Authors: Dr. Rajesh Kumar Raju, Dr. Akanksha, Nishi Kant Niraj
Abstract: The proliferation of global environmental and social challenges has driven organizations to transition toward Sustainable Business Models (SBMs), which demand the simultaneous creation of economic, social, and environmental value—often referred to as the Triple Bottom Line (TBL). This transition presents a critical managerial challenge: reconciling short-term financial performance targets with long-term sustainability imperatives. This abstract explores the pivotal role of economic incentives, both external (market-based mechanisms) and internal (organizational compensation), in shaping managerial decision-making within SBMs. External incentives, such as carbon taxes, cap-and-trade systems, and government subsidies, function by correcting market failures and internalizing environmental externalities, thereby making sustainable practices financially advantageous and unsustainable practices costly. This external pressure directly alters the cost-benefit analysis employed by managers, encouraging investment in clean technologies and resource efficiency. Internally, the research highlights how performance-based pay and non-monetary rewards must be carefully redesigned to align executive and employee behavior with TBL metrics. By linking compensation to measurable sustainability outcomes (e.g., waste reduction, social impact, energy efficiency), organizations mitigate agency conflicts and foster a strategic culture of behavioral consistency. Ultimately, this analysis concludes that economic incentives are essential catalysts, serving as the link between abstract sustainability goals and concrete operational choices. Effective incentive design is critical for managers to successfully navigate competing institutional logics and leverage sustainability not as a cost burden, but as a source of long-term competitive advantage and innovation.
DOI: http://doi.org/10.5281/zenodo.18297481
