«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»
& Chen, 1996; Deephouse, 1999; Greenwood & Suddaby, 2006; Norman, Kendall, & Martinez, 2007), especially when the institutionalized practice constrains the access to important resources on which the organization is dependent (Oliver, 1991; Leblebici et al., 1991; Ingram & Simons, 1995; Sherer & Lee, 2002). Non-conformity also often occurs as a result of “institutional contradictions” (Seo & Creed, 2002): the “various ruptures and inconsistencies both among and within the established social arrangements” (Seo & Creed, 2002: 225). As a result of disruptive events (Hoffman, 1999), changing social, economic or political conditions (Oliver, 1992; Kraatz & Zajac, 1996), or existing incompatibilities between institutional pressures, organizations may receive conflicting incentives that drive them to non-conforming behaviors. In the occurrence of such events, Oliver (1991) expanded the reactions that organizations can develop with respect to institutional pressures beyond mere conformity. Besides conforming entirely (acquiescence), organizations may balance the pressures of several institutional influences (compromise), disguise or escape them (avoidance), ignore or contest them (defiance) or influence and control (manipulate) the institutional environment in which they operate (Oliver, 1991; Goodstein, 1994; Etherington & Richardson, 1994; Ingram & Simons, 1995; Clemens & Douglas, 2005).
Given the risk and uncertainty associated with these latter non-conforming strategies, how and when firms can be successful institutional non-conformists arise as important questions. These questions are all the more pertinent for small firms, given that some of the literature expects path-breaking behaviors to emanate most likely from smaller firms (Schumpeter, 1934; Leblebici et al., 1991). However, whereas there is a growing literature on the conditions that lead organizations to non-conformity or that instigate institutional change, there is little and inconclusive research on the conditions that foster organizational success in this feat. In addition, the emerging literature has mostly focused on institutional nonconformity among larger firms. Less fully explored is institutional non-conformity among small firms, an area where the extant literature has produced inconsistent findings to date as well.
7.2.1. Small business institutional non-conformity In his “Theory of Economic Development”, Schumpeter (1934) proposed that the driving force in capitalism comes from small ventures that crack the codes of the institutions in which they operate. Although Schumpeter’s work has spawned a new school of inquiry into the conditions that facilitate organizational founding and the sources of innovation in new firms (Shane & Venkataraman, 2000; Davidsson et al., 2006; Cliff et al., 2006), the literature
remains inconclusive on whether existing small businesses possess the tools to engage in the complex social process of deviating from established institutional practices (Damanpour, 1991; Haveman, 1993b; Camison-Zornoza, Lapiedra-Alcami, Segarra-Cipres, & BoronatNavarro, 2004; Barnett & McKendrick, 2004). A number of elements argue in favor of small firms. First, in the event that institutional non-conformity would require abandoning extant practices, strategies or organizational forms, small businesses are often not as committed (Ghemawat & Del Sol, 1998) as larger organizations to existing technological regimes and business models (Hannan & Freeman, 1977; Tushman & Anderson, 1986; Hinings & Greenwood, 1988) and are more flexible in adapting to environmental changes (Fiegenbaum & Karnani, 1991; Chen & Hambrick, 1995). In its most extreme form, the small business as a new venture can even start without any commitment towards or association with the prevailing institutional context (Schumpeter, 1934; Cliff et al., 2006). Second, since smallbusiness managers are very often also the owners of the firm, they do not depend on the decisions and interests of stockholders. As a result, they have more discretion to enact their own envisioned reality (Johannisson, 1987) and are more committed to doing so as well (Gibb & Scott, 1985; Thompson et al., 1992). Third, small businesses are not as visible as large firms, and often operate at the fringe of an organizational field, which decreases the likelihood that they will be subjected to the same scrutiny as larger firms in the industry (Hinings & Greenwood, 1988; Leblebici et al., 1991; Greening & Gray, 1994). As a result, small firms have been found sometimes to act as the “bandwagons” for novel practices, which are subsequently adopted by larger firms (Haveman, 1993a; Aldrich & Fiol, 1994; Terlaak & King, 2007).
In contrast, however, studies of institutional non-conformity in larger firms have found that successful institutional non-conformity depends on a number of factors that small businesses are generally not associated with (Haveman, 1993b; Miller & Chen, 1996; Sherer & Lee, 2002). For example, Greenwood and Suddaby (2006) suggested that successful institutional non-conformity depends on the political, financial and organizational resources and power to influence a firm’s environment. Small firms are often dependent on more powerful customers and suppliers, who constrain them in the options that can be developed to challenge institutional pressures (Meyer & Rowan, 1977; Pfeffer & Salancik, 1978; Fligstein, 1991; Frooman, 1999; Davidsson et al., 2006; Dewald et al., 2007). Furthermore, small businesses often lack slack time and resources which would be needed in the event that institutional non-conformity requires the development of new practices, contacts, business models and the like (Bourgeois, 1981; Sharfman et al., 1988; Damanpour, 1992). Specifically,
the introduction of novel and deviating practices and products requires “complementary assets” to ensure acceptance in the market and society (Sherer & Lee, 2002), which are often lacking in small businesses (Schumpeter, 1942; Teece, 1986). But most importantly, small businesses depend on networks to acquire information and exchange experiences (McEvily & Zaheer, 1999; Atherton, 2003; Nooteboom, 2004), which may be the same networks that impose and support the institutional logic they want to challenge (Johannisson, RamirezPasillas, & Karlsson, 2002). As a result, small business owner-managers have a tendency to get locked into path-dependent behaviors based on previously successful patterns of activity (Baron, 1998; Minniti & Bygrave, 2001), and thus continue their practices more based on cognitive habits and traditions, rather than on thoughtful and strategic reflection.
Even though owner-managers may have the internal impetus to engage in institutional non-conformity, the literature is inconclusive about whether small businesses actually possess the means to be successful in this feat. The contradictory streams of evidence highlight the need for more explorative work on the factors that explain the success of small firm institutional non-conformity. In this study, we therefore move beyond the debate on whether small businesses have the organizational features to support institutional non-conformity, to ask more importantly about the factors that distinguish successful and unsuccessful institutional non-conformity in small firms.
7.3. Methods As mentioned, the theoretical inconsistencies about the organizational features a business must possess for successful institutional non-conformity emerged as a result of the iterative process of analyzing the data and enfolding existing literature in chapter 6. In order to contribute to resolving these inconsistencies, the goal here is to further probe our data on the eight VMS cases and explore how the categories that emerged in chapter 6 may help to explain these theoretical inconsistencies uncovered in the introduction. Again, the reader is referred to chapter 5 for a full introduction to the Belgian ornamental horticulture sector as a research setting and the methodological choices made. That we can use the same methodology is justified for two reasons. First, the empirical research in this chapter remains an exercise of theory elaboration (Lee et al., 1999) with the aim of resolving a theoretical inconsistency (Siggelkow, 2007). In this perspective, also the use of case studies is appropriate, since these are best for addressing ‘how’ and ‘why’ questions (Yin, 2003), such as “how do small businesses successfully implement strategies that resist conformance to seemingly insurmountable institutional forces in mature fields?” Second, perhaps even more
than strategies and practices, the particular nature of institutions and their influence are unconsciously engrained in the assumptions and perceptions of the owner-manager (Jepperson, 1991). Revisiting the perceptions of an owner-manager through various data sources and multiple angles was therefore a necessary prerequisite to uncover the complex phenomenon of institutional non-conformity.
Before engaging in a further analysis of the eight VMS cases, however, it is necessary to connect the research setting of VMS in the Belgian ornamental horticulture to the particular constructs of institutional non-conformity: (1) the choice of organizational field, and (2) the act of institutional non-conformity. First, institutional theorists argue that the institutions are enacted within an organizational field. An organizational field is a set of organizations that “in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products.” (DiMaggio & Powell, 1983:148). In addition, the boundaries of an organizational field depend on a particular issue that elicits regulative, normative and cognitive expectations (Hoffman, 1999; Scott, 2001). Previous studies have used a combination of sector, geographical territory and issues to delineate organization fields.
Greenwood et al. (2002) used the changes of organizational form in the accounting services sector in Alberta (Canada) from strict accounting firms towards multidisciplinary practice firms as their institutional field. Hoffman (1999) used the US chemical industry and the actors revolving this industry with regards to environmental issues. Maguire et al. (2004) chose the emerging practices of HIV/AIDS treatment advocacy in Canada as the dynamic boundary of their organizational field. In the current study, we use the Belgian ornamental horticulture industry and how it deals with the organizational impact on the natural environment.
Second, the phenomenon of interest in this study is the presence of proactive environmental strategies among firms in the Belgian ornamental horticulture industry. As mentioned before (see Table 5.9), in contrast to earlier studies on organizational reactions to natural environmental issues (Henriques & Sadorsky, 1996; Henriques & Sadorsky, 1999;
Buysse & Verbeke, 2003; Bansal, 2005), PES in the Belgian ornamental horticulture industry represent an act of non-conformity, rather than one of conformity. More specifically, the dominant institutional logic in the ornamental horticulture sector discourages PES, and acts in favour of maintaining the status quo. As a result, by becoming member of VMS, Belgian ornamental horticulture firms not only reveal their proactive environmental intentions, but also their institutional non-conformity for several reasons. Since the goal of VMS is to stimulate firms to voluntarily disclose information on their environmental impact and to go