Business model innovation towards energy transition in emerging markets: the case of South African coal industry

Abstract

The global commitment to mitigate climate change necessitates the decarbonisation of the energy sector, presenting a profound dilemma for coal-dependent firms regarding business survival and the execution of fundamental resources reconfiguration and business model innovation (BMI). This exploratory cross-sectional qualitative study addresses the critical gap by empirically detailing the actionable frameworks decision-makers use to overcome deep-seated financial, operational and cognitive barriers within the constrained context of the South African coal industry. The study utilises the resource-based view (RBV) and dynamic capabilities (DC) as its theoretical lens to explore how decision-makers allocate resources and adapt capabilities to enact BMI. The South African context acts as a critical proxy for other emerging markets facing analogous multifaceted challenges. This research employed an exploratory cross-sectional qualitative study design. Data was collected via semi-structured interviews, from a non-probability sample of 14 executive and senior managers. Participants were drawn from three distinct firm classification in the coal value chain: Emerging Coal Miners (ECM), Major Coal Producer (MCP) and Coal-fired Utility (CFU). Findings were systematically analysed using thematic analysis. Results reveal that external financial and geopolitical limitations, such as financial institutions turning away from coal, paralyse BMI adoption. Decision-makers understand the morality of the change but argue that base load limits make coal important for energy security for 20–30 years. The main strategy is progressive organisational transformation. Due to external financial exclusion, internal optimisation (maximising coal cash flow) is the major internal cross-funding mechanism, which funds measured diversification into renewables and critical minerals. The findings provide critical, actionable frameworks and detailed empirical validation for policymakers and decision-makers in high-carbon industries globally. Recommendations include adopting a dual strategy of intense internal cost optimisation and simultaneous strategic narrative management to secure policy and financial viability for diversification venture.