496433
research-article2013
OAE26310.1177/1086026613496433Organization & EnvironmentZollo et al.
Article
Beyond What and Why:
Understanding Organizational
Evolution Towards Sustainable
Enterprise Models
Organization & Environment
26(3) 241­–259
© 2013 SAGE Publications
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DOI: 10.1177/1086026613496433
oae.sagepub.com
Maurizio Zollo1,2, Carmelo Cennamo1, and Kerstin Neumann1
Abstract
In this article, we strive to contribute to the ongoing shift in the sustainability debate from its
historical focus on definitional (“what”) and motivational (“why”) questions to the understanding
of change and learning process questions (“how”) connected to the efforts some firms are
making to evolve toward “sustainable enterprise” models. A conceptual framework to study
these evolutionary processes is thus developed, and the complexities and research design
trade-offs facing the related empirical inquiry highlighted. The main message advanced herein
is that shifting the focus of analysis to the level of the initiatives undertaken to change the
various elements in the enterprise model could prove the best way to frame the conceptual
and empirical challenge before us. In a way, to make progress on the “what,” research should
focus on the “how.”
Keywords
corporate sustainability, organizational evolution, organizational learning, business model
innovation, organizational adaptation, organizational change, corporate social responsibility,
strategic decision making, managerial cognition
Introduction
The simultaneous pursuit of economic, environmental, and social sustainability is rapidly
becoming part of the established rhetoric for many enterprises across sectors and geographic
regions. The concept of sustainability, and the related notion of sustainable development, has
also become part of the common vocabulary in the debates within and across several social sciences such as economics, political science, sociology, and (more recently) in management
research and practice. In general, scholars refer to the core concept as “. . . the specification of
a set of actions to be taken by present persons that will not diminish the prospects of future
persons to enjoy levels of consumption, wealth, utility, or welfare comparable to those enjoyed
by present persons” (Bromley, 2008). In management science, the notion of sustainability has
been applied to business organizations as social systems that are embedded in larger social and
1Bocconi
2WU
University, Milan, Italy
Vienna, Austria
Corresponding Author:
Maurizio Zollo, Department of Management and Technology, Center for Research on Innovation, Organization and
Strategy (CRIOS), Bocconi University, 20136 Milan, Italy.
Email: maurizio.zollo@unibocconi.it
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Organization & Environment 26(3)
ecological systems with which they share the availability of inputs and the impacts of outputs.
In this framing, it has taken on specific meanings related to the capacity of the business organization to serve purposes that include not only economic but also environmental and social criteria (Bansal, 2005; Berry & Rondinelli, 1998; Crane & Matten, 2010; Freeman, Harrison,
Wicks, Parmar, & de Colle, 2010).
Research in the management field has generally developed in two main strands addressing
two different, broad sets of questions: why should companies move beyond serving merely economic purposes, and what makes a company more sustainable. Answering the question “why
(should companies embrace sustainability?)” generated the central and by far the largest empirical effort in the corporate sustainability knowledge domain. While a small set of studies has
focused on the normative foundations of the debate (e.g., Donaldson & Preston, 1995; Hosmer &
Kiewitz, 2005; Jones, 1995), the majority has focused on its instrumental flavor. Indeed, over the
past four decades, close to 300 articles have been published in peer-reviewed journals focusing
on the (typically correlational) link between social and environmental performance on the one
hand (e.g., Carroll, 1999; Waddock & Graves, 1997; Kassinis & Vafeas, 2002), and economic
performance on the other (Hillman & Keim, 2001; Margolis & Walsh, 2003). Despite the lack of
complete consensus on the matter, the current state of the art on the empirical evidence seems to
point to a positive causal linkage between the development of sustainability-oriented practices
and mind-sets and long-term financial performance (Berman, Wicks, Kotha, & Jones, 1999;
Laplume, Sonpar, & Litz, 2008). Eccles, Ioannou, and Serafeim (2011) provide convincing evidence of this result, based on an accurate, matched pair design study of companies (across all
sectors) with similar economic performance and different degrees of sustainability practices and
mind-sets in 1993. The evidence shows a staggering divergence of financial and accounting performance outcomes over the following 17 years, with average return on assets almost twice as
high and average share values 46% higher in the high sustainability practices group.
Research on the “what (defines a company as sustainable)” questions has also involved
extended inquiry, with studies focusing on the definition of firm stakeholders and their salience
(e.g., Buysse & Verbeke, 2003; Clarkson, 1995; Freeman, 1984; Mitchell, Agle, & Wood,
1997; Starik, 1995), firm stakeholder management (e.g., Cennamo, Berrone, Cruz, & GómezMejía, 2012; Frooman, 1999; Jensen, 2002; Jones, 1995; Rowley, 1997), and firm governanceorganizational structure (e.g., Cennamo, Berrone, & Gómez-Mejía, 2009; Jones, 1995; Luoma
& Goodstein, 1999).
Despite, and in part because of, the long debates on the definitional (“what”) and motivational
(“why”) issues, we are still missing today a significant investment in research and knowledge
development on questions related to the processes through which firms actually navigate the
multiple change requirements to identify, experiment with, and eventually realize more sustainable models of the enterprise.1 In other words, linking motives to outcomes through task features
is not enough to explain interfirm variation in the effectiveness of evolutionary change. The question, of course, becomes, why, when faced with the same external or internal pressures to innovate and change toward sustainable enterprise models, do some firms generate initiatives of a
“higher,” “deeper,” or “more engaged” quality than others? In other words, what accounts for
interfirm heterogeneity in adaptive response to sustainability-related issues? And what factors
influence the performance impacts of these adaptive responses?
Adaptive capacity has typically been viewed, implicitly or explicitly, in terms of competence
in the adjustment of operating routines (Teece, Pisano, & Shuen, 1997). However, this is only
part of the problem in the case of enterprise model innovation. In fact, the most complex part of
the adaptation lies in the capacity to influence the evolution of behavioral antecedents (beliefs,
values, emotional traits, etc.) at both the individual and collective levels (e.g., Donaldson &
Preston, 1995; Margolis & Walsh, 2003). Some work in this direction can be found in environmental management literature, for instance on individual initiatives (Andersson & Bateman,
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2000; Ramus & Steger, 2000), cognitive frames and organizational values (Bansal, 2003), and
the internal processes related to such initiatives (Winn & Angell, 2000). Yet we are still far from
having a holistic representation and understanding of these issues. In particular, the processes
through which current models of the enterprise might evolve toward more sustainable versions
(the “how”) remain very much an open issue.
As we will argue below, the conceptual and empirical challenge that lies before us (and before
the managers we study) might be best framed as an evolutionary process of discovery and refinement of what constitutes a sustainable enterprise through the study of the initiatives undertaken
to change the various elements of the enterprise model. To some extent, the best way to make
progress on “what” questions, beyond purely conceptual debates, is to focus on how a firm
experiments with and discovers (more or less intentionally and consciously) what it might mean
to be a sustainable enterprise, that is, by focusing essentially on “how” questions.
In an effort to stimulate progress on these questions, the article is structured as follows. First,
we provide a brief overview of the status quo in the intellectual debate on corporate sustainability
and propose an investigation of the evolutionary processes in organizational learning and change
toward sustainable models of the enterprise as a way to progress the debate. Second, we put forward a conceptual framework that allows an integrated study of these evolutionary processes
across diverse objects of change (the “whats”) and motivations to change (the “whys”). Third, we
identify the tensions to be tackled to develop an empirical research agenda to study these problems and provide suggestions on possible ways to address these challenges and move the core
concept of sustainability forward.
A Conceptual Overview
Sustainability has been a cornerstone concept in strategic management research through its association with competitive advantage. Significant progress has been made in this field in recent
years, including the move from narrower definitions of sustainability of competitive advantage
based on superior economic performance to a recognition of the importance of other dimensions
of performance connected to the social and environmental impacts of firm behavior (Harrison,
Bosse, & Phillips, 2010). This has been argued from the stakeholder theory perspective, which
redefines the main purpose and objectives of the firm (the “what”) in terms of its being part of a
system of actors (stakeholders) who influence, and are influenced by, the setting and achievement of organizational objectives (Freeman, 1984).
One such stream focuses on stakeholder engagement and management issues, and implicitly
assumes that an enterprise is more or less sustainable depending on its capacity to understand and
engage its relevant stakeholders in the decision-making process (e.g., Donaldson & Preston,
1995; Jones, 1995; Post, Preston, & Sachs, 2002; Sachs & Rühli, 2011). Stakeholders are considered to be relevant if they make specific investments in the firm that are instrumental to its longterm success (Coff, 1999; Hill & Jones, 1992). In a similar vein, Mitchell et al. (1997) propose a
set of stakeholder identification principles, explicitly recognizing the practical difficulty and
complexity managers face when spotting and prioritizing stakeholder interests. The approach
clearly recognizes that stakeholder concerns may not automatically turn out to be relevant and
that they are not stable over time and across groups. Thus, they require “different degrees and
types of attention” (Mitchell et al., 1997, p. 879).
From a resource-based perspective, scholars have more explicitly explored the effect of stakeholder management on performance. The dominant underlying logic here is that since stakeholders provide valuable, difficult to imitate resources, such as social and human capital, which
involve causal ambiguity, the capacity to engage them effectively will ultimately lead to sustained competitive advantage (Berman et al., 1999; Hillman & Keim, 2001).
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These streams of literature have without doubt led to important insights on how to improve
long-term economic performance. However, they generally still apply an instrumental logic of
stakeholder management, leaving the underlying model of the firm’s role virtually untouched,
despite their claims to a stakeholder-based theory of the firm as underlying conceptual
apparatus.
The same limitation applies to research focusing on the impact of firm activities on the natural
environment (see Etzion, 2007, for a review). Such studies often analyze issues like institutional
pressure and legitimization processes (e.g., Berrone, Cruz, Gómez-Mejía, & Larraza-Kintana,
2010; King & Lenox, 2000; Marquis, Glynn, & Davis, 2007; Sharma & Vredenburg, 1998) and
point to the fact that firms are more likely to converge on and adopt common environmental
standards when there is institutional pressure to do so and/or a need for legitimacy (e.g., Marquis
et al., 2007; Sharma & Vredenburg, 1998). King and Lenox (2000) found, for example, that in the
absence of governmental intervention, there is significant potential for opportunism by chemical
companies. In contrast, when governmental sanctions exist, companies tend to adopt the required,
and often well-accepted, environmental standards.
However, this legitimization process constrains firms’ abilities to innovate in their products
and operating processes. Aragón-Correa and Sharma (2003) observe that “as environmental regulations and certification standards become legislated and concretized, managers have less discretion and less opportunity to invest in the development of environmental capabilities” (p. 77).
Thus, the legitimation process affects the way the organization evolves not only in terms of
“what” it does but also in terms of “how” it does it, that is, how the organization keeps delivering
value over time by evolving its objectives, processes and systems. This is an important point, but
one that scholars have not so far directly examined.
One final limitation in the received literature is that while the dynamics linked with internal
organizational change are often acknowledged at a general conceptual level (e.g., Aragón-Correa
& Sharma, 2003; Cennamo et al., 2012), they are rarely addressed explicitly in theory building
and, especially, in empirical efforts. An explicit consideration of organizational dynamic processes includes, besides the characterization of internal change, also the potential enabling and
hindering effects of organizational and environmental factors and the learning processes that
allow firms to identify and leverage the former, and deemphasize or avoid the latter.
This has produced streams of literature that have evolved separately, forming distinct silos of
knowledge, each focused on specific sustainability issues, from supply chain management to
integrated reporting, from ethical codes to incentive systems to environmental management of
operations, and many more. Yet failing to capture the interdependence among these silos would
inevitably constrain our ability to capture the corporate sustainability phenomenon in its entirety.
Moreover, this has contributed to the feeding of micro-paradigms within these separate streams
of literature via an incremental examination of the issues related to the set of research questions
that are deemed relevant in the respective areas and/or streams. Consequently, core questions
about the micro-foundations (individual and group level behaviors and their psychological antecedents such as motivations, cognitive frames, emotional states, etc.) of internal dynamics that
might facilitate or hinder the emergence of sustainable enterprise models have received relatively
scarce attention, despite the general consensus on their salience.
A Theoretical Framework
The different “silos” in the literature discussed above can be broadly categorized in line with the
four main blocks of explanations they have produced: the strategizing (e.g., Berman et al., 1999;
Hillman & Keim, 2001), the organizing (e.g., Cennamo et al. 2009; Coff, 1999; Hill & Jones,
1992; Jensen, 2002), the capabilities (e.g., Aragón-Correa & Sharma, 2003; Mitchell et al., 1997;
Post et al., 2002),and the relational quality (e.g., Jones, 1995; Husted, 1998; Rowley, 1997)
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Figure 1. Underlying components of the organizational adaptive capacity for enterprise model
innovation.
dimensions of corporate sustainability. Indeed, companies differ in their degree of integration of
sustainability principles within various organizational characteristics, such as (a) strategy making
in the standard processes of allocating resources to growth, competitive or cooperative practices
in pursuit of strategic objectives for the long-term success of the enterprise (e.g., Berman et al.,
1999; Jensen, 2002); (b) organizing processes, such as structures and systems of governance,
coordination, control, management of human resources, knowledge, and relational assets (e.g.,
Hill & Jones, 1992; Luoma & Goodstein, 1999); (c) capabilities connected to the management of
operating activities, their adaptation to the varying changes in the environment, and to the general sensing, sensemaking, and learning processes related to issues unrelated to sustainability
(e.g., Aragón-Correa & Sharma, 2003); and (d) relational assets, such as the quality of relationships with external actors as well as between internal organizational members (e.g. the climate of
trust, respect, and camaraderie; e.g., Cennamo et al., 2012; Jones, 1995; Rowley, 1997).
However, considering these four dimensions separately misses the process through which (the
“how”) sustainability change initiatives emerge, gain momentum within the organization, and are
implemented; in other words, it misses the link between these four different dimensions that
makes organizations able to adapt and change their enterprise model. Accordingly, we link these
four dimensions with what we consider to be the key elements in the dynamic process of learning
and adaptation, namely, the change initiatives companies launch at different levels (individual,
functional, organizational, or even ecosystem level) to move toward sustainability. We refer to
the complex interplay of the change initiatives and the four organizational attributes that underlie
their genesis and deployment as the organizational adaptive capacity. This concept is central to
answering the “how” question in firm evolution toward sustainability, with the change initiative
as the core unit of analysis (see Figure 1).
A change initiative is a project or set of concerted actions undertaken to address and overcome
a sustainability issue—an “event, or trend perceived as potentially having an impact on the organization” (Bansal, 2003, p. 511). The shift to such a unit of analysis is by no means a trivial step,
since it recognizes that (a) the core problem lies in the explanation of the process through which
the firm changes and learns to change (e.g., Winn & Angell, 2000) and (b) the key objects of
these learning and changing processes are internal elements in the firm (e.g., Andersson &
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Bateman, 2000; Bansal, 2003; Sharma, 2000), not externally driven initiatives, typically conducted in collaboration with “outer ring” stakeholders (nongovernmental organizations, etc.), as
described in much of the literature on stakeholder engagement and the resolution of social/environmental problems. For instance, Bansal (2003) and Andersson and Bateman (2000) show that
the way issues are identified, framed, and “sold” internally to the top management team affects
the set of issues that receive attention and legitimation, and hence also the initiation and implementation of strategic change. In a similar vein, Sharma (2000) advances, and empirically supports, the notion that managerial interpretations of sustainability issues impact a firm’s choice of
environmental strategies.
This does not mean that other aspects of the sustainability problem, such as those related to
“why” questions (institutional pressure, internal motivations, etc.) or to stakeholder interactions
aimed at tackling external social or environmental issues, are not relevant or appropriate. On the
contrary, the key assumption behind the framework is that the effectiveness of internal change
processes is a prerequisite for a firm to be capable of responding to external expectations (and
internal aspirations) of a contribution to resolving the maladies of the world (Margolis & Walsh,
2003). In other (cruder) words, unless and until firms learn how to evolve toward (still only partially understood) models of sustainable enterprise, it is unlikely and unreasonable to expect that
they will be able to contribute to solving social and environmental tensions, barring the all-toofrequent cases of laudable initiatives driven by reputational objectives, divorced (almost by definition) from genuine desires to undertake serious and painful internal change processes (Crilly,
Zollo, & Hansen, 2012).
Transitioning toward a sustainable enterprise model involves changes in different elements of
the organization. These changes can be categorized along three different levels of analysis: (a)
firm-wide traits (e.g. purpose and structure of the firm, shared values and beliefs), (b) the functional level (e.g., function-specific processes and systems), and (c) the individual level (factors
such as individual value systems, beliefs, motivations, emotional, and psychological dispositions
that have been recently recognized as micro-foundations of organizational learning and change
capacity (Foss, Heimeriks, & Winter, 2012). An evolutionary perspective places a strong emphasis on “bottom-up” variation as a more distributed and frequent source of organizational change
(Nelson & Winter, 1982; Burgelman, 1991). Following this logic, individuals and groups generate ideas (e.g., Ramus & Steger, 2000) on how to improve existing processes or create new ones
based on their sensing capacity, that is, they identify issues (Andersson & Bateman, 2000) without the support of formal structures, which would recognize the changes ex post, if successful.
This is of particular importance in the examination of sustainability-related change, since the
underlying mechanisms of behavioral adaptation relate to deeply seated convictions about the
raison d’être of the firm (Sharma, 2000), including its role and responsibilities within the communities in which it operates (Cennamo et al., 2012). Shifts in these cognitive frames, shared
values, or even emotional attachments to organizational identity, are very rarely the consequence
of top-down indications, let alone demands (Bansal, 2003; Winn & Angell, 2000). They typically
emerge from a complex set of interdependent stimuli (Sharma, 2000), which encompass personal
or group experiences, coping efforts and interpretations of signals from the top of the hierarchy
(Ramus & Steger, 2000) as well as from peers, subordinates and, crucially, external members of
personal or professional networks (Andersson & Bateman, 2000). These sensing processes are
therefore a critical, albeit so far poorly understood, determinant of the motivational dynamics
that generate the organizational change processes aimed at innovations in the model of the
enterprise.
As discussed above, the central element of the framework is the change initiative. The change
process activated by the initiative leverages the organizational capacity to adapt organizational/
functional and individual traits (i.e., the objects of change) to integrate dimensions of social or
environmental sustainability.2 We expect the sustainability change initiatives to mediate between
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Figure 2. A general framework of sustainable enterprise model innovation.
the motivational factors or external and internal stimuli (why the firm chooses to invest in this
specific type of transition, defined by the firm attributes that are targeted for change) and the
outcomes of the change process in terms of effectiveness in realizing the intended adaptation in
the objects of change (Figure 2).
Importantly, understanding the way organizations transition toward more sustainable enterprise models requires the identification and analysis of the initiatives through which change
occurs. The change initiative can be first analyzed in terms of its key theoretical attributes. For
instance, its level of depth describes the degree to which the change effort aims to reach the most
subtle, tacit and fundamental elements of the firm, such as the shared purpose, rather than limiting its ambitions to more superficial elements such as structural arrangements (e.g. the creation
of a sustainability department) or symbolic artifacts (e.g., sustainability reports). The level of
depth of the initiative, in turn, may be the result of how employees and managers perceive sustainability issues. For instance, Sharma, Pablo, and Vredenburg (1999) find that firms are more
likely to undertake substantive, proactive initiatives (high levels of depth) when managers perceive issues to be opportunities not threats. Indeed, Andersson and Bateman (2000) maintain that
“framing an issue in an appropriate manner can capture the attention of organizational decision
makers and thus shape and direct subsequent issue-relevant activity” (p. 551). This implies that
change initiatives and individual traits are interrelated, since initiatives may eventually affect the
mindset and cognitive frames of individuals; at the same time, an individual’s interpretation of
the firm’s goals and purpose, his/her own role within it, and his/her values, may be a first source
of such change initiatives (e.g., Ramus & Steger, 2000; Sharma, 2000). For instance, Bansal
(2003) contends that “values impede, shape, and filter the change efforts that individuals initiate”
(p. 519).
Organizational evolution is also affected by dimensions of change like the degree of intentionality and formality with which the initiative is proposed and carried out (e.g., Dutton & Ashford,
1993; Mitchell et al., 1997) and the level of consciousness of the results or outcomes of such
initiatives (Foss et al., 2012). These are theoretically meaningful factors that need to be taken into
account, since they can influence in both positive and negative ways the process through which
change initiatives are designed and deployed, and consequently the capacity of these initiatives
to achieve the aspiration levels set by senior executives. For instance, highly intentional and
formal sustainability-driven change initiatives typically have the advantage of attracting more
attention from the members of the organization who are responsible for their deployment, as well
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as those who will manage the relevant units or activities after the completion of the change project. However, by the same token, highly formal initiatives might also attract higher levels of
resistance from those who will deploy the initiative and those who will “receive” it, since the
perception of a formal, top-down, imposition might make it harder to engage their support during
and after the implementation process (e.g., Coff, 1999).
An additional characteristic of the change initiative relates to the degree of engagement of
stakeholders during the various phases of the decision process, since this affects the issue exploration and identification, as well as their interpretation (Andersson & Bateman, 2000; Sharma,
2000). The importance of stakeholder engagement has been argued on the basis that it gives better access to resources (Kassinis & Vafeas, 2002, 2006) and establishes strong networks that can
help the firm develop valuable intangible assets (Berman et al., 1999; Buysse & Verbeke, 2003;
Hillman & Keim, 2001; Jones, 1995; Sharma & Vredenburg, 1998) as well as dynamic capabilities (Aragón-Correa & Sharma, 2003) and improved reputation and legitimacy (Berrone et al.,
2010; Cennamo et al., 2012). Equally important, the quality of external stakeholder relationships
can be effectively leveraged to facilitate the development, selection, and deployment of internal
change initiatives (Sachs & Rühli, 2011; Zollo et al., 2009).
Firms can vary substantially along the dimension of effectiveness in stakeholder engagement
throughout the decision-making process (Post et al., 2002), from the sensing of the external pressures or expectations to act, to the sensemaking of the pressure (Why do they want us to do X?
Should we actually do something about it?), to the generation of alternative ways to respond, to
the selection of the (presumably) most appropriate one, and then during the execution and postexecution learning processes. Indeed, they can vary not only in terms of whether stakeholders are
at all engaged and consulted but also in the way this engagement and the consultation is handled.
Even more importantly for the quality of the outcome of the sustainability initiative is the assessment of the extent to which they are approached in a spirit of partnership, trust and respect (Jones,
1995), as opposed to (more frequently) instrumental logics connected to the management of
constraints or of reputational dynamics.
The Challenge of Studying
Sustainability-Related Change Initiatives
The key question driving the proposed conceptual framework, and the eventual empirical analyses derived from it, is: why do certain firms implement initiatives that are of a “higher,” “deeper,”
or “more engaged” quality than others when facing the same type of external or internal pressures
to innovate and change toward sustainable enterprise models? In other words, what accounts for
inter-firm heterogeneity in the adaptive response to sustainability-related issues? What factors
impact the performance of this adaptive response?
The first challenge in tackling these complex questions consists of the deceptively simple
application of the received wisdom on organizational adaptation and evolutionary change (Baum
& Singh, 1994). Adaptive capacity has typically been viewed, implicitly or explicitly, in terms of
competence to adjust operating routines (Teece et al., 1997), which is only part of the problem in
the case of enterprise model innovation. In fact, the most complex part of the adaptation lies in
the capacity to influence the evolution of behavioral antecedents (beliefs, values, emotional
traits, etc.) at the individual as well as the collective levels (e.g., Donaldson & Preston, 1995;
Margolis & Walsh, 2003). Consequently, studying the impacts of sustainability-related change
initiatives requires an assessment of the extent to which dynamic capabilities (Zollo & Winter,
2002) are developed in a firm, and, more important, if these capabilities can provide an advantage vis-à-vis competitors. Competitors, in fact, might deal with similar sustainability issues but
fail to respond via deep change processes related to, for instance, shared purpose, values, and
identity, as they keep the emphasis of change at the behavioral (operating routine) level. In other
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words, a particularly difficult but central question for the whole debate on organizational evolution and adaptation to sustainability-related pressures is: does the capacity to change and adapt
operating routines help or hinder the adaptation and innovation required for transitioning toward
sustainable enterprise models? And what conditions does it do so?
Other challenges relate to research design issues. Any research program trying to empirically
tackle the question of how enterprise models evolve toward sustainability faces challenges that
stem from several characteristics of the problem. The first one lies in the segmentation of the
scientific inquiry across different levels of analysis. This includes both the uneven magnitude of
effort across the individual, organizational, and societal levels of analysis (where the organizational level is by far predominant) as well as the limited efforts to understand the interdependencies that tie these different levels in a complex set of cause–effect linkages. The individual level
of analysis has been particularly underrepresented in the various domains of sustainability
research, despite the general recognition of the importance of realizing change in cognitive schemas, personal values and emotional dispositions to generate the enduring behavioral change that
will support and magnify efforts at the public and business policy levels. The system level of
analysis is typically understood to mean either the relevant stakeholders connected to a value
chain or those clustered around a geographic location (a town, a region, a nation, or the whole
world). Observing and understanding the factors that facilitate or hinder adaptation in these complex multiparty endeavors poses challenges of accessibility of information, of comparability of
observation, and even of disclosure, given the politically charged nature of the debates.
The second (related) problem has to do with the segmentation across disciplines in our scientific understanding of the problem. Sustainability has typically been studied in scholarly silos
(environmental science, biology, climatology, geophysics, environmental economics, development economics, sociology, demographics, health care and medicine, management, political science, behavioral and decision science, psychology, and neuroscience, etc.). It is clear, however,
that the answers to the questions formulated above can only be tackled if thought leaders in all
the relevant scientific domains learn to collaborate in joint programs of scientific inquiry (Holm
et al., 2013; Ostrom, 2009). This is a tall order. We, as social scientists, and as management scholars in particular, are generally not accustomed and untrained to conceptualize and design, let
alone deploy, these complex scientific ventures. More on this below.
A third problem has to do with the lack of engagement of the “objects” of observation
(Waddock, 2004). This limitation stems from the fact that scientific endeavor in the context of
sustainability science has typically been conducted without the active engagement of the key
decision makers responsible for the specific set of decisions and activities that are subject to
change interventions (policy makers, business leaders, civil society leaders, etc.). This might
be justifiable in a research context with established paradigms and with high levels of replicability of processes and predictability of outcomes. Unfortunately, none of these conditions are
met in the context of transitions toward sustainable enterprise models, and are particularly
absent in the case of transitions toward sustainable socio-economic systems. Under these conditions, the active engagement of the (sentient) “objects” of research is a precondition for the
success of the scientific enterprise, since progress is dependent on effective experimentation,
with rapid feedback and learning loops, of alternative change approaches and eventually
deployment to scale (Snowden, 2002; Snowden & Boone, 2007; Van de Ven, 2007).
This brings us to the final limitation faced in designing appropriate research programs capable
of tackling the questions identified above with the required rigor, depth, and comprehensiveness:
the lack of experimentation on alternative interventions. The typical methods of scientific inquiry
that characterize research work in most sustainability knowledge domains rely essentially on the
collection and use of data from archival sources for ex post validation of theoretical modeling. In
some rare cases, research has relied on direct observations of phenomena as they unfolded, to
both validate theoretical models and develop novel concepts and insights. Most problematic,
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though, is the limited combined use of simulation and experimental methodologies to identify the
effects of interventions aimed at behavioral change in the various sustainability domains and
across the relevant levels of analysis (Sterman, 2012) This is surprising, because not only is the
experimental method acknowledged to produce the highest quality of evidence on the efficacy of
interventions, it also has the most direct link to the production of usable knowledge and tools for
the business and public policy actors responsible for the actual transitions and the quality of their
results.
So, how can we, as a community of management scholars interested in questions related to
organizational evolution toward sustainable enterprise models, study the phenomenon of interest
despite these limitations?
The first cognitive shift that is required in our way of framing the issue is to start thinking in
terms of only a few, large-scale, collaborative, multidisciplinary programs, instead of many (hundreds of) small, independent, narrow efforts by two to three individuals. A program-level way of
thinking (and doing) addresses, by definition, a number of the limitations listed above. It allows
the development of a cross-disciplinary, multimethodological research agenda, with all relevant
competences and knowledge domains fruitfully engaged and deployed both in its overarching
design and in the execution of its modules (at the project unit level). It also offers the scale advantages necessary to access the financial and human resources required to support the work: the
main research agencies (e.g., the various national science foundations, the European Commission,
etc.) and major foundations invest more and more at this level and scale of research effort, and in
this type of cross-disciplinary and multimethodological design.3 The other component of this
mental shift relates to the fact that the time horizon and planning logic required for a research
enterprise capable of tackling these questions need to be significantly different from the normal
assumption in the context of a standard management research project. Not only does the relevant
time horizon usually become a decade, rather than 1 to 2 years, but the planning and organizational efforts also become much more emergent and evolutionary in nature. The community (or
at least the group of initiators) begins with a compelling set of research questions and a broadly
defined agenda, and then adjusts the content over time as resources become available (usually
with some strings attached which require adaptation) and new scholars join the group with their
own interests and skills.
This is by no mean a utopian scenario, by the way. It has already been done several times in
different scientific domains, and in some of them it is now actually more the norm than the
exception. In particle physics, for instance, a community of about 3,000 scholars from all over
the world worked together for 20 years to design and build ATLAS, one of the giant “cameras”
used to capture particle collisions in the CERN accelerator. They are now publishing some of the
results from the current experiments in articles with 3,000 authors, recognizing each and everyone’s effort over the two decades. Similar traits can be seen in the human genome project in
biology, or with space-related projects (space travel, telescopes, remote sensing, mapping, communications, etc.). The magnitude of the financial commitment involved is clearly what required
these communities of scholars to group together and figure out rules and governance mechanisms
that matched the needs of the research program as well as the individual academic careers and
home institutions.
In addition to this key cognitive element with its own radical transformation implications for
our academic institutions, the design of the research enterprise needs to integrate two components. First, it has to leverage diverse and complementary methodologies (and even epistemologies) in a logical flow of modular, yet linked activities. How do we blend archival, clinical,
simulation-based and experimental designs in a coherent, synergistic, program of activities that
support each other’s effectiveness via input–output linkages or parallel comparative efforts?
Second, it requires a constant engagement and interaction with the main objects of scientific
inquiry. These go beyond business managers and include local, national, and supranational
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authorities and policy makers, industry associations, representatives of key stakeholders (e.g.,
unions, consumer associations, civil society organizations, etc.). We will obviously also need to
“walk the talk” in our own research, especially if we intend to study the shift toward a stakeholder-based view of the firm. Are we ourselves willing and capable to engage all the key stakeholders that are relevant to the success of our research enterprises?
An Illustrative Case
To illustrate the case in point, we would like to use the Global Organizational Learning and
Development Network (GOLDEN) for Sustainability research program4 as an example. This
program pursues a research question that is in line with the overarching theme discussed in this
article, since it was created to study how firms evolve toward sustainable enterprise models. The
overarching question is broken down into several subquestions that were manageable in terms of
developing theoretical and empirical contributions. They address, for instance, the development
of sensing, change, and learning capabilities, with additional research questions relating to the
identification of factors that influence (positively and negatively) the capacity of firms to develop
these capabilities.
The research questions have been tackled by a large community of more than 100 scholars
working in 43 institutions across the five continents, with expertise in most management domains
(strategy, organization, human resource management, innovation, in addition to corporate social
responsibility, environmental management, business ethics, etc.), other business disciplines
(accounting, marketing, etc.), relevant social sciences (sociology, political science, economics,
psychology) as well as natural (environmental and earth) and neurocognitive sciences. The fact
that such a broad community of scholars could even be assembled, let alone gotten to work
together, brings evidence to the fact that the current limitations to the standard research logics in
our field might be the results of self-imposed cognitive boundaries, rather than objective barriers
to large-scale, multidisciplinary, research collaboration in our fields of inquiry.
However, the relevance of this program as illustrative case goes beyond the assembling of the
research community necessary to address the challenges outlines above. It relates to the way the
community is actually operating.
Principles of Collaborative, Engaged, Research Design
From a research design standpoint, the program started on the basis of a fairly standard combination of large-scale archival data collection and categorization protocol focused on sustainability
initiatives with the development and deployment of a clinical data collection protocol aimed at
reconstructing the evolution of sustainability in participant companies by focusing on the historical accounts of strategically relevant sustainability efforts (to the extent there were any). The
clinical research protocol was particularly complex, with several phases of interviews to the relevant functional areas, followed by stakeholders’ interviews, then again internal interviews with
senior managers in charge of business units, subsidiaries or country managers, and finally a broad
survey of a representative sample of the management population. Companies were engaged on
the basis of an interactive process of assessment of their past endeavors, and the production of
benchmarked reports identifying the factors that influenced in positive and negative ways the
impact of their sustainability initiatives.
However, it soon became clear that this was not sufficient to engage corporations with the
sustained depth needed to tackle the research questions. Ex post reconstruction of past initiatives
had several, well-known, design limitations, and could generate only limited interest from managers preoccupied with current sustainability issues and possible ways to tackle them. The solution for both the academic and the practitioners’ quest came by adding a critical element to the
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research program: field experimental designs to assess the effectiveness of currently ongoing
change interventions or designed ad hoc to tackle focal sustainability issues of strategic
relevance.
The experiments would be designed and monitored by the scholars in collaboration with relevant management at the participant company. Their objective was to identify the factors that
might explain the development of sustainability-driven change capacity, and followed scientific
design logics (e.g., randomized controlled trials) to the maximum extent possible given the contextual conditions. The baseline and postintervention impact measurements would also be jointly
selected and collected by the scholars involved. A confidential report on the quality of the deployment process as well as the impacts of the interventions would be delivered to the company, so
that a rapid feedback loop could be established and new rounds of reflection, deliberation, and
deployment eventually launched and observed by the scholars involved.
In some cases, such as those of sustainability-related training programs, experimental conditions occur naturally. Here, a randomization of individual participants and the creation of both
active and passive types of controls are relatively easy to design and deploy. In other cases, this
is much more difficult to achieve, but still feasible. Locke’s (2013) experimental work on the
introduction of sustainability-oriented supply chain management techniques at Nike’s operations
in the Far East is a great case in point. When the change intervention is already in motion at the
time of the experiment, the researcher has to set up the experimental design conditions and measurement processes (to the extent possible) by leveraging the interventions and the measurements
that are already in place. However, even in such cases, sequencing and randomizing the selection
of organizational units in which the sustainability-related interventions are carried out offers the
possibility of adequate control conditions.
The advantage of the experimental designs is that, in principle, all the requirements for successful and impactful, engaged scholarship appear to be met. Management and scholars can push
the frontier of empirical work in their domains, thereby joining the recent trends in behavioral
economics (Karlan & Zinman, 2011) and sociology (Sampson, 2008) of carrying out the experiments in the field and testing theories with natural experiments and/or randomized trials
(Banerjee, Duflo, Glennerster, & Kinnan, 2009; Duflo, Beaman, Chattopadhyay, Pande, &
Topalova, 2009). At the same time, managers in the participant companies will not only benefit
from new knowledge about the general effectiveness of change interventions that they might
consider doing. They will also have actually experienced the change directly, albeit on a pilot
scale and in experimental conditions. Likewise, the analyses will be tailored to their own particular context, interventions, and impacts—a far stronger proposition for attracting (and justifying)
deep and sustained engagement.
Experiments at the individual and organizational levels designed in key activities and functions of the firm, can already build on a large stock of academic and managerial expertise in the
study and execution of change initiatives. This is not the case, however, for the ecosystem level
of analysis, which presents a much greater challenge, not only in the design of precise, controlled
and randomized trials but also in the conceptualization and communication within and across the
academic/practitioner divide. Part of the problem lies in the fact that literature on large system
change is still in a relatively embryonic stage, especially in the mainstream academic communities. Most of the work that has already been done is based either on simulation models or on
single case qualitative assessments. This compounds the problem of designing rigorous experiments at this level of analysis.
The GOLDEN program tackled this design challenge in two different ways. First, it created a
subcommunity of scholars and practitioners with experience in these types of change efforts,
with the explicit aim of not simply sharing experiences and insights but of actually co-developing
an experimental approach to study the deployment of currently ongoing large scale change initiatives. These initiatives typically focus on tackling one specific sustainability issue (e.g., the
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United Nations–led “Energy for All” or the “Food Lab” initiatives, the “Equator Principles” in
banking, etc.). Second, by creating integrated, multilevel, experiments within a given community
(e.g., a small town or a village) in which the socioeconomic system revolves around a single, or
very few, enterprises. Take, for example, a mine or a manufacturing plant in a developing country
or a sparsely populated area in a developed country. The experimental designs here would be
drawn on the basis of a portfolio of interventions that include, in addition to a set of internal
changes similar to the ones described above (but multiple interventions across functions, rather
than isolated to a single function), a package of community-level initiatives driven by actors
external to the enterprise (e.g., local government, utility providers, civil society organizations,
etc.) aimed at enhancing the sustainability of their socioeconomic system. The idea here is to
assess the potential impact of combined, synergistic, change initiatives achieved through the
combined strength of the business, local government, and civil society components of the community. By comparing these types of integrated, experimental, interventions with those carried
out solely within a business organization, it should be possible to assess the relative magnitude
of the synergistic gains from private–public coordination and collaboration in moving the socioeconomic system toward a balanced and environmentally sound economic and social
development.
Discussion and Conclusion
Nowadays, sustainability is central both to management agendas as well as to debates within and
across several of the social sciences (e.g., economics, political science, sociology), including
management research and practice. The core problem for organizations and society at large is
how to change a firm’s operations, goals and overall business model to meet the demands and
expectations of its external stakeholders as well as the aspirations of their internal counterparts.
The adaptation of a firm’s purpose, for instance, of the kind and magnitude implied by the current
debates on corporate sustainability requires significant adjustment to both the content and process of strategic decisions on growth, competitive interactions, and resource allocations, since
these decisions now need to be made not just for the benefit of shareholder, but for a plurality of
stakeholders, with alternatives evaluated along parameters of environmental and social impact in
addition to economic profitability. It also requires the adaptation of governance mechanisms:
from the composition and role of the board of directors to the structural arrangements across and
within all key functions in the firm. Even more critically, it requires fundamental change in the
most subtle aspects of the organization, such as its shared values and beliefs, the emotional dispositions and motivations of its members, and the taken-for-granted notions and artifacts that
make up the social fabric and culture of the organization.
The transition from identifying the sustainability challenge to its resolution is far from trivial
in both descriptive and normative terms. There are at least two reasons for this. First, it requires
a strong motivation on the part of a firm to engage in what is likely to be a fundamental transformational process that touches not only its operating routines but also all the “quasi-genetic” traits
(Cohen et al., 1996) of the organization, from its strategies to its systems, from its cultural traits
to its shared values and emotional dispositions. Second, it demands a much deeper understanding
than we have at present of the processes through which this fundamental transformation in the
purpose and foundational model of the enterprise could happen in effective and efficient ways. It
requires the identification of the enabling and hindering factors behind the success of these transformational processes, and (in a more normative perspective) an understanding of which approach
to the change challenge might work under what conditions.
In this article, we put forward the idea that a fruitful way to tackle this challenge requires the
adoption of the change initiative as the core unit of analysis, and to focus on some of the theoretically and managerially meaningful dimensions that influence its genesis, its deployment and its
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performance. Furthermore, a framework linking the evolution of the change initiative to the
strategic and organizational processes, supported by capabilities and the relational capital of the
firm, was offered for future theoretical development and empirical investigation. Our hope is that
it will allow sustainability scholars to recognize first, that the core problem lies in the explanation
of the process through which firms change and learn how to change (e.g., Winn & Angell, 2000);
and, second, that the key objects of these learning and change processes are internal elements of
the firm (e.g., Andersson & Bateman, 2000; Bansal, 2003; Sharma, 2000), rather than connected
to the external stakeholders of the firm.
On the empirical validation front, the proposed framework presents several challenges related
to both the multidisciplinary and context-dependent content, as well as the engaged and experimental nature of the research process and design. The example of the GOLDEN program served
the purpose to illustrate how some of these challenges could be addressed, often through painful
learning and willingness to reconsider and adapt the content and the process of the research.
More generally, though, it shows how ill equipped the community of management scholars is to
enter into meaningful dialogue both with scholars in related social and natural sciences, as well
as with the key actors of the sustainability phenomenon: managers, policy makers, community
and civil society representatives, among others. These tacit cognitive boundaries are of general
concern for the capacity of management scholars to gain the voice and the influence that they
might deserve on debates concerning the competitiveness of firms, sectors or countries. They
become even more problematic, and serious barriers to meaningful process, if the concern is
about the role of the business enterprise in the sustainable evolution of our economic system.
On the brighter side, there are excellent advancements in what is termed sustainability science
(Clark & Dickson, 2003) and the study of the requirements for large ecosystem resilience and
environmentally sustainable growth. However, very little of those advancements have perculated
in management research, and especially in the context of cross-disciplinary collaborative research
designs. Still, both communities of sustainability scientists and corporate sustainability scholars
are increasingly aware of each other’s role, not only in the definition of the sustainability problem
but, possibly even more, in the search for effective and sustainable solutions. The conceptual link
is based on the general recognition of the fact that business organizations play a fundamental role
in determining the evolution of the social system toward (or away from) sustainable development
paths. Whereas business activity is recognized (at least partly) as the root cause of the social and
environmental crises that the world is currently facing, the business firm, as an institution, is also
acknowledged as being one of the most powerful potential sources of the solutions to (most)
sustainability issues, since it controls some of the key resources required to tackle the sustainability challenges, including technological innovation, organizational capabilities and political/
relational influence on civil society and societal institutions like government.
Moving from conceptual recognition to factual collaboration, however, is no small feat. No
matter how strong is the logic for cross-disciplinary, large-scale, collaboration in empirical
designs focusing on interdependent experimentations on the effectiveness of change interventions within and outside corporate boundaries, the reality of the current state of play is embryonic, at best. We are missing many of the required complementary assets for such endeavors to
materialize and succeed: from the incentives and capacity for scholars to undertake, or even
participate in, such complex and high-risk projects, to the deep and sustained engagement of
corporate, government and civil society actors, required to ensure feasible design and accurate
deployment. Interestingly, financial resources from national and international resource agencies
and private foundations might not be one of the constraints, and be actually available for such
bold, potentially high-impact (scientific and societal) endeavors, especially if the cross-disciplinary collaboration is fruitfully embedded in the design.
Besides the cross-disciplinary and engaged scholarship nature of the response to the challenge, we have highlighted the importance of leveraging the synergistic potential of multiple,
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255
complementary, methodological approaches (archival, clinical, experimental data) and even
epistemologies (inductive and deductive designs). The expectation is that such integrated system
of methodologies would not only enhance the quality of the output of each of its components, it
can also be fruitfully leveraged to generate tools and insights for business, policy makers, and
other key actors in the sustainability domain. These actors will be engaged not only at the design
and observation/measurement stages but also in support the analysis and sensemaking of results,
the identification of alternative (or consequent) paths of action, and the improvement of future
strategic decision-making output. Furthermore, such system of integrated methodologies could
support decision making by providing internally coherent and empirically well-founded evidence, based on direct experience of impacts generated by carefully selected and rigorously
designed experimental change interventions. It can also be expected—and this is a crucial aspect
for the purpose of the scientific inquiry at hand—to generate the cognitive shifts and behavioral
changes that are necessary to move the organization and its ecosystem toward more sustainable
patterns of development.
The road toward a comprehensive study of organizational and ecosystem evolution toward
sustainability appears long, winding and only partially visible ahead of our community of scholars. Nonetheless, our hope is that this paper could serve at least as a stimulus to undertake the
journey, with increasing levels of attention to the collaboration with fellow travelers from different but related disciplines. In fact, any alternative scenario, different from significant collective
advancement on this scientific journey, is way too bleak for the future generations, of scholars
and of world citizens, to even consider.
Acknowledgments
This article is the result of many discussions had with the participants in the Global Organizational Learning
and Development Network (GOLDEN) for Sustainability research program over the past 2 years. We would
like to thank all GOLDEN scholars and the participants at the community workshops at Bocconi University,
WU Vienna, Boston University, and MIT, as well as the symposia and Professional Development Workshops
at the Academy of Management and Strategic Management Society in 2011 and 2012, respectively, for their
support in developing these ideas and the entire research program. In particular, the contributions by
Andrew Van de Ven, Ed Freeman, Alberto Aragon Correa, Frank Brueck, Stefano Brusoni, Arnaldo
Camuffo, Tim Devinney, Bob Eccles, Rebecca Henderson, Christopher Lettl, Richard Locke, Joe Mahoney,
Chris Pinney, Jim Post, Joan Enric Ricart, Sybille Sachs, Tim Smith, Mike Tushman, Steve Waddell,
Sandra Waddock, and Simon Zadek have been particularly important for the development of some of the
ideas presented in this article. We are also grateful to Mark Starik and two anonymous reviewers for their
helpful comments on previous drafts of the article. Of course, the full responsibility for remaining errors or
omissions remains on us.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or
publication of this article.
Funding
The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Research funding from the Italian Ministry of University and Research (PRIN program
project number: 201078ZTXE_001), Bocconi University, WU Vienna, the NorthStar Initiative of the
University of Minnesota, the Academy of Business in Society (ABIS) additionally, ENEL, COREPPLA,
Foundation, Microsoft Corporation, Telecom Italia, and Unicredit is gratefully acknowledged.
Notes
1.
An enterprise model goes beyond the usual notion of a business model and includes organizational
dimensions like shared purpose, shared values, and culture. This distinction is important because it
256
2.
3.
4.
Organization & Environment 26(3)
highlights the complexity of the challenge involved in integrating principles of sustainability in the
“softer” elements of the enterprise model.
The assumption is that the dimensions of economic sustainability are de facto integrated in the standard
design of business firms’ strategies, heuristics, routines, and even cognitive frames. The adaptation
problem is thus bounded to the integration of the social and/or environmental dimensions of the goals
and performance of the firm.
See, for instance, the $25 million grant recently provided by USAID to an international consurtium led
by Michigan State University to study the sustainability of food supply chains, and the C$25 million
grant provided by the Canadian government to Simon Frazer U. to study sustainability in extractive
industries at a global level.
The GOLDEN (Global Organizational Learning and Development Network) for Sustainability program was launched in early 2010 by a group of scholars and institutions based on the principles of
engaged scholarship (Van de Ven, 2007), with key funding from the Center for Research in Organization
and Management (CROMA) at Bocconi University and WU Vienna University of Economics and
Business, and additional support from the European Academy of Business in Society, Microsoft, and
Telecom Italia. For more information on the program, see www.goldenforsustainability.org.
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Author Biographies
Maurizio Zollo is the Dean’s Chaired Professor in strategy and corporate responsibility at Bocconi
University, visiting professor at WU Vienna and MIT Sloan School of Management, and the academic
director of the GOLDEN for Sustainability research program (www.goldenforsustainability.org). His
research focuses on corporate strategy, corporate development (M&A and alliances), organizational learning, and sustainability. He currently serves as president of the European Academy of Management. He has
also cofounded the Stakeholder Strategy Interest Group of the Strategic Management Society.
Carmelo Cennamo is an assistant professor of strategy and entrepreneurship at Bocconi University since
September 2010. He received his PhD in strategic management from IE Business School. His research currently focuses on competitive dynamics and the orchestration of platform ecosystems in two-sided markets,
and on firm-stakeholders management.
Kerstin Neumann is senior researcher at the Center for Research on Innovation, Organization and Strategy
at Bocconi University and a member of the research committee of the GOLDEN for Sustainability research
program. She received her PhD in business administration from WU Vienna University of Economics and
Business. Her research focuses on (sustainable) external corporate development activities (alliances, M&A)
and the integration of the stakeholder theory of the firm in the study of corporate growth.