASF introduced
technology. The company is targeting contractors that make a software tool called Ecovio Eco-Efficiency Compass (E3C) The tool
products for brand name companies, and is building new PTT is based on BASF’s Eco-Efficiency tool, which the company has long
production facilities in China to reach these customers. used to evaluate the life-cycle environmental impacts and cost-
Second, to demonstrate that sustainability can provide new effectiveness of key products. To help downstream customers
value, DuPont created a new corporate eco-label, the Renewable make decisions to use Ecovio and to support communication of
Materials Sourced icon, to accentuate the environmental attributes Ecovio’s ecological value downstream in the value chain, E3C is
of Bio-PDO and Sorona. As a marketing device, the icon indicates designed for customers to compare the eco-efficiency of Ecovio
that a product contains a minimum of 20% renewably-sourced against other products, such as Braskem’s Green PE, for particular
content by weight, allowing Sorona, which contains 37%, to qualify. applications.
DuPont also established internal environmental performance Thus BASF eventually developed a business model for
metrics for biodegradability, energy use and greenhouse gas commercializing a biobased version of Ecoflex. Yet, despite its
emissions. The company advertises Bio-PDO as a biodegradable external collaboration, the company mobilized few dynamic
monomer based on an OECD Guideline Test for Biodegradation. To capabilities to shape the emerging business ecosystem for bio-
support its eco-label, DuPont sponsored external LCA studies of plastics. Rather than invest in a business model that would expand
Bio-PDO from cradle to factory gate. Invoking these studies, Bio- its capabilities in biobased chemicals, BASF chose to occupy a nar-
PDO is advertised as using 40 percent less energy compared to rower place in the bioplastics value chain.
petroleum-based PDO (Anex and Ogletree, 2006), and that as
a result Sorona PTT made from Bio-PDO has 50% less CO2 emissions 5.2.3. Braskem
than petrochemical-based Nylon. In 2007, Braskem seized the opportunity it sensed for biobased
Thus, DuPont mobilized its dynamic capabilities to justify price PE by commercializing ethanol-based PE using well-established
premiums in the context of growing consumer concerns about supply infrastructure. By 2010, the plant began producing up to
environmental impacts, and to expand its upstream and down- 200,000 tonnes at Triunfo in the state of Rio Grande do Sul, where it
stream presence in the bioplastics value chain. By developing already operated petrochemical crackers. As a subsidiary of the
a marketing strategy that accentuated the environmental attributes Brazilian conglomerate, Odebrecht, Braskem purchases ethanol
of Bio-PDO and Sorona through labeling, DuPont created a device from a fellow Odebrecht subsidiary, ETH Bioenergia. The company
that downstream customers could use to articulate ecological has announced plans to expand production by opening a second
values to consumers. In addition, DuPont worked to shape their plant given the initial volume of customer orders. Building on its
downstream supply chain. The company invested in knowledge success in marketing green PE, Braskem is developing another
resources to clothing manufacturers as a potential new customer business model for Green polypropylene (the second largest poly-
segment and in production infrastructure that enables a larger mer market), using industrial biotechnology developed through
reach as a PTT supplier. a new partnership with the Danish fermentation firm Novozymes.
This marked a dramatic change in harnessing Braskem’s dynamic
5.2.2. BASF capabilities from simply taking up pre-existing ethanol technology
Whereas DuPont moved steadily into building a business model to seizing an opportunity to develop its own bioconversion
for bio-PDO, BASF hesitated to seize its bioplastics opportunity. expertise. Braskem also plans to become the world’s leading bio-
Despite the enhanced performance benefits of PHA, BASF perceived plastic producer, focusing on drop-in commodities rather than
more market risks due to its high production costs and niche polymers that require downstream process modifications.
46 A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49

Because Green PE is chemically identical to petroleum-based PE, agricultural supply systems continue to evolve. Yet, BASF, DuPont,
Braskem did not need to address how a new biopolymer would and Braskem all have barely begun to address the sustainability
perform downstream, as did BASF and DuPont. Braskem could challenges that may undermine the durability of their bioplastic
secure many contracts with consumer product manufacturers businesses.
interested in renewable packaging, such as Procter & Gamble,
Toyota, Johnson & Johnson, Coca-Cola, and Tetra Pak, prior to 5.3.1. DuPont
production starting (Engelman, 2010). These customers bought DuPont is seeking a self-regeneration capacity by setting
Green PE at a 15e30% price premium despite the fact that Green PE corporate sustainability goals, making new acquisitions, and
costs were comparable to petroleum-based PE. Still, Braskem focusing internally on biobased initiatives. At the corporate level,
worked with some customers to develop special products DuPont aimed to earn 25% of its revenues from renewable materials
promoting Green PE, such as Monopoly games. by 2015, using this company-wide goal to drive innovation and
Like DuPont and BASF, Braskem launched a marketing campaign investment (Bryndza, 2011). To assure that its biobased chemicals
to “prove” the environmental attributes of Green PE. The company can survive incumbency and scale obstacles, the firm uses the
created the US-trademarked “I am Green” label, which is based on following heuristics: displacing existing products with renewable
the D6866 international standard and an eco-efficiency analysis by materials should lead to superior cost and performance; and
the Espaço ECO Foundation. Using its own corporate eco-label, developing new products that are not drop-in must result in
Braskem contends that Green PE reduces greenhouse gases significantly better performance for customers (Bryndza, personal
sharply: for every ton of Green PE, 2.5 tons of CO2 are sequestered communication, 2011). In contrast to BASF, DuPont is thus willing to
in biomass and are not released since PE is not biodegradable develop a range of bioplastic markets rather than restricting itself
(Engelman, 2010). The label enables manufacturers to communi- to a niche market, and to take reasonable risks in developing
cate to consumers that products made with Green PE are renew- biopolymers with novel properties to create new markets alto-
able, thus allowing price premium-seeking or preferential buying gether. DuPont also created a Bio-Based Materials Unit that unifies
further downstream. Interestingly, some customers such as P&G do scientific expertise in bioconversion through combining its
not use this seal because their Green PE usage remains a tiny genetically-modified seed business and complementary partner-
fraction of their overall plastics consumption (De Guzman, 2010). ships with biotechnology firms such as Genencor and agri-food
This is partly attributed to the lack of production capacity. The “I am companies such as Tate & Lyle. In 2011, the company boldly
Green” label will presumably be used for other Braskem products, bought Genencor, to control its own biotechnology intellectual
such as green polypropylene. property and infrastructure.
Companies that fail to seize new opportunities are often
inhibited by their established production systems (Teece, 2007). 5.3.2. BASF
This appears to be the case with BASF. One important way to Conversely, BASF is still developing self-regeneration mecha-
overcome this conservatism is to engage the larger business nisms to guide its bioplastics business growth. Ecoflex was
ecosystem through collaboration with other entities, such as supply conceived in an experimental team in BASF’s R&D laboratories and
chain partners, customers, and consumers. The firms diverged in commercialized by a tiny management and marketing group that
how they integrated biomass feedstock into their manufacturing: lacked significant power within BASF (Daemmrich, 2009). Thus
whereas DuPont began moving backward into agriculture, Braskem BASF’s bioplastic exploration remained dependent on changing
bought readily available ethanol, and BASF ended up buying managerial views of the relative merits of different biomass inputs
biopolymers from another producer to manufacture its Ecovio rather than reflecting a company-wide strategy. Nonetheless, BASF
product. Each company took further steps to create green has tentatively investigated how it could scale up biopolymer
marketing mechanisms but differed in how they accomplished this production by investing in university research in Austria. Interest-
through building dynamic capabilities. While DuPont collaborated ingly, in 2010, BASF acquired Cognis, a Belgian company with a few
across its supply chains to increase the market availability of new biobased specialty chemicals. Like DuPont, BASF is positioning itself
products, BASF relied on setting standards that would shape to expand its biobased product lines by acquiring in-house capacity
markets and convince customers, and Braskem merely marketed its for R&D and bioconversion. However, the firm remains committed
Green PE as a straight drop-in chemical. All three firms, however, to a niche polymer market, potentially limiting its future growth.
relied extensively on LCA to legitimate their environmental claims,
despite many LCA analyses remaining opaque, publicly inaccessible 5.3.3. Braskem
and insufficiently verified by independent experts (Iles, 2010). Braskem initially did not perceive the need to develop internal
mechanisms. The company focused on bringing green PE quickly to
5.3. Maintaining competitiveness by reconfiguring polymer the market. When the company realized that it could seize the
divisions and improving sustainability commodity biopolymer market, managerial interest in self-
regeneration grew. Since 2010, Braskem has invested in R&D
The business models that BASF, DuPont, and Braskem are facilities at the National Bioscience Laboratory located in Campinas,
developing to commercialize their bioplastic opportunities will in contrast to most Brazilian corporations. (R&D is largely the
require continuous improvement over time because the “right domain of Brazilian government agencies like Emprapa.). The
business model is rarely apparent early on in emerging industries” company sponsored a roadmap to direct science and technology
(Teece, 2010). The companies must deal with the potential conse- policies that encourage Brazilian companies to use renewable raw
quences of choosing particular bioplastic markets over others, and materials (Coutinho and Vitor, 2011). In addition to identifying key
with emerging challenges to the “sustainability” of bioplastics. Few drivers for increased use of renewable raw materials and fore-
companies in the chemical industry and in downstream sectors casting how key competitors such as BASF, Solvay, Dow, DuPont,
fully understand bioconversion, biomass feedstock production, and and Cargill will shape the market, the roadmap concludes that
their environmental impacts yet. Thus, the companies have incor- Brazilian firms have an exceptional opportunity to dominate the
porated in their bioplastic business models strategies for regener- new biobased materials sector, due to the presence of Brazil’s
ation, or the ability to continuously replenish and revise their ethanol industry and the lower greenhouse gas emissions profile of
biobased chemical portfolio as technologies, markets, and sugarcane ethanol compared to oil. Yet Braskem’s business model
A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49 47

emphasizes only innovating drop-in chemicals from the ethanol biodegrades more rapidly than its plastic predecessors which
platform, potentially discouraging R&D for new, innovative require industrial composting operations. Yet it remains unknown
biopolymers, including from other feedstocks. how well Ecovio biodegrades in non-industrial composting facili-
In general, the companies continue to treat bioplastics as ties. The large-scale composting facilities needed to decompose
marginal products that may appeal to more ecologically aware biodegradable and compostable materials seldom exist yet
customers or consumers who are willing to pay price premiums. (ACS, 2007). In turn, although the Bio-PDO monomer can be com-
Bioplastics are not sustainable merely because of their renewable posted, its downstream products are blends of biomass and
origins. Table 4 outlines the environmental and socio-economic petrochemical materials that are not designed for composting or
challenges, ranging from feedstock choices, contamination of recycling. DuPont has not addressed PTT recycling and waste issues,
recycling systems, to pollution in bioconversion. despite Mohawk’s acknowledgement that recycling PTT with the
As customers, consumers and governments take greater critical more widely used PET could harm the quality of recycled polymers.
interest in the sustainability of bioplastics, industry will have to Braskem’s Green PE does not meet biodegradability standards even
improve this sustainability through innovation, remolded supply with additives (Gautam et al., 2007), even though PE is among the
chain relationships, and stronger governance mechanisms. Many more easily recyclable plastics. Yet, the vast majority of PE products
customers remain uncertain about the risks and benefits of bio- are not recycled because of the complexities of collecting and
plastics. A Genencor survey of American consumers revealed sorting uncontaminated PE (ACS, 2007). None of the companies
a growing awareness of biobased materials as sustainable, yet also appear to be engaging the waste management segment of the value
widespread skepticism about the environmental claims being made chain or improving product degradation, whereas one key aim of
(Genencor, 2011). Ethanol was treated with most caution, compared producing bioplastics is to reduce overall plastic impacts.
to laundry products, reflecting greater public and media scrutiny of Upstream sustainability issues have similarly received scant
biofuels in the past five years. If bioplastics attract similar attention, attention. For instance, while DuPont celebrates using corn to make
companies may struggle to maintain their markets. Bio-PDO, corn monocultures in the US have caused numerous
Bioplastics face several challenges to their environmental environmental problems including pesticide and fertilizer use,
claims. First, a contradiction exists in using bioplastics: most damage to wildlife habitat, and rural economic decline (Gillon,
applications are now disposable or non-durable, reinforcing the 2010; Granda et al., 2007; German et al., 2011). Due to controver-
waste production economy. These applications are justified by sies over ethanol, Braskem is unusually sensitive to claims that
biodegradability or recyclability claims. BASF asserts that Ecovio could undermine the purported sustainability of cane feedstock.
Unlike DuPont and BASF, Braskem has created a supplier code of
Table 4
practice for its feedstock to assure improved environmental and
Environmental impacts of bioplastics. social performance. Braskem uses this code to support its claim that
cane feedstock does not harm the Amazon or compete with food
Production stage Environmental impacts
uses, in contrast to DuPont’s dependence on corn.
Feedstock New demand for biomass inputs can
More diverse biomass feedstock choices favoring multi-
expand uses of land, fossil fuels, chemical
inputs, and water. functional, agriculture that can support greater functional biodi-
Feedstock choices can reinforce existing versity may help make bioplastics more sustainable, particularly
problems associated with corn and sugarcane. where government incentives favor diversification and agro-
Converting forests or grasslands to ecological practices (Iles and Marsh, in press). Companies could
expand agricultural production can
offset the CO2 sequestered by plants
advance these developments by redirecting their R&D activities and
before harvest (Searchinger et al., 2008). supply chain partnerships to encourage multi-functional agricul-
ture, rather than perpetuating traditional industry practices.
Manufacturing Bioconversion is energy intensive
and processing (Gallezot, 2010). DuPont and BASF already anticipate using cellulosic feedstock from
Bioconversion may require the use of grasses and crop residues, but have not yet made this a priority in
potentially toxic petroleum-based their R&D and business models. BASF’s former business partner,
solvents (Ahman and Dorgan, 2007). Metabolix, aims to produce PHAs from non-food, native crops with
Bioconversion produces significant
lower overall GHG emissions and environmental impacts. Compa-
water effluent needing treatment
(Ahman and Dorgan, 2007). nies could reinforce this trend by investing in biorefineries that can
Bioconversion consumes water resources take multiple feedstock, supporting the development of cellulosic
for fermentation, cooling, and heating. bioconversion technologies (Clark and Deswarte, 2008), and by
End of life fate Compostable bioplastics may contaminate supporting farmers who are reluctant to engage in multi-functional
recycled plastic streams unless they are agriculture due to the risks they incur from implementing new crop
properly separated and managed systems that require greater knowledge about managing ecological
(Song et al., 2009).
complexity and new harvesting methods and distribution
Compostable plastics require high
temperatures to decompose in a landfill infrastructure.
and special industrial equipment to be Finally, in the processing and manufacturing stages, all factory
composted (Song et al., 2009). processes should be designed to ensure sustainability. Chemical
Unless a landfill is managed well and companies have institutionalized environmental management
kept dry, degrading bioplastics will
release methane gas.
systems that require continuous improvement, but these have not
yet dealt with the particular resource use, pollution, and waste
Life-cycle assessments Significant reductions of energy consumption
issues of bioconversion. Energy and water use is particularly
and GHG emissions are possible
(McKone et al., 2011; Akiyama et al., 2003). intensive in biopolymer production, and companies must consider
Conversely, PHAs and PHBs have higher GHG how to recycle water inputs efficiently and integrate renewable,
emissions because of fossil fuel use for fertilizer low-carbon energy sources to power biorefineries (Williams et al.,
production, agricultural production, corn wet 2009; McKone et al., 2011).
milling, fermentation, polymer purification and
other production processes (Kurdikar et al., 2001).
Nonetheless, the companies have not yet instigated robust
metrics and targets for bioplastic sustainability across the entire
48 A. Iles, A.N. Martin / Journal of Cleaner Production 45 (2013) 38e49

production life cycle. Rather than focusing almost exclusively on more skeptical societies and markets: their authority no longer
greenhouse gas emissions, companies should create systems to prevails exclusively in the face of multiple views and opposition.
track, evaluate and publicize the specific activities, if any, they are While DuPont, BASF, and Braskem have introduced tools, standards,
taking to address sustainability targets for bioplastics. Anecdotal and corporate labels for evaluating sustainability impacts, these
evidence from interviewing business managers in both start-up tools do not yet provide means to monitor improvement in bio-
and established firms suggests that the majority of firms do not plastics. Without accountability systems, governments, consumers,
regard identifying and rectifying the environmental impacts of and the many societal actors in the bioplastics value chain are
biobased chemicals as important as moving these chemicals to unable to verify whether firms are reducing adverse impacts and
market quickly (personal communications in 2011). increasing environmental and social benefits through their R&D,
Societies need to be confident that companies are addressing biomass sourcing, processing, and product marketing.
sustainability issues. This requires two major steps: companies Therefore, a business model for sustainability needs to
must extend their LCA considerations past the factory gate and communicate to societies the ways in which bioplastics can improve
implement accountability systems that enhance the ability of in the future. Should it be greater renewable content in products?
companies, governments, consumers, and citizens to track the Better biodegradability? Better recycling systems? Better agricul-
performance of bioplastics and to provide input that can lead to tural practices? A combination? In particular, we argue, companies
continual improvement. Accountability systems are “a system, or need to develop business models to close the loop at the end of
set of mechanisms, designed to make sure promises are kept, duties bioplastic life cycles, and to address agricultural production impacts
are performed and compliance is forthcoming” (Weber, 2003). An that may far outweigh those of the processing and use stages.
accountability system can include defining sustainability priorities Business models also need mechanisms for greater accountability
and goals, making company activities and practices public and open for achieving these changes and reporting on substantive progress
to critique and allowing workers and outside actors to have a say in to societies. In doing so, companies will create industrial norms that
environmental decision-making (Iles, 2007). Having to account can not only allow biopolymer businesses to maintain competitiveness
make the environmental impacts of production and products more but ensure that they are driving sustainability within their organi-
transparent and actionable for companies. Companies can also zations and at all stages of the product life cycle.
develop ongoing processes for NGOs, communities, and govern-
ments along the value chain to audit their activities critically. In Acknowledgements
turn, accountability systems and societal engagement around
defining sustainability can help companies mobilize their dynamic This research was funded in part by the Energy Biosciences
capabilities more effectively to focus on environmental challenges. Institute and the Agricultural Extension Station at the University of
California at Berkeley. We are very grateful to Frank Boons at
6. Conclusion Erasmus University Rotterdam, multiple reviewers, and partici-
pants at the ERSCP-EMSU 2010 conference at Delft Technical
Using the dynamic capability framework, we show how estab- University for their valuable comments for improving the
lished chemical companies can sense and seize market opportu- manuscript.
nities for bioplastics. Merely reducing costs and increasing yields
does not assure survival in the market. Rather, developing inno-
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