«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»
"It’s like quitting smoking. You have to be conscious first that you really want to quit smoking. If you say ‘yeah, I’d better quit’, yet are not really conscious of it, then it’s just not going to work.” Recent studies in psychology have shown that motivations which are framed as “ideals” induce a particular disposition in individuals which is called a “promotion” focus (Higgins, 1998; Liberman, Idson, Camacho, & Higgins, 1999). Within regulatory focus theory (Crowe & Higgins, 1997; Higgins, 1998), such a promotion focus induces a need among individuals to accomplish an idealized and desired state. Interestingly, experiments have shown that people with such a promotion focus will be more willing to abandon practices-inuse and to switch to new ones (Liberman et al., 1999; Brockner, Higgins, & Low, 2004). In other words, by theorizing the proactive reduction of environmental impact as part of an idealized state, VMS induced a promotion focus among the successful firms, which enabled them to really engage in the institutional non-conformity that achieving a high VMS score required. In contrast, regulatory focus theory states that motivations which are framed as “oughts” induce a “prevention” focus. Such prevention-focused individuals are driven by security and safety to realize their duties and obligations (Higgins, 1998), and are less likely to abandon safe and secure known practices.
Secondly, besides the effect of the institutional theorizing on the disposition of the owner-manager, the flexibility of the owner-manager to consider alternative solutions in the face of institutional pressures may indicate the presence of bricolage capabilities in the firm.
Bricolage is the process by which a person is “making do by applying combinations of the resources at hand to new problems and opportunities” (Baker & Nelson, 2005: 333). In their summary of the bricolage literature, Baker and Nelson found that a bricoleur is characterized by “a bias toward action and active engagement with problems or opportunities, rather than lingering over questions of whether a workable outcome can be created from what is at hand.” (Baker & Nelson, 2005: 333), and that “bricolage typically appeared to involve a general awareness of existing practices and norms and a conscious willingness to abrogate them.” (Baker & Nelson, 2005: 342). A commitment to question the taken-for-granted assumptions and a belief that one’s goals can be realized through the creative recombination of resources inside or outside the firm is central to the notion of bricolage. The owner/manager of Fabre reveals a striking example of bricolage in the way they dealt with game damage in their plants.
“It sounds a bit stupid maybe, but game repellent, you know that right, plants are sometimes eaten by rabbits and all. Others will then spray with a product that is in fact totally forbidden or doesn’t look red [VMS indication for high toxicity], but purple of toxicity. And what do we spray our fruit trees with against game? Tabasco!
Everybody laughs at you, you know, but it does give you the results, it’s environmentally friendly and it doesn’t cost you anything! It’s just, when a rabbit tastes it, you know yourself that it’s very hot. And what we do is adding a product that makes it stick to the leaves and the little trees.” (owner/manager Fabre) Taken together, the goal inflexibility and means flexibility fit the description of bricolage as Baker and Nelson found in their own research: “a conscious and frequently wilful tendency for firms in our sample to disregard the limitations of commonly accepted definitions of material inputs, practices, and definitions and standards, insisting instead on trying out solutions, observing, and dealing with the results.” (Baker & Nelson, 2005: 333).
Overall, our findings indicate that the perseverance that results from theorizing the institutional non-conformity as a desired future was an important predictor for successful institutional non-conformity in the industry. As such, our findings may shed a new light on earlier studies where institutional non-conformity was the result of institutions constraining a firm’s access to necessary resources (Leblebici et al., 1991; Sherer & Lee, 2002). Based on our findings, we would argue that firms that successful firms theorized an alternative future in which these constraints were absent. Accordingly, they were driven to accomplish their
objectives and flexibly look for emerging solutions to their resource scarcities. However, whereas the large law firms in Sherer and Lee’s (2002) could subsequently diminish the legitimacy risk of their deviant practices by using the clout that came with their larger size, this was impossible among our small firms. The successful firms nevertheless possessed other organizational characteristics that helped to manage the risks of their institutional nonconformity, which are the focus of the next section.
7.4.3. Organizational Conduciveness to Institutional Non-conformity Even though the former two paragraphs uncovered how the firm’s embeddness and perseverance enabled it to detach from institutionalized practices and persistently find solutions that enabled them to follow through on their objectives, the question remains how the firms were able to deal with the risks in terms of lower certainty and legitimacy that generally come with such deviant behavior. In particular, we wondered why they were so insensitive to these risks and were even able to develop “institutional agency” to express their discontent with the current institutions. To this purpose, we honed in on how the institutional non-conformity related to other domains of the firm’s business model and how sensitive it was to the prevailing institutional practices.
Given that institutional non-conformity incurs risks of reduced access to resources (Zimmerman & Zeitz, 2002) or even decreasing financial returns (Haveman, 1993b; Chen & Hambrick, 1995; Miller & Chen, 1996; Deephouse, 1999; Norman et al., 2007), we expected a small business’s non-conformity to be a singular and exceptional endeavor. Our data suggest, however, that the institutional non-conformity with regards to green production methods was often not the only part of the business model that deviated from prevailing practice in the industry. A business model reflects how the firm will create value in the market through “an interrelated set of decision variables in the areas of venture strategy, architecture, and economics” (Morris, Schindehutte, & Allen, 2005). Venture strategy refers to the overall direction in the firm’s market positioning, the architecture includes the internal processes and decision of infrastructure that enables the firm to create value, and the economic model is the firm’s logic of profit generation. By comparing the firms’ business models, we found that the successful firms were not only different in terms of their proactive environmental strategies, but that they also deviated in other dimensions of the business model. Furthermore, we found that most of the firms had a track-record of non-conformist behavior, which seemed to desensitize them from the institutional risks as well.
Table 5 highlights the differences between the firm’s business models, their deviance from prevailing business models, and their conduciveness to high VMS performance. We assessed multiple non-conformity by probing the data for features in the business model that indicated firm deviation from practices other than green production. A business model was categorized as “Radically different” when it involved a strategy, architecture or economic model unique to the sector and in ways that questioned other institutional forces besides green production; “Moderately different” when the strategy, architecture or economic model deviated from the general practice in the sector, but other firms with similar business models could be found; and “Conform” when business model followed standard practice as defined by established institutional norms. We determined the conduciveness of a business model as “Conducive”, when the business model stimulated green production methods, “Neutral”, when the business model did not stimulate or discourage green production methods, and “Incompatible”, when the business model inhibited green production methods.
As indicated in Table 7.3, successful non-conformity was associated with a business model that differed, at least moderately, in other perspectives than merely the proactive environmental strategy. However, the case of Van Dyck shows that this was not enough: the entire business model also needed to be compatible with the institutional non-conformity.
Whereas Van Dyck’s profit generation logic through a cost leadership strategy and technological leadership deviated from most other arboriculture firms, their large scale and cost leadership was incompatible with the requirements for achieving higher scores in VMS.
For example, for their large scale operations, they needed large amounts of land, which was not easily available in their surroundings. As a result, they increased the number of plants on the land and continued working on their own overexploited lands. Since the risk of pest infestation increases with the exploitation of land, they needed to spray pesticides more frequently. Given the high density of plants, they were also unable to use mechanical weeding and were therefore obliged to toxic chemical pesticides for pest control. Furthermore, the owner-manager of Van Dyck ridiculed the monitoring needs associated with VMS by saying that “we’re growers, not accountants!” In contrast, although growing similar plants and working in almost the same village, the owner-managers of Fabre had a business model that was far more conducive to achieving high VMS scores. Although they equally focused on eradicating costs in their business, they used a series of monitoring and measurement techniques to this purpose, including VMS. In fact, they found VMS to be “the most important source of information we have now”. In addition, they possessed enough land on their own, which allowed some parts to lay fallow and to reduce the risk of pest infestation.
The case of Ensor presents a particularly telling example of how the high VMS-score resulted from a radically different business model that was also conducive to green production. At the time VMS was launched, Ensor was involved in a radically innovative project in the Azalea sector to set up a joint venture together with 2 growers, 5 international traders and an R&D/production advisor. The unique economic model of the joint venture was to market a license-protected and unique Azalea variety that was to be grown only by topquality growers and then sold at premium prices in limited amounts to a niche of carefully chosen retail shops. As such, the business model itself presented a radical departure in multiple perspectives. First, it deviated from the usual production that differentiates only in plant size, shape or color and caters to bulk trade markets. Second, it involved a collaboration with trade companies that was deemed impossible in the sector. Third, the mission statement of the joint venture reads “only top varieties that can stand the severest quality controls and that are grown with respect for the environment are granted the [top quality label]”. In the process of setting up this radically innovative joint venture, the individual members had also decided that a VMS-A rating was required for the joint venture membership. Ensor’s business model was thus in fact more conducive to green production, than it was to conforming to the institutional pressures in the sector. As a result, Ensor bore no risks with achieving a high score in VMS.