From wood to food: Approaching stakeholder integration in forest-based biorefinery development / Vom Holz zum Lebensmittel: Ein Beitrag zur Integration von Stakeholdern bei der Entwicklung von Holz-Bioraffinerien

Starting from the strategic plan development of Porter (1980), two different business strategies are developed, which depict a selection of visionary outcomes. The definition of a vision for each business strategy is based on a content analysis of relevant industrial development studies and strategy papers of the European Union, member states, and forest-based biorefinery related associations (e.g. CEPI, 2011; CEPI, 2012; Luguel et al., 2012; Edelmann et al., 2013). This ensures that all goals and aligned objectives are recorded and subsequently can be summarized in an integrative vision.

For the case study selected, two contrary but techno-economically feasible business strategies were identified.

The green strategy named after the source of hemicelluloses is based on a fully integrated pre-extraction step and produces high-purity hemicelluloses suitable for producing food additives (Van Heiningen, 2006). Hemicelluloses are extracted from woodchips through adapted green liquors. The pretreatment, separation, and concentration can be fully integrated into energy and material flows of an already existing kraft pulp mill. Great future challenges are technical and financial barriers, adequate legal frameworks, and targeted market requires additional approvals and registration. Adequate strategic partnerships might help to overcome the technical challenges of a fully integrated biorefinery and pave the way to the targeted market (Menrad et al., 2009).

The black strategy again named after the source of hemicelluloses is based on black liquor refining, which is fully integrated and converts this residue into a wide range of novel products while a separate combined heat and power generation provides sufficient heat and power (CEPI, 2011). The suggested key technology is thermo-chemical gasification, which aims at decomposing polymers into smaller molecules (Sousa, 2010). Within pulping, up to 50% of the processed biomass ends in the black liquor, an underestimated source for added value applications (Fengel and Wegener, 1983; Bajpai, 2013). Thermo-chemical conversion technologies are already operational for biofuels and are expected to have high potential to satisfy the European demand (Molino et al., 2016). The large scale might have considerable impacts on surroundings and cause considerable resistance from local stakeholder groups (Luguel et al., 2012).

The large-scale implementation of biorefineries affects several stakeholder groups. However, within the scope of this paper, the focus is set on the three most relevant stakeholders considering the evaluation of new business strategies. The stakeholder groups are introduced below.

The pulp and paper industry (PPI) accesses and processes large quantity of biomass, is technologically advanced, and has a long experience in the fractionation and separation of wood components. It can provide a sufficient amount of raw material and economies of scale for biorefining and is furthermore strongly connected to the rural economy. Due to the saturated markets for pulp and paper products, this industry sector is under pressure to diversify and to develop new value chains. Most production facilities are located in North and Central Europe and the leading countries in terms of quantities are Germany (23.9%), Finland (11.9%), and Sweden (11.9%) (CEPI, 2012). Consequently, the survey has primarily focused on these countries.

Public and private funding (PPF) will play a decisive role to overcome the technically and economically risky startup phase. Mainly two groups of potential investors can be identified: institutional investors and public funding agencies. Forest-based biorefining is still in the development stage and might not be the most obvious future investment. It is therefore essential to survey attitudes and prior knowledge of potential investors. To understand and meet their requirements is the prerequisite for additional co-financing.

Food additive industry (FAI) is the third stakeholder group and consists of potential customers. This group includes the food additive industry in general and furthermore food additive producers with experiences in microencapsulation. Their experiences in processing food additives, their market power, and access to target markets are of crucial importance for the success of novel products (Stern, 2009). The analysis was limited on the development of strategies within the European Union (plus Norway and Switzerland) with an evident focus on regions with considerable pulp production, in particular North and Central Europe (CEPI, 2012). Nevertheless, the developed evaluation approach assumed to be transferred to other geographical regions as well.

The evaluation scheme used in this study is based on Porter’s five forces model, which attempts to evaluate the competitive forces within existing business environments (Porter, 1980). With regard to the research scope of the present paper, the focus of the competitive environment of an existing business has to be transferred to the specific case of entering new markets (Stern, 2009). Therefore, an examination of the competitive environment is carried out from the entrepreneurial perspective entirely focusing on the influence of key factors on business performance. In contrast to Porter’s model, the adapted version evaluates the expected business environment from the management perspective of a potential partner and investor. This potential partner has to rate potential threats to entering the market, and even after a successful implementation of a forest-based biorefinery, the management has to permanently cope with existing competitors and influences from suppliers and buyers.

The main objective of the evaluation scheme is to link the stakeholder’s investment preferences with the characteristic properties of the strategy by standardized key factors.

Therefore, the construction of the stakeholder survey was setup in order to generate adequate numeric assessment values. The selection of the decision criteria, hereinafter referred to as key factors, derives from the adaption of Porter’s five forces model. The questionnaire essentially consists of five-point Likert scales for the rating of the specific influence of the key factors regarding the stakeholder’s investment preferences. The respondents can propose their level of acceptance by choosing a category ranging from “strong influence” represented by “1” down to “zero influence,” which is represented by “0.” In order to reduce the amount of invalid replies, the survey is constructed to give participants the opportunity to refuse the answer. Additionally, replies to the questions are voluntary. At the end of each questionnaire sequence, an open question is envisaged, which allows the beneficiary to indicate any other relevant influence factors relating to the topic. The main part of the questionnaire is accompanied by supporting information, demographic questions, and general questions about knowledge and attitudes.

To ensure data comparability of the differing stakeholder groups, the weighted average influence factor was calculated for each factor and stakeholder group. A “zero influence” rating contributed 0% (respectively 0.00) to the weighted influence whereas a “strong influence” factor had 100% (respectively 1.00) potential to seriously jeopardize the future business performance. The weighted average influence factor consists of the average linear combination of the total number of observed assessments for each Likert-scale rating x_i and the appropriate weighting w_i:

x¯=1n∑i=1nxi×wi$$\overline x = {1 \over n}\sum\limits_{i = 1}^n {x_i \times w_i }$$

The corresponding result is the comparable weighted assessment of the potential competitive influence of every key factor in each stakeholder group (see Table 1). An additional advantage of compiling the single ratings to one assessment is to avoid biased assessments based on the number of participants per stakeholder group.

A large set of potential participants and organizations (n=268) of the three stakeholder groups throughout Europe were identified via desk research. The stakeholder groups were invited to participate in March 2013. A rather short period of 14 days was set to submit their responses after invitation. The number of valid replies amounted for 23 reliable datasets, which have been used for further analysis. The responses can be allocated to all analysed stakeholder groups, although at varying levels: pulp and paper industry (n=9 or 25%), the investment and consulting group (n=10 or 8%), and the food additive and microencapsulation industry (n=4 or 4%). It is important to note that the obvious and indeed low response rate has a very limited practical impact. First of all, the purpose of the study, the development of a feasible approach for stakeholder integration, has to be kept in mind. Therefore, the empirical results refer only to the case study presented while other cases may use the same approach but perceive other results.

Second, the lack of representativeness in this kind of expert survey is system immanent as there is no defined base population. Of the 268 companies/experts contacted, a very small share may be active in biorefinery development. Especially the food additives business and the investors may not even have thought about the topic before and can therefore not treat equal to those who responded. Hence, it is not possible to scale up any of our empirical results from the 23 respondents to the total number of companies contacted (268). Given the diversity of these companies, such an attempt to scale up would be anyway very difficult.

The descriptive analysis of the generated data points out general differences in the weights of each key factor for every stakeholder group. As the focus of this paper is set on the verification of the stakeholder assessed approach, a detailed discussion of these results is dispensed (see Table 2). The evaluation scheme was furthermore applied to assess the performance of the two strategies (green and black) by consulting the appropriate literature (see Table 1). In this case, the results show differences in the performance of the strategies regarding the key factors. Even though one strategy outperforms the other in the overall assessment, it is necessary to consider the stakeholder related weight of each key factor to complete the assessment (see Table 3).