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«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»

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“For example, you’re stuck with a severe aphid infection and you call and ask “I’ve got an aphid infection here, what should I spray?” DDVP! Of course, what does the chemicals vendor know about VMS? Nothing! He just says “DDVP is the best product”. (owner/manager Jordaens) This finding is in line with Adler and Kwon’s observation that “in life, we cannot expect to derive any value from social ties to actors who lack the ability to help us” (2002: 26).

–  –  –

Panamarenko Magritte Ensor Fabre Brueghel Rubens Jordaens Van Dyck Network-building Professional association membership and activities SME professional association membership and activities Innovation network membership Meet customers Visit international trade fairs Visit local peers Visit international peers Civil organizations Connected to most innovative firms Top advisor at the firm Others Collaboration activities Joint development of production technologies Joint development of commercial practices Institutional agency Voicing dissatisfaction Crafting alternative institutional arrangements Insensitive to prevailing institutional pressures = multiple illustrations, = few illustrations, = singular illustration

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As a result, we found that the higher performing engaged in an active and open search for both deliberate and unintended relationships that did possess the complementary capabilities they were looking for (Teece, 1986; Adler & Kwon, 2002). To do so, it was necessary to reach out to partners that were outside the usual arenas in which the Belgian ornamental firms are traditionally active. In other words, “networking” by itself was not sufficient. Typical for learning patterns that involve innovative organizational trajectories, we found that it was necessary to find and establish heterogeneous network relationships (Rodan & Galunic, 2004) that bridged “structural holes”, the gaps between normally disconnect clusters of organizations (Burt, 1992; Burt, 1997; Nooteboom, 2004; Zaheer & Bell, 2005). For example, when asked where they found their innovative equipment that allowed eradicating weeds with mechanical instead of toxic chemical means, Fabre’s owner-manager answered “In terms of mechanization, there’s not much too see around here. You can see those things in Germany, those modern companies, but not around here”. (owner/manager Fabre) They attributed such a lack of munificence of innovative solutions in their immediate environment to the fact that “here, everyone just copies everyone else”. Although this active search for innovative solutions in a broader network often necessitated going abroad, the higher performing firms also knew who to contact in their immediate surroundings. They did so by leveraging their connections with other innovative organizations in the sector, such as top advisors, emerging initiatives with the frontrunners in the industry and likeminded peers.

For Panamarenko, who was particularly new in the sector, these connections were key:

And when I’m looking for something, then I have to find it. Sometimes that can be quite annoying, my wife says that too, but when something has gotten in my head, then it has to happen. And connections are always interesting. Especially in the plant world. It’s only in [two innovation network initiatives in the sector], if you want to build something, that you meet people that work on the same level as you are.

(owner/manager Panamarenko) In contrast, the four lower performing VMS firms displayed a far more passive approach to building relationships, resulting in a network that was limited to those contacts with which the firm had necessary direct relationships (peers, suppliers, customers, government). “It’s just that I don’t have the time for it” was an often mentioned constraint when we asked the firms about the reasons why they did not build contacts more actively. In addition, they complained that it was difficult altogether to maintain their existing networks because their traditional contacts no longer visited their firms. Whereas trading companies used to inspect the plants before they were bought at the firm, the increasing digitalization and

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on-line retail chains resulted in decreasing face-to-face transactions that used to facilitate informal information exchange. The perceived need to always be present at the firm, and the perception that “a day without having had your hands in the soil is a day not worked” made firms reluctant to leave the firm and establish new contacts.

Besides the active building of networks, the higher performing firms were also successful in efficiently exploiting them. Whereas the lower performing firms were reluctant to disclose information about the firm and feared that their practices would be copied by other firms, the higher performing firms experienced that they were able to substantially speed up the exchange of information, and in particular the type of information they were looking for.

For example, Panamarenko argued that the reason why he was able to get information from

competitors and international contacts was:

“because I’m always open. I’ll always do that. I can never hold something back. And then you get reaction.” (owner-manager Panamarenko).





Another beneficial consequence of this general tendency to be open to new contacts, exchanges and practices was that it made them attractive partners for other actors as well. As such, they were often approached by suppliers to test new products, by other innovative firms to discuss ideas or by customers to try out new products or business concepts.

In sum, whereas the lower performing firms could only draw on the scarce knowledge and resources that were available in their direct contacts, the higher performing firms were able to increase the pool of external resources and capabilities that could be drawn from. By reaching out to alternative and complementary sources of knowledge and resources, the network of the higher performing firms mimicked a munificent environment, an environment that generated more resources and knowledge that was potentially valuable to realizing the PES.

Collaborating for the joint development of lacking resources and knowledge.

Through their networks, the higher performing firms were able to access the resources and knowledge whenever they were readily available. As such, they could passively derive value from their micro-munificent environment. However, we found several instances where the high performing VMS firms actively engaged in the joint development of resources and knowledge when these were generally nonexistent. Building on the results of an enlarged network, they transcended their network ties and accomplished an organizational end that

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could be better achieved collectively (Dyer & Singh, 1998; Hardy, Lawrence, & Grant, 2005;

Lavie, 2006).

In our data, we mainly found instances of collaboration for the creation of new technologies and the joint creation of new market opportunities. For example, in line with the findings of McEvily and Marcus (2005), Panamarenko was able to build new resources for pollution prevention by engaging in joint-problem solving together with suppliers. For example, after having had multiple problems with pests in his plants and having discussed this with his advisor, Panamarenko’s owner-manager realized that they needed a specific type of pot soil which they could not find on the market. Committed to finding a solution, the ownermanager decided to set up a meeting together with their pot soil supplier, their fertilizer supplier, the advisor and one of his employees. Together, they developed a new kind of pot soil that enabled Panamarenko to substantially reduce their pesticide use, even though this came at a great cost. Ensor shows a particular example of a collaborative endeavor to create new technologies through institutional support. Since he found himself unable to test a new and upcoming technology because the investments and risk were too large for one firm to carry, the owner-manager collaborated with peers in negotiating government-sponsored research on these technologies. Although there had not been any results from this research project, they were nevertheless kept informed on new potential production technologies that could provide breakthroughs in the future without having to pay the costs of doing the actual research themselves.

In addition to such direct effects of collaboration on reducing the organizational impact on the environment, both Ensor and Panamarenko had developed collaborations that also had indirect effects. More specifically, they had established collaborative commercial relationships that took away some of the competitive disadvantages of realizing a PES.

Whereas it was often mentioned that it was “impossible to collaborate in the traditional and conservative Belgian ornamental horticulture sector”, both firms had bridged this insurmountable cognitive barrier and had succeeded in establishing partnerships with competitors. For example, Ensor had engaged in a joint venture with a number of big trading companies and other top-quality competitors, to market an exclusive top-quality flower in a niche segment with a limited supply and premium prices. Since the goal of the joint venture was already to position the product as being unique, new and exclusive, they decided together that only VMS-A labeled plants would be sold in the joint venture. As a result, Ensor was one of the very few firms that had been able to capitalize on its efforts to achieve a high

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environmental performance. Although the label by itself did not result in higher prices, it was a necessary requirement for membership in the joint venture.

These data show that, in the event neither the firm itself, nor a broadened network can yield the means that enable it to realize its proactive environmental strategy, a joint investment with network partners creates a new pool of market or institutionally based supportive resources the firm can draw from.

Institutional agency. Institutional agency refers to the agility of the firms to defy or change the norms, beliefs and institutions in which they operate (Dimaggio, 1988; Rao, Morrill, & Zald, 2000). According to institutional theory, firms adjust their behavior according to prevailing norms and values (DiMaggio and Powell, 1983). They do so to acquire a level of legitimacy in their organizational field for access to resources and for alignment with governing power structures (Suchman, 1995; Oliver, 1997; Lounsbury & Glynn, 2001; Zimmerman & Zeitz, 2002; Maguire, Hardy, & Lawrence, 2004). Whereas conforming to institutional forces has been identified as an important factor explaining environmental responsiveness (Bansal & Roth, 2000; Buysse & Verbeke, 2003), we found in our cases that the institutional forces were more often hindering than promoting such behavior. The burden of being proactive is that it may go beyond or against these dominant institutional forces and require institutional structures which are not always compatible with prevailing beliefs and behaviors (Dean & McMullen, 2007; Cohen & Winn, 2007). Firms may thus need to create support and legitimacy for their business model or beliefs in order to gain access to resources and to ensure the viability of these proactive business goals (Zimmerman & Zeitz, 2002). In other words, they need to develop institutional agency to find or create the institutions that support their intentions (Lounsbury & Glynn, 2001; Zimmerman & Zeitz, 2002). It was quite apparent in the data that those firms experiencing hindering institutional forces engaged in this process.

Although all firms experienced dissatisfaction with institutional forces, more successful firms had the sense that they could do something about it and acted accordingly.

While Jordaens and Rubens were quite disappointed with the fact that their customers only wanted cheap products and did not care about whether they were environmentally friendly produced or not, they remained resigned about it. “What can we do about it?” was the reaction heard in these lower performing firms. The owner-manager of Panamarenko, on the contrary, criticized the farmer’s association (which has its own plant store chain) for not being consistent with their own policies to promote VMS and selling non-VMS plants in their

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