Rethinking sustainability strategies

TLDR: In this paper, the authors proposed two conceptual frameworks to link sustainability with business strategy, which set a strategic context to tie sustainability, to mediating variables, such as innovation and technology, while also linking them to generic strategies (low cost leader, differentiation, and focus).

Abstract: Purpose The purpose of this paper is to provide both theorists and practitioners with a conceptual framework that links sustainability strategies more closely with Porter’s generic strategies. The intent of this approach is to establish sustainability, fundamentally, as a strategic process. The proposed models set a strategic context to tie sustainability, to mediating variables, such as innovation and technology, while also linking them to generic strategies (low cost leader, differentiation, and focus) and firm financial performance in a causal chain. The proposed model gives rise to conclusions about the effectiveness of sustainability strategies that are consistent with emerging research about the role of radical innovation in sustainability. Design/methodology/approach The paper proposes two conceptual frameworks designed to link sustainability with business strategy. These models are rooted in evolving understandings of business strategy arising from Porter’s original explanations of generic strategies and sources of competitive advantage. The first model is a causal model that links drivers, such as type of competitive strategy and mode of innovation, to competitive outcomes and firm financial performance. The second model describes how different modes of technology development, in sustainability initiatives, cause changes in firm competitive and financial outcomes. Findings The conclusions arising from the model-based insights suggest that conventional continuous and incremental improvement sustainability practices hold the potential to pose strategic risks to some firms – depending on their core business strategy. By contrast, the model provides a logical, yet, less known, rationale that suggests radical innovation in sustainability practices may pose fewer strategic risks. It may also offer relatively more competitive and financial advantages than well-established programs relying on incremental innovation. Research limitations/implications Although the proposed conceptual frameworks are rooted in strategic management theories, the proposed models and expected outcomes have not yet been empirically tested or validated. However, initially, these models appear to have more face validity in explaining breakthrough sustainability success stories, such as Nike, than do competing explanations. Most importantly, the counter-intuitive finding that radical innovation is likely to be more effective in driving both sustainability and financial outcomes is a topic for future investigation. Practical implications The proposed models and accompanying rationale have direct implications for practitioners. They provide practitioners with a road map to logically and deductively frame sustainability strategies based on their current business strategy. Practitioners are often hindered by the lack of high-level guidance for making the transition from operationally focused sustainability tactics to strategies than are congruent with current business strategies. The current paradigm of using incremental sustainability strategies on an ad hoc basis does not always provide neutral outcomes regarding financial effects and competitive advantage – they may yield negative effects. Social implications The importance of sustainability strategies and management practices cannot be overstated. On a global scale, evidence indicates that most corporate sustainability programs are ineffective at slowing the rate of global forces offsetting sustainability. The proposed models and strategic management approach are intended to dramatically increase the effectiveness of sustainability improvement by closely aligning them with corporate strategies. Historically, companies have struggled to make the leap from randomly using eco-efficiency tools to making sustainability a key component of their business strategy. Originality/value This paper integrates a number of diverse lines of inquiry from the strategic management literature into a counter-intuitive approach for integrating sustainability into a firm’s core business strategy. The proposed conceptual frameworks can be used, prospectively, to design new sustainability strategies, or it can be used, analytically (retrospectively), to understand reasons for failure or under-performance in sustainability initiatives.