Abstract
Although scholars agree that local context is critical in a firm’s commitment to sustainable development, questions remain about how this context plays a role in achieving simultaneous goals of sustainable community development and firm strategic success. By sampling two groups of firms differentiated according to their adoption of a weak or strong orientation to sustainable development, this author searched for relevant explanations from the local context that help to answer this very question. Results point to indigenous resource and institutional capital, the combination of which assists the firm in its ability to embed sustainable development. Whereas more tangible forms of capital assist in the strategy implementation process, less tangible forms of capital influence the strategy formulation process. What is more, firms tended to progress sequentially in the appropriation of these forms of capital as a result of the strengthening of the relationship with contextual stakeholders.
In the midst of escalating battles between poor farmers, peasants, and indigenous populations on one side and corporate and government interests on the other, sustainable development was conceived and defined by the Brundtland Commission in 1987 as development that meets the needs of the present without compromising the ability of future generations to meet their own needs (World Commission on Environment and Development [WCED], 1987). The ambiguity surrounding the concept, however, resulted in interpretations that many argue derailed its original purpose (Banerjee, 2003; Fergus & Rowney, 2005; Kallio, Nordberg, & Ahonen, 2007; Stubbs & Cocklin, 2008). Under what some define as the “weak” interpretation of sustainable development (Kallio et al., 2007; Stubbs & Cocklin, 2008), economic development and market fundamentalism remain the priority, the indirect result of which are expected to alleviate indigenous community issues that initially spawned the concept (Banerjee, 2003).
Many scholars have argued that the “weak” interpretation remains Western centric, exploitative, and ignorant of unique variants of the South that are required for sustainable development (Banerjee, 2003). At the business level, critics have raised questions about whether company actions truly represent sustainable development when those in the local context are not part of determining whom or what needs to be sustained (Banerjee, 2003; Escobar, 1995; Peet & Watts, 1996). Under the weak interpretation, company contribution to community welfare is typically philanthropic in nature with low levels of corporate–community interaction (Muthuri, Chapple, & Moon, 2009). In response, scholars advocating a “strong” interpretation of sustainable development encourage greater incorporation of the local context in firm strategy and operations (Banerjee, 2003; Hart, 2005) and warn of the danger of presuming universal application of models and initiatives that were identified as successful in unique locations (Easterly, 2006; Elkington & Hartigan, 2008). This warning is particularly important in the global South where context is especially idiosyncratic (Idahosa, 2004) and where government corruption, partial media, and poor social and physical infrastructure have left the private sector as an important and perhaps atypical agent in promoting sustainable development (Annan, 2002; Bansal, 2002; Hart, 2005; Prahalad & Hart, 2002; Valente & Crane, 2010). By local context, the author means the individuals, community-based groups and organizations, institutions, norms, and culture that define the firm’s operating environment and distinguish it from other contexts. A firm that adopts a strong interpretation of sustainable development more deliberately links the local idiosyncrasies of its operating context to its core strategy and therefore works toward what many have called sustainable community development (Bridger & Luloff, 1999; Goddard, 2005; Muthuri et al., 2009).
Yet questions remain around how local context matters to the firm in its efforts to adopt a strong interpretation of sustainable development. In an attempt to answer this very question, this study examines the interface between six firms and their respective local contexts in countries of Africa. Whereas three firms adopted a weak interpretation of sustainable development where community-based social and ecological activities remained extraneous to strategy and operations, the remaining three firms adopted a strong interpretation where community-based social and ecological activities were embedded in its strategy and operations. On the basis of preliminary findings that confirmed the relevance of local context as a key differentiator in these two extreme sets of cases, the author analyzed the data with a particular focus on the role of local context in the firms’ respective strategies and their ability to contribute to sustainable community development. By teasing out similarities and differences across these cases, the author presents a framework that conceptualizes the role of indigenous resource and institutional capital in a firm’s efforts to adopt a strong interpretation of sustainable development. From this framework, the author puts forward six overarching propositions, three of which hone in on the role of different forms of capital and the remaining three propositions describe how these forms of capital interact with a specific emphasis on the sequence in which they become relevant to the firm and their collective role in the strategy formulation and strategy implementation process. Together, they provide important insight into the highly interdependent relationship between firm strategy and sustainable community development.
Theoretical Background
In 1995, the Academy of Management published a special topic forum on “Ecologically Sustainable Organizations,” where a number of provocative articles were published that warned of the unsustainable nature of present operating philosophies of business (Gladwin, Kennelly, Krause, & Kennelly, 1995; Purser, Park, & Montuori, 1995; Shrivastava, 1995a; Starik & Rands, 1995) and the need for a greater incorporation of a worldview that better reflects the social and ecological issues of our time. Since this special issue, both the academic and practitioner fields have worked to understand how business can, and whether they should, play a role in sustainable development, a concept that remains highly ambiguous (e.g., Hart, 2005; Hart & Milstein, 2003; Prahalad, 2005; Prahalad & Hart, 2002). But there remains strong disagreement on the interpretation of the concept where scholars have implicitly or explicitly classified sustainable development using a weak-strong dichotomy (e.g., Kallio et al., 2007; Stubbs & Cocklin, 2008).
Under the weak interpretation of sustainable development, self-interested agents justify the exploitation of intra- and inter-generational equity and the natural environment for the broader benefits of economic development (Davidson, 2000; Gladwin et al., 1995; Purser et al., 1995). Under this interpretation, sustainable development is corralled under the dominant economic paradigm empowered by a rational, instrumental, and science-based logic that precludes moral or ethical values and inclusive decision making (Banerjee, 2003; Fergus & Rowney, 2005; Kallio et al., 2007; Lele, 1991; Midgley, 1992). In Africa, for example, economists advise vigorously for neoliberal macroeconomic policies such as the privatization of public services, a focus on systemic exports, and an enabling environment for multinational corporation foreign direct investment as somewhat of a combined silver bullet for economic development that can also mend social and governance issues of the communities in these regions (The Economist, 2010; Leke, Lund, Roxburgh, & van Wamelen, 2010; McKinsey Global Institute, 2010).
Scholars criticize this interpretation as imperialist in nature, guided by Western and economic views of a social order (Harvey, 1996), based on a “unitary system of knowledge” and science (Banerjee, 2003; Escobar, 1995, p. 71), predicated on pre-defined notions of what is to be sustained (Gladwin et al., 1995; Hart, 1997), and based on underpinnings of global survival regulated and controlled by international governing bodies (Visvanathan, 1991) to be imposed on the global South. The ideology underpinning this interpretation does not consider local community cultures (Esteva, 1992) and the marginalization of traditional knowledge of communities and does not appropriately elaborate on the notion of human needs and wants (Kirby, O’Keefe, & Timberlake, 1995; Redcliff, 1987). In its translation to the organizational level, the domain of corporate social responsibility is assessed by economic criteria primarily (Banerjee, 2003) that, if inclusive in any way, keeps relationships with nongovernmental organizations (NGOs) and communities ambiguous and is “framed by categories furnished by international institutions such as the United Nations and the World Bank” (Banerjee, 2003, p. 164). Akin to the logic adopted by McKinsey Global Institute (2010) and The Economist (2010) whereby development in Africa is contingent on the introduction of Western business practices that presume an already established economic enabling environment, the weak interpretation shows little regard for the idiosyncrasies of the firm’s local context and therefore results in token community investment initiatives that do not contribute to the sustainability of these communities or corporate strategy (Banerjee, 2003; Chapple & Moon, 2005; Easterly, 2006; Elkington & Hartigan, 2008; Hart, 2005; Muthuri et al., 2009).
The strong interpretation of sustainable development has instigated greater attention to those local idiosyncrasies that characterize business contexts, particularly those in the global South, where social, governance, and ecological issues are pervasive and firm’s strategic success largely hinges on their direct contribution to the social, economic, political, and ecological welfare of the communities in their surrounding context (Hart, 2005; Valente & Crane, 2010; Wheeler et al., 2005). Under this interpretation, development is tempered by constraints imposed by the ecological environment and a moral compass meant to preserve spirituality and cultural values within and across generations through participatory, transparent, and democratic processes (Banerjee, 2003; Bebbington, 2001; Carvalho, 2001; Davidson, 2000). This perspective extends narrowly focused definitions of sustainable development to include the preservation of culture, social values, spirituality, indigenous lands, and belief systems for the purpose of sustainable community development (Goddard, 2005). Translated to the firm level, Hart introduced the concept of native capabilities, which refers to a firm’s ability to become indigenous and “to move beyond ‘alien’ strategies imposed from the outside” (p. 23). Wheeler et al. similarly introduced the sustainable local enterprise network model, which involves a dense network of contextual actors “working in a self-organized way to create value in economic, social, human and ecological terms” (p. 35). These scholars warned against cookie-cutter solutions and advocated a greater incorporation of livelihood resources in sustainable development (United Nations Development Programme [UNDP], 2004). Easterly (2006) heavily criticized the top-down approach of aid advocated by Jeffrey Sachs (1998) and others that presume that aid projects can be replicated across multiple contexts, whereas Elkington and Hartigan (2008, p. 141), in their discussion of social entrepreneurs, highlighted the criticality of context when they explained:
Successful social innovators . . . have spent decades designing, implementing and referring demand-driven approaches to complex social and environmental problems. Those that have studied the dynamics of scaling and replication call for “anything but a cookie-cutter process.”
There is thus consensus by leaders in the field that local context is a critical variable in a firm’s attempt to embed a strong interpretation of sustainable development into its core operations and strategy. Put differently, sustainable development hinges on the simultaneous and highly interdependent process of firm strategy formulation and community development. Doing so is particularly important in regions where the private sector has emerged as an important actor in filling gaps in community welfare left by government (Scherer & Palazzo, 2007; Valente & Crane, 2009). This extended political role of business represents an ideological twist to the notion that business should remain focused on economic wealth creation and leave ensuing social and ecological externalities to government. Many African governments, for example, lack the capacity to address social and ecological issues implying that any ambitions of business to operate in these environments should be met with expectations to play governmental roles (Matten & Crane, 2005; Palazzo & Scherer, 2006; Valente & Crane, 2010; Visser, 2006). Operating in these environments therefore requires a greater sensitivity to creating business models and processes that incorporate multiple and often conflicting objectives, recognize the limitations of an exclusive focus on economic development in the sustainability of local communities, and take greater ownership for the social and ecological externalities associated with business in industrialized nations (Valente & Crane, 2010).
Yet despite the growing consensus among scholars on the need for the private sector to effectively incorporate local community context in the quest for sustainable development (Banerjee, 2003; Easterly, 2006; Hart, 2005; London & Hart, 2004), we know very little about the ways in which local communities are relevant to the firm strategically and how they play a role in sustainable development. Although the sustainable livelihoods framework has emphasized the role of a combination of livelihood resources, including natural, economic, human, and social capital (UNDP, 2009; Wheeler et al., 2005), it remains at the broader socioeconomic or network level of analysis and is limited in its ability to predict how contextual forms of capital assist in a firm’s efforts to link strategic outcomes with those of sustainable development. The author therefore proposes the following research question:
Research Question: How does local context contribute to a firm’s ability to embed a “strong” orientation of sustainable?
This question is important for at least two reasons. First, given the increasing pressure to consider local context in a firm’s definition of sustainable development, understanding its idiosyncrasies may provide important clues about what is and what is not relevant for this objective. As several scholars have explained, social responsibility remains top-down and static, neglecting the attitudes and reactions of internal and external audiences (Goddard, 2005; Muthuri et al., 2009; van der Voort, Glac, & Meijs, 2009). A more interpretive effort by the firm to understand and incorporate its local context as a source of influence and benefit has grown increasingly relevant in our understanding of private sector sustainable development.
Second, in light of a firm’s natural need to create strategic value through competitive differentiation, it is important to understand the relationship between contextual factors present in communities and firm’s competitive advantage (Porter & Kramer, 2006, 2011). Van der Voort et al. (2009) argued for a more interpretive effort for strategy when building in social responsibility, which requires greater consideration of resources and institutional capital on the ground, whereas Bowen (2007) explained that having a corporate social strategy is not the same as implementing one and that it “may be more complex, contradictory, political and contested than simple top-down explanations of corporate strategy might suggest” (p. 109).
To explore this research question, the author draws upon a broader research program that has looked at how firms in developing regions of Africa have embedded sustainable development into their operations and strategy. Consistent with extant literature, preliminary analysis revealed the importance of local context. The author then revisited the data to understand this phenomenon in greater detail by coding how and why local context was relevant to the firm’s strategy and how it assisted in the contribution to sustainable community development.
Method
To best answer this question, the author used a qualitative, inductive, comparative case research design that followed a replication logic; that is, cases were treated as a series of experiments, each serving to confirm or disconfirm the inferences drawn from the others (Eisenhardt, 1989; Yin, 2003). The author chose a qualitative approach because the phenomenon of interest is largely unknown in the management field and any theoretical testing done using a quantitative study may overlook the rich explanatory variables that explain how local context matters in a firm’s effort to adopt a strong orientation to sustainable development. Consequently, the research goal here was to build theory through in-depth interviews and observations rather than to test theory.
The author divided the research process into two major phases. Because the degree to which the “strong” interpretation of sustainable development is adopted by the firm was not identified a priori, the first exploratory phase was instrumental in uncovering different ways firms approach sustainable development. Over a 6-week period during March and April of 2005, the author interviewed internal and external stakeholders of six firms that faced substantial social, ecological, and economic issues in their local operating context: three in agriculture and three in manufacturing. Preliminary data analysis revealed that two of the cases exhibited behavior consistent with the “weak” interpretation of sustainable development, two exhibited behavior consistent with the “strong” interpretation, and the remaining two were somewhere in between. That is, the first two firms viewed community sustainable development to be an indirect consequence of their pursuit of economic value creation and the second two firms viewed the local community context to be inextricably tied to the welfare of firm operations and strategy.
The author consulted two literatures to help clarify these differences more theoretically. The first was the sustainability paradigm literature where scholars have alluded to principles to which organizations adhere to demonstrate adoption of the strong interpretation of sustainable development (Gladwin et al., 1995; Purser et al., 1995; Shrivastava, 1995b; Starik & Rands, 1995). To identify these principles, the author created an inventory of definitions and properties of the sustainable development concept from a range of scholarly sources. The author used theme analysis to tease out similarities and differences across the inventory that contributed to categorized terms and phrases to build first-, second-, and third-order abstractions, from which three principles emerged. A condensed version of this process is presented in Appendix A. The first principle of sustainable development requires the inclusion of multiple systems (Alvesson, 1993; Bansal, 2005; Fergus & Rowney, 2005; Kallio & Nordberg, 2006). As Gladwin and colleagues explained, moral monism is rejected in favor of moral pluralism where sustainable development actively embraces the full conceptualization of political, civil, social, ecological, and economic rights and systems (Gladwin et al., 1995). Second, inclusivity is insufficient unless firms acknowledge system interconnectedness (Hoffman & Ehrenfeld, 2000; Shrivastava, 1995a). Unlike a reductionist approach where systems are considered independently, sustainable development requires the mastery of understanding interrelationships of causality and predicting the diverse effects of decisions on ecological cycles, sociocultural ways of life (Hart, 2005; Shrivastava, 1995a), and economic systems. Finally, including multiple systems in an interconnected way is insufficient unless these systems are incorporated equitably. The equity principle replaces any position of privilege afforded to certain systems with equality through the fair distribution of resources, opportunities, basic needs, and property rights (Bansal, 2002; Gladwin et al., 1995). The equity principle also acknowledges that nature has intrinsic worth and requires that humanity’s freedom and rights to self-determination operate within the limits of Earth’s carrying capacity (Starik & Rands, 1995; Stubbs & Cocklin, 2008). Consequently, integrative system inclusivity is insufficient under a strong interpretation of sustainable development unless systems are treated equally without any socially constructed superiority of one over another.
The second literature was Greenwood and Hinings’ (1988, 1993) notion of archetypes whereby archetypal or paradigmatic variation (i.e., weak-strong dichotomy) is dependent on fundamental differences in the norms associated with what firms should be doing and how they should be doing it. By comparing and contrasting the data from these six businesses using these two literatures, the author uncovered three orientations toward sustainable development. Resembling the weak interpretation of sustainable development, the first orientation is an extraneous sustainable development orientation where any activities associated with sustainable development and the maintenance of local contextual systems are philanthropic and/or reactive to regulatory constraints and industry norms, are fractured in nature, and do not represent significant relevance to firm purpose and core operations. The second orientation is an emergent orientation where firms incorporate independent social and ecological systems in pockets of the firm as a legitimate organizational activity yet not collectively in their overarching purpose and core operations. Resembling the strong interpretation of sustainable development, the third level is an embedded sustainable development orientation where firms have fully incorporated and “embedded” sustainable development into the modus operandi and core operations whereby the integrity of multiple localized social and ecological systems are inextricably tied to the strategic interests of the firm. Because case-based scholars advise using polar extremes (Eisenhardt, 1989), the author dropped the emergent orientation cases for the purpose of this study. Table 1 outlines the different orientations according to the principles of sustainable development identified above.
Sustainable Development Principles and Case Orientation
Because firm adoption of orientations was expected to manifest itself differently by sector (Greenwood & Hinings, 1988), the author applied these orientations to the agriculture, manufacturing, and tourism sectors in Table 2. With these orientations discovered, the author theoretically sampled the remaining cases so that there was one firm in each orientation across three different sectors: agriculture, manufacturing, and tourism. The six firms were chosen from a larger pool of 16 cases operating in developing regions of Africa that were identified as part of a broader research project. All 16 cases were assigned an orientation level based on input from a range of sources, including investment officers of the International Finance Corporation, academic experts, and internal and external informants of the cases themselves. From this pool, the researchers chose extreme cases or polar types across three sectors. Consequently, six cases were sampled in total.
Sustainable Development Orientations by Sector
The second phase of the research process took place over a 10-week period from October to December 2005 and involved more than 79 interviews with informants inside and outside the 6 firms to understand how and why they occupied their respective orientations. Informants were told that although information gleaned from the interviews would be used for the purpose of research and teaching, any identifying information would be disguised. Preliminary findings were consistent with extant literature and pointed to the importance of local context (i.e., surrounding community) in explaining variation in a firm’s ability to embed sustainable development. Although an important finding, the precise role of the local context in the firm’s strategy and in contributing to sustainable community development was beyond the scope of the original study, yet was the central focus here. Consequently, the phenomenon of interest emerged in the data and thus was not predetermined to represent an important explanatory variable. This approach adds reliability to the findings because informants identified and elaborated on the phenomenon of interest without any preempting from the interviewer.
Interviews were conducted with a range of stakeholders, including employees, middle and senior managers, NGOs, community groups, community leaders, government, and farmers. Interviews with stakeholders external to the firm were important in uncovering the relevant social and environmental challenges of the context, their impressions of the firm’s response to these issues, and their role in this process (if any). Internal firm interviews revolved around understanding the firm’s strategy, its relation to the surrounding context, and their general approach to sustainable development. The author spent anywhere between 3 to 15 days at each firm, which allowed him to supplement interview data with observations and informal conversations. For instance, conversations over meals, speaking with staff while waiting for interviews, transportation to and from meetings, and social outings with employees and managers allowed for a more congenial environment to understand how firms responded to social and ecological issues and the role of contextual stakeholders in this endeavor. Also, staying in the community surrounding the firm allowed the author to understand some of the social and ecological issues interviewees referred to. These observations were very helpful in confirming or disconfirming claims made in the interviews while providing this author with a richer account of what explained firm adoption levels and the role of the surrounding context. As expected then, interview time represented a relatively small percentage of onsite field time. Table 3 provides background and data collection information for each case.
Case Background and Data Collection Information
Data analysis ran concurrently with data collection (Eisenhardt & Graebner, 2007; Yin, 2003). At the conclusion of a given day of interviews and observations, the author would reflect on the day by developing contact summary sheets for each interview, noting key observations and messages from the interview. The author would also write field notes at the conclusion of each day to summarize the collection of interviews and observations while identifying emerging questions to ask later (Miles & Huberman, 1994). The interview data were transcribed verbatim and then analyzed to search for patterns in how the local context was important and how it played a role in the firm’s ability to embed sustainable development (within-case analyses). The author then compared these observations across the weak and strong orientations for each sector to identify nuances that were evident in the embedded firms but not in the extraneous firms and vice versa. The author used a replication logic where preliminary descriptors from one case were verified, amended, or dropped based on comparisons with the other case (Eisenhardt & Graebner, 2007). With higher levels of abstraction emerging at the sector level, the author conducted a similar replication strategy across the sectors to verify, further amend, or drop emerging constructs and relationships. At this point, contextual stakeholder resource and institutional capital emerged as an important construct explaining how local context mattered for the firm. The author consulted extant literature as an aid to guide the interpretation of these findings and located Oliver’s (1997) categorization of these forms of capital as complementary to firm-level competitive advantage. The final stage of the analysis involved understanding how these high-level constructs, now representative across the three sectors, were interrelated (Pratt, 2009). In what follows, the author presents the types of capital that emerged from the data followed by two ways in which they were interrelated that correspondingly speak to the broader research question posed. The article ends with a discussion, some limitations, and directions for future research.
Findings
External stakeholders of the firm, particularly those indigenous to the local context, provided two high-level forms of capital that played instrumental roles in helping firms embed sustainable development: resource capital and institutional capital. Capital refers to “durable but not necessarily tangible resources or capabilities that yield services over its lifetime that contribute to sustainable competitive advantage” (Oliver, 1997, p. 709). Whereas resource capital is defined as value-enhancing assets and competencies of an actor, institutional capital is defined as the actor’s ability to support these value-enhancing assets and competencies (Oliver, 1997).
The data also revealed that resource and institutional capital were interrelated in at least two ways. First, they were sequential in that firms gained access to more intangible forms of capital over time as relationships between the firm and community-based stakeholders strengthened. Second, as the firm progressed through each form of capital, its importance grew and shifted from representing a role in firm strategy implementation to representing a role in strategy formulation. Figure 1 displays these dynamics in their entirety. The author begins by introducing each form of capital along with describing how they played a role in the firm’s embedded sustainable development orientation. The author then discusses their interaction effects.
The Role of Local Context in Embedding Sustainable Community Development in the Firm
Resource Capital
Tangible resource capital
Embedded firms drew upon tangible resource capital from the local context, including financial capital, NGO office space, public service infrastructure, and community equipment. Tangible resource capital is defined as physical assets and resources owned by a particular individual, group, or organization. Examples may include equipment, buildings, supplies, hardware, vehicles, and physical infrastructure. The provision of tangible resource capital was either a one-time event or it represented an ongoing contribution. One-time provisions of capital included start-up financial capital or the use of community or NGO assets such as land or equipment to address urgent public service gaps. In response to a major drought, Kenya Mining used a number of community vehicles to help in the distribution of food and water provisions:
So around the period of the drought we started providing free aid for about thirty thousand Maasai. There was a lot of collaboration with the Maasai because the community had a number of trucks and equipment that we used for the food and water drop. (Kenya Mining)
A lack of government services in the area placed Kenya Mining in a governmental role due to the fact that they needed to maintain a competitive context that could support basic public services such as water, food, education, and health care. Kenya Mining’s vehicle fleet was insufficient to reach the widely dispersed 22,000 Maasai at the time of the drought. Yet existing community-based resources were equally ill equipped to deal with the issue. Only by combining community and company tangible resources were they able to adequately distribute food and water to the Maasai.
One-time resource capital also came in the form of financial start-up capital. Kenya Honey remarked on the importance of tapping into financial capital from NGOs and foundations. For instance, they used the financial capital from an NGO to fund a pilot project of 100 beehives that would later prove to be a viable value proposition for both investors and the NGO community.
I went out to see [the NGO] . . . and I told them about a small income-generating project with beehives. They gave us funding for 100 beehives. (Kenya Honey)
How is one-time tangible resource capital important in a firm’s ability to embed sustainable development? Although the provision of resource capital was an isolated incident, it set an important precedent as an example of the benefits of collaboration between two historically adversarial stakeholders. More specifically, it spoke to the potential opportunity associated with combining efforts to achieve economic and social value creation concurrently. Notice in the following quotation how the collaborative response to the drought described earlier became an impetus to an ongoing collaboration related to the formulation and implementation of a community policy:
I guess during the food and water drop plan, we went out to these villages. So there was an opportunity to sort of discuss the issues in the community and the problems of the drought and things in general. I suppose that was our first major exposure with the community which led to the discussion about the policy. (Kenya Mining)
This same effect took place with Kenya Honey. After the demonstrated success of the NGO-funded pilot project, several additional NGOs were eager to discuss a partnership opportunity:
Well, things changed since the initial pilot. The pilot was only the beginning. We sent out a communication to a whole list of donors saying that we have been successful . . . at the small grower level and wanted a celebration to mark the occasion. Someone from the press showed up and gave us a great full-page story. It sparked the interest of the donors to get more involved. (Kenya Honey)
Similar to the Kenya Mining example, start-up financial capital allowed the firm to demonstrate the feasibility of joining forces for the creation of community and economic value. The author therefore proposes the following:
Research Proposition 1a: The provision of one-time tangible resource capital enables the demonstration of local actor objective alignment and acts as an impetus for ongoing collaboration.
The second form of tangible resource capital included resources that were used on an ongoing basis by the firm in the implementation of its business model. Kenya Honey gained access to a number of offices and community centers located throughout the country that were owned and operated by NGOs or the communities. They also added NGO trucks to their vehicle fleet to collect and transport honey from the collection centers to the production facility.
Our project officers often times have a pretty big area to cover. And they don’t always have a base or office in their area of operations. Sometimes they find it easier to use [the NGO] office because they have one in that particular location. (Kenya Honey)
These tangible resources provided critical operational advantages for the firm. The NGO offices provided Kenya Honey with a geographical advantage that allowed them to access and recruit remote farmers as suppliers for their business. The community centers they accessed provided Kenya Honey with important collection centers to which farmers would travel to trade their honey. These provisions consequently saved Kenya Honey in capital outlays that would have been required to set up administrative operations and distribution channels. More important, without these physical office locations, Kenya Honey would not have had the financial resources to tap into the poorest farmers in the most rural communities. Because of the remoteness of these farmers and the inefficiency of supplying from geographically dispersed suppliers, Kenya Honey would have had to resort to a more centralized model that neglected the poorest of the poor:
We’re working with small farmers in multiple areas of Kenya, so naturally it wasn’t an efficient system if you were to disregard the social and environmental aspects. Obviously, it would make more sense to use 3-4 larger farmers with hundreds of acres. (Kenya Honey)
Consequently, the ongoing provision of tangible assets allowed the firm to overcome some of the cost constraints associated with incorporating community-based issues in its operating practices. These forms of capital were operational in nature, which freed up resources for the firm through which they could focus on competiveness in the marketplace.
The three extraneous firms showed no sign of drawing from tangible resource capital from the contextual environment and instead provided local stakeholders with financial capital for community projects, the development of community infrastructure, or public services such as health care and education. For instance, SA Hospitality provided communities with used computer hardware among other equipment as part of their corporate social responsibility contribution, whereas Kenya Steel built a bus shelter in the surrounding community. These firms paid for schools and health care facilities for their respective communities with very little or no reciprocal incorporation of existing community assets. This conduct resonated with those who criticize firm CSR initiatives as public relations stunts that have very little to do with their core operations and thereby mask the overriding objective of profit maximization (Muthuri et al., 2009; Rogers, 2000). The author therefore proposes the following:
Research Proposition 1b: The ongoing provision of tangible resource capital provides firms with important operational advantages to implement an embedded sustainable development orientation.
What does the provision of tangible resource capital bring to the providers of the capital? Although the capital provided firms with much-needed assets to accomplish their goals, contextual stakeholders were only willing to bring forth their assets if they were satisfied that the goals of the firm helped to achieve their own objectives. Kenya Mining’s food and water drop program and Kenya Honey’s pilot project were all easily identifiable to contextual stakeholders as an important effort to address community social issues. Because the NGO’s mandate, in the case of Kenya Honey, was to assist farmers through sustainable sources of income, the partnership enabled Kenya Honey to reach those farmers who would most benefit from access to domestic and international markets. Notice the plea in the following quotation made by the firm to gain NGO support:
You have problems of implementation of agricultural projects, you have problems with sourcing the right technology and access to training. . . . By far the biggest challenge is ensuring some level of continuity and long-term sustainability after you exit. (Kenya Honey).
It was therefore important that firms illustrated the alignment between company and local stakeholder goals in the acquisition of tangible resource capital. The author therefore proposes the following:
Research Proposition 1c: Firms are able to access tangible resource capital if they can demonstrate that the capital would be used for purposes that would help to achieve local stakeholder objectives.
Intangible resource capital
Firm ability to embed sustainable development was also contingent on accessing value-enhancing intangible assets from the local context. Intangible resource capital is defined as a collection of nonphysical assets and resources owned by an individual, group, or organization. Examples may include knowledge, expertise, and human resources. Wheeler et al (2005) found that the possession of intangible resources that are rare, valuable, and difficult to imitate represented an important mechanism through which a sustainable local network achieved success in creating multiple forms of value. The data in the present study pointed to a combination of human capital, employee dual roles, and social capital as being important forms of intangible resource capital for the firm. The author discusses each in turn below.
South Africa Ecotourism was facing issues when community members were poaching wild fauna and thus threatening their level of service to the ecotourism consumer. The community responded by providing human capital to police poachers around the private game reserves. Similarly, NGOs in the region played an important role in implementing community projects that consumers expected as part of their tourism experience: “The community plays an important security role here and [the NGO] is essential in community project work our customers expect” (SA Ecotourism). Drawing on these intangible resources ensured that the ecotourism business model had in place the appropriate measures to provide a high level of service for the consumer, the result of which created multiple forms of value in the surrounding community. From the community’s perspective, protecting wild fauna in the surrounding areas for the purpose of ecotourism offered a more sustainable source of income that would otherwise be unavailable in a poaching environment. From the NGOs perspective, the implementation of community projects aligns with their objective of providing public services for their constituents. From the company’s perspective, the protection of wild fauna by the community ensured an uninterrupted ecotourism experience for the end consumer and the development projects and the positive impact on the community was part of the ecotourism service received by the consumer:
Consumers now expect as part of their ecotourism experience updates on community development and expect to see it as part of the service. This is radically different. And this is exactly what we were doing. (SA Ecotourism)
Kenya Honey drew upon NGO employees to assist in farmer training for operating the beehives and to collect the honey from the farmer. This approach provided the firm with savings in labor costs along with tacit knowledge of some of the idiosyncrasies of the local context with which these NGO employees would be familiar. From the NGO’s perspective, because the business model collects the honey on time, pays on the spot, and is a reliable source of income for the farmers, they see a benefit in assisting in this endeavor largely because such a business model aligns well with their objective of building community self-sufficiency.
In contrast, intangible resources from the local environment were not relevant to extraneous firms. For instance, Kenya Steel had the opportunity to enter neighboring Sudan to play a role in developing housing projects for war-torn communities. Yet, despite the potential to partner with an NGO who possessed critical knowledge capital of the Sudanese market, the firm was reluctant to partner.
We struggle to get a more systematic involvement in infrastructure development. Steel is an important material for rural areas, but [Kenya Steel hasn’t] shown interest. This is where we struggle. (NGO Representative)
Such a partnership would have granted Kenya Steel lucrative and highly inimitable knowledge that could have overcome the many hurdles prevalent in entering this potentially valuable market context. Doing so would have ultimately meant bridging the company’s business strategy with community development in Sudan. The author thus proposes
Research Proposition 2a: The provision of local human capital provides the firm with critical value-laden knowledge and expertise that assists the firm in implementing an embedded sustainable development orientation.
Firms can also require human capital and indigenous knowledge through their employees. Unlike extraneous firm employees, embedded firm employees occupied dual roles as members of contextual stakeholders. This dualism predisposed employees to the challenges of the local environment and instilled in them an understanding of how sustainable community development issues are linked to the business. Kenya Mining hired a Maasai from the surrounding community to act as the interface between the community and the business, whereas Kenya Honey’s project officers were hired from farmer communities because they understood the challenges that could affect farmer honey yields.
The project officer is the key. . . . They play an important role in knowing what is happening on the ground. Because most of [the project officers] are from the local community and speak the language and know the culture, they are able to continuously gather the right information about the . . . farmers. They act as a link between [Kenya Honey] and the community. (Kenya Honey)
Although these examples did not reflect a direct contribution of resources from particular stakeholders, they remained an important source of capital from the local environment that enabled firm incorporation of sustainable development.
Research Proposition 2b: Employees that play dual roles as members of the local context provide important and value-laden knowledge and expertise that assist the firm in implementing an embedded sustainable development orientation.
Finally, contextual stakeholders provided social capital to embedded firms. Social capital is defined as “goodwill that is engendered by the fabric of social relations and that can be mobilized to facilitate action” (Adler & Kwon, 2002, p. 17). Kenya Honey’s relationship with an NGO, for example, presented the firm with important social capital with rural farmers that aided in their recruitment as suppliers of honey:
The NGOs, who have been here for a long time, have done a lot of work at the cross streets and thus have developed the capacities of very many communities through a myriad of projects. And so we felt that the easiest way to actually reach the communities effectively is to go partner with these stakeholders. (Kenya Honey)
The gain of social capital from the NGO was instrumental in overcoming the prevalent negative stigma local community actors, especially farmers, had toward the private sector (Neath & Sharma, 2008). In the above quotation, the NGO possessed the capital the firm needed to build and expand its supplier base. Therefore, the following proposition is proposed:
Research Proposition 2c: The provision of social capital from the local context provides the firms with important value-laden relationships with the contextual environment that assist in implementing an embedded sustainable development orientation.
In sum, intangible resource capital provides the firm with important value-laden resources that are rare, valuable, and difficult to imitate. Without these resources, the firm would not possess the assets required to compete effectively in the marketplace.
Institutional Capital
The second broader source of capital originating from the local context was institutional capital, defined as an actor’s ability to build and support value-enhancing assets and competencies for the firm (Oliver, 1997). Institutional capital was drawn from the local context cognitively and structurally, the combination of which closely linked together the firm and its contextual stakeholders. Unlike resource capital, which tended to represent isolated forms of knowledge or skills to tackle operational elements in the implementation of the firm’s strategies, institutional capital had fundamental impacts on the formulation of the firm’s sustainable development strategy. Here, influence was much more pervasive, reflecting ways of thinking, traditions, and culture, all of which had profound implications for the business model.
Cognitively, institutional capital enhances frames of reference in the firm that support the creation of different types of assets and competencies. Managerial cognition scholars define a frame as a cognitive lens through which people organize and simplify the world (Hodgkinson, Maule, Bown, Pearman, & Glaister, 2002; Reger, Gustafson, DeMarie, & Mullane, 1994). Wright and Goodwin (2002) explained that any single frame can only yield a partial view of the world and that changes in a frame or reference point might have a fundamental effect on the way a decision is viewed and, hence, the course of action that would subsequently be taken (Kahneman & Smith, 2002; Tversky & Kahneman, 1981). The data indicated that the contextual environment provides additional cognitive frames through which firms make decisions. As an example, NGOs provided Kenya Honey with a unique perspective to complement the business way of thinking:
[NGO Director] keeps us on the straight and narrow. It’s good to have somebody out there who comes from a little more on the social side of the spectrum than you are. (Kenya Honey)
The tension results in the incorporation of multiple and seemingly divergent frames of reference. Notice in the following quotation how the Kenya Honey business model developed through negotiations with an NGO about whether farmers should purchase their own beehive equipment or have it provided free of charge, a debate that reflected a development versus business frame:
[The NGO] wanted to donate the [equipment] to the farmers but it was important to [Kenya Honey] that we provide them on a loan basis. This was difficult for [the NGO] to accept because they’ve never taken funds back. They conceded on the ownership issue and we conceded on allowing farmers to share [handling equipment] with one another. (Kenya Honey)
The close relationships with unconventional stakeholders, combined with an increased level of interaction with the firm, played an important role in infusing the firm with alternative frames of reference. At the time of a massive drought, Kenya Mining’s former managing director spoke of the need to be immersed in the community to truly understand their needs and perspectives. With growing expectations on the company to fill governmental gaps in public service, the managing director was struggling to understand how this role could be done in a sustainable way. Rather than commuting 70 miles to and from Nairobi as other senior managers had done, he and his wife lived in the Maasai community. As he explained, below, this residence afforded him a nuanced understanding of how things worked on the ground in the surrounding community context:
Moving on site we used to get local Maasai dropping in to the house on a fairly regular basis raising issues and problems. So I had a fairly broad coverage of some of the issues facing the community. I lived on site during the weekends as well, which was an opportunity to go out and talk to people. I got involved in the community in different ways, so you got a pretty good feel for what was going on. (Kenya Mining)
Similar to Kenya Honey, as the relationship grew, shifts in thinking led to a questioning of their roles and responsibilities:
As the community got more involved, we started to question our role as a company in terms of doing all this philanthropic stuff. Maybe they should be the ones to manage this. In fact, they were having the same thoughts. (Kenya Mining)
Notice in the previous quotation the corresponding effect of an infusion of cognitive capital on the firm. Kenya Mining and the community began to negotiate roles and responsibilities that resulted in strong interorganizational interdependence in the formulation of a business model that embedded sustainable development. The author therefore puts forward the following proposition:
Research Proposition 3a: Institutional capital leads to an increase in cognitive tension between the firm and its contextual environment, the outcome of which influences the formulation of firm strategy associated with an embedded sustainable development orientation.
As this negotiation process takes place, contextual stakeholders played their final role by structurally supporting the assets and competencies required to support a business model that embeds sustainable development. Structural capital is defined as the voluntary provision of resources and capabilities deemed necessary to support the firm’s core operations and business model. Contextual stakeholders provided critical capabilities that were complementary to those of the firm in the execution of the firm’s business model. In effect, roles and responsibilities were identified and shared between the firm and its contextual stakeholders in the formulation of the business model. Notice this very dynamic with Kenya Honey in the identification of complementary strengths across local actors:
One of the key success factors of the model was getting the strengths of each of the partners identified and to then determine the role of [Kenya Honey], the role of the development agency, and of farmers. So we tried to isolate and distill the core competencies of those players so that we could mobilize them. (Kenya Honey)
In effect, Kenya Honey sought to build a structure that would harness the collective capabilities of the firm and its local context: “The tripartite model is really a division of expertise. It helped us to formalize our relationships with [the NGO] and with [farmers].” The tripartite model is a structural reflection of the interconnectedness of the business, NGO, and the farmer or community. Notice how farmers played an important role in building loyalty of neighboring farmers to the firm:
There was one [farmer] who was not being cooperative and well he was thinking of selling his honey somewhere else. . . . We told him that we’ll not deal with him. If he thinks of looking for a market anywhere else, then we won’t deal with him as a community. (Kenya Honey)
SA Ecotourism similarly remarked on the need to combine resources in ways that drew upon the competencies of tribal communities and NGOs. The community’s knowledge of the behavior of indigenous people in the region was instrumental for understanding community issues and ways of life and NGOs were instrumental in implementing community projects. As consumers entered the game reserves, the communities, NGOs, and the firm brought critical capabilities that collectively made up the service to the consumer: “As [the NGO], we were best equipped to lead these community projects. So we deal directly with the customer too.” Notice in the following quotation how the aforementioned complementary capabilities informed the firm’s positioning strategy:
There’s a growing niche market out there right now. The traveler wants to know where they’re going, what’s being done for the surrounding communities, and what’s being done for the environment. So we realize that it’ll become more and more important to the guests that where they’re staying is a responsible eco-tourism operator. (SA Ecotourism)
The author therefore proposes the following:
Research Proposition 3b: Structural capital from the local context provides firms with complementary capabilities that play a critical role in the formulation of firm strategy associated with an embedded sustainable development orientation.
Without institutional capital at the cognitive and structural levels, the resource capital discussed in the previous sections remained isolated to particular projects. Only when institutional capital was infused in the provision of these resources did they begin to represent parts of the firm’s business model, which correspondingly used a private sector mechanism to achieve sustainable community development. The author now discusses two important observations related to the interconnectedness of these two forms of capital that further speak to the research question posed.
Sequential Dynamics
Firms tended to progress through each capital sequentially. Tangible resource capital was especially important in the early stages of firm–local context collaboration because it represented a gesture of good faith for an isolated project without a substantial commitment of highly valued intangible resources or institutional capital. Due to the negative stigma that typically prevails between the private sector and indigenous stakeholders (Neath & Sharma, 2008), this low-risk partnership represented an important period of trust building.
It was a lot of hard work. It wasn’t normal that NGOs would partner with the private sector. But the Danish International Development Agency (DANIDA) had a small development project in a small-arid region of Kenya. . . . I begged and pleaded about a small project . . . so [they] gave us funding for 100 hives . . . it was low risk for them. (Kenya Honey)
Depending on the success of this early partnership, stakeholders were more willing to share intangible forms of capital such as human resources, knowledge, and social capital. These skill sets represented key operational capabilities for the firm. Notice in the following quotation from Kenya Mining that collaboration around the response to the massive drought led to the establishment of a small team of leaders and experts from the community and the company to discuss how best to more systematically respond to governmental gaps in public service provision:
We had contact with Maasai on a daily basis who lived within walking distance of [the company]. . . . We stayed close to four respected people in the community to get their input and to learn how we could work together. (Kenya Mining)
Management scholars have explained that trusting relationships among partners strengthens the network connection by enhancing tie density, thickness, and stability (McEvily, Perrone, & Zaheer, 2003) while mobilizing exchange partners to pursue relational governance mechanisms that improve performance (McEvily & Zaheer, 2005). As trust developed among the firm and its stakeholders, actors theorized roles and responsibilities that ultimately drew upon each other’s resource and institutional capital.
This trust led to the final source of capital where local community stakeholders became more infused in the decision-making processes of the firm. Notice in the following quotation that Kenya Mining explained that the incorporation of cognitive and structural capital in the development of the community policy largely originated from the earlier stages of collaboration:
The food and water drop program sent clear messages to the community that we were there for them. But then there was the community relations policy that they were heavily involved in drafting and presenting to the board of directors. (Kenya Mining)
These findings suggest that although all forms of resource and institutional capital are important in a firm’s embedded sustainable development orientation, the acquisition of these forms of capital was largely sequential. Movement from more tangible to less tangible forms of capital was based on the strength of the relationships between the firm and the contextual environment. The author therefore proposes the following:
Research Proposition 4a: Tangible resource capital, intangible resource capital, and institutional capital progress sequentially in the firm.
Research Proposition 4b: A firm’s movement from tangible to intangible forms of capital is based on the strength of relationships between the firm and contextual stakeholders.
Relevance to Strategy Process
The value appropriated to firms in their efforts to embed sustainable development increased as they moved through this sequence. The use of tangible resource capital, while helpful, was more important for the implementation of existing firm strategies without any direct or indirect influence on strategy formulation. In these situations, community investment is considered peripheral and not part of corporate strategy. Intangible resource capital, in contrast, through the influence of human capital, employee knowledge, and social capital demonstrated an indirect influence on strategy formulation and a direct influence on strategy implementation. Thus, although intangible resource capital is instrumental in implementing a sustainable development strategy, it is only indirectly influential on strategy formulation. For instance, in Kenya Honey’s discussion of the role of project officers, they explained that they were instrumental in providing important feedback about farmer issues and productivity levels that informed the business model. But direct influence on strategy formulation comes primarily from local context institutional capital. As reflected in the quotations in the previous section, firm strategy was influenced cognitively by stakeholder perspectives in the immediate environment and structurally by the value-laden capabilities these community stakeholders brought to the firm. As a consequence, the firm’s community development strategy was not considered peripheral to corporate strategy but instead represented a critical component. This relationship means that community development strategy formulation and corporate strategy formulation were difficult to distinguish. The author therefore proposes the following:
Research Proposition 5a: Tangible and intangible resource capital have direct effects on strategy implementation.
Research Proposition 5b: Intangible resource capital and institutional capital have a direct and indirect effect on strategy formulation of the firm, respectively.
Research Proposition 6: There is a direct relationship between the strength of local context influence on firm strategy and the intangibility of the type of capital provided.
Implications and Conclusion
The departing platform in this study was the scholarly consensus that local context is pivotal if a firm is to claim adoption of a strong interpretation of sustainable development where community development and firm strategy are highly interdependent. By sampling firms according to their adoption of a weak or strong orientation to sustainable development, the author searched for relevant variables from the local context that played a role in explaining how firms achieved this orientation. The study conclusions pointed to two different forms of capital—resource capital (tangible and intangible), and institutional capital—each of which contributes to the firm’s objectives in different ways. Collectively, the findings presented here reveal some important dynamics associated with the interdependent relationship of firm strategy and sustainable community development. First, it appeared from the data that firms progressed sequentially in the acquisition of these forms of capital as a result of changes in the relationship with stakeholders in the surrounding context. Second, the different forms of capital varied in their relevance across the strategy formulation and implementation processes. In effect, sustainable community development and firm strategy formulation became highly interdependent processes as firms incorporated more intangible forms of capital from the local community context.
Four contributions are intended from this study. First, the findings presented align closely with Oliver’s (1997) view that resource selection and sustainable competitive advantage are profoundly influenced at the individual firm and interorganizational levels by the institutional context of resource decisions. However, these findings suggest that the local institutional context surrounding the firm contributes to the firm’s ability to achieve this sustainable competitive advantage in a way that contributes to sustainable community development. The author therefore extends Oliver’s definition of institutional context beyond just the rules, norms, and beliefs surrounding economic activity that define or enforce socially acceptable economic behavior to include the resource and institutional capital of social and ecological stakeholders, both of which help to define what is and what is not perceived as socially and ecologically sustainable and what represents a strategic opportunity for the firm. This extension aligns with the view of those scholars who argue for an increased recognition of native capabilities (Hart, 2005) or fringe stakeholder perspectives (Hart & Sharma, 2004) as an important source of value for the firm (Banerjee, 2003) and for goals of sustainable development.
Second, the study contributes to the public-private partnerships literature and on global sustainable enterprise in that it provides insight into the dynamic relationship between the firm and community development. Although there has been growing recognition of the need for public-private partnerships, there has been limited understanding about how these relationships systematically influence firm-level ambitions for sustainable development. Although scholars have explained the need for multiple forms of indigenous capital (UNDP, 2009; Wheeler et al., 2005) they were unable to predict how these forms of capital mattered in a firm’s attempts to connect sustainable development with competitive advantage. The results here describe a portfolio of capital forms, the combination of which provides important clues for our understanding of private sector sustainable development. Third, the results begin to open up the black box of native capabilities articulated by Hart (2005) by defining the different types of indigenous capital available to the firm and discussing how they interact in a firm’s commitment to sustainable development. In particular, the findings point to preliminary evidence of where firm transition through different forms of local capital depends on the growing strength of relationships with local stakeholders.
Finally, the findings point to a deeper understanding of the connection between sustainable community development and firm competitive advantage. The progression of different types of capital over time is suggestive of a relationship where the strength of influence is highly correlated to the degree of tacit capital provided. Put another way, institutional capital is more effective in contributing to sustainable community development and competitive advantage than tangible forms of resource capital, yet together they have a highly developmental impact in a firm’s ability to adopt a strong interpretation of sustainable development. Practitioners can learn from the models presented here in their attempts to address stakeholder pressures related to sustainable development while also building sources of competitive advantage. The notion that such objectives are trade-offs is severely questioned in this article by shifting focus away from efficiency and cost reduction and focusing to a greater extent on competitive differentiation through sustainable community development.
This study is not without limitations. Although the broader research question was to understand how local context matters in a firm’s attempt to embed sustainable development, the results only provide one answer and thus a starting point. In addition, although the data referred to important power dynamics between the firm and its stakeholders, there was little information available about the terms of appropriation of tangible and intangible resources. In other words, there are likely important power dynamics that influence how and why many resources are allocated to the firm along with details on the distribution of costs, benefits, and risk. Although this dimension was beyond the scope of the present study, future researchers may want to flesh out these details in an attempt to understand how these negotiations lead to outcomes associated with sustainable development. Finally, rather than considering the local context as a homogeneous actor as was the case in this study, future researchers may want to investigate the power struggles between different stakeholders and how this dynamic affects the allocation of capital to the firm and, subsequently, the definition of sustainable development in the region.
Footnotes
Appendix
Sustainable Development Principles
| First Order | Second Order | Third Order | Principle |
|---|---|---|---|
| • Environmental integrity and ecological sustainability | Ecological systems: Ability of one or more entities to exist and flourish | ||
| • Maintain, preserve, or restore the health of habitats and ecosystems as a basis for human life | |||
| • Avoiding the erosion of the earth’s land, air, and water resources, consider limited regenerative capabilities and carrying capacity, and avoid launching toxins and waste into the biosphere | |||
| • Social justice | Social systems: Intra- and inter-generational equity; all members of society | Inclusivity | |
| • Social and political aspects of systems (Hoffman, 2003) | |||
| • Developing and maintaining desired “social values, institutions, cultures, or other social characteristics” | Broader systemic viewpoint; multiple systems considered (Hoffman, 2003) | ||
| • Social justice, the distribution of wealth and power, and society–nature relationships | |||
| • Civic participation in how sustainability is defined | |||
| • Economic responsibility | Economic systems: Critical as part of a broader definition of development (progressive transformation of economy and society) | ||
| • Productive capacity of organizations and individuals | |||
| • Creation and distribution of goods and services that raise the standard of living (Bansal, 2005) | |||
| • Open, competitive, and international markets that encourage innovation, efficiency, and wealth creation (Bansal, 2005) | |||
| • Development is not exclusively economic based, and economic growth is not a means to an end | |||
| • Question dominance of instrumental rational paradigm to include intuition, subjectivity, and experience | Open, critical, democratic, integrated discourse based on an ethic of values and diversity | Inclusion as a philosophical base for social advancement | |
| • Reflective communicative rationality versus blinkered self-reinforcing instrumental rationality | |||
| • Democratic processes of social learning, cultural politics, and new institutional arrangements | Including all factions of society in decision-making processes on development | ||
| • Nested in biological ecosystems and interconnected with biogeochemical cycles | |||
| • Viewed as part of rather than in opposition to the socioecological environment | Economy is part of society, which is part of the larger ecological system | ||
| • The focus on ecosystem health in this paradigm is not simply to preserve wilderness by attempting to outlaw culture from the perimeters of nature. Modern culture is also a part of nature. | |||
| • Human beings and organizations are members of ecosystems. Attempts to use a reductionist approach where individual systems are considered independently is counterproductive | Nested | ||
| • Human freedom and rights to self-determination remain intact so long as the actions deriving from these freedoms and rights do not destroy the life-support systems upon which such human autonomy depends | Social, environmental, and economic responsibilities are complementary | ||
| • Self-interested individual and organizations are more likely to pursue an economically advantageous course of action when confronted with a choice between environmental preservation or economic development | Integrated | ||
| • Integration as a philosophical base for social advancement | Sustainable development requires integration across multiple systems | Interconnectedness | |
| • Integrating the four entities of society, government, environment, and business in a common process of development | |||
| • Integration and broadening in an inclusive manner | |||
| • Integration and coordination are systemic elements that are fundamental to understanding the ecological sustainability of organizations | Complexity | ||
| • The recognition of such complexity meant that one could never know with complete certainty what effects the manipulation of | Appreciation of the complexity of social, ecological, and economic processes individual components within an ecosystem would have on the ecosystem as a whole | ||
| • The most cost-effective solution to dump toxic waste chemicals into a watershed may benefit the individual firm, but places the surrounding ecosystem at risk, as toxic chemicals find their way into the biological food chain | |||
| • All members of society have equal access to resources, opportunities, and basic needs (food, clothing, and shelter) | Universal access to basic needs and opportunities (Bansal, 2005) | All systems have equal rights | |
| • Future generations have access to basic rights and resources | |||
| • Local rural communities receive similar privileges as global industrialized regions | |||
| • Humans are equal to nature | |||
| • Well-being of other species is as important as human welfare | There is no power imbalance where one system of interests dominates over another | Equity | |
| • Mitigating poverty does not require natural ecosystem exploitation | There are no trade-offs between systems | ||
| • Social, ecological, and economic systems must be given equal priority | |||
| • Diversity of cultures is preserved and given equal standing | |||
| • The natural environment is not seen as a resource to be mastered and deployed | All systems have equal intrinsic value (Montiel, 2008) | ||
| • Economic growth does not trump environmental preservation, and nature has inherent worth. |
Acknowledgements
The author would like to acknowledge the helpful support from Professors Ellen Auster, Oana Branzei, Christine Oliver, Eileen Fischer, and David Wheeler. The author thanks International Finance Corporation for their assistance in data access. The author also thanks the International Development Research Centre (IDRC), the International Order of the Daughters of the Empire (IODE), and the Social Sciences and Humanities Research Council for their financial support.
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) received no financial support for the research, authorship, and/or publication of this article.