The relationship between a sustainable mindset and
organizational performance: A multiple case study
in the Dutch and Swedish organic food sector
MASTER THESIS WITHIN Business Administration
NUMBER OF CREDITS 30
PROGRAMME OF STUDY Global Management
AUTHORS O. E. Konradsson
A. Witsenboer
2
Master Thesis in Business Administration
Title The relationship between a sustainable mindset and organizational performance: A multiple case study in the Dutch and Swedish organic food sector
Authors Olivia Elise Konradsson and Anna Witsenboer Tutor Ulla Anneli Saari
Date 18th of May 2020
Key terms Sustainability, Sustainable Mindset, Sustainability Strategy, Organizational Performance, Sustainable Entrepreneurship, Food Industry
Abstract
Background The world is facing difficulties in terms of environmental, social and economic sustainability. Sustainability in the food industry is especially important, as food production exceeds planetary limits, resulting in a need for the food industry to embrace sustainable business practices and face the growing pressure to account for externalities. However, what drives leaders to embrace sustainability? Scholars have only just started to emphasize the importance of the mindset of leaders. A sustainable mindset strongly influences an organization and its strategy, and could thus potentially contribute to organizational performance. Purpose The purpose of this thesis is to identify whether the mindset behind a
sustainability strategy supports organizational performance. With this thesis, we hope to contribute to the body of knowledge on a sustainable mindset in an organizational setting.
Method This thesis adopted a qualitative exploratory research approach. Semi-structured interviews were conducted with both sustainable entrepreneurs and employees at organic food stores in order to gain an understanding of the mindset, strategy and organizational performance.
Conclusion This study has found that the sustainable mindset does support organizational performance. The research participants all indicate that their sustainable mindsets are deeply ingrained into the organizations’ core missions. The mindset urges individuals to act sustainable in every respect, both on an individual and on an organizational level. The sustainability movement shaped by the study participants does therefore support organizational performance in various ways, as it directly influences the triple bottom line.
3 Acknowledgements
Before we begin, we would like to take a moment to thank those who have been a part of this process. Writing a master thesis is a unique moment in one’s life, and thus we would like to express our gratitude to the people who have supported us throughout, and have invested their time and energy in helping us during this important process of our lives.
First and foremost, we would like to express our gratitude for the help we have received from our supervisor, Ulla Anneli Saari. Thank you for brainstorming with us in the initial stage of the process, for sharing your ideas, for reading our drafts and for providing us with honest feedback and guidance.
Second, we would like to thank our interviewees, who were open to participate in our study, even when Covid-19 was causing chaos on our planet. Thank you for dedicating time to participate in our study, for sharing your thoughts and other inputs, and for your trust in us as researchers.
We also aim our gratitude to our peers, with whom we have been in this process together, and who have provided us with constructive feedback that has helped us tremendously along the way.
Last but not least, a special thanks goes out to our families and friends who have mentally supported us throughout the process of writing this master thesis. Without all of you, this thesis would not have existed.
Anna Witsenboer Olivia Konradsson
4 Preface
In front of you lies our master thesis on the relationship between a sustainable mindset and organizational performance in the organic food sector; the very last component of our master studies in Global Management at Jönköping University.
Writing a master thesis alone is already an impactful experience by itself. However, writing a master thesis whilst a pandemic is raging across the planet called for a whole range of new challenges. 2020 was meant to be the year in which we would contribute to the body of knowledge on sustainability and fill a gap in the literature that we had identified back in 2019. Unfortunately, the start of 2020 was unlike anyone could have ever imagined, which resulted in us facing great difficulties while conducting our research.
Due to Covid-19, we have been unable to find a sufficient number of companies that were willing to participate in our study. Whilst in some industries, people were treated with more time than usual as activities were being halted, the food industry faced enormous levels of activity and demands that were greater than during major holidays such as Christmas. As a result, most organic supermarkets that we have approached to participate in our study have declined our requests. We have thus been unable to get a satisfactory amount of empirical data to conduct our study in the way we had intended to do. Given the time frame of this thesis, it was impossible for us to wait until the pandemic was in a more controllable state. Regardless of this situation, we have done our utmost best to make the most out of this thesis and to contribute to the body of knowledge on the sustainable mindset.
Anna Witsenboer Olivia Konradsson
5
Table of Contents
Abstract ... 2
Acknowledgements ... 3
Preface ... 4
Terms and Definitions ... 8
1.
Introduction ... 10
1.1. Background ... 10 1.2. Problem statement ... 13 1.2.1. Research question ... 14 1.3. Purpose ... 152.
Literature review ... 16
2.1. Drivers for sustainability ... 16
2.1.1. External drivers ... 16
2.1.2. Internal drivers ... 18
2.2. Sustainable mindset ... 19
2.2.1. Importance of a sustainable mindset ... 21
2.3. Sustainability strategy ... 22
2.4. Organizational performance ... 24
2.4.1. The triple bottom line ... 25
2.5. Research gap ... 27
3.
Framework ... 29
4.
Methodology ... 32
4.1. Philosophical standpoint ... 32 4.2. Research design ... 33 4.2.1. Research purpose ... 33 4.2.2. Research approach ... 34 4.2.3. Research strategy ... 34 4.3. Research context ... 35 4.4. Literature search ... 36 4.5. Unit of analysis ... 37 4.6. Data collection ... 37 4.6.1. Sampling strategy ... 376 4.6.2. Selection of participants ... 39 4.6.3. Primary data ... 39 4.6.4. Secondary data ... 40 4.7. Data analysis ... 41 4.8. Research ethics ... 42 4.9. Research quality ... 42
5.
Empirical findings ... 44
5.1. Drivers for sustainability ... 45
5.2. Sustainable mindset ... 46
5.3. Sustainability strategy ... 49
5.3.1. The triple bottom line ... 49
5.3.2. Long-term perspective, change and innovation ... 50
5.4. Organizational performance ... 51 5.4.1. Competitive advantage ... 51 5.4.2. Economic disadvantage ... 52 5.4.3. Innovation ... 52 5.4.4. Employee motivation ... 53 5.4.5. Additional findings ... 54
6.
Analysis ... 55
6.1. Drivers for sustainability ... 55
6.2. Sustainable mindset ... 56
6.2.1. Personal values and deep-seated beliefs ... 56
6.2.2. Motivation to contribute to the greater good ... 58
6.2.3. Social norms ... 59
6.2.4. Ability to recognize sustainable opportunities ... 59
6.3. Sustainability strategy ... 59 6.4. Organizational performance ... 63 6.4.1. Competitive advantages ... 63 6.4.2. Sustainable innovation ... 65 6.4.3. Environmental impact ... 66 6.4.4. Social achievements ... 67
6.4.5. Employee motivation and organizational culture ... 68
7
7.
Conclusion ... 72
8.
Discussion ... 75
8.1. Contribution to the literature ... 75
8.2. Limitations ... 77 8.3. Future research ... 78 References ... 80 Appendices ... 87 Appendix 1 ... 87 Appendix 2 ... 93
List of Figures
Figure 1: Triple Bottom Line. Reprinted from “Zen and the Triple Bottom Line” by J. Elkington, 2018 ... 8Figure 2: Global Greenhouse Gas Emissions by Economic Sector. Adapted from “Climate Change 2014” by Intergovernmental Panel on Climate Change (IPCC), 2014, p. 9. ... 11
Figure 3: Sustainable Mindset Framework by Witsenboer and Konradsson (2020). ... 29
List of Tables
Table 1: Sample criteria ... 38Table 2: Selection of participants ... 39
Table 3: Interview outline ... 40
8 Terms and Definitions
Sustainability
“In the corporate realm, the term is often used to refer to a “triple bottom line” approach to business through which companies seek to deliver not just profits and solid economic results but also good performance from an environmental and social perspective” (Esty & Simmons, 2011, p. 5).
Triple bottom line
The triple bottom line, first introduced by John Elkington in 1994, is a model consisting of three circles that focus on environmental sustainability, social sustainability, and economic sustainability. The environmental bottom line has a focus on protecting the natural capital, including the oceans, the climate, and biodiversity, whilst the social bottom line focuses on social capital including public health, education, skills, and society’s wellbeing. The economic bottom line focuses on whether a company is economically sustainable, competitive, and innovative in the long run (Elkington, 1999).
Sustainability strategy
“Sustainability strategies can be defined as strategies designed to ‘meet the needs of a firm's direct and indirect stakeholders, without compromising its ability to meet the needs of future stakeholders as well’”(Dyllick & Hockerts, 2002, p. 131).
Mindset
“By mindset we mean the lens through which individuals view the world and their role/place in it, including the underlying assumptions, beliefs, and values that inform that lens” (Kassel, Rimanoczy, & Mitchell, 2016, p. 3).
Figure 1: Triple Bottom Line. Reprinted from “Zen and the Triple Bottom Line” by J. Elkington, 2018
9 Sustainable mindset
“A sustainability mindset incorporates a systemic approach to understanding, one which goes beyond technical knowledge and even understanding the basics of a healthy ecosystem and a thriving society” (Kassel et al., 2016, p. 3).
Competitive advantage
A competitive advantage is a superiority that an organization has over competitors in terms of an ability to offer greater value to consumers. A sustainable competitive advantage specifically “is determined and measured in many different ways such as productivity, performance, economic development, resource management and human and social capital competencies” (Thiel, 2017, p. 214).
10
1. Introduction
__________________________________________________________________________________________ The purpose of this chapter is to familiarize the reader on the background perspectives and the research problem. It introduces contemporary sustainability issues, figures, and a background on the organic food industry in the Netherlands and Sweden. The chapter is divided into three parts including the background, the problem statement and the purpose of this study.
__________________________________________________________________________________________
1.1. Background
Sustainability is becoming increasingly important in today’s time, and it is often described in terms of environmental, social and economic sustainability, also known as the triple bottom line. This model will be used to provide a background to the topic of sustainability in the food industry, as well as its importance and relevance for businesses, starting with environmental sustainability. On November 29, 2019, the European Parliament declared a global climate emergency, urging immediate action to fight and halt climate change (Haahr, 2019). According to the World Meteorological Organization (2019), 2015 - 2018 have been the warmest four years in the history of the planet. Moreover, the temperature of the ocean is hitting a record high, and sea levels continue to rise as the Arctic and the Antarctic ice continues to melt. These changes to the environment have widespread impacts on agriculture, pollution, greenhouse gas emissions, food security, population displacement, health, loss of biodiversity, water shortage, and air and water contamination (Kassel et al., 2016; World Meteorological Organization, 2019). Thus, action is needed from world leaders, organizations and consumers to collectively make a sustainable effort.
Organizations are facing stricter regulations as well as growing pressures from stakeholders to act sustainably (Leonidou, Katsikeas, & Morgan, 2013). Moreover, the public awareness of climate-related issues is continuously rising, making it impossible for organizations to pursue infinite growth and profits without paying attention to planetary limits. Environmental sustainability in the food industry specifically should be an important area of focus, as the food industry is one of the largest polluters worldwide, accounting for 24% of global greenhouse gas emissions (IPCC, 2014). Additionally, animal agriculture and commercial fishing are the most significant contributors to biodiversity loss (European Commission, 2019). The European Commission (2019) further emphasizes that the food industry compromises the Earth’s capacity and ability to produce food in the future. Food
11 production today is exceeding planetary limits, meaning that there is an opportunity for the food industry to become a more sustainable industry. Thus, a focus on the food industry is interesting, particularly because this industry has a strong focus on innovativeness and improvements in terms of the triple bottom line (Longoni & Cagliano, 2018).
Figure 2: Global Greenhouse Gas Emissions by Economic Sector. Adapted from “Climate Change 2014” by Intergovernmental Panel on Climate Change (IPCC), 2014, p. 9.
Companies taking a triple bottom line approach to sustainability look beyond environmental sustainability and also focus on a wide range of social issues, including labor rights, equality, workplace conditions and safety, ethics, workers’ health, community development, et cetera (Esty & Simmons, 2011). Even though the European Union has numerous laws and regulations in place to prevent large scandals in the food industry from happening (European Food Safety Authority, 2019), issues concerning food safety, health and nutrition, workplace safety and animal welfare persist. For example, controversy around the herbicide Glyphosate, a potential carcinogen, has led to debates on the ban of such substances in order to promote greater food safety and ultimately better health (World Health Organization, 2015). The industry has responded to such issues, and the interest in organic farming has consequently been rising. Between 2010 and 2017, the amount of land devoted to organic agriculture increased by 70% (European Commission, 2019). Another key disruption in the food industry can be seen in the meat and dairy sector, fueled by growing concerns around animal welfare, and a growing awareness about the health-promoting effects of plant-based diets (Deloitte, 2019). The market for plant-plant-based foods increased by 20% in 2018, compared to 2017 (Plant Based Foods Association, 2018). These figures show that the market is rapidly transforming and sustainable entrepreneurs should actively grasp these opportunities.
25% 24% 6% 14% 21% 10% Greenhouse Gas Emissions by Economic Sector
Electricity and Heat Production
Agriculture, Forestry, and Other Land Use Buildings
Transportation Industry Other Energy
12 Economic sustainability in the food industry has also changed considerably over time. According to the European Commission (2019), food systems were primarily supply-driven during the past decades, meaning that products would be manufactured and would then be supplied to the market. However, at this point, the food system is predominantly demand-driven, which means that the market demands certain products that will then be supplied to the market by the manufacturers. This shift has resulted in higher bargaining power for the retail sector, forcing farmers to produce and sell at the lowest prices possible (European Commission, 2019). A study by O’Donoghue et al. (2016) found that 56% of farms in the Netherlands are economically unsustainable. It is therefore crucial for organizations to urge and embrace sustainable practices, especially in today’s time.
In the past, organizations could get away with using methods that did not account for externalities such as climate change and damage to local communities. However, the pressure to account for those externalities is continuously growing. Hence, companies have to redefine the way they operate and adapt to sustainability strategies (Kassel et al., 2016), with which companies do not solely aim to generate profits, but also seek to deliver good results from an environmental and social perspective (Esty & Simmons, 2011). To run a successful sustainability strategy, sustainability should be incorporated everywhere in the organization (Bonn & Fisher, 2011), and embedded in every decision (Schrettle et al., 2014). According to Kuckertz and Wagner (2010), a sustainable mindset can provide more opportunities for organizations as it recognizes unsustainable behavior and could drive sustainable innovation (Vilanova et al., 2009). The mindset of leaders is reflected upon entire organizations, making leadership a critical part of an organization’s success (Bonn & Fisher, 2011; Esty & Simmons, 2011; Kassel et al., 2016). Moreover, engaging stakeholders to act sustainably starts with leadership and the leaders’ mindset. If leaders successfully achieve to engage stakeholders in sustainability, better results will follow as everyone works towards a collective vision, mission and goal (Kassel et al., 2016). It is therefore of great importance for organizational leaders to be aware of their values, beliefs and motives as they can affect the strategic decision-making process and perception of strategic and bottom-line issues (Bonn & Fisher, 2011).
This thesis will focus on the sustainable mindset of leaders in the organic and sustainable food retail sector in the Netherlands and Sweden. We have made a deliberate choice to study these countries as they are more sustainably developed, compared to countries in Central, Eastern and Southern Europe (Chkanikova & Mont, 2011). Consumers are found to
13 have diets higher in vegetables and fruit (Rumm-Kreuter, 2001), and lower in milk, bread and butter (Trichopoulou, Naska, & Costacou, 2002). This suggests that the Netherlands and Sweden are suitable markets for sustainable entrepreneurs to grasp the opportunities of being sustainable.
The organic and sustainable food retail sector is well established in both the Netherlands and Sweden. Organic food sales in the Netherlands are much larger than in neighboring countries, like Belgium and Luxembourg, but smaller than in Sweden. Sweden has the highest per-capita organic consumption within the European Union, whilst the Netherlands holds a seventh place (USDA Foreign Agricultural Service, 2018). The Dutch organic food market has seen steady growth in the past years, with an 84% increase in value over the last seven years to a total of €1,205,500,000 in 2017 (Statista, 2020a). A similar trend can be seen in Sweden, where the sales value of organic food products has increased by nearly 200% over the last decade to a total of €1,542,000,000 in 2017 (Statista, 2020b).
1.2. Problem statement
The interest in sustainability is rising and has become a popular topic all around the world (Bonn & Fisher, 2011; Esty & Simmons, 2011). Both organizations and consumers are continuously becoming more aware of their ecological footprints and the consequences of their everyday actions. Pressure on nations, organizations, and consumers is rising to reduce waste and emissions, to have fair labor conditions and human equality, and to live, consume and operate more sustainably (Cech & Dohnalova, 2015). Operating more sustainably is often regarded as a significant challenge for organizations, but if managed right, it can present significant opportunities (Esty & Simmons, 2011). Our planet is changing, and it is crucial for both companies and individuals to take action. Sustainability is quickly becoming a critical aspect as well as a necessity for organizations (Longoni & Cagliano, 2018), but organizations undeniably consider profits of greater importance (Ketola, 2008). There is a notion that sustainability comes at the cost of profits. For that reason, organizations are not always eager to pursue sustainability strategies (Bretzke & Barkawi, 2013). A study by Drost, Long, Wilson, Miller and Campbell (1996) found that the key barriers to adopting sustainable practices include financial risk, lack of knowledge and skills, as well as lack of required equipment. Furthermore, Milbrath (1995) emphasized that some of the barriers to sustainability result from deficiencies in information, knowledge and consciousness.
14 Even though sustainability has been well researched in the last decades, scholars have only just started to emphasize the importance of the mindset of managers and organizational leaders (Bonn & Fisher, 2011; Esty & Simmons, 2011; Kassel et al., 2016; Milbrath, 1995; Schrettle, Hinz, Scherrer-Rathje, & Friedli, 2014). Yet, not a lot of research has been done on the mindset of leaders that dedicate their entire strategy to sustainability. Leaders and top managers strongly influence an organization and its strategic decisions. Their leadership reflects personal values and emotions (Bonn & Fisher, 2011). Therefore, it is vital to study the mindset of leaders. Sustainable leaders include both environmental and socioeconomic factors in their decision making (Starik & Kanashiro, 2013), where traditional leaders are more concerned with the economic outcomes of their actions. The sustainable mindset is embedded in every decision (Bonn & Fisher, 2011; Schrettle et al., 2014), and helps the organization thrive (Kassel et al., 2016). However, what is it that drives leaders to act sustainable? In the past decades, sustainability was not consciously considered by leaders (Milbrath, 1995), but what has changed now that sustainability is consciously considered more often? What is the mindset behind a sustainability strategy and how does it influence organizational performance?
Nowadays, sustainable business practices are crucial. Hence, the relationship between a sustainable mindset and organizational performance should be an area of attention, especially given that only few studies have previously explored the sustainable mindset in a business setting. Therefore, this thesis will be dedicated to exploring the sustainable mindset in a business setting, with a focus on the Dutch and Swedish organic food sector. We hope to contribute to the body of knowledge on the sustainable mindset and how it affects leaders, their strategic decision making, and ultimately organizational performance. This to create awareness on the consequences of organizations’ actions on both our planet and the society. Furthermore, the goal is to create awareness to enforce positive changes towards a more sustainable long-lasting life span for organizations.
1.2.1. Research question
Does the mindset behind a sustainability strategy support organizational performance in organic food stores in both Sweden and the Netherlands?
15 1.2.1.1. Research context
In the context of this study, we are specifically exploring the mindset of sustainable entrepreneurs, managers, and leaders. In pre-existing literature, sustainability has been found to support organizational performance in several ways. For this study, organizational performance is defined in terms of having a sustainable competitive advantage (Aragon-Correa et al., 2008; Doh et al., 2012; Epstein & Roy, 2001; Esty & Simmons, 2011; Funk, 2003; Lartey et al., 2020; Longoni & Cagliano, 2018; Porter & Kramer, 2006; Schrettle et al., 2014; Thiel, 2017; Vilanova et al., 2009; Zhou et al., 2019), increased employee motivation (Horisch et al., 2014; Thiel, 2017), a positive corporate culture (Kassel et al., 2016), sustainable innovation (Enticott & Walker, 2008; Kuckertz & Wagner, 2010; Vilanova et al., 2009), making a positive environmental impact (Porter & Kramer, 2006; Vilanova et al., 2009; Zhou et al., 2019) as well as a positive social impact (Brammer & Millington, 2008; Orlitzky et al., 2003).
1.3. Purpose
The purpose of this thesis is to identify if there is a relationship between the mindset behind a sustainability strategy and whether it supports organizational performance. As has been highlighted earlier in this chapter, sustainability is becoming increasingly important in today’s time. Organizations operate in a larger society and in order to secure their survival, firms depend on the health of their employees, the strength of the society in which it exists, and the wellbeing of the biosphere, as the biosphere is the place where all economic and social activities take place. Sustainable development is not only crucial in today’s time, but also to preserve the planet for future generations. The world thus needs sustainable entrepreneurs that pursue a sustainability strategy that stems from a sustainable mindset. The importance of a sustainable mindset in strategic decision making has been clearly established in the literature. However, it is unclear whether the sustainable mindset supports organizational performance. This thesis will contribute to the body of knowledge on a sustainable mindset behind a company’s sustainability efforts, and whether it contributes to increased organizational performance.
16
2. Literature review
__________________________________________________________________________________________ In this chapter, the reader is provided with the existing theoretical background on sustainability and the connection to the mindset, strategy and performance. The literature review is divided into four major parts: drivers for sustainability, sustainable mindset, sustainability strategy and organizational performance. The concluding paragraph of this chapter will be devoted to discussing the gap in the research.
___________________________________________________________________________
2.1. Drivers for sustainability
To better understand the mindset behind pursuing a sustainability strategy, it is essential to study what drives leaders and organizations towards sustainability in the first place (Horisch, Freeman, & Schaltegger, 2014). An increasing number of organizations recognize the threats that the world is facing in terms of climate change, alongside with many other social and economic threats (Bonn & Fisher, 2011). As a result, more companies are moving toward an ecosystem perspective (Candi, Melia, & Colurcio, 2019).
The drivers for sustainability are not only focused on enhancing financial value for companies, but are also focused on improving quality of life for stakeholders, as well as improving the environment (Horisch et al., 2014). Over time, scholars have identified numerous drivers for sustainability and divided them into two categories, classified as internal and external drivers (Schrettle et al., 2014).
2.1.1. External drivers
2.1.1.1. Regulations and compliance
“Thousands of citizens and their governments are embracing a new way of thinking and acting about their future” (Roseland, 2012, p. 2). Governments drive sustainable development top-down through the establishment of laws, regulations, public policies as well as through partnerships with organizations and society (Newell, 2008; Post & Altma, 1994; Thiel, 2017). Complying with these government regulations is an important driver for sustainability in many organizations (Candi et al., 2019), as non-compliance has legal consequences and can seriously harm a company’s reputation (Schrettle et al., 2014). Thiel (2017) specifically emphasized that
17 society has the potential to significantly influence and shape government policies as well as the marketplace, thus playing a vital role in driving sustainability.
2.1.1.2. Societal values and norms
The world is facing a growing demand for ethical business practices that take the interest of multiple stakeholder groups and the society as a whole into account (Candi et al., 2019). Schrettle et al. (2014) and Newell (2008) have identified various stakeholder groups including NGOs, the media, community groups, politics, investors, employees and consumer organizations, and recognizes these interest groups as significant drivers for sustainability. The influencing power of these groups has grown considerably in recent years and can thus pressure organizations into sustainable change (Schrettle et al., 2014; Thiel, 2017).
2.1.1.3. Market forces
Apart from top-down drivers through regulations, societal pressures and increased stakeholder expectations (Kassel et al., 2016), sustainability is also driven bottom-up through market forces (Candi et al., 2019; Newell, 2008). According to Post and Altma (1994), consumers are willing to vote with their money and buy products that are in line with their environmental values. As a result, the sale of eco-friendly products has increased considerably. Data from the Center for Sustainable Business (2019) showed that the sales of products that are marketed as eco-friendly grew 5.6 times faster than the sales of conventional products. A similar viewpoint has been presented by Schrettle et al. (2014), suggesting that consumers positively respond to an organization's sustainability efforts when they are aligned with their personal values and norms. This, in turn stimulates demand for sustainable products, and thus sustainability should be of high importance to companies. Candi et al. (2019) found that companies are willing to innovate on sustainability aspects if they recognize a high degree of change in consumers’ demands and expectations. However, Thiel (2017) states that consumers’ attitudes towards the environment do not always lead to greener consumption behavior, resulting in a decreased motivation for firms to manufacture greener products.
18 2.1.2. Internal drivers
2.1.2.1. Culture
According to Schrettle et al. (2014), cultural influences like motivation, information sharing, a long-term perspective, and management commitment determine sustainable responsiveness. Kuckertz and Wagner (2010) additionally emphasize the motivation aspect, suggesting that individuals who highly value sustainability naturally have a high desire to express these values and to act according to their values. Moreover, Saari and Joensuu-Salo (2019) suggest that intrinsic motivation and values play a role in driving sustainable business practices. However, it is important to note that sustainability programs are not necessarily always initiated by an organization's management, but can also be initiated bottom-up through the employees of an organization (Sharp & Zaidman, 2010).
2.1.2.2. Strategy
Criado-Gomis et al. (2018) emphasized that organizations’ commitment to sustainability is often strategic in nature. The biggest challenge for managers, however, is the degree of integration of sustainability initiatives with the firm’s strategic objectives, mission, and vision (Schrettle et al., 2014). Many forward-looking leaders now recognize that sustainability is not just a burden and forced upon companies by government regulation, but that it can also provide business opportunities that can lead to differentiation in the marketplace (Vilanova, Lozano, & Arenas, 2009). In turn, sustainability can thus lead to a competitive advantage (Candi et al., 2019; Thiel, 2017), meaning that an organization is superior over competitors in terms of being able to offer greater value to consumers. This is especially true for truly innovative companies (Funk, 2003), that manage to develop breakthrough technologies and services (Esty & Simmons, 2011; Thiel, 2017). Already in 2008, a study conducted by KPMG suggested that nearly 50% of companies consider sustainability to be an important driver for innovation (Bonn & Fisher, 2011). More recently, a study conducted by BCG in 2017 found that 90% of executives think of sustainability as a necessity, yet only 25% of organizations have developed a genuine business case for sustainability (Kiron et al., 2017). Sustaining a competitive advantage is even more significant in today’s time, where competing on quality, pricing and product features alone is simply not sufficient anymore. Sustainability should thus be looked at as an investment, bringing stability, credibility, prosperity and a good reputation in the long run (Cech & Dohnalova, 2015; Funk, 2003; Vilanova et al., 2009).
19 2.1.2.3. Resources
Aragón-Correa et al. (2008) emphasized the importance of human capital to drive sustainability in organizations. Employee involvement and capability, as well as a shared vision are crucial for successful sustainability initiatives. Schrettle et al. (2014) further argue that the possession of adequate resources (including financial capital, technology and human capital) drive an organization’s sustainability efforts. In addition, Funk (2003) suggests that organizations with a sustainable mindset can get easier access to capital. Firms that already have a sustainability track record are found to be more successful in driving further sustainability initiatives (Schrettle et al., 2014).
2.2. Sustainable mindset
In the literature on the sustainable mindset (e.g. Kassel et al., 2016), both the terms ‘sustainable mindset’ as well as ‘sustainability mindset’ are being used comparatively. This thesis will generally refer to ‘sustainable mindset’. However, if an original source refers to the term ‘sustainability mindset’, that term will be used.
It is useful to establish what exactly is meant by a sustainable mindset. According to Kassel et al. (2016), a mindset can be defined as the lens through which individuals see the world, which is influenced by the underlying beliefs, values and assumptions of those individuals. A sustainable mindset specifically “… incorporates a systemic approach to understanding, one which goes beyond technical knowledge and even understanding the basics of a healthy ecosystem and a thriving society” (Kassel et al., 2016, p. 3) and has been defined as “a way of thinking and being that results from a broad understanding of the ecosystem’s manifestations as well as an introspective focus on one’s personal values and higher self, and finds its expression in actions for the greater good of the whole” (Kassel et al., 2016, p. 8). Mindsets are not fixed, and can change over time as individuals change their worldview, undermining their fundamental beliefs. Humankind is starting to recognize the interconnectedness of the planet, people, and profit, which is causing a transformation of the mindset (Kassel et al., 2016).
Organizations are recognizing that it is not possible to pursue infinite growth and profits without paying attention to sustainability (Kassel et al., 2016). As stated by Dyllick and
20 Hockerts (2002, p. 9): “An obsession with short-term profits is contrary to the spirit of sustainability” (Schrettle et al., 2014). Conventional entrepreneurs are often driven by economic value creation, whilst sustainable entrepreneurs are considered to be emotionally involved in driving the development of their enterprises by embedding environmental values and social awareness. Sustainable entrepreneurs consider these values to be of greater importance than the economic aspects of their business (Saari & Joensuu-Salo, 2019). Sustainability management rejects the notion that ethical issues can be separated from business, as these two aspects are interlinked (Horisch et al., 2014). As established earlier, a significant driver for sustainability is to gain and sustain a competitive advantage. Kassel et al. (2016) suggest that most organizations do not engage in sustainability from an ethical point of view, but indeed, rather for the pursuit of competitive advantage. However, a sustainable mindset and vision matters, as it puts organizations on notice about sustainability issues and challenges (Esty & Simmons, 2011). This has also been emphasized by Schrettle et al. (2014) and López-Gamero et al. (2011), as these scholars suggest that the environmental attitude of a company’s leader is a significant factor in shaping a firm’s sustainability initiatives. Aragon-Correa et al. (2008) also suggest that the manager’s ability to extend sustainable views to the rest of the organization is a crucial factor in sustaining a competitive advantage. According to Kassel et al. (2016), managers can also sustain a competitive advantage by truly applying a sustainable mindset. The sustainable mindset will instill new ways of managing risk, of solving problems, and will transform environmental and social issues into an advantage.
According to Meek, Pacheco and York (2010), social norms and unwritten codes of conduct are often present within social groups and indirectly affect the behavior of people within that group. For entrepreneurs specifically, social norms can guide them to pursue sustainable opportunities, as they are perceived to be desirable and legitimate by their social groups (Meek et al., 2010). Additionally, Kuckertz and Wagner (2010) suggest that individuals with a sustainable mindset are more likely to recognize entrepreneurial opportunities resulting from unsustainable behavior. Hoogendoorn, van der Zwan and Thurik (2019) support the idea that the motivation of sustainable entrepreneurs comes from a willingness to contribute to increased social and environmental gains for others in their social groups and society at large. Meek et al. (2010) suggest that group members are more likely to behave in a desired way in order to avoid feelings of guilt, embarrassment and shame for not complying with the social norms. However, Ketola (2008) found that social issues are often perceived as ‘soft issues’ resulting in ‘traditional men’ not feeling comfortable dealing with those issues. As has been
21 stated by Magretta (2008) in (Kassel et al., 2016, p. 4), sustainability is “far from being a soft issue grounded in emotions or ethics, sustainable development involves cold, rational business logic”.
2.2.1. Importance of a sustainable mindset
The importance of the mindset in organizations has also been recognized in other areas. For example, in the field of globalization, former GE CEO Jack Welch has suggested that “The real challenge is to globalize the mind of the organization... until you globalize the intellect, you haven’t globalized the company” (Gretzel, Davis, Bowser, Jiang, & Brown, 2014, p. 168). Bonn and Fisher (2011) also emphasized the importance of the mindset of managers, as their environmental sensing capabilities, emotional involvement, and underlying values affect their perception of strategic issues and thus strongly influence the strategic decision-making process. This is the case for managers that are aware of environmental issues and perceive them as relevant, as well as for managers that perceive environmental issues as irrelevant. However, leaders cannot change things that they do not cognize. In the past decades, sustainability was often not consciously considered, resulting in planet-wide sustainability concerns (Milbrath, 1995). Sustainability should thus be embedded in a leader’s mindset in order to influence sustainable practices (López-Gamero et al., 2011; Schrettle et al., 2014). Kassel et al. (2016) moreover suggest that it is not only important to look at what entrepreneurs think and do, but also how they think and what their underlying motivations for acting sustainable are, because all of these factors affect organizational behavior and strategy making, and could thus possibly have an influence on organizational performance. Leaders who reflect on the higher purpose of sustainability are more engaged and motivated to act sustainably, compared to leaders who are solely motivated by a potential pursuit of competitive advantage (Kassel et al., 2016).
As a result, organizations must understand the mindset, values, and deep-seated beliefs of its strategic decision-makers in order for the organization to become more sustainable (Bonn & Fisher, 2011). Understanding personal values is crucial, as they ultimately affect one’s sustainable or unsustainable behavior (Kassel et al., 2016). Lastly, Kassel et al. (2016) emphasize the benefits that come from having a sustainable mindset when the environmental, social, and economic aspects are all embedded and interwoven within the corporate culture. When the business case for sustainability has become the norm, the next step is to combine the head and the heart to inspire sustainable actions and to embrace sustainability strategies.
22 2.3. Sustainability strategy
There are many definitions for the word ‘strategy’. One of them comes from Whittington (2006), who defines it as “something people do” (p. 613). Meanwhile, Jarzabkowski (2005) defines strategy as a “goal-oriented activity within an organization" (p.53). Although scholars define the word ‘strategy’ differently, the fundamental understanding of the concept is mutual; a strategy is the core activity of an organization. This activity is ingrained within the values, goals and identity of the organization (Epstein & Roy, 2001; Jarzabkowski, 2005).
A sustainability strategy aims to create a proactive work environment with a focus on the triple bottom line; the economic, environmental and social dimensions of an organization. This could include reducing environmental cost such as waste and energy (Esty & Simmons, 2011; Wisner, Epstein, & Bagozzi, 2010), decrease the use of materials and toxic substances (Lartey et al., 2020), or to use social relations to obtain competitive advantages (Thiel, 2017). To fully understand a sustainability strategy, it is essential to differentiate it from a corporate social responsibility (CSR) strategy. A sustainability strategy goes beyond a CSR strategy as it does not solely aim to satisfy social needs, but is instead a long-term commitment towards balancing the triple bottom line (Bonn & Fisher, 2011; Cech & Dohnalova, 2015; Esty & Simmons, 2011; Horisch et al., 2014; Longoni & Cagliano, 2018). Sustainability should be everywhere within an organization, including the mission and vision (Bonn & Fisher, 2011). In addition, Esty and Simmons (2011) state that organizations that are executing a true sustainability strategy will have key performance indicators associated with sustainable outcomes.
In order to create a long-lasting sustainability strategy, organizations need to identify the operational activities associated with sustainability issues (Epstein & Roy, 2001). By identifying these issues, organizations can transform sustainability issues into major opportunities (Bonn & Fisher, 2011; Cech & Dohnalova, 2015; Esty & Simmons, 2011; Funk, 2003; Porter & Kramer, 2006). Esty and Simmons (2011) explain the importance of constantly being aware of organizational issues affecting sustainability: “Sustainability must be understood not as an endpoint but as a journey. Issue spotting isn’t something you do once and then move on. Every company needs to regularly update its impact analysis and rethink the risks and opportunities presented by the evolving set of sustainability pressures” (p. 34).
23 Therefore, a sustainability strategy should be continuously monitored as an organization grows and develops, and as new external and internal regulations take place (Bonn & Fisher, 2011; Starik & Kanashiro, 2013). Horisch et al. (2014) argues that although strategies mainly focus on the long-term consequences, the short-term consequences should not be forgotten nor neglected. There is no recipe for a long-term nor short-term sustainability strategy that creates a competitive advantage for every organization (Esty & Simmons, 2011). However, most scholars agree that obtaining some type of sustainable initiative within an organization will boost competitive advantage (Aragon-Correa et al., 2008; Doh, Lawton, & Rajwani, 2012; Epstein & Roy, 2001; Esty & Simmons, 2011; Funk, 2003; Lartey et al., 2020; Longoni & Cagliano, 2018; Porter & Kramer, 2006; Schrettle et al., 2014; Thiel, 2017; Vilanova et al., 2009; Zhou, Xia, Feng, Jiang, & He, 2019). Competitive advantage could derive from sustainable initiatives such as innovativeness (Vilanova et al., 2009), decreased environmental impacts (Wisner , Epstein , & Bagozzi, 2010), social achievement (Candi et al., 2019; Esty & Simmons, 2011), along with increased organizational productivity (Porter & Kramer, 2006), and employee commitment (Candi et al., 2019).
Schrettle et al. (2014) suggest that some employees might have a hard time accepting sustainability as an organizational strategy, instead of only performing it as an initiative or side activity. Bonn and Fisher (2011), Esty and Simmons (2011), and Kassel et al. (2016) therefore state the importance of good top management. Especially in an organization where sustainability is the core, as top leadership reflects upon the entire organization. Starik and Kanashiro (2013) call it sustainable management and define it as “the formulation, implementation, and evaluation of both environmental and socioeconomic sustainability-related decisions and actions” (p. 12). Strong leadership is critical and the sustainable mindset should be embedded in every decision (Bonn & Fisher, 2011; Schrettle et al., 2014), to help an organization thrive (Kassel et al., 2016). B. Willlard wrote in his book The Sustainability Advantage (as cited in Esty & Simmons, 2011, p. 13): “Good leaders who align employees’ efforts with inspired visions of sustainability leadership, who educate and empower their carefully recruited talent, and who provide the necessary support to make it happen, will see the difference in their bottom line”. However, if top management fails to lead the organization on a sustainable path, it will seemingly create mistrust, problems and lack of performance (Esty & Simmons, 2011). To avoid this, Horisch et al. (2014) also highlight the importance of sustainability education and knowledge, as this is key when implementing sustainability processes.
24 An increasing amount of organizations today understand the benefits of carrying out sustainability strategies (Zhou et al., 2019). Porter and Kramer (2006) express that if an organization carries out a social strategy, it could lead to decreased risks in the value chain, as the social perspective focuses on both the internal and the external areas of an organization. A sustainability strategy can also help to cut costs for an organization (Aragon-Correa et al., 2008; Esty & Simmons, 2011). Meanwhile, Kassel et al. (2016) explain the critical aspect of engaging every stakeholder in an organization and not only a small number of individuals, as more significant changes and results come with many working together towards a mutual goal. As stated by Cech and Dohnalova (2015), devoting an organization's strategy to sustainability is an investment in the organization. Forward-looking and proactive leaders are starting to recognize the advantages of acting sustainable (Vilanova et al., 2009), the most prominent one being increased organizational performance (Esty & Simmons, 2011).
2.4. Organizational performance
The purpose of an organization is to generate value for all stakeholders (Candi et al., 2019; Horisch et al., 2014). Organizational success is, therefore, a major dependent on the relationship with stakeholders (Candi et al., 2019; Vilanova et al., 2009). Enticott and Walker (2008) suggest that an organization which explores new markets, innovations and actively responds to a changing environment is linked to remarkable organizational performance. Schrettle et al. (2014) state that sustainable initiatives can improve organizational performance, but also argue that it only improves the performance to a certain extent. The authors explain this phenomenon as “firms taking a very proactive approach in sustainability tend to overinvest in green initiatives going beyond the optimal effort-performance-rate” (p. 80).
The majority of scholars agree upon a positive relationship between sustainable initiatives and competitive advantages (Aragon-Correa et al., 2008; Doh et al., 2012; Epstein & Roy, 2001; Esty & Simmons, 2011; Funk, 2003; Lartey et al., 2020; Lo & Shue, 2007; Longoni & Cagliano, 2018; Porter & Kramer, 2006; Schrettle et al., 2014; Thiel, 2017; Vilanova et al., 2009; Wisner et al., 2010; Zhou et al., 2019). According to Thiel (2017), “sustainable competitive advantage is determined and measured in many different ways such as productivity, performance, economic development, resource management and human and social capital competencies” (p. 214). Horisch et al. (2014) discuss the production of organic products in relation to employee motivation. The scholars state that employees are prouder to
25 work for companies that trade organic products, as customers’ awareness of products consumed is nowadays rising. It creates employee motivation, which is associated with productivity, competitive advantage, and strengthen performance (Thiel, 2017).
2.4.1. The triple bottom line
The triple bottom line model intertwines with all three of its dimensions. In other words, one dimension influences the other two and vice versa. It is therefore difficult to fully separate them. However, certain perspectives and outcomes are more associated with one rather than all (Elkington, 2018).
From a social perspective, a sustainability strategy can create brand recognition and attract new customers while keeping regular customers satisfied (Esty & Simmons, 2011). Horisch et al. (2014) found that an organization that reports and follows the GRI guidelines has an impact on stakeholder engagement. In addition, by implementing sustainability in every aspect of an organization, it will likely boost stakeholder value, and contribute to joyful and satisfied employees. Sustainability strategies can work as motivators for employees (Bonn & Fisher, 2011), which has been linked to organizational growth (Esty & Simmons, 2011). Employees nowadays are more aware of organization’s values, and naturally, so are suppliers and consumers (Cech & Dohnalova, 2015). The pressure on organizations to embrace sustainability is thus rising (Post & Altma, 1994). Previous studies indicate that social determination leads to stakeholder approval (Candi et al., 2019). Research has also found that stakeholders connect to the culture and identity of an organization (Jarzabkowski, 2005). Baron (1995) explains the importance of the social aspect as “market success depends not just on their products and services, the efficiency of their operations, their internal organisation, and the organisation of their supply chains, distribution channels, and alliance networks. Success also depends on how effectively firms deal with governments, interest groups, activists, and the public” (p. 73). Furthermore, Candi et al. (2019) endorse the relationship between social responsibility and organizational performance. Scholars have found that organizations with good social achievements have better financial performance in the long-term; however, organizations with weak social performance are found to have better financial performance in the short-term (Brammer & Millington, 2008; Orlitzky, Schmidt, & Rynes, 2003). Social organizational performance is also linked to integrity, commitment and economic performance (Candi et al., 2019).
26 A sustainability strategy from an economic perspective could reduce organizational expenses (Ketola, 2008), and increase an organization’s financial performance (Orlitzky et al., 2003). According to Esty and Simmons (2011), focusing on eco-efficiency, such as better energy management, could reduce significant expenses that would immediately affect the triple bottom line. A sustainability strategy could also reduce cost using smarter packaging solution, decreasing energy and raw materials consumption, and better waste disposal handling (Epstein & Roy, 2001; Galpin, Whittington, & Bell, 2015). Another economic perspective is the employees. Research has shown that an increasing amount of organizations screen the values of potential employees before hired (Galpin et al., 2015). Organizations have implemented screening because having a sustainability strategy and sustainability values in an organization is a tool to retain employees and attract new ones (Ambec & Lanoie, 2008; Bonn & Fisher, 2011; Esty & Simmons, 2011). Additionally, employees with similar values are usually more committed to an organization (Galpin et al., 2015), which results in better performance (Candi et al., 2019). Overall, when having a positive relationship with stakeholders, organizational advantages usually follow (Epstein & Roy, 2001). A sustainability strategy can also lead to better organizational financial capital and investment opportunities (Ambec & Lanoie, 2008).
In order to increase organizational performance from an environmental perspective, it is necessary to have a long-term commitment to the environment, which requires a long-term sustainability strategy (Longoni & Cagliano, 2018). The environmental aspect of a sustainability strategy can, for example, focus on water usage, land, energy and the efficient usage of other natural resources. An environmental aim is crucial for organizations as it can increase organizational productivity (Porter & Kramer, 2006) and innovativeness (Vilanova et al., 2009). It can also be a contributing factor to increased organizational performance (Zhou et al., 2019). Judge and Douglas (1998) confirmed the relationship between strategic planning and environmental management, and emphasized that integrating the two will have a positive effect on both the financial and the environmental performances of an organization. Indeed, Wisner et al. (2010) state that an environmental focus has positive effects on organizational value. In today’s time, governments and stakeholders are increasingly aware of environmental issues, and more cautious of products consumed, which has led to more regulations and reporting on environmental performance data for organizations (Esty & Simmons, 2011). Epstein and Roy (2001) state that complying to these regulations can improve an organization’s reputation and prevent negative press.
27 According to Ketola (2008), an organization that maximizes its social, economic and environmental obligations is an ideal organization. Indeed, Vilanova et al. (2009) analyzed the “Top 25 most innovative companies” in Business Week 2007, and the majority of those organizations had strong commitments towards sustainability and CSR. However, to keep the competitive advantages and to continuously increase organizational performance, organizations have to continually modify and update their ways of operating as the environment and regulations rapidly change (Esty & Simmons, 2011).
2.5. Research gap
It is clear that personal values, beliefs, and norms are the roots of the sustainable mindset. The importance of a sustainable mindset in strategic decision making has been clearly established (Bonn & Fisher, 2011). It is however unclear whether the sustainable mindset actually supports an increase in performance. Previous research has found evidence that sustainable initiatives can potentially lead to increased organizational performance in terms of a competitive advantage (Aragon-Correa et al., 2008; Doh et al., 2012; Epstein & Roy, 2001; Esty & Simmons, 2011; Funk, 2003; Lartey et al., 2020; Longoni & Cagliano, 2018; Porter & Kramer, 2006; Schrettle et al., 2014; Thiel, 2017; Vilanova et al., 2009; Zhou et al., 2019), increased employee motivation (Horisch et al., 2014; Thiel, 2017), a positive corporate culture (Kassel et al., 2016), sustainable innovation (Enticott & Walker, 2008; Kuckertz & Wagner, 2010; Vilanova et al., 2009), and making an environmental impact (Porter & Kramer, 2006; Vilanova et al., 2009; Zhou et al., 2019) as well as a social impact (Brammer & Millington, 2008; Orlitzky et al., 2003). What has not yet been established is what is driving leaders to execute sustainability strategies, as well as how their mindset and motivation to contribute to the greater good ultimately support the performance of their organization.
Few studies have previously focused on the sustainable mindset and how it affects organizations specifically. Existing literature on the sustainable mindset is primarily focused on competencies in management education (Hermes & Rimanoczy, 2018; Pokholkov, Tolkacheva, & Chervach, 2017; Tavanti & Davis, 2018) as well as sustainable behavior from a consumer perspective (Gierszewska & Seretny, 2019). However, the sustainable mindset has not yet been explored in organizational settings. Sustainability has often been approached from a more strategic point of view, however, to fully understand how and why organizational
28 leaders are making certain strategic decisions, the mindset needs to be studied. We believe the mindset, strategy, and performance relate to each other. As such, we wish to study these topics and contribute our findings in order to narrow down the gap in the literature. It is important to close this gap as the mindset of leaders affects organizations, the planet and the society at large. Organizations operate in a larger society and in order to secure their survival, firms depend on the strength of the society in which it exists as well as on the well-being of the biosphere, as the biosphere is the place where all economic and social activity takes place (Kassel et al., 2016). It is thus crucial to understand what is driving sustainability leaders to execute sustainability strategies, and how it can be put to use in order to create better performing organizations, as well as a thriving planet.
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3. Framework
__________________________________________________________________________________________ This chapter introduces the framework that is going to be examined for thesis. It will moreover provide the reader with an overview of the literature that has led to the establishment of this framework. The different components of the framework will be discussed briefly.
__________________________________________________________________________________________ The framework that is being tested in this thesis is based on the literature and examines if the sustainable mindset behind a sustainability strategy supports organizational performance. Therefore, the framework consists of three main components, namely the sustainable mindset, the sustainability strategy, and organizational performance.
Figure 3: Sustainable Mindset Framework by Witsenboer and Konradsson (2020).
Source: based upon Aragon-Correa et al. (2018), Bonn and Fisher (2011), Brammer and Millington (2008), Doh et al. (2012), Enticott and Walker (2008), Epstein and Roy (2001), Esty and Simmons (2011), Funk (2003), Hoogendoorn et al. (2019), Horisch et al. (2014), Kassel et al. (2016), Kuckertz and Wagner (2010), Lartey et al. (2020), Longoni and Cagliano (2018), Meek et al. (2010), Orlitzky et al. (2003), Porter and Kramer (2006), Schrettle et al. (2014), Thiel (2017), Vilanova et al. (2009), Zhou et al. (2019).
Various authors have defined the sustainable mindset in the literature. Kassel et al. (2016) emphasized that a sustainable mindset results from one’s personal values. The importance of personal values has also been stressed by Bonn and Fisher (2011), who suggested that understanding deep-seated beliefs of strategic decision-makers is crucial if an organization is to become more sustainable. Meek et al. (2010) found that social norms affect the behavior
Sustainable mindset •Personal values •Deep-seated beliefs •Social norms •Ability to recognize sustainable opportunities •Motivation to contribute to the greater good Sustainability strategy •Environmental sustainability •Social sustainability •Economic sustainability Organizational performance •Competitive advantage •Employee motivation •Corporate culture •Sustainable innovation •Environmental impact •Social achievements
30 of people, and that social norms can in turn guide entrepreneurs to pursue sustainable opportunities. Both Vilanova et al. (2009) and Kuckertz and Wagner (2010) suggest that individuals with a sustainable mindset are more likely to recognize opportunities, which can in turn lead to differentiation in the marketplace (Vilanova et al., 2009). Kuckertz and Wagner (2010) also suggest that individuals who highly value sustainability naturally have a desire to act accordingly to those values, and contribute to the greater good (Kassel et al., 2016). Additionally, Hoogendoorn et al. (2019) found that sustainable entrepreneurs are motivated to contribute to social and environmental gains for others in their social groups, as well as for society at large.
Entrepreneurs who highly value sustainability will thus be motivated to act upon their values (Kassel et al., 2016; Kuckertz & Wagner, 2010) and embed sustainability into their strategy. The sustainability strategy has a triple bottom line approach, focusing on environmental, social and economic sustainability.
As has been previously established in the literature review, numerous authors have found that executing a sustainability strategy can lead to increased organizational performance. Most scholars agree that a sustainability strategy can lead to a competitive advantage (Aragon-Correa et al., 2008; Doh et al., 2012; Epstein & Roy, 2001; Esty & Simmons, 2011; Funk, 2003; Lartey et al., 2020; Longoni & Cagliano, 2018; Porter & Kramer, 2006; Schrettle et al., 2014; Thiel, 2017; Vilanova et al., 2009; Zhou et al., 2019). According to Thiel (2017), the competitive advantage is strengthened by increased employee motivation, productivity and performance. Horisch et al. (2014) have established a link between employee motivation and sustainability, suggesting that employees are proud to work for companies that sell organic products. Apart from a competitive advantage and employee motivation, a sustainable mindset and strategy can lead to benefits when the environmental, social and economic aspects are all interwoven within the corporate culture of a company (Kassel et al., 2016). Moreover, stakeholders associate themselves with the identity and culture of an organization (Jarzabkowski, 2005). By implementing sustainability, it is expected to strengthen the devotion towards an organization, add stakeholder value and increase employee satisfaction (Bonn & Fisher, 2011). These motivators have in turn been linked to organizational growth (Esty & Simmons, 2011). Sustainability can therefore improve an organization’s performance (Schrettle et al., 2014). Furthermore, individuals with a sustainable mindset are more likely to recognize new opportunities (Kuckertz & Wagner, 2010). As such, by exploring new markets
31 and innovative solutions, an organization can differentiate itself in the marketplace (Vilanova et al., 2009), and enhance its organizational performance (Enticott & Walker, 2008). Porter and Kramer (2006) have established that environmental sustainability specifically can further boost an organization’s productivity and also contribute to even more innovation (Vilanova et al., 2009). Environmental sustainability does not merely contribute to increased organizational performance (Zhou et al., 2019), but, for example, also enhances the environmental impact of a company by reducing water, land and energy usage. Lastly, social achievements have been shown to contribute to financial performance specifically, especially in the long run (Brammer & Millington, 2008; Orlitzky et al., 2003). Hence, a combination of these factors could thus lead to increased organizational performance.
We believe that this is a non-linear process and that all aspects of the framework are at least partially interlinked. A sustainable mindset contributes to the execution of a sustainability strategy, but the strategy might also strengthen the mindset even further by deepening beliefs about sustainability. The execution of the sustainability strategy will in turn lead to increased organizational performance. As organizational performance is increasing, it will be more likely for organizations to continue executing a sustainability strategy. Moreover, increased organization performance can in turn also contribute to the sustainable mindset. It could, for example, intensify the motivation to contribute to the greater good.
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4. Methodology
__________________________________________________________________________________________ The methodology chapter introduces the methodological approaches of this thesis. It provides the reader with the research’s philosophical standpoint and explanations of methods. It includes the research design, the research context and a thorough summary of the literature search. In addition, a detailed description of the data analysis is provided, followed by the research ethics. Lastly, the chapter justifies the establishment of trustworthiness and the quality of the thesis.
4.1. Philosophical standpoint
In order to ensure the quality of this thesis, the research philosophy and methodology need careful consideration. Ontology is the core aspect of the research philosophy and is thus the starting point of this chapter. The ontology of this study is relativism. This approach suggests that there is more than one truth and that there are, in fact, many truths. People hold different views and have different perspectives on the issue of sustainability, and thus not every truth will be accepted by everyone (Easterby-Smith, Thorpe, & Jackson, 2015). As stated by Easterby-Smith et al. (2015, p. 129): “The international debate about climate change is a good example of the difficulties in reaching agreement about the significance of ‘scientific’ evidence...and a good illustration of what happens when individuals have no established reflexive sense of self in respect to knowledge and the process of judgement based on evidence.” In the context of this study, this means that what is true for one organization, is not ultimately true for every organization. Consequently, there is not one truth or one piece of scientific evidence that is accepted by everyone. Moreover, especially when studying a controversial topic like sustainability, there are often numerous groups of people that have conflicting interest (e.g. the animal agriculture industry and environmentalists), which contributes to even more debates (Easterby-Smith et al., 2015). Furthermore, from the relativist point of view, the focus is more on the mental capacities (the mindset of sustainable entrepreneurs) and less on the physical characteristics (organizational performance). Kassel et al. (2016) suggest that when talking about a sustainable mindset, one should move away from a right/wrong approach and instead take a both-and perspective, which means that one is able to accept that contradictions are part of the complexity of today’s world. Finally, in relativism, it is recognized that financial performance is merely one indicator that can be used to determine corporate health. Other factors, such as innovation and sustainability, are considered equally important. However, a
