«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»
Propostion 1b: Small businesses that are exposed to alternative institutional logics will decrease the institutional embeddness that inhibits successful institutional nonconformity Why do the adoption of multiple roles in the organizational field and the exposure to different institutional logics enable firms to go against institutional pressures? We argue that both the development of absorptive capacity and the bridging of structural roles underlie these processes. First, the multiple roles and the exposure to alternative institutional logics uncover multiple ways of thinking and heterogeneous perspectives to the same problem, detaching them from the dominant logic in the field and opening the owner/managers up to different logics (Seo & Creed, 2002; Greenwood & Suddaby, 2006). Although the taken-for-granted assumptions are consistent across institutional roles, the exposure to alternative viewpoints increases the firm’s absorptive capacity (Cohen & Levinthal, 1990; Zahra & George, 2002) to absorb and discover new solutions and perspectives. Whereas institutional exposure has been used to provide the reasons why a firm would engage in institutional change, our findings show that it also exposes them to the tools to go against the institutional pressures in their own organizational field.
Secondly, both processes help to bridge structural holes that constrain unsuccessful firms in finding alternative perspectives and solutions (Burt, 1992). Structural holes are voids between organizational clusters in social networks where density of ties is low. Actors that can bridge these gaps in networks may benefit from preferential access to various resources and capabilities, thereby increasing their social capital (Burt, 1997). Institutional theorists have been looking mostly at firms as atomistic players in the organizational field, bridging structural holes mostly by establishing network ties between members of different organizational clusters. As there were abundant ties between the multiple clusters within the organizational field (e.g., growers and traders), the successful firms in our sample did not bridge the structural holes through network ties between them. Instead, by assuming different roles within the organizational field, they bridged the structural holes by overlapping the Chapter 7 clusters within the firm. As such, they bridged, within the boundaries of their own firm, the connections which are normally characterized by cognitive structural holes. Although intuitively one would expect that the adoption of several roles would increase the embeddedness in the field (Uzzi, 1997), our findings show in fact the opposite. Not only can organizations lower their embeddedness by bridging boundaries to alternative institutional arenas (Greenwood & Suddaby, 2006), as is also the case in our sample, yet this also happens as a result of bridging disconnected roles in the organizational field.
Together, our findings reinforce the finding that it is not network position, but the lower embeddness of the firm as a result of its interaction scope with the organizational field that explains how firms can successfully go against institutional pressures. Negating institutional expectations and prescriptions requires the firm to become detached from them in the first place. Our findings indicate that the adoption of different roles within the organizational field and the exposure to alternative institutional logics were important in this perspective.
7.4.2. Cognitive Approach Towards the Institutional Non-conformity Besides the role of the firm’s network interaction scope in enabling institutional nonconformity, we also found that a further exploration of “focused adaptability” helped to explain small business institutional non-conformity. In particular, we were interested in whether a more fine-grained analysis of the firm’s cognitive approach towards the institutional non-conformity would shed light on why some firms had been able to develop the flexibility to realize their objectives and others not. To this purpose, we probed the data for the underlying reasons why the firms had wanted to become member of VMS and what they were willing to do in order to get a high VMS score.
Table 4 summarizes the firm’s cognitive approach to the institutional non-conformity.
We assessed the cognitive approach by coding the interviews for responses indicating the reasons each firm had to become a member of VMS and the sacrifices they were willing to make to achieve a high VMS score. We then followed a logic of “data reduction” (Lee et al.,
1999) to summarize our findings in three constructs that reflected the way the ownermanagers had framed VMS membership: “institutional theorizing”, “goal flexibility” and “means flexibility”. An institutional theorizing was called “Envisioned Future” when the owner-manager believed that green production should be the norm for ornamental horticulture firms in the future; “Inevitable Future” when the owner-manager expected that ornamental horticulture firms would be forced to use environmentally friendly practices in the future; and
“Potential Trend”, when they believed that environmentally friendly production was a novelty that could be beneficial to the firm. In addition, we paid attention to the firm’s efforts and sacrifices to bring their actions in line with their aspirations. We therefore assessed the firm’s flexibility in their goals and the means to achieve these goals. The goal flexibility was considered “Persistent” when the firm followed through on its goals in a principled and obstinate manner. Goal flexibility was considered “Relenting” when the firm dropped its objectives as soon as hurdles or difficulties were experienced. We assessed means flexibility as “Proactive” when the firm proactively looked for or developed new practices themselves and tried alternatives when they were presented to them; “Active” when they mostly tried alternative practices presented to them, or “Reluctant”, when they were conservative in their practices.
By further exploring the construct of “focused adaptability”, we found that it comprised a flexibility in the means how the firm achieved its objectives, but a resilient perseverance to achieve the goal of reducing the impact on the environment. Interestingly, firms that combined such means flexibility with goal inflexibility had theorized VMS as an idealized and envisioned future. All successful firms theorized VMS membership as part of a desired and envisioned future, were inflexible about their objectives, but flexible in the means to achieve them. Although nearly all firms were interested in the independent assessment service that the VMS system provided, the successful firms attached a higher goal to VMS. In fact, they considered the traditional production methods as outdated and had a strong desire that the entire sector, not just their own firm, would engage in more modern and socially legitimate production methods. For all four successful firms, VMS was an intrinsic and necessary element in that endeavour. Accordingly, they persistently refrained from environmentally polluting practices in line with their objectives and were either proactively engaged in a continuous active search for alternative production methods or experimenting with new practices when they were presented to them.
An interesting comparison is the difference in behaviour between Ensor and Bruegel.
Both companies grow the same plants and face the same type of pest risks. Both firms differ in particular in their approach of dealing with aphid infestations. The general practice in the sector is to use Endosulfan, a very effective, cheap, yet very toxic product that results in low VMS scores or even withdrawal of a firm’s label. A comparison of both firms shows how the approach towards VMS and the use of Endosulfan is very different. To Ensor, VMS was part of an envisioned future in which the sector would become more transparent to their various
stakeholders, and to the government in particular:
“I also want to show the government, because we’re seen a bit by the world as ‘those poison sprayers, look at them again, how it stinks here’; Look! This is what I’m using, all registered, all official things, sometimes toxic, others less. I’ve got an A, for example, in VMS, because I comply with those things. I believe in it.” (owner-manager Ensor) Ensor also showed persistent goal inflexibility and proactive means flexibility. Given that the use of Endosulfan would result in a lower VMS score, he stopped using the product despite
the substantial benefits in terms of cost and labour:
“Use endosulfan once a year or three to four other products? I use the three or four other ones, which costs me more. But I’ve chosen for the system, so I stick to it.” (owner-manager Ensor) As a result, he was described as one of only three people in the entire industry that did not use Endosulfan and used a combination of intensive crop monitoring, with a number of alternative, but more expensive products. Although even experts reported the risks of these practices in terms of plant quality deterioration, Ensor pushed the limits of what was possible
and explained his success as follows:
“I began dealing with pesticides a lot more consciously now. Sometimes in a very extreme way, that I wait too long to spray, (...) until I get an attack from something (…) but I think it’s important.” In contrast, Bruegel’s VMS membership reflected the anticipation of an inevitable future in which registration of fertilizer and pesticides would be made compulsory. “Now with our new minister of agriculture, I’m sure it’s going to happen one day, such a [compulsory] system of registration”. In the event of this happening, he hoped that VMS would be recognized as a legitimate registration system. Yet, Bruegel’s owner-manager was described as very risk-averse and reluctant to reduce the traditional practices of preventive calendarbased pesticide spraying, including Endosulfan, out of fear for having quality losses or plant damage. Whereas Ensor involved his independent advisor in the flexible improvement of his practices, Bruegel’s advisor reported a far more conservative and inflexible approach towards production methods. “I have to say that he sprays relatively more than I let other businesses do, also in Azalea. The question mostly comes from him.” (independent advisor of Bruegel) As a result of this inflexibility in adopting new means to achieve a high VMS score, he had to compromise his goal of lowering pesticide use and of achieving an A score in the VMS
system. Recurring in the successful cases was a similar perseverance to question the takenfor-granted and to find innovative solutions to their problems. Taken together, we propose:
Chapter 7 Proposition 2a: Small business owner-managers who theorize institutionally nonconforming practices as part of an envisioned future will develop the means flexibility to adapt their practices in a way that enables them to persistently realize their nonconformist objectives.
Proposition 2b: Small business owner-managers who theorize institutionally nonconforming practices as part of an inevitable future or a potential trend will relent their non-conformist objectives to continue conforming practices.
Why does the framing of VMS as an envisioned future, and the resulting combination of goal inflexibility with means flexibility increase the ability of small businesses to successfully engage in non-conformity? First, by framing VMS within a future perspective that was part of their vision or desire, the owner-managers seemed impelled to following through their engagement with VMS. As the owner/manager of Panamarenko stated, “passion is the key word for those who want to go for the non-conventional”, or like the
owner/manager of Ensor expressed it: