Key Aspects of Implementing a Corporate Sustainability Strategy in a Decentralized Organization

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Key Aspects of Implementing a

Corporate Sustainability Strategy in a Decentralized Organization

A Case Study

Master’s Thesis 15 credits

Department of Business Studies Uppsala University

Spring Semester of 2019

Date of Submission: 2019-06-05

Dan Bäversten

Maja Nordström

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Abstract

Companies are considered as central actors towards a more sustainable society. Implementing a sustainability strategy is seen as an effective way for corporations to take responsibility and meet the society’s expectations. Different factors have been identified to affect the implementation of a sustainability strategy. The purpose of this thesis is therefore to add to the concept of strategy implementation and how organizational structure, organizational culture and internal communication affect the implementation process. A qualitative case study has been chosen to answer the research question where we conducted semi-structured interviews with employees at various positions in the case company. Our result revealed that a company’s sustainability strategy can be implemented even if the internal communication is weak.

However, we suggest that an organizational culture that is promoting the employees to feel committed to the strategy will have a positive impact on the implementation process. Finally, we also advocate that the organizational structure has affected the case company’s implementation of their sustainability strategy positively by enabling strategies to emerge from practice.

Keywords: Sustainability Strategy, Strategy Implementation, Organizational Structure, Organizational Culture, Internal Communication, Decentralization

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Introduction

In this section the background information and the problem formulation is discussed. We will also present the aim of the study and finish with our research question, followed by the delimitations of the study.

Background

Companies are considered as central actors in today’s discussion towards a more sustainable society and the expectations on corporate responsibility are ever-increasing (Engert &

Baumgartner, 2016). Given the higher expectations, sustainability has become a pivotal part for companies’ long-term survival (Ortiz‐de‐Mandojana & Bansal, 2016). Even though concepts such as corporate social responsibility (CSR) and corporate sustainability have been discussed for many years, there has only been limited progress towards sustainable development (Baumgartner & Rauter, 2015). According to Eccles, Ioannou and Serafeim (2014), there has been an increasing number of companies that have voluntarily integrated sustainability efforts in their business models and organizational processes. Furthermore, there has been a large increase in sustainability and CSR reporting during the last two decades (Baumgartner, 2009).

Even though sustainability reporting has increased substantially, it is uncertain whether it has improved companies’ sustainability work or not (Klettner, Clarke & Boersma, 2014). Previous research has shown how there is a gap between companies formulated sustainability strategy and their implementation resulting in that companies engage in sustainability efforts without becoming more sustainable (Engert & Baumgartner, 2016). Even though managers are aware of that engaging in a more sustainable strategy would be beneficial and essential, they might not know how to implement and integrate an effective strategy or how to configure the organization to become more sustainable (Eccles et al., 2014; Engert & Baumgartner, 2016).

Marx (2016) and Olson, Slater and Hult (2005a) discuss how the organizational structure is a critical factor to consider during a strategy implementation process. Aligning a company’s structure and strategy is therefore a challenge (Marx, 2016). Epstein and Roy (2001) argue in line with them that implementing a sustainability strategy into a complex organization is not an easy task. According to Engert and Baumgartner (2016), there must be coherence between

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the organizational structure and sustainability strategy in order for the strategy to successfully be implemented.

Previous research has concluded that strategy implementation may be easier to achieve with in a decentralized organizational structure as it allows employees close to the operations to participate in the strategic management process (Olson et al., 2005a). A decentralized organization is characterized by less formality where the authority is delegated downwards in the organization (Love, Priem and Lumpkin, 2002). Distributing the responsibility to lower levels implies that the individual employee is empowered and hence have a higher level of impact on the strategic management process (ibid.). Therefore, a decentralized organization is perceived to contribute to more freedom among employees, increasing their motivation to engage in the strategy implementation and open up for new ideas deriving from various organizational levels (Olson, Slater and Hult, 2005b) On the other hand, Mintzberg (1994) argues that centralized organizational structures are beneficial during strategic planning where only the top management is involved and thus provokes more straight-forward decisions.

Dobni (2003), Pirjol and Radomir (2016) and Engert and Baumgartner (2016) present that previous research has found that an organization’s internal communication has been fundamental for a successful strategy implementation. Engert and Baumgartner (2016) also highlight that regarding sustainability strategies, an effective internal communication promotes employees’ willingness to engage in the implementation process. Previous studies have primarily focused on the relationship between companies’ external communication and their sustainability strategy where less emphasis has been devoted to the internal communication (Uusi-Rauva & Nurkka, 2010). As a company’s sustainability strategy is nowadays often considered to be part of their core strategy, more focus has been dedicated to how the internal communication affect the strategy implementation process (ibid.). However, there exist differences to what extent employees should be aware of the strategic management process.

Mintzberg (1994) claim that the top management should be restrictive with what they choose to disclose regarding the strategy. On the contrary, Stegaroui and Talal (2014) and Miller (1997) argue that communicating the articulated strategy will increase the employees’

knowledge and make them feel committed to the strategy. Heide, Grønhaug and Johannessen (2002) argue that the internal communication is essential to consider during a strategic

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Engert and Baumgartner (2016) identified both internal communication and organizational culture as success factors for a corporate sustainability strategy implementation. Internal communication is considered to create a shared understanding of the established strategy whilst an organizational culture constituted by values that promotes employees to be open for new ideas should facilitate the implementation process (ibid.). Hambrick and Canella (1989) found that a shared understanding for and a commitment to the strategy is a prerequisite for a successful implementation process. The authors claim that the success depends on the top management’s ability to create a coherence of the strategy within the organization. This implies that the organizational culture is crucial for an implementation process as it may either facilitate or complicate the implementation process. A culture that promotes and enables a transition from the existing culture to become more sustainable will facilitate the implementation process (Engert & Baumgartner, 2016). On the other hand, a culture that dismisses employees to be open-minded, adaptable and willing to change will hinder the implementation process (ibid.).

Aim of the study

Organizational structure, organizational culture and internal communication have been identified as important factors when implementing a strategy. These factors, in combination with that the literature regarding corporate sustainability strategy implementation in decentralized organization seems scarce have served as a basis for this thesis and hence the research question. The purpose is therefore to investigate how organizational structure, organizational culture and internal communication may foster or inhibit a sustainability strategy implementation process within a highly decentralized organization. The aim of the study is thus to contribute to a deeper understanding of how different types of factors impact the implementation.

Research question

How does organizational structure, organizational culture, and internal communication affect a decentralized company’s implementation of a sustainability strategy?

Delimitations

This thesis aims at contributing to a deeper understanding of factors that affect an implementation process, but does not emphasize what the company does in order to be

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sustainable. Further, there will be no appraisal on whether the company has a good sustainability strategy or not. The study only investigates the factors organizational structure, organizational culture and internal communication and devotes focus particularly to those areas, neglecting other types of factors that may affect the implementation of a sustainability strategy.

Theory section

This section presents central theoretical concepts that the thesis is based upon. The topic of sustainability strategy as well as the identified factors, organizational structure, organizational culture, and internal communication are presented according to existing literature.

Sustainability Strategy

According to Dyllick and Hockerts (2002) sustainability has become essential for the 21st century. The concept of sustainability embodies a promise to improve the social and environmental performance of both the present generation as well as future generations to come (ibid.). According to Baumgartner (2009), sustainability can only be achieved in the long run if sustainability aspects are being integrated in the company’s core strategy. An efficient way for companies to do this is to conduct and implement a sustainability strategy (McElhaney, 2009). Engert and Baumgartner (2016) highlight that implementing a sustainability strategy can be beneficial for companies in terms of competitive advantages and customer focus and Bhattacharya and Sen (2004) emphasize how stakeholders’, foremost customers’, interest in sustainability is a spur for companies to engage in sustainable endeavours.

The implementation process is to be seen as the most fundamental key factor for a strategy to be successful (Miller, 1997; Hambrick & Canella, 1989). A strategy can be well formulated, however, if the implementation process of the strategy is weak and the formulated strategy is not being realized, the strategy will not provide any value for the company. Implementing a strategy is not an easy task and as for a sustainability strategy, it requires that the strategy is being integrated throughout the organizational culture and that the employees are willing to strive for a change (McElhaney, 2009; Baumgartner & Rauter, 2016; Baumgartner, 2009).

When conducting a sustainability strategy, it is important that the board and top management

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of being sustainable (Baumgartner & Rauter, 2015). McElhaney (2009) emphasizes the importance of integrating sustainability efforts and the corresponding strategy in the whole organization and highlight how it should be integrated into the culture: “Fully integrate CSR into the culture, governance, and strategy-development efforts of the company, and into existing management and performance systems” (McElhaney., 2009, p. 33).

This implies that the sustainability efforts should be managed as a pivotal part of the business and that sustainability thus is to be treated as a part of the company’s core strategy (McElhaney, 2009). It will be required that the sustainability strategy will be integrated in the daily operations and that the whole organization is motivated to become more sustainable (Baumgartner & Rauter, 2016).

Organizational structure

Strategies must be suited to the organizational structure (Marx, 2016: Olson et al., 2005a;

Epstein & Roy, 2001). Organizational structure is the system that determines the allocation of responsibility, authority and tasks within an organization (Lunenburg, 2012). Different organizational structures influence how decisions are made, how the communication is carried and the coordination within the corporation (Olson et al., 2005a). When implementing strategies, these aspects are key parts (ibid).

The organizational structure is a critical component of strategy implementation (Olson et al., 2005a; Epstein & Roy, 2001). Andersen and Nielsen (2009) and Olson et al. (2005a) emphasize how decentralized organizational structures where autonomy is pivotal, is beneficial for strategy implementation. In decentralized organizations, the authority is delegated to lower levels of the organization (Love et al., 2002). This means that the responsibility is distributed to different departments and units, and empowerment is given to more individuals than solely the top management. Andersen and Nielsen (2009) present that by involving empowered employees in organizational decisions, relevant and important information as well as alternative perspectives are included when evaluating the decisions. The authors state that participatory decision-making and autonomous initiatives induce adaptive behaviour. This enhances the performance and implementation in turn. Olsen et al. (2005a) present a similar reasoning and discuss how a decentralized structure may be beneficial for sustainability as

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individuals close to the operations have an understanding of local factors. Granting them empowerment therefore facilitates the implementation process (ibid.).

Strategies that evolve from initiatives taken at lower hierarchical levels, emergent strategies, tend to be common in decentralized organizations (Mintzberg & Waters, 1985). Mintzberg and Waters (1985) present how emergent strategies enable the management to surrender control to those close to the operations, possessing the knowledge and information relevant to shape realistic strategies. These type of strategies enable collective actions and convergent behaviour (ibid.). Andersen and Nielsen (2009) emphasize how strategies that emerge from autonomous initiatives, collective and participatory decisions facilitate adaptive behaviour. Emergent strategies arise in contexts where actions at lower hierarchical levels can be taken without the top management’s awareness (Andersen & Nielsen, 2009). This context represents a decentralized organizational structure where empowered employees have sufficient autonomy to take initiatives and to make decisions that can become a part of the corporate strategy (ibid.).

The authors state that by giving authority to employees at lower organizational levels allows important strategic influences to arise from actions taken at levels closer to the operations.

These employees possess better understanding of the relevant surroundings (ibid.).

However, as a decentralized structure distributes the responsibility and thus allows greater freedom for employees, it also provides less control over operations (Marx, 2016). This could affect strategy implementation as less control over operations means less ability to affect and govern the different units. Love et al. (2002) claim that it is often harder to affect and turn decisions over to empowered employees and that it consequently is important with guidelines.

The authors state: “The need for integration is greater in more decentralized firms in order to maintain strategic cohesiveness and control” (Love et al., 2002, p. 615). The need to make the strategy explicit and clarify the mission downwards in the firm to all members is thus important in decentralized organizations. For effective strategy implementation, it is pivotal.

Organizational culture

Organizational culture becomes important during a strategy implementation process as the success of the implementation depends on the top management’s ability to create a shared understanding of the strategy and a uniformity within the organization (Hambrick & Canella,

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and expressed through social interactions (Schein & Schein, 2017). Even though it exists numerous of definitions of what culture is depending on research field, the common view is that organizational culture is the shared values, norms, beliefs and behaviors that exists within the organization and that affects the way employees interact with each other as well as with other stakeholders (Heide et al., 2002; Schein & Schein, 2017). The culture also tends to persist over time even when the composition of members changes (Baumgartner, 2009).

The organizational culture will also impact how employee’s make decisions, perceive, think and feel about certain things (Baumgartner, 2009; Schein & Schein, 2017). This implies that in order for a sustainability strategy to be successfully implemented, there has to exist a cohesive organizational culture, consisting of values and norms in line with the strategy (Baumgartner, 2009; Heide et al., 2002). In order to create uniformity within the organization, communication becomes of great importance (Hambrick & Canella, 1989). Organizational culture is therefore presumed to be constituted by the employees through communicating with each other (Heide et al., 2002). This implies that there has to exist a shared view about the company’s sustainability strategy in order for employees to be committed and live up to it (Miller, 1997;

Heide et al., 2002).

In order for a strategy to be implemented successfully, the organizational culture has to allow new thinking and that new strategies can emerge (Miller, 1997). This can, to some extent, be governed by the management by promoting such behaviors and attitudes that facilitates the implementation process (ibid.). An organizational culture that consists of values that contributes and promotes employees to be open-minded, active and engaged will ease the implementation as well as having a conducive climate (ibid.). During an implementation process, it is common that the culture faces pressure where social norms and behaviors may be questioned (Baumgartner, 2009). Even if implementing a new strategy implies a cultural change (McElhaney, 2009; Baumgartner, 2009), the culture should support the strategic management process rather than counteracting it.

The implementation process will be facilitated if there exist a mutual belief within the organization that that the sustainability strategy will provide with benefits (McElhaney, 2009;

Baumgartner, 2009). It is also crucial that the new strategy is being integrated at all levels within the organization (Baumgartner, 2009; McElhaney, 2009). Therefore, it is of great importance that the company make sure that the strategy has emerged in line with the

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company’s culture and the employees’ shared values in order to be successfully implemented (Heide et al., 2002). Baumgartner (2009) also mention that a company can only become sustainable if sustainability is something that is desirable within the organization. This implies that the sustainability strategy has to be communicated throughout the whole organization (Baumgartner & Rauter, 2016), where an effective internal communication is required (Heide et al., 2002).

Internal Communication

Communication can be defined as the process of transmitting information, thoughts and emotions among and between individuals (Stegaroui & Talal, 2014). Effective internal communication is considered to be a prerequisite for a company to succeed with its strategy implementation (Dobni, 2003; Heide et al., 2002; Pirjol & Radomir, 2016; Rapert et al, 2002).

Rapert et al. (2002) argue that internal communication is a crucial part of the strategy implementation process and thus assert that it is a central part of turning the strategy into action.

Dobni (2003) claim that numerous of strategy implementations have failed as an outcome of ineffective internal communication. Lack of effective internal communication is one of the reasons why companies fail to motivate and engage their employees to adopt corporate sustainability strategies and work towards its long-term goals (ibid.). Pirjol and Radomir (2016) reaffirms that an effective internal communication will have a positive impact on employees’

motivation regarding the implementation process and to engage in it.

Heide et al. (2002) claim that communication should be seen as fundamental for every company as it is the internal communication that helps to create, develop and hold together the organizational culture through social interaction. Heide et al. (2002) argue that the main objective with an effective internal communication is to achieve an organizational change and to promote a common goal building, enabled through communication. Creating a common goal within the organization facilitates the company to motivate the employees to engage in the strategic management process and thus increase the likelihood of succeeding with the implementation process. An increased shared understanding within the organization regarding the new strategy will also contribute to a stronger cohesion and strengthening the organizational culture (Hambrick & Canella, 1989).

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Uusi-Rauva and Nurkka (2010) found that face-to-face activities were the most effective internal communication channels during a strategy implementation process. Workshops, unofficial meetings, social events and regular meetings were found to be the most effective way of communicating strategy-related information with the employees and also to ensure that the strategy had been presented and understood correctly (Uusi-Rauva & Nurkka, 2010;

Stegaroui & Talal, 2014). Communicating the sustainability strategy through such easy-to- understand communication channels will facilitate the process of creating a consensus of the strategy as it fosters the employees to feel committed to and engage in the process (ibid.).

As oppose to face-to-face activities, one-way communication channels were found to be the most ineffective way for a company to communicate its strategy. Such communication channels do not facilitate the implementation process nor increase employees’ commitment to stay engaged in the process (Uusi-Rauva & Nurkka, 2010). Sending emails or posting news on the intranet are examples of such ineffective communication channels and is considered to be one-way channels, from the top management and downwards within the organization (ibid.).

Companies should instead emphasize two-sided communication channels that requires active participation from both parties (Stegaroui & Talal, 2014). Such internal communication channels are considered to be more effective than one-way channels since it encourages incentives from lower organizational levels, promoting a higher level of participation which will increase employees motivation to stay active in the strategic management process since they will feel more involved (ibid.). This implies that strategic internal communication should be a central part of the company’s strategic plan and thus facilitate to achieve its sustainability strategy (Stegaroui & Talal, 2014; Uusi-Rauva & Nurkka, 2010).

According to Mintzberg (1994), the top management should be careful with sharing and disclosing too much information about the strategic management process for employees as it may lead to inertia and impaired flexibility in their decision making. On the contrary, Miller (1997) argues that the strategic management process should be seen as a communication process where a well-communicated strategy is determinant for a successful implementation, as it will facilitate to create a shared view concerning the strategy. This will further foster the employees motivation to stay active, committed and involved in the implementation process (ibid.). Ansoff (1987), Bourgeious and Brodwin (1984) and Stegaroui and Talal (2014) claim that a formulated strategy should be communicated within the organization as it will make it

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easier for the employees to adapt and thus facilitate the implementation process. Rapert et al.

(2002) argues that getting as many as possible involved in the strategic planning process will increase employees’ motivation and the probability of succeeding with the implementation.

Excluding a large part of the employees outside the implementation process will make it more difficult for the culture to adopt the strategy and will be harmful for the organization as it creates a gap between the culture and the new strategy (Ansoff, 1987; Miller, 1997). According to Rapert el a. (2002), effective communication channels will foster a cultural consensus, create a shared understanding for the strategy and close the gap between the culture and the new strategy. This is in line with Love et al. (2002) who states that in order for the implementation to be successful it is important that the strategy is being well-presented. The authors stress how it is crucial in decentralized organizations as a clearly articulated strategy creates a consciousness and a link between the goals and the employees which in turn creates an awareness and increased knowledge about the company’s strategic intentions. This in turn promote commitment and motivation among the employees to actively participate in the implementation process (ibid.).

Methodology

In this section, the methodology of the thesis is presented and the underlying assumptions adopted in order to perform the study will be explained. The choice of research strategy as well as research method in relation to the purpose of our study is presented, followed by the data gathering process and the data analysis. The chapter will end with ethical aspects and a method reflection.

Research philosophy

According to Saunders, Lewis and Thornhill (2016), Bryman and Bell (2013) and Śliwa (2017), qualitative research can be derived from an interpretation-oriented ontological approach. This implies that there is no such thing as objective truth nor observable reality but instead, each human has its own perception of what is real and true, where the world is a social construction made by those experiencing it. This interpretive and constructivist approach emphasize to understand human behavior and to explain complex phenomenon through the researchers view (Śliwa, 2017; Bryman & Bell, 2013).

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With this approach in mind, we felt that it was suitable to conduct a qualitative research concerning the purpose of our thesis. This is in line with what Bryman and Bell (2013) and Cassell, Buehrins and Symon (2006) claim, that when the purpose of the study is to investigate a complex phenomenon where its contextual setting is essential for the results and where there is no single answer to the problem, the researchers should choose a qualitative research strategy. Investigating a strong market player’s corporate sustainability strategy and how its implementation process may be affected by the company’s organizational structure, culture and internal communication, the contextual setting is most certainly relevant. Therefore, a qualitative approach was chosen in order to generate a deeper understanding of the studied phenomena, which Andersen (2012) and Hyde (2000) emphasize that qualitative research do.

In line with Śliwa (2017) who argues that there is no single paradigm within the research field of business that can explain the whole science, we also found it suitable for us to choose a qualitative research design, since there is most likely not one single theory or answer to our studied phenomena. Similar to our research and our case study, it is plausible that there are numerous of organizational factors that will affect the company’s ability to successfully implement their sustainability strategy and that the factors will depend to a large extent on the respondents as well as on how we tend to interpret the findings. The chosen success factors are based on what we have perceived as the most determinant and important factors to consider for a successful strategy implementation, in combination with our empirical findings and previous literature.

Research approach

An abductive approach has been applied where we formulated the research problem and the purpose of the thesis by looking at previous research in the same field. We identified how a gap between corporate sustainability strategy formulation and implementation had been investigated and that there exists numerous of studies that examine the implementation of sustainability strategies. However, to our knowledge, not in highly decentralized organizations.

Having an abductive approach allowed us to subsequently modify the theoretical framework depending on what type of empirical data that was being gathered as the process proceeded. It also enabled us to move back and forth from theory to analysis and is thus an iterative process.

According to Woo, O’Boyle and Spector (2017), abductive reasoning is a combination of the two traditional ways of performing research, deductive and inductive reasoning which combines the two approaches in order to develop, conduct and evaluate research. In the next

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sections, our chosen case company will be presented as well as how the interviews were conducted.

Research design - Case study

Since the main purpose with our study is to generate a deeper understanding for how different factors affect a company’s sustainability strategy implementation in a decentralized organization, we decided that a case study would be a suitable research design. According to Bryman and Bell (2013) and Śliwa (2017), a case study enables the researcher to study an actual problem in its natural context and is a suitable method to use when the main purpose of the study is to generate a deeper understanding of the studied area. In order for us to be able to answer our research question, a more in-depth understanding for the organization’s structure, organizational culture and internal communication had to be acquired through individuals who experience it. In line with our methodology, the research design was also chosen because it allowed us to focus on one particular case in one specific company. The research design further enabled us to make strong theoretical connections, contribute with new knowledge and thus increase the study’s credibility and trustworthiness.

Case company - Company X

Our chosen case company will be referred to as Company X with regards to their request of being anonymous. The case company was selected based on its involvement in sustainability activities and because of its profound sustainability strategy. The company has further claimed themselves as taking a leading position for sustainability, making it a relevant case company.

It is a large Swedish retail company operating mainly in Sweden but also in some countries nearby. The case company has an organizational structure which is highly decentralized where the operators of the stores, the retailers, are independent and self-owned actors. The stores thus work as self-contained operating units independent of each other. Interviewing employees at various positions enabled us to investigate how such decentralized structure and decision- making authorization foster or hinder the company’s implementation of a sustainability strategy. This method identifies the employees perspective of Company X’s corporate sustainability strategy implementation with regards to the chosen success factors.

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Data collection

Semi-structured interviews were conducted with the respondents and company information was gathered from the case company’s website. Prior research and literature has been gathered through Uppsala University’s library. Bryman and Bell (2013) and Śliwa (2017) emphasize various data collection methods in order to get a holistic view of the case.

Empirical data

Our empirical data consist of primary data collected from our semi-structured interviews. We found semi-structured interviews to be a suitable method due to its flexibility and ability to generate qualitative data and to get a better understanding for the studied phenomena. The interviews were held with employees within the case company, working at different organizational levels. By interviewing owner’s (retailers), store managers as well as one employee working at the company’s sustainability department, we managed to get an overview perspective of the case company and their organizational factors.

Semi-structured interviews

Semi-structured interviews allows the respondent to express his or her own feelings and give distinct examples instead of solely shallow answers (Bryman & Bell, 2013). This is important to remember, as the main purpose with a semi-structured interview is to make it feel more like a conversation rather than a questioning (ibid.). With this in mind, we conducted our interview guide by having prepared questions but where the focus was devoted to cover broader themes during each interview rather than emphasizing specific questions. Semi-structured interviews also allow additional questions to be asked depending on the situation which means that one interview will differ from the other. This happened several times during our interviews when some of our prepared questions were skipped as the respondent had already touch upon it and when there were ambiguities and uncertainties in the respondents’ answers. Our interview guide was derived through an abductive reasoning based on previous similar studies and operationalized from our literature review (see Appendix 1), in line with what Bryman and Bell (2013) recommends, in order to make strong theoretical connections in the analysis.

Every interview was held individually with the respondents in order to get closer to the respondent’s true opinions and to minimize the risk of getting influenced. During the interviews, we tried to ask as open questions as possible and not to uncover our own thoughts and feelings about the subject in order to stay as objective as possible and to not affect the

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respondents answer. This should be kept in mind by the researchers (Bryman & Bell, 2013).

Even if it is impossible for the researcher to stay entirely objective during an interview, there is a risk that the interviewer’s opinion will have a negative impact on the respondent’s willingness to answer as truthful as possible (Kim, 2011; Seidman, 2006).

Table 1. Overview of the interviews

Interview Respondent Date Length of the interview

Type of interview

Position

1 X1 2019-04-25 31:11 Telephone Store manager

2 X2 2019-04-29 40:54 Personal meeting Retailer/owner

4 X4 2019-05-03 25:06 Personal meeting Sustainability

developer

Selection of respondents and conducting the interviews

Our empirical findings have been gathered from six interviews. Each respondent was contacted through email, telephone or Linkedin a few weeks before the interviews were being held. This enabled us to present ourselves, the aim of our study and to make an appointment for the interview. However, we were cautious about revealing too much about the study since the main purpose of the interviews was to get an understanding of their personal view without being affected by our opinions.

The interviews were conducted in Uppsala, Stockholm and Västerås between the date April 25^th- May 8th 2019. The pilot study as well as one of the interviews were conducted by phone

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with Bryman and Bell’s (2013) recommendations in order to get closer to the respondents natural setting. The interviews lasted for about 25-60 minutes. The interview held by phone was more of a structured character as the conversation was less vivid than the face-to-face interviews. In the interviews, both of us participated. One held the interview and focused on the conversation whereas the other one took notes, observed and interrupted if anything was unclear or followed up with supplementary questions if there was a need for further elaboration.

The interviews were further recorded which is recommended by Bryman and Bell (2013) and Saunders et al. (2016) as it facilitates the transcription process and thus the data analysis.

However, informing the respondents about the recording can sometimes be perceived as a negative aspect as the interviewee may feel restricted to express true feelings (Bryman & Bell, 2013; Christensen, Engdahl, Gräss & Haglund, 2010). Nonetheless, we informed the respondents about the recording and asked for their permission in order to be transparent. We explained that we needed to record to facilitate the analysis.

After we had conducted our sixth interview, and due to our time limit, we decided to focus on the analysis instead, in order to find patterns within our empirical findings and to make strong theoretical connections. Qualitative research are often getting criticized because of their too small sample size. However, in accordance with Trost (2010), we decided that we had gathered enough data to proceed with our analysis.

Pilot study

A pilot study was conducted before the real interviews to make sure that our research question was valid and feasible to study as well as to ensure that our interview questions were relevant.

Bryman and Bell (2013) and Kim (2011) suggests that a pilot study should be conducted in order to examine whether the problematization and research question are well-formulated and is actually worth studying.

After our pilot study, we decided to keep the same layout and arrangement for the planned interviews. Some of our questions were replaced or erased since the answers did not provide with any useful information for the purpose of our thesis. The respondent for the pilot interview was chosen through a purposive sampling method and were approached through LinkedIn. The respondent worked as a store manager and felt to our knowledge as a suitable respondent.

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Bryman and Bell (2013) argue that a pilot study should be as similar as possible as a regular interview to ensure that the interview guide is relevant.

Data analysis

The analysing part is a central part of the research where the purpose is to get a better understanding and to present the data that have been collected (Bryman & Bell, 2013). Every interview was recorded and transcribed to make it easier for us to compare and find patterns in the data and thus, facilitate the analysing process. Transcribing also minimizes the risk of misinterpreting the respondents answers or to use them incorrectly (Bryman & Bell, 2013).

After the interviews had been transcribed, we started to analyse our data by systematically manage it in separate documents. The empirical findings were then categorized by us separately by using colour marks for each theme. This was done in order to not miss anything important from our gathered data but also to make sure that we had perceived the data in similar ways.

As a second part of our analysis, we merged our notes into one document where we discussed and compared inconsistencies or where we had highlighted differently in our data.

Furthermore, we came up with subjects within each factor that we felt had emerged clearly from the interviews. This facilitated our analysing process but also served as a layout for our analysis. This have been done in accordance with Holme and Solvang’s (1997) three phase method by structuring the data systematically, where the purpose is to create an overview analysis.

Ethical aspects

The responsibility to perform this thesis in a moral and ethical manner has been ours. The information presented in the thesis has not been changed or modified under any circumstances.

The respondents participating in the study was informed that involvement was optional and they had the opportunity to end the participation at any time. Each interview started by informing the respondent about ethical aspects regarding confidentiality and anonymity as well as informing about audio recording (Appendix 1). The respondents were also informed that the material would only be used for the purpose of the study and solely by us. The respondents had further the possibility to reject being quoted. None of the interviewed disapproved or had objections about the ethical aspects that were presented in the beginning of each interview.

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These ethical aspects were taken into consideration based on Vetenskaprådet’s (2017) recommendations when conducting research.

Method reflection

Since our result and conclusions are based on one single case company, they should not be generalized to other situations. Our study also consists of a relatively small sample size and has not been selected through a probability selection method. However, in line with Saunders et al.

(2016), this has not been our intention with the thesis where the main purpose instead has been to study a real case and to make strong theoretical connections.

With this in mind, we selected our respondents based on our own ability to choose suitable respondents, which is called a purposive sampling method and is commonly used within qualitative studies (Śliwa, 2017). The method enabled us to get access to respondents involved in the sustainability strategy implementation process at different organizational levels, possessing relevant knowledge. However, there is a lot of critique against the sample method where the researchers can never be quite sure that the respondents possess relevant information before the interview has been conducted, which can be very time consuming for the researchers (Polit & Beck, 2008, Alvehus, 2013). We faced some difficulties with getting access to relevant respondents were some chose to reject our invitation whereas others did not reply.

In general, we have three main implications regarding our methodology, all related to how we selected our respondents and conducting the interviews. First, every retailer or store manager that was interviewed owned or worked in a large store located in larger cities. None of the respondents hence operated in stores at the countryside. This could affect our empirical findings as there could be differences based on geographical and demographical aspects. Secondly, when the respondents were contacted, we presented our topic for the respondents, before they had decided to participate in the study or not. Afterwards, we believe that this transparency came to be a disadvantage for us. Presenting the study’s subject before the interview affected our sample by probably only attracting individuals committed to sustainability in general and that somewhat act in accordance with the case company’s sustainability strategy. This may also have affected individuals that lacks the knowledge or motivation regarding the subject to reject participation. The last limitation that we see with our methodology is that only one of the respondents worked at the headquarter. We wanted to interview at least two from the

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headquarter since they are heavily involved in the strategic management process but it was difficult to get the access. This means that, in this study, the headquarter is only represented by one respondent and should therefore not be seen as representative nor objective for the headquarter.

Considering these limitations, we believe that our findings is distorted. Therefore, our findings nor conclusions should be seen as representative for the whole case company. Our case study should thus only be seen as a part of the whole organization.

Further in our analysis, quotations from our respondents will be presented. These quotations, as well as the interview guide, have been translated to English in order to make the thesis understandable for international peers.

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Findings

This section presents the empirical findings from the interviews. To clarify the claims made by the respondents, quotes are provided.

Organizational structure

Type of organizational structure in the case company

During the interviews with the individual retailers, the respondents emphasized how they are independent and self-contained retailers. Emphasis was put on the authority they have and consequently on the substantial amount of freedom. The retailers were asked upon if the parent company had an impact on their operating work and more specifically on their sustainability work. The respondents claimed that the HQ does not interfere in the retailers’ sustainability activities nor tell the retailers to act in accordance with their articulated strategy. There are however recommendations and guidelines for the sustainability work. X1 stated:

“There are guidelines [regarding sustainability] from Company X but it is up to each store to decide what should be done and not” - X1

The respondent meant that there are guidelines from HQ on how to act regarding sustainability, but also that it is up to every store to decide what to actually implement and how to act. X2 expressed a similar claim and stated that it is in the hands of the retailer to work with sustainability and that there are no demands or requirements.

X5 argued that the retailers possess more knowledge and a better understanding of the day-today activities than the headquarter does as they are close to the operations and to the customers.

The respondent meant that they know what is best for their store and in their local area and that they act upon what is needed for them. X3 claimed similarly and stated that the operations and business need to be adapted to the local market and how there are differences in our country.

The respondents further emphasized how their sustainability efforts mainly derives from what is relevant for their own store and their customers. X2 stated how the efforts need to be fitted to the specific needs, where the stores find their own way:

“It feels like each store tries to find its own way in terms of sustainability” - X2

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The respondent mean that for their sustainability activities, they find ways and solutions that are suitable to them. X5 explained how the location of the store, which happen to be an articulated environmental-friendly area is affecting their operations to a large extent, more than the HQ’s general goals and strategy:

“I believe that the fact that we are located in an eco-friendly city area drives our sustainability work more than the corporate goals” - X5

X5 explained how they do many sustainable friendly choices and the respondent stated how that is affected and influenced by the local area. Their customers who demands it take the sustainability efforts as a prerequisite. The respondent’s store changed plastic bags due to the willingness to be ‘in the front’ and follow trends, be ahead of their customers. The respondent claimed that they identified that their competitors changed, hence they changed. Respondent X3 further claimed how they in their store have a certain type of plastic bags due to the retailer’s belief that it is a better bag than other plastic bags. X6 explained how there was a problem with plastics and packaging in the respondent’s store and declared how solving that became a priority. The respondent further emphasized how this and other sustainable efforts are driven by personal beliefs and attitude towards sustainability.

The power of the retailers

During the interviews, it was revealed that the individual retailers have the possibility and the authority to affect decisions that not only involve them, but also the organization as a whole.

The organizational structure in the case company thus allows decision-making at different levels. One of the respondents, X2 declared that the people at the HQ listen to the retailers to a large extent and because of this, they have great possibility to affect what happens in the organization. Respondent X5 expressed a similar reasoning and claimed that the retailers have the power to be part of different decisions that are made:

“I would say that there are quite few decisions being made by HQ that the retailers have not been involved in” - X5

The respondent meant that the retailers have been involved in the majority of the decisions made by the HQ. X6 further declared the same and stated that all organizational decisions that

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decision to reduce single-use plastic products is a decision that has been made by the HQ in conjunction with the retailers.

X3 and X6 explained that specific elected retailers together with representatives from the top management are involved in different decision-making processes. The two respondents emphasized how these retailers are part of the strategic decisions made in the organization. X4 stated accordingly and expressed how the retailers affect the HQ and declared how they are involved in different projects. The respondent explained how a large project aiming at reducing waste was decided by the top management, but in conjunction with the retailers. The respondent emphasized how the structure of the organization is formed in a way where the retailers are a big part of the overall corporation and that the retailers are influencing and affecting them much. X4 stated:

“The retailers have a very strong voice, coming from all parts of the country” - X4

The respondent meant that the power from the retailers is major.

Organizational Culture

Unspoken consensus through freedom

It emerged during the interviews that there is a lack of awareness of the company’s sustainability strategy and goals among the respondents. The retailers and store managers were asked if, or what they knew about the company’s sustainability strategy and it revealed that there is a lack of knowledge. X4 who is working at the HQ’s sustainability department was the only respondent familiar with the company’s strategic goals in detail. The other respondents claimed that they could not provide with any specific information about the strategy. X2 expressed that they do not look at the parent company’s strategic goals when they are conducting their own market analysis and thus, strategy:

“I must admit that I am not that familiar with the corporate goals, I would rather say that we perform our own independent market analysis that we follow” - X2

Another respondent, X5, expressed a similar reasoning and stated that he was familiar with the corporate sustainability strategy but not in detail. X5 explained that some of his goals are in

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common with the parent company’s, but that the focus primarily is devoted to his own strategy and goals:

“I know that there are some corporate goals and of course we share them, but my primary goal is to focus on our own store’s goals” - X5

The respondents expressed that their relationship with the HQ is built on trust and freedom, where they are able to act independently and to make own decisions. This type of relationship with the HQ was something that the respondents were pleased with. Furthermore, many of the respondents expressed that there is often a common view among the retailers and the HQ on how to do things which ease their collaboration. X6 explained:

“For me personally, I listen to what they [the HQ] say and take it in to consideration. I think that it is great that we can do things together. It is not like they make demands [...] but rather that we can accomplish things

together” - X6

All of the respondents answered in similar ways when they were asked why they are committed to sustainability related activities. From their answers, it became clear that it exists a cohesion and a common view within the whole organization about their sustainability commitment, without being aware of the strategy in detail. X4 declared that this shared understanding existing within the organization could be explained by the company’s history, arising from the individual retailers commitment of contributing to and being locally engaged in their community. As the company has grown and become a large player in the Swedish retail- industry, X4 expressed that their willingness to contribute to a sustainable world and take responsibility have become stronger within the organization:

“[...] We need to take responsibility to earn our place as a large actor in the Swedish market. Besides, we have a history of being locally engaged in our communities which has expanded up to the headquarter. We have a tremendous power coming from the retailers, which is why I believe so many great things are being done.” - X4

The respondents were asked how the stores may comply with the parent company’s articulated strategy when there are no direct requirements from the HQ to act in a certain way and where the strategic works seems to occur independently from the HQ. Similar to previous findings, X6 declared that the organization have existed for such a long time that it nowadays is grounded

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also revealed that the main objective of the collaboration between the retailers and the HQ is to get benefits in order to develop competitive advantages together with the parent company and maintain their strong market position:

“We have been around for over 100 years and it is in our culture to cooperate and make things better. A lot of good things are coming from HQ but I would say that very much is coming from us retailers too, making it a

great mix.” - X6

“We are individual retailers who collaborate to make things better, to create advantages and to move our businesses forward.” - X2

Another explanation for the respondents shared view about their sustainability strategy within the organization is that the HQ never starts implementing a strategy unless the retailers have been informed and to some extent agreed upon it. This emerged from the interview with X4.

According to the respondent, before the HQ is introducing a new strategic goal such as reducing their waste, they have a long process of trying to establish and highlight what benefits that may arise from the strategy within the organization and among the retailers. X4 said that it is essential to establish the new strategy within the organization before it is being implemented and formulated externally as it ensures that the goals are achievable. Continuously, X4 emphasized that there has to exist a commitment and a will to become more sustainable from the retailers in order to succeed with the strategy. If the retailers do not feel motivated to act in accordance with the sustainability strategy, X4 believe that they have failed:

“[...] We have a quite long process before the implementation to ensure that the strategy has been adopted by the retailers. This does not mean that every retailer will be aware of it or feel committed to it but that the strategy and its goals are achievable [...] There has to exist incentives and engagement among the retailers in order for our sustainability strategy to be achievable [...] If we set strategies that no one wants to follow where

we have not given them incentives to do so, we have failed” - X4

Internal communication

Internal communication channels

All the interviewees mentioned that HQ put a lot of effort on communicating the company’s sustainability strategy through various internal channels such as the intranet, email, specific councils represented by different retailers and at regional- and general meetings. However, during the interviews, it was revealed that there is an information gap and lack of internal

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communication concerning their sustainability strategy, as none of the retailers nor store managers were aware of their sustainability strategy or its strategic goals in detail, as already been stated.

Some of the retailers explained that strategy-related information mainly is communicated through non face-to-face channels such as the intranet or by email. X3 stated:

“A lot of the information is being communicated through our intranet” - X3

Sustainability- and environmental announcements such as reduced waste or emission-related information are communicated through the intranet. It emerged from the interviews that some of the retailers disapprove how the sustainability strategy is communicated. X2 claimed that the HQ relies too much on the intranet to be an efficient communication channel and expressed that they seem to believe that the intranet is used more than it actually is:

“I would say that HQ perhaps rely a bit too much on the intranet. They think that the store managers are constantly active on the intranet which is not always the case.” - X2

The respondent further claimed that this also puts too much responsibility on the individual retailer, to always stay active and informed about the strategy. X2 continued and explained how it would be preferable if the HQ found better channels to communicate the sustainability strategy, targets and goals through.

X4 also expressed concerns regarding that the sustainability strategy foremost is communicated through such channels as some of the retailers choose not to take note of the information. The respondent further explained how the strategy awareness depends on the retailers’ and store managers’ own will to be active by checking emails and the intranet. X4 continued by explaining that there is an ambition from the HQ to find other ways to communicate with the retailers through and to get them more engaged in the strategic management process. The respondent however elaborated on the difficulties in gathering a large amount of individual retailers and to create a shared understanding of the company’s sustainability strategy, especially when some of them do not even check their email:

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“Yes, it is very difficult to reach every single one of the retailers, especially when some of them do not even check their email. This is something that we [HQ] are trying to get better at, in order to get more retailers more

involved and committed regarding sustainability” - X4

Simultaneously, other respondents claimed that the strategy was communicated in an efficient way through the existing communication channels. From the empirical findings, it became evident that there existed ambiguities among the retailers’ attitude towards some of the meetings that are being held by the HQ. X3 mentioned that far from every one of the retailers participate at these meetings. In line with X3, X6 expressed that these type of general meetings are unnecessary and time-consuming for retailers as him, that already takes part of the information that is being provided by the HQ through the existing communication channels:

“For me personally, I think that the general meetings sometimes are a waste of time. Many of the meetings are only about information that I have already been taken part of. However, not everyone do that so I guess in some

cases these meetings are meaningful but most often it is old news for those who stay informed” - X6

Analysis

This section analyses the empirical findings together with previous literature presented in theory section.

The organizational structure within the case company is highly decentralized and the individual retailers are self-contained and independent operators. They decide on everything in their stores and have the authority to affect decisions relevant for the organization as a whole. As Andersen and Nielsen (2009) and Olson et al. (2005a) discuss, this type of structure can be favourable for strategy implementation. The retailers have sufficient autonomy to make decisions that can affect things on higher hierarchical levels. This is beneficial as they are close to the operations and hence possess the right knowledge and understanding of what the customers wants and demands, and thus have relevant information about the operations. Olson et al. (2005a) stress how granting employees close to the operations empowerment facilitates the implementation of the strategy. Andersen and Nielsen (2009) emphasize how this generates adaptive behaviour which in turn enhances the implementation and performance. One respondent explained how a large strategic target to reduce waste was developed by the HQ together with the retailers. It was further revealed that the retailers are involved in various strategic decisions and that most of the decisions made by the HQ is made in conjunction with the retailers.

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Strategies that evolve in this particular way, emergent strategies, are to a higher degree attainable as they emerge from, and out of, the practice (Mintzberg & Waters, 1985). If the retailers have been part of the strategic decisions and thus been involved in deciding targets and goals, the strategies have emerged from practice and are therefore more realistic. Because of this, due to the fact that employees at lower organizational levels have been involved in strategic decisions and that it seems that strategies have emerged from these levels, it should influence their adaptation to the strategies. In light of Mintzberg and Waters’ (1985) concept of emerging strategies, the retailers’ and store managers’ sustainability efforts are aligned with the overall corporate strategy, without fully knowing what the strategy entails. This could be explained by their involvement in the strategic decisions. As the retailers have been granted autonomy through the organizational structure and are active and participative in strategic decisions, in combination with their sustainable actions, it seems that within the case company, the sustainability strategy and the organizational structure are aligned. As the organizational structure is a critical factor in strategy implementation, it is important with alignment (Marx, 2016; Olson et al., 2005; Epstein & Roy, 2001).

Another explanation for why the individual retailers comply with the parent company’s sustainability strategy without being aware of it in detail could be the organizational culture within the case company. It was revealed that there is a common view of the culture emerging from the company’s long history of being locally engaged in their community and to contribute to the society. Having a strong organizational culture is perceived to facilitate the process of creating a shared understanding of the strategy within the company (Hambrick & Canella, 1989). McElhaney (2009), Baumgartner (2009), Heide et al. (2002) argue that companies that want to implement a new strategy, such as the case company’s goal of reducing their waste, have to ensure that the strategy is derived from the employees shared values and has support from the company’s values. This implies that it has to exist a consensus and a common view about the strategy within the organization to become more sustainable and in order to actually be able to implement a strategic sustainability goal (Baumgartner, 2009; McElhaney, 2009).

A4 expressed how the company’s commitment to become sustainable has become more prevalent as the company has grown and become a strong player in the Swedish retail-industry.

This is similar to what Baumgartner (2009) claims, that an organization’s culture is constituted

Key Aspects of Implementing a Corporate Sustainability Strategy in a Decentralized Organization