«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»
Yet at the same time they were initiating changes within their institutional context, the four high performing firms seemed to have become “immune” to the institutionalized practices and expectations in the sector. By adopting nonconventional business models that created value in alternative ways, they were less dependent on traditional transactional relationships and therefore able to see beyond the traditional opinions that “environmentally friendly production does not pay off”. In contrast, the four lower performing firms followed the traditional business models that were often indeed incompatible with the sometimes costly and risky practices that would lower the impact on the environment. As a result, they remained highly embedded in the conservative cognitive logics of their organizational field.
These examples show that the higher performing firms built further on their networkbuilding and collaboration capabilities to foster a micro-institutional environment that was more conducive to achieving higher VMS performance. Although their current VMS performance had not necessarily depended on this process, it reflected an investment in resource and institutional capital that would continue to spawn solutions and support for environmentally friendly production in the future.
In sum, our data revealed that the process of munification through network-building, collaboration and institutional agency enabled the firms to create micro-munificent environments that mimicked the conditions which foster the realization of PES. Whereas each subtheme has its own specific impact in this process, our analysis nevertheless revealed that each subtheme is affected and reinforced by the presence of the other. For example, the greater the network of the firm, the greater its potential to collaborate or impact the institutional environment of the firm. Similarly, the more agents are involved in a collaborative effort of institutional agency, the greater the likelihood of generating a
supportive institutional context. Taken together, these notions lead us to propose:
Chapter 6 Proposition 1a: Organizations that are able to create external resource capital through the interdependent capability of network-building, collaboration and institutional agency will be more able to achieve their intended proactive environmental strategies than those that do not.
Proposition 1b: Organizations that are able to create external institutional capital through the interdependent capability of network-building, collaboration and institutional agency will be more able to achieve their intended proactive environmental strategies than those that do not.
Our data also revealed that both the development and appropriation of the benefits of munification hinged upon the presence of organicity in the firm. That is, the firm was only able to engage in the complex process of munification when it was flexible enough to dedicate managerial time and resources to its development, and remained prudent in how its precious resources were dedicated in this process. In addition, the firm needed to be flexible enough to adapt the firm to the valuable resources and knowledge that could subsequently be derived from the environment, while remaining particularly obstinate in achieving its objectives.
6.5.2. Organicity We identified “organicity” as the ability of the firm to maintain cognitive and practical flexibility and to invest in an open, yet prudent development of the appropriate means to relentlessly achieve its objectives (Burns & Stalker, 1961; Mintzberg, 1978; Covin & Slevin, 1988; Kickull & Gundry, 2002; Farjoun, 2002). In our data, the construct of organicity emerged as the interplay between “bootstrapping”, (2) “focused adaptability”, and (3) “disciplined scrutiny”. Table 6.5 and Table 6.6 show an overview of how we coded these individual subconstructs in the data and how they vary across the sample firms.
Bootstrapping. As mentioned before, small businesses are generally associated with the presence of lower levels of slack resources. Yet, recent studies have indicated how small businesses can develop “bootstrapping” capabilities that enable them to create higher levels of resources (Bhide, 1992; Winborg & Landstrom, 2001; Ebben & Johnson, 2006). By such practices as delaying payments to suppliers, minimizing stock or using subsidy finance, firms are able to reduce the financial pressures on the firm and create more slack resources.
Although this process has been mostly investigated in the context of financial resources, we found a number of practices that resulted in bootstrapping human resources as well. Although all owner-managers spoke about long workdays and a general lack of time, the higher performing firms were able to find pockets of time and resources that enabled them to
nevertheless dedicate time and effort to both munification, as well as assessing the possibilities for improvement of their environmental performance. The lower performing firms, instead, were locked in their daily practices of everyday survival and only acknowledged that they would spend more time in munification practices “if there would be more time”.The most important way to build up human resources slack was by making sure that several people in the firm were able to temporarily take up the responsibilities of the owner-manager. Sometimes this was fairly easy, for example when the owner-manager could fall back on family to follow-up the firm during his absence. In other instances, this required the training of employees and the confidence of the owner-manager to delegate responsibilities to them. What we found in our data, however, was that the lower performing firms either did not want or were not able to delegate responsibilities. The same commitment an owner-manager has to his firm may constrain his mental ability to leave it in the hands of someone else. Rubens, for example, found it impossible to delegate tasks to his peers, convinced that the work would always be done better if he did it himself. He explained this by referring to the incompetence of his employees.
I just can’t get away from here, that’s the problem. (…) That one kid that is permanent here, he’s nineteen or twenty years old, works a year and a half, two years here.
That’s still young you know. And the motivation simple isn’t there. The other is Turkish, has been working here for twelve years or so, or even longer, but she still doesn’t speak Flemish. She can understand you, but she doesn’t learn you know.(owner-manager Rubens) When we asked the higher performing firms about this, they argued that finding good personnel was indeed difficult, but it was possible by paying higher wages than peers. As a result, Fabre, Panamarenko and Ensor all had been able to attract or maintain well-trained and dedicated employees they could trust the firm to. In addition, the higher performing firms had technologies or practices in place that enabled them to be confident enough to leave the firm.
Panamarenko, for example, visited trade fairs or international colleagues because he could leave the firm to one of his employees and used the VMS system itself as a means to organize this type of slack. For him, the registration of product use for the VMS system acted as a log file that he could use in the event that the employee in charge of production would become ill.
“I’m often away to trade fairs. And [with MPS] you always have an overview of what’s happened. And if [employee name] is ill, then I’ll know what has to be done.
Everything is registered.”(o/m Panamarenko).
Chapter 6 Through these bootstrapping methods, the higher performing firms had been able not only to build internal resources, but also to increase the potential of the firm to use its munification capabilities for the creation of external resource and institutional capital.
Focused adaptability. While they are determined to stick with their objectives, firms with organicity are able to harness more alternatives to achieve them. This “focused adaptability” is thus both a cognitive and practical flexibility to detach from habitual behavior and network contacts and to challenge the “taken for granted”. Despite the high levels of flexibility small firms are often attributed, their lower levels of slack sometimes results in cognitive myopia that makes them less flexible than they could potentially be (Van der Stede, 2000; Minniti & Bygrave, 2001; Atherton, 2003; Ebben & Johnson, 2005). In contrast, the higher performing firms saw more potential uses for the resources and knowledge they had within the firm or were able to draw from their networks (Ward, 2004; Baker & Nelson, 2005). For example, Fabre argued that everyone knew that the preventive calendar spraying of pesticides, a traditional and polluting production method, was useless, but said that most growers “just follow the user instructions that tell you to “repeat every fourteen days” instead.
Rather, he argued, one could greatly reduce pesticide use by spraying based on temporary needs and careful monitoring. Interestingly, all lower performing firms stuck consciously to this method of preventive calendar spraying and were very reluctant to abandon it. Given Rubens’s extremely busy schedule, he lacked the time to really follow-up carefully and was
too afraid of the risks of plant damage he could potentially have:
“In winter times, the plants are covered with plastic for six weeks. (…) Well, in that time you can have a full grown population [of pests] underneath that. That’s why we say: we spray it preventively. I don’t dare to give that up. There’s too much at stake.” Fabre, on the other hand, had been open to experiment with some unusual alternatives to toxic practices. For example, they had acquired a machine from one of their foreign colleagues that allowed them to mechanically weed out herbs instead of using pesticides. Although this machine was widely used in French vineyards, their use of it in the arboriculture was unique.
Similarly, while discussing with one of their customers, they had stumbled upon using harmless hot pepper sauce as a game repellant instead of toxic pesticides. While other firms had laughed at both practices in the beginning, it was such openness to use the solutions that were provided in their micro-munificent environment that had enabled them to reduce their impact on the environment.
We saw the openness to alternative perspectives often reflected in the experiments that all successful growers engaged in when they found new techniques that became available through their networks. Magritte, for example, attributed most of his ability to lower the impact of his operations on the environment to his “integrated” pest control. When he started out, he had pushed the limits of what was possible and had eagerly accepted the offer of a government consultant to help him with this innovative technique. By combining the complex use of specific and less toxic pesticides, together with the natural pest control of beneficent insects, he had greatly reduced his pesticide use.
“You only use those products that kill the bad insects and let live the good ones.