Sustainable Global Enterprise

Hart

Sustainable global enterprise represents the potential for a new private-sector-based approach to development that creates profitable businesses that simultaneously raise the quality of life for the world’s poor, respect cultural diversity, inspire employees, build communities, and conserve the ecological integrity of the planet for future generations. Making such a societal contribution while simultaneously creating shareholder value will take real imagination and a fresh approach to business strategy. I believe that the transformation to a sustainable form of enterprise that is occurring now is no less momentous than the transformation from the small, owner-operator style of “free market” capitalism advocated by Adam Smith to the industrial corporate model in the 19th century—the model that still predominates today.

Kolk

Sustainability or sustainable development is often an umbrella term involving a range of things, environmental, social, ethical, and economic, not only for a multinational company and its direct business partners and stakeholders but also the communities and wider societies in which it is active. So one would expect a sustainable global enterprise to take these different aspects into account properly and make the best out of it. Also in case of dilemmas, tensions or trade-offs between the various elements, there will be openness about the way in which those dilemmas have been considered and a sound reasoning on how and why decisions were eventually taken, and also, how possible negative side effects are addressed. This means responsibility, transparency, and accountability. But for a company that operates in a range of countries, with often divergent expectations, cultural traditions, levels of development etc., this is highly complex, not only because the issues and the contexts differ, but also because the very term sustainable may be subject to different interpretations.

Sharma

Each organization has a global value chain whether it chooses or not to operate in, or enter, global arenas. Due to the complexity of global value chains of organizations, it is impractical and extremely difficult for a single organization to be truly sustainable from cradle to grave, that is, in terms of a zero or positive environmental and social footprint in its value chain. Even if an organization completely redefines its business to deliver a service instead of physical goods or digitized electrons instead of stuff, it is extremely difficult (if not impossible) to generate a zero or positive social and environmental footprint throughout its global value chain. Even the substitution of services or electrons for material goods generates massive carbon emissions and material impacts in the supply chains as giant servers consume massive amounts of energy to generate the electrons.

Each SGE is therefore a multiorganization, multistakeholder enterprise where its negative social/environmental footprints can potentially be offset by the positive social/environmental footprints of others. For example, an SGE may be embedded within a grouping of other organizations located in one or more regions based on principles of industrial ecology. This would mean that while an individual organization may generate emissions and wastes, these would be absorbed by other organizations, and so on, until there are zero wastes and emissions leaving the grouping. Similarly, an SGE may be embedded within a network of partnerships with NGOs, microcredit organizations, self-help groups, communities, and local governments to generate positive social and environmental impacts in the upstream and downstream value chains of these groupings.

Waddock

By definition, the word sustainable means no growth—sustaining or keeping what already is. Sustainable enterprises focus on developing a prescription for profitable, human-scale business enterprises that, by connecting with all stakeholders and the natural environment, operate in tune with social progress and in harmony with planetary boundaries (Waddock & McIntosh, SEE Change: Making the Transition to a Sustainable Enterprise Economy, 2011). Focusing on reasonable returns and profits, rather than constant growth, they inherently have a multiple (environmental, social, governance, and financial) bottom-line orientation. They understand and work within resource and human limitations, providing “decent” and stable, reasonably paid work. They pay their taxes, and developing strategies, policies, and practices that contribute to the well-being of their stakeholders, societies, and the natural environment, rather than detracting from them or destroying them. And since no global enterprise is remotely sustainable today, a shift toward sustainable global enterprise means a radical system change. In this change, global enterprises would necessarily incorporate a “do no harm” mentality into their production of goods and services with respect to the natural environment and within the societies and communities where they operate.

Hart

I don’t believe it is either. Instead, it is simply an imperative. If we do not figure out how to make this transition in the next two to three decades, our society, as we currently know it, will collapse. The clock is ticking. Luckily, the institutions of entrepreneurial capitalism are ideally suited for the sort of experimentation, creative destruction, and scaling that will be needed to make this dramatic shift.

Kolk

This depends of course on one’s definition of an SGE, but as I said in response to the first question, even for the approach that I described (which is a different ideal type than others may have), this is pretty difficult. Multinational firms are complex entities, usually spread over a large number of countries, with a range of business units/lines of business. And “sustainability” also encompasses many different aspects and subaspects—environmental, social (employee and/or community based, but can also be human rights more broadly), ethical, and even economic (in the sense of generating employment and poverty alleviation). So some companies can have a positive impact on one or more aspect, at a certain moment at a certain location, but that may be different for another time/place/issue. For example, Wal-Mart was chosen as the best employer in China while being under attack on this same issue in the US and simultaneously developing rather far-reaching corporate environmental policies.

Sharma

As pointed out above, given the current structure, institutional structures, and organization of firms, SGE is an unattainable idea for a single organization but achievable via carefully designed and crafted multiorganization, multistakeholder partnerships where each organization offsets another’s negative social and environmental footprints.

Waddock

Well, in many ways, SGE seems like an unattainable ideal, given the momentum and powerful forces, including the financial system and powerful political forces, behind the current economic model. The current economic model fosters linear growth, excessive consumption and materialism, and an inherent unsustainability. There is, however, evidence that some large enterprises are moving in the direction, and faster than most governments, of sustainability—or what they are calling sustainability—because their leaders recognize the imperative that the world faces.

Hart

Existing MNEs are a long way away from realizing the vision of sustainable enterprise. As I have argued elsewhere, most MNEs have engaged in “greening” reforms to make current products and processes less bad (as Bill McDonough would say), but few have made significant headway yet in leaping to the clean technologies of tomorrow or the business models of the future that will be needed to include the 4 billion plus at the base of the income pyramid in the capitalist dream. This is the “beyond greening” revolution that is just getting started.

Kolk

A generic assessment is difficult. It is undoubtedly true that sustainability issues have become important for multinationals. There is awareness and some degree of accountability, as demonstrated by the multitude of sustainability/ CSR reports published—I have followed and examined this trend myself (Kolk, 2010c). However, this is a largely voluntary exercise and companies can expose whatever they prefer. Still, there is a lot of activity, although one company can be active on climate change but not on human rights, or a leader in one location but not in another, or have a great corporate policy but lacking implementation, etc. So even for one MNE it is often very hard to establish their “performance,” and the broader you take the concept, the more difficult it becomes. Let alone that we can assess this for MNEs from different developed, emerging, and developing countries and cover the range of locations where they are active. This also points at a large research agenda.

Sharma

Even the most advanced MNEs are at very early stages of beginning to understand how to develop business models that can generate an economic return while generating positive environmental and social impacts. Global enterprises have just yet begun to understand and measure their social and environmental footprint along the entire value chain. Some such as Wal-Mart have begun to address the sustainability footprint of its hundreds of thousands of suppliers. However, Wal-Mart has not even begun to understand the sustainability impacts of the second-stage or third-stage suppliers (that is, its suppliers’ suppliers, and so on). Others such as P&G have been active in examining the life cycle of their products but have not addressed their vast global supply chains. Similarly, while several MNEs have entered the base of the pyramid markets where people earn less than a dollar a day, there are yet no viable examples of sustainable MNEs or truly sustainable business models.

Waddock

Today’s MNEs are operating in a business-as-usual mode that relies simply on linear growth, continued fostering of ever-more consumption, and a purported belief in the maximization of shareholder wealth. They have given much less attention to the contributions, investments, and inputs of other stakeholders, who also, in reality, are necessary for a successful business. Efficiency and cost control are central values, while as many costs as possible are externalized into the social, economic, and ecological environments. Competition is the heart and soul of many companies’ philosophies, with the idea that they will, as Dr. Seuss’s The Lorax says “bigger and bigger and bigger” themselves endlessly. Because of these attributes, the current model on which companies are based is inherently unsustainable in a world whose limits are becoming increasingly clear.

In contrast, an SGE would be based on a different model, one that is oriented to cyclical, and sustainable production and service cycles. It would be based on a holistic assessment of the needs and interests of a wide variety of stakeholders and oriented toward balance and equilibrium, health and well-being at the individual, company, societal, and ecological levels. In a sustainable enterprise the definition of wealth is equated more with well-being than just money or profits, and costs would be internalized through process of life cycle or full cost accounting, so that the real costs of producing goods and service are accounted for. Further, goods would be produced with longevity and reuse in mind, and companies would orient themselves toward servicing those goods already produced, rather than attempting to sell more “new and updated” products constantly. Company purposes would be prosocial and proecological, and hence public as well as private, and oriented toward preservation of a future. In that future, all of humanity and the other creatures and ecosystems of the world can survive and even thrive.

Hart

I believe long-run survival is at stake. Those MNEs that “crack the code” on sustainable enterprise will become the icons of 21st-century capitalism (along with the new entrants that will be revealed to us). Those that do not will be relegated to the dust bin of history. We already see this happening. It’s just that governments are hesitant to let the gales of creative destruction really blow (witness the U.S. auto industry).

Kolk

There is an abundant literature that shows a mix of drivers for firms’ social and environmental strategies, performance, and (disclosure) practices, partly firm-specific, industry-specific and country-specific aspects: thus, individual, organizational, institutional (local, national, international) as far as the firm is concerned and with a whole set of stakeholder influences potentially playing a role. The exact balance depends on the specific situation of the MNE and the issue at hand. Reputation and visibility are important factors for MNEs—so there is the danger that those outside the public eye feel less pressure to do something. This applies, for example, to companies that do not sell directly to end consumers but are in business to business, or those originating from countries where domestic stakeholders are less sustainability oriented. In both cases supply-chain pressures from visible MNEs may have an impact, but this is much more indirect, thus representing a different mix (and perhaps even a relative absence) of drivers.

Sharma

It is possible that some MNEs are driven by the leadership’s personal values of creating a sustainable world. Business leaders such as Ray Anderson of Interface and Yvonne Chouinard of Patagonia are examples of such leaders. However, in most likelihood, MNEs are searching for growth in nonsaturated and less competitive markets as developed economies mature, slow down, or become stagnant. These include markets at the base of the pyramid. They realize that conventional paths of industrial development will not work in markets that are culturally very different and hence present very different environmental and social issues as compared to developed markets. For example, developing-country markets are characterized by major social problems such as massive poverty, lack of women’s rights and human freedom, and child labor, etc.

There is another form of SGE which did not start as an MNE: organizations that started with a social mission and subsequently became profitable and global. A famous example is Grameen bank that launched Grameen Bank USA recently and has plans to take its Grameen Bank and Grameen Phone model global while putting all its profits in a trust for reinvestment in socially oriented ventures. It is worth exploring whether this is the right model for developing an SGE rather than a for-profit MNE struggling to reduce its social and environmental footprint.

Waddock

Visionary leadership at the top or from within the enterprise that recognizes the need for a true sustainability orientation (e.g., Interface; compare. Dow and DuPont, who recognize that their future success is dependent on a healthy environment); external stakeholder pressures from activists, NGOs, community organizers, and international agencies, peer networks, coalitions of signatories to various principles and standards, like the World Business Council for Sustainable Development, the UN Global Compact and media attention; Web 2.0 and other interactive technologies that connect activists to create new movements; Investor pressures from the approximately 10% of investors who are already concerned about the social, equity, and ecological impacts of firms; employee pressures. However, no one of these forces is likely to be the cause of a shift toward sustainable enterprise. Rather, some combination of many of them is the most likely way forward. They can build further pressures on governments for regulatory and legislative reform to redesign, redirect, and reinvent corporations in the future to meet the needs of the 21st century.

Hart

As I have argued elsewhere, I believe the critical leverage point is taking the “green leap”—running commercialization experiments that seek to incubate tomorrow’s distributed, small-scale green technologies first in the underserved communities at the base of the pyramid. Once firmly established in these underserved spaces, the new technologies, industries, and business models can then “trickle up” toward the top of the pyramid.

Kolk

For a multinational to take social and environmental issues into account properly, this needs to be embedded overall at all levels and all locations, supported and often initiated from the top. But this is not without complexities, especially when MNEs are involved that have a large number of subsidiaries in many different countries and a range of activities that have social and environmental impacts—there are many dilemmas to be considered. And transparency and accountability, which can be seen as crucial components, also require courage as it may not be possible to please everybody. Structure, culture, and the management and reporting systems will need to be changed in most cases.

Sharma

The MNE has to begin with a clear vision of a sustainable business model and how to reconfigure its current businesses and strategies toward that model. For example, DuPont has adopted “life sciences” as a sustainable business model and has been selling its chemical and plastics businesses after reducing their environmental impacts by adopting eco-efficiency strategies. All future investments, developments, acquisitions, and partnerships are focused around the sustainable vision. At the same time, the MNE has to understand, identify, and measure the social and environmental impacts for each element of the value chain and design/redesign its activities and configure/reconfigure its capabilities to generate positive economic, social, and environmental impacts. This is a long-term complex process and requires a stable enduring vision from the top management team. The MNE has to make a decision to focus on the long-term versus reacting to the vagaries of short-term performance demands of its stakeholders. This is not impossible and some MNEs such as DuPont have set upon this path. However, it takes tremendous leadership.

Waddock

An MNE can become an SGE by understanding resource limitations, by operating in accord with ecological principles like those of the Natural Step, by restoring or renewing local environs when they need to use renewable resources, and by avoiding the use of nonrenewable resources. They would foster well-being among their employees and their employees’ families, communities, investors, suppliers, and customers by making useful and necessary products with long life cycles and internalizing their costs. They would improve their offerings through “servicization” models that enhance the usability, longevity, and appeal of products rather than fostering consumption and materialism. They would market products and services honestly and with integrity, and keep integrity as a core value with respect to all of their stakeholders. They would value competition and they would also equally value collaboration and cooperation, both with other business enterprises and with enterprises in other social sectors, including governments and civil society enterprises. They would also value the natural environment and people as ends in themselves.

It would be more likely to be a systemic change process that happens from the “bottom-up” through the process of, what Joseph Schumpeter called “creative destruction,” than from any kind of top-down change. That is, it is likely that new enterprises carrying some of the values articulated above will form and start to grow. Examples of these new forms of enterprises are B Corporations, Conscious Capitalism, social entrepreneurship and enterprise, and hybrid organizations. And some of these will become large enough to replace or displace existing enterprises—and that they will do so carrying their own set of foundational values and orientations.

Hart

Without shape-shifting the strategy and business model, “conflicts and trade-offs” are inevitable. In fact, I would argue that it is the presence of seemingly insurmountable trade-offs that deter most firms from pursuing truly sustainable strategies. The trick is to figure out how to shatter the apparent trade-offs and optimize the outcomes for all stakeholders, including the investors. There is growing evidence that this is possible, witness the recent book by Raj Sisodia and his colleagues, “Firms of Endearment.”

Kolk

I am not sure what sustainable development governance exactly means, this is a very contested terrain and as complex as the issues faced by multinationals. There are local, regional, and international policy processes, on several topics, and very often protracted—climate change is a case in point. In addition to policy makers, other stakeholders, particularly NGOs are involved as well. Besides the variety of sustainability issues and diverging perceptions about concepts, and distribution of costs and benefits, an MNE need to decide in which forum(s) or issue arenas to participate and in what way—i.e., individual or via industry groups, and what position to take (e.g., merely following, setting its own policies in an active way, etc.). Policy makers and NGOs can try to involve MNEs—and already do so, in a variety of partnerships and other collaborative settings—but there are many potential sources of tensions here as well.

Sharma

Becoming an SGE requires partnerships. This inevitably requires negotiation and compromise to avoid conflict and a breakdown of the partnerships. Generating profits, while creating positive social and environmental footprints, requires patient capital and a long-term orientation. Organizations have to change decision rules in order to evaluate performance over longer periods of time and to value natural capital and social welfare.

Moreover, social inequity breeds environmental damage, especially in BOP markets. For example, the poorest cut trees and vegetation for firewood and fuel due to lack of access to, and adorability of, any other form of fuel. Countries such as India compound the environmental problem by providing subsidized kerosene as a cooking fuel to the poor, generating higher levels of GHGs. Within such a context, a SGE needs to develop a business model that addresses poverty while ensuring that the poor have access to cheap affordable and reliable renewable energy.

Waddock

Transforming into sustainable global enterprise requires a significant mind-set shift as well as systemic change to bring about new forms of enterprise that inherently think about the multiple bottom lines of business profits, society, equity, and nature. The “growth” mentality of the current system is out of line with the concept of sustainability—and even of thrivability, a capacity to thrive using current or fewer resources. Both the economic system as a whole and the fundamental underpinning of corporations need to emphasize thriving, thrivability, or well-being rather than growth.

Companies and their leaders are going to have to learn to focus on balance, equity, and sustainability for all of their stakeholders rather than the (ostensible) focus on shareholders alone. Decision making in this system will be more complex because it will be systems-, stakeholder-, and needs based, rather than oriented simply toward financial returns. Governance leaders, that is, directors, will need significant training and education in areas of sustainability, climate change, social justice and equity, and multiple bottom lines to even begin thinking about making this change toward balance, equity, and sustainability.

Hart

In my view, one of the potential pitfalls of a vision of sustainable global enterprise is pursuing it at too grandiose or “large scale” a level. Indeed, some companies stake their claim on the future by hitching their wagon to multisector and multilevel collaborations that require unprecedented levels of cooperation to ever bear fruit (witness the difficulties of achieving global climate governance). Instead, I advocate a more focused and practical approach by concentrating attention on real “on the ground” business experiments in actual communities. This limits the complexity of the undertaking, increases the likelihood of success, and limits the cost of failure. In short, I ascribe to a “fail small-learn big” philosophy of sustainable global enterprise.

Kolk

Peculiar to MNEs is the debate on whether, on the one hand, to adapt and be responsive to local circumstances, given divergent stakeholder pressures, markets and customer preferences, and cultural differences. Or, on the other hand, whether to standardize across locations to reap economies of scale and scope, and rely on global brands, assuming that buyer behaviors become more homogeneous and markets integrated. This global integration versus local responsiveness, or standardization versus adaptation, has been examined for environmental, social, and ethical issues as well. Within the broad local–global continuum, there is a large variety in norms and stakeholder expectations, that MNEs need to balance: those originating from international agreements, those that are part of a so-called “market morality” (usually part of an industry initiative), and those applicable in home and host countries. Although these norms may overlap, they can diverge as well, resulting in managerial discretion in a “moral free space.”

Sharma

Western MNEs suffer from a negative image in most developing countries. This is a hangover of colonial rule and exploitation in past centuries. MNE presence in developing countries is often still seen as neo-colonialism. Therefore, MNEs have to develop “native capabilities” (London & Hart 2004), address the core/fundamental social needs in these markets (rather than pushing their products), build economic capacity for the local communities while generating profits for themselves, and be seen as local rather than foreign via true integration in local contexts. As mentioned above, the social and environmental issues relevant in any context are determined by society which is represented by the various stakeholders of any MNE. Therefore, in order to understand and address sustainability issues in any country, region, or jurisdiction, the SGE has to establish partnerships with multiple stakeholders. These stakeholders will not only help the SGE understand and measure the sustainability issues but also partner with the SGE to address them in order to develop a viable sustainable business model.

Waddock

There are clearly risks, evident in the US’s political landscape today that are regressive rather than progressive. So, the path forward is hardly clear, nor are these more progressive forces as deliberately aligned in a strategy to move their agenda forward as are the more regressive forces of conservatism.

They could face the forces of conservatism, which want very much to continue business as usual, with profits and resources going to the already well-off. The Bretton Woods organizations and most governments, since they focus on “what is” rather than “what needs to” or “might be,” will likely attempt to continue business as usual as much as possible and support any reluctance on the part of companies to make the necessary shifts as fast as they need to be made. On the other hand, companies are used to operating in fast-paced, constantly shifting, and dynamic environments; therefore they may well be able to “lead” governments and their business coalitions toward necessary change if leaders can be developed inside companies who understand the imperatives that the world is facing.

Hart

In my experience, most developed-country MNEs are focused fundamentally on “greening”—eco-efficiency, sustainable supply chain management, and stakeholder engagement—around the current businesses. This means they primarily pursue what Clay Christensen calls “sustaining” innovation. In contrast, developing-country MNEs are bimodal: Some are global laggards, demonstrating the worst, most polluting and exploitive business practices to be found; others, however, are true “disrupters,” showing the potential to change the game and leapfrog over industry incumbents—to clean technology and innovative BOP strategies. Right now, my money is on this second set of developing country, emerging MNEs.

Kolk

Stakeholder pressure and norms in emerging countries differ from those in developed countries. In the case of developed-country MNEs, home-country constituents exert most pressure and MNEs have learned to adopt stakeholder-mandated sustainability standards. When operating abroad, these MNEs have been confronted with host-country social, ethnic, religious, community, and/or environmental conflicts, with MNEs’ home-country constituents also exerting pressure to accommodate these concerns properly and adhere to similar norms abroad. For MNEs from emerging countries, although their home-country context is highly idiosyncratic, this has been different. Home-country societal pressure has been absent or focused more on the domestic setting and its problems, so reputational effects that might harm their activities abroad have been limited. They seem to have more room for maneuver, given the absence of home-country constituents that worry about their international sustainability behavior; ownership (e.g., by the state, private nationals, or foreign investors) may play a role as well though. If emerging-market MNEs internationalize to developed countries, adapting to stakeholder-mandated requirements may not be easy given unfamiliarity.

Sharma

The management literature usually adopts a Western or Northern perspective of MNEs based in developed countries attempting to build global enterprises. However, it is important to look at the rapidly accelerating trend of MNEs from developing countries building global enterprises. Based on this trend and the significantly faster economic development rates of countries such as India, China, and Brazil, this trend will accelerate further and a decade from now, companies from developed countries could well be a minority in a list of the world’s top 100 MNEs. While MNEs from developed countries have more advanced environmental practices primarily due to the negative impacts of climate, water bodies, and habitats of the large quantities of wastes and emissions of harmful substances and chemicals that they generate, these MNEs are struggling to understand how to integrate social equity into their decision-making criteria. Base of pyramid contexts are very alien for these companies and the learning curve is very steep and long. MNEs from developing countries, such as India’s TATA group were founded on the principles of social equity for communities and employees. These MNEs have evolved based on more labor-intensive operational methods and have not developed advanced environmental practices due to a lower negative impact. However, adoption of advanced Western technologies and chemicals and the rapid rate of economic development is creating a looming environmental crisis of gigantic proportions as China has overtaken the US as the world’s largest emitter of carbon dioxide. There is potential for partnerships between MNEs from developed and developing countries to learn from each other to improve their social and environmental performance, respectively.

Waddock

Many companies in developing nations are SMEs, rather than MNEs, and are therefore much more “rooted” locally than are MNEs, which tend to operate in a global context without much sense of their original rootedness. In addition, many developing nations already are fully aware of resource constraints and operating in a resource-constrained environment. There are two polar opposite forces likely to emerge. One is a demand for a more eco- and human-sensitive approach premised on what already exists in many of these locals. The other is a demand to be “just like” the nations that have already squeezed resources out of the natural environment and looted and pillaged their way to prosperity—or perceived prosperity.

Hart

By far, most published peer-reviewed literature in SGE to date had focused on the pollution prevention and eco-efficiency agendas. Why? Because there are large-scale databases to be analyzed which enable sophisticated, quantitative, hypothesis testing work. It is this sort of work that affords the quickest, most direct route to tenure—six “A” journal articles in 6 years. Unfortunately, the current structure of the academic reward system mitigates against the sort of work that would really push the agenda forward. What we really need is more prospective, action-research work which pushes the state of the art—what C. K. Prahalad called “next practice” rather than such a singular focus on existing “best practice.”

Kolk

There are studies that have also empirically analyzed sustainability and MNEs (though not approached as SGEs). But, as we have shown in a recent overview paper (Kolk & Van Tulder, 2010), the geographical distribution is very unbalanced, with hardly any studies on the poorest countries. Big problem is the lack of large-scale databases, and primary data collection is very difficult and time-consuming. This may explain the focus on the U.S. and some European countries, and on topics such as corruption and environmental standards (e.g., ISO 14001) for which rankings, adoption rates, or other information can be obtained. Settings where doing research is complex, for cultural, political, linguistic, or security reasons, tend to be avoided, leading to studies characterized by lack of local knowledge and context-rich approaches. Such absence is understandable in terms of a publication strategy because risks are higher from that perspective as well. This is also because more innovative or unusual data collection and research methodologies need to be adopted, and arriving at sufficiently large sample sizes for adequate quantitative analyses is hard.

Sharma

The SGE literature is extremely limited with rich potential for development. There is some empirical work that focuses on a narrow range of environmental practices of MNEs (Christmann & Taylor, 2001; Dowell, Hart, & Yeung, 2000; Nehrt, 1996, 1998)

At the same time, there are some pioneering more practitioner oriented rather than theoretical articles:

At best, these articles develop midrange theories. In addition, there are several descriptive case studies. The concept of SGE needs clear definition and theoretical perspectives that explains the logic for becoming a SGE and the factors contributing to success of SGEs.

Waddock

There is a beginning literature on SGE, but it is not necessarily theoretically framed at this point. Most of our theories are quite limited in that they are not systemic in their orientation (see some exceptions in work on sustainability put forward by Hart and other ecologists). Unfortunately, the discipline-based orientation fosters a narrow conception of what needs to be done, whereas the reality is that more holistic, systems-based approaches (e.g., like the one offered originally by Peter Senge in The Fifth Discipline, 1990, rev. 2006) are what is needed—but they are not theoretically easy to develop in the narrowly constrained way that theory is conceived today, so are less likely to be academically acceptable than are many more narrowly conceived framings.

Hart

I’ll show my clear bias by saying that I’m still pretty high on the “natural-resource-based view of the firm.” I think we have only scratched the surface in testing and developing this theoretical framework, as I suggest above.

Kolk

In my view, theoretical frameworks from the field of international business should be used much more, as this is where a large body of knowledge on all aspects related to MNEs have been built up. I have referred to some of this in my answers to earlier questions, and recent articles in special issues of international business/management journals have laid some good foundations for follow-up research. In this context, it is also important to keep in mind that there are hardly truly “global” firms: research has shown that most multinational firms are regional, with the majority of their sales and assets concentrated in one region (e.g., Europe), or two at best, rather than spread across the Triad, let alone covering the “globe,” including the South as a whole. The number of truly global firms is very small. This has clear implications for sustainability issues as well, as I have explained in more detail in a recent paper (Kolk, 2010b).

Sharma

There is no extant theoretical framework. The multistakeholder, interorganization collaboration and RBV literature offer the greatest promise for future theoretical development.

Waddock

As noted in the response above, holistic systems approaches like that of Peter Senge’s Fifth Discipline, the Natural Step’s systems constraints, modeling similar to but broader than Michael Porter’s five forces model, Fritjof Capra’s Web of Life and Turning Point, some of Stuart Hart’s work, and my own Leading Corporate Citizens, offer some prospect for framing how we need to understand business going forward.

Hart

You cannot take it all on simultaneously. I am afraid it is important to take a more focused and targeted approach, especially to empirical works in this domain.

Kolk

Important I think is a clear focus and a good research design. It is impossible to cover everything in a single study, or even a series of studies. So we need to specify what we are talking about exactly, and make sure to have a clear focus in the research undertaken so that studies build on one another and reckon with the complexities of international business.

Thus, a focused research question, for example, on a specific issue and/or sets of companies and/or particular countries/regions, and then selecting a good sample that may allow for subsequent generalization, are good first steps. It is also important to consider what type of data can be collected, and how and where. Especially in view of the difficulties that I mentioned in my response to an earlier question, on the state of the field and data availability problems, this is crucial for not only determining the feasibility of the study but also its added value and the “so what.”

Sharma

I would suggest that we develop deep explanatory guiding theories first before we jump into research design and methodological issues. Organizational performance, even within a single market context, is also very complex and may result from interactions between the industry structure, internal capabilities, strategic alliances, operational strategies, human resource strategies, emerging external contingencies, changing consumer preferences, etc. This does not prevent researchers from biting off a chunk of the complexity, developing an effective research design, and developing explanations to shed light on a piece of the puzzle. The SGE literature will have to develop one piece of the puzzle at a time and this is an exciting area of research rich with promise and potential, not only for research but also for its potential impact on helping understand how to create a more sustainable world.

Waddock

Interestingly, there is a research project that is just beginning under the direction of Maurizio Zollo of Bocconi University called the GOLDEN (Global Organization Learning and Development Network) Project for Sustainability, which attempts to deal with the complexities of system change with a pre–post/intervention design, with participation expected by research centers from around the world. It is research of this scale and scope that will be needed, with systemic approaches that both quantitatively and qualitatively tap into what companies are and might be doing, how what they are doing effects (or does not affect) change, and what the performance and other outcomes are.

Hart

Again, I think we need to focus more attention on “future-creative” research that helps us invent those sustainable enterprise practices of tomorrow, and less on “hypothesis-testing” practices from the past using large-scale data sets.

Kolk

We are looking for answers to a range of questions, including how MNEs perform, how this differs for those from different sectors and countries of origin, and how it works out in different host countries. And then for the various dimensions of sustainability—how these interact and influence each other or not; how do MNEs organize this (internally, in their supply chains), and what works best. How do they address the diversity of norms; are there reputational/performance implications; and what role do consumers play in all of this? Dynamics over time, and herd behavior (follow-the-leader type of mechanisms) are also interesting issues to know more about. The interaction between MNEs and stakeholders (including governments), and who influences which firms most, and under which conditions are also important questions. It is also important to pay more attention to “uncharted territory” regarding geographic locations despite the difficulties of doing research there. From a more normative perspective, everybody will be interested in knowing what works best to help solve the crucial problems that we face.

Sharma

What type of organizational configurations will be best positioned to achieve zero/positive social and environmental footprints throughout their value chain? Does an organization that starts with a social mission have a greater potential to become a SGE versus one that starts as an MNE with an economic mission? What factors motivate an MNE to venture on the path of becoming an SGE? What external and internal factors—institutional, industrial, market, organizational, and managerial—contribute to the success of an SGE? How can public policies and regulations support and enhance true SGEs?

Waddock

Much bigger and less narrowly constrained questions than we have been dealing with for most of the past 20-plus years will need to be addressed. We need to find ways to ask and then answer the big questions with the “so what?” appendages, to make our work both practical and understandable by other academics and by managers and policy leaders. Questions like How do companies move a sustainability agenda forward? What types of practices and strategies will be successful in a thrivability (or resource constrained) context? How can companies learn to simultaneously compete and cooperate? What economic and social systems will serve the needs of the 21st century? How do we develop “thrivability” that allows human and other creatures to thrive in a way that does not further damage—and even begins to repair the earth? These questions and similar ones oriented toward the future are much harder to answer than questions based on what happened in the past, but the future is calling to us in ways that neither humanity nor academics have faced before. We need to find new ways to answer that call.