«PROACTIVE ENVIRONMENTAL STRATEGIES IN SMALL BUSINESSES: RESOURCES, INSTITUTIONS AND DYNAMIC CAPABILITIES Jan Lepoutre Promotor: Prof. Dr. Aimé Heene ...»
One reason why these findings have emerged so strongly, is that up until now, there has been very little research that has examined proactive environmental strategies of small business (Hillary, 2000a; del Brío & Junquera, 2003; McKeiver & Gadenne, 2005; Clemens, 2006; Aragon-Correa et al., 2008). As such, our findings draw attention to the different microprocesses that may be involved in small business proactive environmental strategies. Small businesses have often been associated with lower visibility and lower stakeholder scrutiny (Greening & Gray, 1994; Meznar & Nigh, 1995; Bowen, 2000). As a result, the withinindustry normative and cognitive pressures may be far more important than has been investigated to date. Whereas a capability of stakeholder integration may therefore be vital in larger firms, the development of practices of institutional non-conformity may be more important in small business contexts.
We also contribute to the ongoing debate about whether the perception of the natural environment as a threat or an opportunity facilitates the adoption of a proactive environmental strategy (Sharma, 2000; Andersson & Bateman, 2000). Although all 8 firms in our sample had proactive environmental strategies, both threat-based and opportunity-based reasons were underlying their motivation. However, our findings show that a promotion focus was necessary to persistently follow through on their strategy and to develop the flexibility in finding the appropriate means for success.
7.6. Limitations and research implications Despite our vigilant care on the rigor of the research process, our findings are not without limitations. Given that we chose to limit our study to one single industry, our findings may lack the power to be generally applicable to small businesses in general. One avenue for
future research may be to test whether our propositions hold in the entire sector, as well as in different contexts and organizational fields. However, the small business literature has identified the disparity of research outcomes as an inherent feature of its domain (d'Amboise & Muldowney, 1988; Curran & Blackburn, 2001) and has therefore asked for more contextualized research in theory building (Zahra, 2007). In this regard, we determine a number of contextual factors as important to our findings, opening up opportunities for related research. First, the ornamental horticulture sector in Belgium is experiencing high levels of competition and even hostility, and has a very traditional population. It may be interesting to see whether the same capabilities we identified will emerge in sectors where the business-asusual is in fact very profitable and does have interesting future perspectives. Second, the institutional logics that were surrounding the Belgian ornamental horticulture sector were able to provide the necessary tools that the proactive businesses were looking for. It might have been completely different if the institutional context surrounding the organizational field was less munificent in solutions or had similar institutional logics. In such contexts, the importance of collaborative efforts to create inexistent resources may become more important, similar to the creation of new markets or institutions (Aldrich & Fiol, 1994; Lounsbury & Glynn, 2001; Greenwood et al., 2002; Maguire et al., 2004). Third, the institutional nonconformity that was used as a context here, involves mostly normative and cognitive pressures for non-conformity. This means that a deviance of the institutional requirements does not lead to illegal behavior as would be the case with institutional non-conformity against regulative (legal) pressures. Future research may want to investigate whether legal rule-bending as a result of an envisioned future may require different capabilities than the ones identified in the present study.
Concluding Remarks Chapter 8
8. Concluding Remarks Small businesses attract a growing interest from policy makers. Unfortunately, their beneficial role in society as the engine of economic growth and employment creation seems to come with substantial impact on the natural environment. In this dissertation, I therefore investigated how small businesses can successfully realize strategies that go beyond legal requirements in reducing their impact on the natural environment. Based on the finding that their small scale induces constraints that inhibit small firms to engage in PES (chapter 3 and chapter 4), I set out to assess how small businesses can overcome these constraining factors.
To this purpose, chapters 6 and 7 report the findings of an empirical study in the ornamental horticulture industry that combine both resource-based and institutional theoretical lenses in the processes that are involved to this purpose.
In this concluding chapter, I discuss the conclusions and limitations of the research. I will present this discussion in four sections. First, I offer a brief synthesis of the answers that this dissertation provided to the research questions identified in chapter 3. Second, I discuss the overall theoretical implications of this dissertation. Third, I discuss the methodological and theoretical limitations that derive from the choices made during the research process.
Finally, I close this dissertation with avenues for future research and some brief concluding remarks.
8.1.1. RQ1: What is the impact of firm size on the adoption of PES in smaller firms?
The literature reviewed in chapter 3 yielded an inconsistent picture on the impact of small scale on the willingness and ability of small firms to engage in PES. Whereas positive correlations between firm size and PES are almost consistently found on the one hand, anecdotal case studies demonstrating small businesses socially responsive strategies are reported on the other. This dissertation has provided new insights that clarify this inconsistency in two perspectives: (1) an in-depth literature review, and (2) a rich account of the phenomenon at work in an empirical setting.
First, in order to resolve the inconsistent findings on the impact of small scale in the PES literature, chapter 4 was dedicated to a further fine-grained exploration of extant findings in the literature. Given the scarcity of studies on small business PES, we decided to use a broader, though still relatively limited, literature base and draw on contributions on small
business social responsibility in general. By distinguishing between the impact of firm size on (1) issue, (2) personal, (3) organizational and (4) context characteristics, three important conclusions could be made.
1. The lack of proactive environmental (and social) strategies among small businesses is not the result of bad attitudes. Rather, the reduced visibility and perceived impact, and the resulting lack of scrutiny, makes that small business owner-managers simply do not recognize environmental issues. As a result, more attention is given to responsibilities towards employees and colleagues, with whom they encounter most social issues and responsibility dilemmas.
2. In addition to the lack of recognition, a lack of time, knowledge, financial resources and power stands between a small firm’s positive attitudes and the realization of proactive environmental (and social) strategies. However, the literature also hinted at a number of factors that could mitigate these constraints and which were further empirically explored in this dissertation.
More specifically, it was argued that a more dynamic and systemic view of small businesses could shed light on the capabilities and contextual factors that enable small firms to adopt proactive social and environmental strategies.
3. Finally, more than larger firms will small firms depend on a supportive institutional and business environment. A culture of shared responsibility, installed by professional associations, peers, governments and partners in the value chain, and an abundant availability of resources in the environment of the firm will facilitate the realization of proactive environmental and social strategies.
Second, chapters 6 and 7 were specifically designed to provide a richer, dynamic and systemic exploration of small business social responsibility, or more specifically proactive environmental strategy. Our findings indicate that a small business context provides constraints, but that they can also be managed. Whereas all firms in our empirical study in the Belgian ornamental horticulture industry had the intentions to go beyond legal expectations in reducing their impact on the natural environment, we found that those firms that had been able to deal with their specific constraints had also been able to realize their PES. In this respect, the impact of small firm size can be reinterpreted as a set of contingency factors that a firm has to deal with in order to realize its objectives. Furthermore, the findings led us to Chapter 8 identify the capabilities that were needed to this purpose, which was necessary to answer the remaining research questions in this dissertation.
8.1.2. RQ2: What are the resources and capabilities associated with successful PES execution in small businesses?
Building on the suggestions of chapter 4, we drew on an empirical study of 8 case studies in the Belgian ornamental horticulture sector that were member of VMS, a voluntary member organization of firms with proactive environmental intentions, to identify the capabilities that differentiated between firms that had been successful and unsuccessful in realizing these intentions. Since VMS members receive ratings of environmental performance, we were able to compare high performing with low performing firms. First of all, our findings reinforced the theoretical importance of internal resource capital, external resource capital and institutional capital as enabling factors for realizing PES. Interestingly, however, none of these facilitating factors were generally present in the ornamental horticulture industry, and realizing a PES was thus “against all odds”.
We found that a successful realization of the firm’s environmental intentions depended on the ability of the firm to create a micro-environment for the firm that mimicked the theoretical conditions favouring PES. More specifically, we identified munification and organicity as the two interacting and composite dynamic capabilities that enabled the firm to change its internal and external resource base. Munification entailed the building and attracting of networks rich with existing complementary resources and capabilities;
collaborating for the joint development of lacking external resource and institutional capital;
and the institutional agency to create an institutionally enabling context. Organicity consisted of bootstrapping, focused adaptability and disciplined scrutiny, together increasing the internal resource capital in the firm. In addition, we also found that both dynamic capabilities interacted with each other and further reinforced the potential of the firm to realize its objectives. The presence of organicity increased the effectiveness of munification in the firm, while the external resource conditions further increased the effectiveness of organicity in building internal resource capital.
8.1.3. RQ3: How can small business be successful in PES when the (institutional) conditions are against having one?