Showing papers on "Corporate sustainability published in 2014"

The Impact of Corporate Sustainability on Organizational Processes and Performance

Abstract: We investigate the effect of corporate sustainability on organizational processes and performance. Using a matched sample of 180 U.S. companies, we find that corporations that voluntarily adopted sustainability policies by 1993-termed as high sustainability companies-exhibit by 2009 distinct organizational processes compared to a matched sample of companies that adopted almost none of these policies-termed as low sustainability companies. The boards of directors of high sustainability companies are more likely to be formally responsible for sustainability, and top executive compensation incentives are more likely to be a function of sustainability metrics. High sustainability companies are more likely to have established processes for stakeholder engagement, to be more long-term oriented, and to exhibit higher measurement and disclosure of nonfinancial information. Finally, high sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market and accounting performance. This paper was accepted by Bruno Cassiman, business strategy.

Cognitive Frames in Corporate Sustainability: Managerial Sensemaking with Paradoxical and Business Case Frames

Abstract: Corporate sustainability confronts managers with tensions between complex economic, environmental, and social issues. Drawing on the literature on managerial cognition, corporate sustainability, and strategic paradoxes, we develop a cognitive framing perspective on corporate sustainability. We propose two cognitive frames—a business case frame and a paradoxical frame—and explore how differences between them in cognitive content and structure influence the three stages of the sensemaking process—that is, managerial scanning, interpreting, and responding with regard to sustainability issues. We explain how the two frames lead to differences in the breadth and depth of scanning, differences in issue interpretations in terms of sense of control and issue valence, and different types of responses that managers consider with regard to sustainability issues. By considering alternative cognitive frames, our argument contributes to a better understanding of managerial decision making regarding ambiguous sustainability issues, and it develops the underlying cognitive determinants of the stance that managers adopt on sustainability issues. This argument offers a cognitive explanation for why managers rarely push for radical change when faced with complex and ambiguous issues, such as sustainability, that are characterized by conflicting yet interrelated aspects.

Organizational Change for Corporate Sustainability

Abstract: Since this classic book was first published in 2003, sustainability has increasingly become mainstream business for leading corporations, whilst the topic itself has also been a hotly debated political issue across the globe. The sustainability phase models originally discussed in the book have become more relevant with ever more examples of organizations at later stages in the development of corporate sustainability. Bringing together global issues of ecological sustainability, strategic human resource management, organizational change, corporate social responsibility, leadership and community renewal, this new edition of the book further develops its unified approach to corporate sustainability and its plan of action to bring about corporate change. It integrates new research and brings illustrative case studies up to date to reflect how new approaches affect change and leadership. For the first time, a new positive model of a future sustainable world is included -strengthened by references to the global financial crisis, burgeoning world population numbers and the rise of China. With new case studies including BP's Gulf oil spill and Tokyo Electric Company's nuclear reactor disaster, this new edition will again be core reading for students and researchers of sustainability and business, organizational change and corporate social responsibility.

Managing Corporate Sustainability and CSR: A Conceptual Framework Combining Values, Strategies and Instruments Contributing to Sustainable Development

Abstract: Sustainable development can be a source of success, innovation, and profitability for companies. To use this source and to deal with the challenge of sustainability, corporations need a framework they can rely on in order to identify opportunities and threats and to develop, implement, control, and improve corporate sustainability strategies to be both more sustainable (for themselves and the society) and more successful in economic terms. Based on an extensive literature review of strategic management, CSR, and corporate sustainability, a conceptual framework is developed which offers an integrated view on the relevance of sustainability aspects for an individual company and enables the integration of these sustainability aspects on different management levels. Contextual factors are used to identify the relevance of sustainable development and the significant sustainability aspects. Based on this initial step, the relevance of sustainability issues for the different management levels, as well as opportunities and threats related to sustainable development, can be identified. The framework distinguishes three different management levels: normative management, strategic management, and operational management. Questions of vision and mission of a company and of the fit between sustainability engagement and organizational culture are in focus of the normative management level. Developing an effective corporate sustainability strategy is part of the strategic level. The implementation of the sustainability strategy in the different corporate functions is part of the operational level. This framework for corporate sustainability management is supported by instruments which are clustered in different areas like performance measurement, assessment and evaluation, operational management or strategic management. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

The Relationship Between Sustainable Supply Chain Management, Stakeholder Pressure and Corporate Sustainability Performance

Abstract: In 2009, Greenpeace launched an aggressive campaign against Nestle, accusing the organization of driving rainforest deforestation through its palm oil suppliers. The objective was to damage the brand image of Nestle and, thereby, force the organization to make its supply chain more sustainable. Prominent cases such as these have led to the prevailing view that sustainable supply chain management (SSCM) is primarily reactive and propelled by external pressures. This research, in contrast, assumes that SSCM can contribute positively to the reputation of an organization as a “good citizen” and, thereby, counter the impression that external stakeholder pressure is the only driver of SSCM. The study draws on Resource Dependence Theory in analyzing the three competing models of the potential stakeholder, SSCM and the corporate sustainability performance relationship. A dataset of 1,621 organizations allows the statistical comparison of these three models. Findings suggest that stakeholder pressure and SSCM both contribute to an organization’s sustainability performance. Thus, supply chain managers will perceive benefits from SSCM other than merely the reduction of risk from reputational damage through stakeholder activism.

Defining and Measuring Corporate Sustainability: Are We There Yet?

Abstract: This literature review article aims to bring a better understanding to the field of corporate sustainability (CS) as studied by management scholars. The first part of this review quantifies the amount of research devoted to CS and related topics such as corporate social responsibility, corporate social performance, environmental strategies and environmental performance from 1995 through 2013. The authors then summarize the different definitions, organizational theories, and measures that have been adopted by management scholars working in the CS field in both academic and practitioner management journals. The results show that the CS field is still evolving and different approaches to define, theorize, and measure CS have been used. Differences are also found between the literature that targets scholars versus the one targeting practitioners. The authors also provide a set of recommendations on how to advance the CS field.

Legitimizing Negative Aspects in GRI-Oriented Sustainability Reporting: A Qualitative Analysis of Corporate Disclosure Strategies

Abstract: Corporate sustainability reports are supposed to provide a complete and balanced picture of corporate sustainability performance. They are, however, usually voluntary and thus prone to interpretation and even greenwashing tendencies. To overcome this problem, the Global Reporting Initiative (GRI) provides standardized reporting guidelines challenging companies to report positive and negative aspects of an organization’s sustainability performance. However, the reporting of “negative aspects” in particular can endanger corporate legitimacy if perceived by the stakeholders as not being in line with societal norms and values. Starting from the theoretical lenses of economics-based disclosure theories and socio-political theories of disclosure, the focus of this study therefore was to analyze the communicative legitimation strategies companies use to report “negative aspects,” i.e., negative ecological and social impact caused by corporate activity. Using qualitative content analysis of GRI-oriented sustainability reports from companies listed on the US Dow Jones Industrial Average Index and on the German DAX Index, we identified six legitimation strategies. We discuss these strategies regarding to symbolic and substantial management of legitimacy. We show that symbolic legitimation strategies aiming at modifying the perception of legitimizing stakeholders dominate in the reports at hand. Such persuasion, however, does not meet the requirement of impartiality as postulated by the GRI guidelines. Building upon this conclusion we propose a concise characterization of “negative aspects” and develop a GRI-compliant schema of reporting about them. In doing so, we offer a way to improve the overall “balance” of sustainability reporting contributing to a true and fair view in sustainability disclosure.

The Governance of Corporate Sustainability: Empirical Insights into the Development, Leadership and Implementation of Responsible Business Strategy

Abstract: This article explores how corporate governance processes and structures are being used in large Australian companies to develop, lead and implement corporate responsibility strategies. It presents an empirical analysis of the governance of sustainability in fifty large listed companies based on each company’s disclosures in annual and sustainability reports. We find that significant progress is being made by large listed Australian companies towards integrating sustainability into core business operations. There is evidence of leadership structures being put in place to ensure that board and senior management are involved in sustainability strategy development and are then incentivised to monitor and ensure implementation of that strategy through financial rewards. There is evidence of a willingness to engage and communicate clearly the results of these strategies to interested stakeholders. Overall, there appears to be a developing acceptance amongst large corporations that efforts towards improved corporate sustainability are not only expected but are of value to the business. We suggest that this is evidence of a managerial shift away from an orthodox shareholder primacy understanding of the corporation towards a more enlightened shareholder value approach, often encompassing a stakeholder-orientated view of business strategy. However, strong underlying tensions remain due to the insistent market emphasis on shareholder value.

The Value Relevance of Reputation for Sustainability Leadership

Abstract: This study investigates whether the market valuation of the two summary accounting measures, book value of equity and net income, is higher for firms with reputation for sustainability leadership, when compared to firms that do not enjoy such reputation. The results are interpreted through the lens of a framework combining signalling theory and resource-based theory, according to which firms signal their commitment to sustainability to influence the external perception of reputation. A firm’s reputation for being committed to sustainability is an intangible resource that can increase the value of a firm’s expected cash flows and/or reduce the variability of its cash flows. Our findings are according to expectations and show that the net income of firms with good sustainability reputation has a higher valuation by the market, when compared to their counterparts.

Commitment strategies for sustainability: how business firms can transform trade-offs into win-win outcomes

Abstract: This paper addresses a fundamental problem in corporate sustainability: How can corporations transform trade-offs through win–win-oriented governance strategies aimed at creating value? Drawing on new strands of research in business ethics, we employ an ‘ordonomic’ perspective and proceed in four steps. First, we sketch how sustainability semantics has evolved historically from a societal searchlight to a heuristics for business practice. Second, we discuss how business firms can make strategic use of moral commitments as governance contributions by deploying individual or collective self-commitments as well as commitment services in their stakeholder relations. Third, we combine these four governance strategies with the three ESG (‘ecological, social and governance’) criteria of sustainability. We derive and illustrate with real-life examples a 12-box matrix as a tool for the strategic management of corporate sustainability. Fourth, we discuss the specific contribution of our ordonomic approach to the literature. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment

Strategic Leadership of Corporate Sustainability

Abstract: Strategic leadership and corporate sustainability have recently come together in conspicuously explicit fashion through the emergence of top management team (TMT) positions with dedicated corporate sustainability responsibilities. These TMT positions, commonly referred to as “Chief Sustainability Officers,” have found their way into the upper echelons of many of the world’s largest corporations alongside more traditional TMT positions including the CEO and CFO. We explore this phenomenon and consider the following two questions: Why are corporate sustainability positions being installed to the TMT?What effects do corporate sustainability TMT positions have at their organizations? We consider these questions through strategic leadership and neoinstitutional theoretical frameworks. Through the latter, we also engage with Weberian considerations of bureaucracy. We find that the reasons why corporate sustainability TMT positions are installed can be in response to a crisis at the corporation for which its legitimacy is challenged. We also find the corporate sustainability TMT position can be installed proactively in an effort to realize external opportunities that may have otherwise gone unrealized without concerted attention and coordination afforded by a strategic level position. Regarding effects, we determine the position can relate to the establishment of bureaucratic structures dedicated to corporate sustainability within the corporation through which formalized processes and key performance indicators to drive corporate sustainability performances are established. In the face of our finding that many corporate sustainability TMT positions are being removed despite having only relatively recently been introduced to their respective TMTs, we find that the successful implementation of bureaucratic machinery can help considerations to sustainability extend beyond the tenure of a corporate sustainability position within the TMT.

The New Heretics: Hybrid Organizations and the Challenges They Present to Corporate Sustainability

Abstract: Corporate sustainability has become mainstream; reaching into all areas of business management. Yet despite this progress, large-scale social and ecological issues continue to worsen. In this article, we examine how corporate sustainability has been enacted as a concept that supports the dominant beliefs of strategic management rather than challenging them to shift business beyond the unsustainable status quo. Against this backdrop, we consider how hybrid organizations (organizations at the interface between for-profit and nonprofit sectors that address social and ecological issues) are operating at odds with beliefs embedded in strategic management and corporate sustainability literatures. We offer six propositions that define hybrid organizations based on challenges they present to the beliefs embedded in these literatures and position them as new heretics of strategic management and corporate sustainability orthodoxy. We conclude with the implications of this heretical force for theory and suggest dire...

The Impact of Corporate Sustainability on Organizational Processes and Performance

Abstract: We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.

Corporate Social Responsibility: The Link Between Sustainability Disclosure and Sustainability Performance

Abstract: This paper explores the relation between sustainability performance and sustainability disclosure within the Australian extractive industries. The study utilizes Ullmann's (1985) stakeholder framework, which depicts sustainability disclosure and performance as two components of management strategy for dealing with stakeholder demands. Consistent with this framework, we predict a positive performance–disclosure relation. Extending prior research that has utilized problematic environmental performance indices such as CEP indices or toxic emissions levels, we develop a sustainability performance index based on the International Finance Corporation's Measuring Sustainability Framework (2001). Using data from 339 mining and energy firms listed on the Australian Securities Exchange in 2006, we find that corporate sustainability performance is strongly associated with disclosure as expected. Sustainability disclosure is also greater for firms with a proactive communication strategy as manifested through press release activity. Finally, asset age and firm size are both positively associated with sustainability, consistent with predictions from the stakeholder framework.

Motivations for Corporate Sustainability Management: Contrasting Survey Results and Implementation

Abstract: This paper compares empirical findings on the implementation of sustainability management with the results of earlier surveys on corporate motivations to deal with sustainability. We analyze the relevance of three different motivations, i.e. seeking corporate legitimacy, market success, and internal improvement. This is accomplished by matching these motivations with empirical findings on the engagement of functional areas. The underlying rationale is that differences in the engagement of functional areas can be expected to depend on the overall corporate motivation for sustainability management. Our analysis shows low engagement in finance and accounting, whereas the public relations department is actively engaged. Since this functional area commonly aims to legitimize corporate activities, this finding contradicts the results of earlier studies which concluded that legitimacy is not an important motivation for sustainability. We discuss reasons for these contradictions and derive implications for future research and business activities. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

The Road to Sustainability: Exploring the Process of Corporate Environmental Strategy Over Time

Abstract: We explore corporate environmental strategy over time, investigating the patterns of evolving environmental investment decisions. Longitudinal case studies provide evidence that environmental strategy evolves through a feedback process, wherein outcomes of earlier decisions have an impact on subsequent decisions. Specifically, positive feedback from outcomes like innovation triggers higher goals, enhancing the undertaking of advanced investments, whereas negative feedback from outcomes, such as increased costs, decelerates the adoption of further investments. The study points to an emergent view of environmental strategy, where capabilities that are gradually developed in concomitance with environmental outcomes lead to an upgrading of environmental goals, thus triggering the feedback process. The process eventually culminates in higher levels of environmental conduct, being more and more integrated with business strategy and competitive advantage. Managers' values and environmental attitudes influence environmental decisions and actions, affecting the acceleration of the feedback process and the magnitude of responses. Managerial implications are discussed. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

Business transformation towards sustainability

Abstract: Sustainability is becoming increasingly important in today's corporate world and can contribute to the current and future success of organizations Integrating ecological, social, and economic objectives into corporate decisions is a key success factor for transformation towards sustainability As sustainability is not achieved by single actions, but rather is an on-going process, decision-makers must have means to analyze the current state of an organization For this, we first illustrate how companies can structure the field of action for the transformation towards sustainability Further- more, we propose a decision model to determine how sustainability actions should be implemented in accordance with the paradigm of value-based management, ie, con- sidering their economic effects We illustrate the application of the approach using the example of a German medium-sized company Executive summary Recently, organizations have recognized sustainability as an emerging mega-trend and as an increasingly important strategic goal Its integration into the business model can be a key success factor, but also a challenge that requires a systematic approach In order to comprehensively steer corporate sustainability, with the aim of minimizing negative externalities while maximizing positive effects, companies first need to structure their processes to achieve transparency on where sustainability actions can be incorporated By furthermore considering the three dimensions of sus- tainability, possible starting points for sustainability actions can be identified These two perspectives are complemented by adapting the basic idea of stages of development and maturity to sustainability context, as a way to capture the progress of sustainability actions within each corporate activity The resulting ''Sustainability Maturity Cube'' serves as a blueprint, ie, a first generic approach, of how an organization can structure

Sustainable Behavior in the Business Sphere A Comprehensive Overview of the Explanatory Power of Psychological Models

Abstract: This conceptual article illuminates multiple determinants of sustainable behavior in companies by adapting the comprehensive action determination model proposed by Klockner and Blobaum. We apply this behavioral model specifically to the corporate sphere and illustrate that its determinants match the theoretical and empirical research on sustainable behavior in companies. By extending the model to the business context and by applying it to the broad sphere of sustainability, we build a connection between psychological findings (especially those related to environmental psychology) and research on organizational behavior and provide a coherent framework for corporate interventions to enforce individual sustainable behavior fostering corporate sustainability. In doing so, we provide an extensive overview of contemporary research on the psychological determinants of sustainable behavior within companies.

Corporate Environmental Responsibility and Firm Performance in the Financial Services Sector

Abstract: In this study, we examine whether corporate environmental responsibility (CER) plays a role in enhancing operating performance in the financial services sector. Because achieving success with CER investing is often a long-term process, we maintain that by effectively investing in CER, executives can decrease their firms’ environmental costs, thereby enhancing operating performance. By employing a unique environmental data set covering 29 countries, we find that the lowering of environmental costs takes at least one or two years before enhancing return on assets (ROA). We also find that lowering environmental costs has a more immediate and substantial effect on the performance of financial services firms in well-developed financial markets than in less-developed financial markets. These results are economically and statistically significant and robust even after alleviating endogeneity and using an additional performance measure. We interpret our empirical results as supporting the social impact and reputation-building hypothesis. Our findings also suggest that policy makers dealing with corporate sustainability management should pursue an environment-centered industry policy not only at the manufacturing sector but also at the financial services sector, as firms in both sectors with lower environmental costs perform better.

Sustainable Behavior in the Business Sphere – A Comprehensive Overview of the Explanatory Power of Psychological Models

Abstract: This conceptual article illuminates multiple determinants of sustainable behavior in companies by adapting the comprehensive action determination model proposed by Klockner and Blobaum (2010). We apply this behavioral model specifically to the corporate sphere and illustrate that its determinants match the theoretical and empirical research on sustainable behavior in companies. By extending the model to the business context and by applying it to the broad sphere of sustainability, we build a connection between psychological findings (especially those related to environmental psychology) and research on organizational behavior, and provide a coherent framework for corporate interventions to enforce individual sustainable behavior fostering corporate sustainability. In doing so, we provide an extensive overview of contemporary research on the psychological determinants of sustainable behavior within companies.

Green Innovation Games: Value-Creation Strategies for Corporate Sustainability:

Abstract: This study builds on insights from 49 sustainability leaders in the U.S. by examining green innovation from the game perspective. It explores how corporate sustainability can advance environmentally friendly innovations, and what managerial roles and activities are required to enable the transformation. It identifies four green innovation games characterized by different underlying value creation logics and organizational and mental barriers. The article suggests ways that can help managers to overcome these barriers and incorporate three decisive managerial roles into their corporate agenda and culture to advance corporate sustainability.