1. The legitimate truth about
sustainable development
Olivia Aronson
PhD Student
March 15th, 2013

2. "We are living on this planet as if we had
another one to go to" -Terri Swearingen

3. Introduction
I explore the past and current literature in order to clarify the
existing logic behind business sustainability; primarily, what
motivates organizations to participate in sustainable
development
 Business affects, and is affected by, limits of the natural environment
• Business is so influential in society that a lack of understanding could
further market failures (Dean & McMullen, 2007) and increase
environmental repercussions
 Many scholars have attempted to examine the rationale for
participation in sustainable development but with little consensus
(Bansal & Roth, 2000 Dillon & Fischer, 1992; Winn, 1995)

4. Presentation Outline
 Define sustainable development
 Examine the literature to date
• Outline the historical background
• Explore the drivers thought to motivate businesses to participate in
sustainable development and their expected outcomes
• List and examine the proposed benefits of participating in
sustainable development
• The ways that organizations pursue sustainable development and
some challenges to the practice of sustainability
 Future Directions

5. Contributions
 First, it provides a review of the sustainability literature
 Second, provides examination of Bansal & Roth’s
(2000) findings of the motivations for ecological
responsiveness
• Must discern motivations in order to create operational
models
 Third, can promote discussion among scholars towards
new theories, models, & paradigms
 Lastly, practitioner utility

6. The Sustainable Development
Construct

7. How did we get here?
When the industrial revolution began in the early 1700’s it
spurred massive industrial development that brought about:
 technological innovations
 an increase in production of goods and services
 economic power
 & a rising human population (Ashton, 1998)
 Over the last 300 years this development has resulted in
environmental degradation (Brown, L. and the staff at the WWI, 1991)
 A dramatically increasing human population will enhance the need
for a larger food supply, more space, energy, and an increase in the
production of goods/services (Ehrlich & Ehrlich, 1991), potentially
further amplifying environmental degradation (Meadows et. al., 1972)

8. Mile markers in the evolution of sustainability
 1972 - UN conference
 1983 - WCED
 1987 - Brundtland Commission released a report that highlighted
economic and social problems.
• Defined and discussed the term “ecologically sustainable
development” (ESD)(WCED, 1987)
 1992 - Rio de Janeiro Earth Summit called for increasing attention,
awareness, and action towards sustainability issues
 1996 - World Scientist’s Warning to Humanity
 1997 - Constanza et al. assessed the financial value of the World’s
ecosystems
 UN Global Compact – encourage human rights and sustainability
initiatives

9. Increase in Literature
Over the past two decades there has been an increase in
sustainability literature (Etzion, 2007)
Organization and Environment journal was founded in 1997
• “demonstrate connections between the natural environment and systems
of organizing human production and consumption”(Foster, Jermier, &
Shrivastava, 1997)
Additional theories and models have been proposed to explain: how
corporations manage environmental problems, what motivates them
to become sustainable, and incentives for organizations to participate
in sustainability (Hart, 1995; Shrivastava, 1995; Bansal & Roth, 2000).
• Etzion (2007) provides a review of literature and evaluated
environmental issues and organizations using a multilevel approach
– Industry, organization, and firm levels

10. Sustainable Development definition
Sustainable development is “development that meets
the needs of the present without compromising the
ability of future generations to meet their own
needs” (WCED, 1987)

11. Sustainable Development mission
 Sustainable development seeks to integrate social and
environmental concerns into a company’s goals and
mission without foregoing financial vitality (Etzion,
2007)
• CSR, ESD, SD, & sustainability share similar focus and are
often entangled terms in the research and practice literature
 Business has a great deal of influence in society,
making them a primary instigator of social change
(Shrivastava, 1995)
• What can they do?
• Incentives for corporations

12. Logics to Sustainable
Development

13. Bansal and Roth (2000)
 Paul Shrivastava (1995) - proposes a framework in which
businesses can approach and manage environmental
problems
 Hart (1995) – NRBV
 Bansal and Roth (2000) created an advanced model of
corporate ecological responsiveness in order to explain
why businesses become ecologically responsive and how
motivation and context influence their actions
• Corporate ecological responsiveness: “a set of corporate
initiatives aimed at mitigating a firm's impact on the natural
environment” (2000: 717)

14. Bansal & Roth (2000)
Identified three primary motivators:
 Competitiveness (with anticipated higher profits)
• “the potential for ecological responsiveness to improve
long-term profitability” (2000: 724)
 Legitimation
• the desire of a firm to improve the appropriateness of its
actions within an established set of regulations, norms,
values, or beliefs (Suchman, 1995)
 Environmental responsibility
• stems from the concern that a firm has for its social
obligations and values (2000: 728)

15. Why organizations engage in
Sustainable Development

16. Research on sustainability motivators
 Bansal and Roth (2000) - Primary model
• Firm motivations influences ecologically responsive initiatives
(Bansal & Roth, 2000)
 Bansal (2004) identified drivers for why businesses choose to
implement sustainable policies and practices
• Two different perspectives- Resource based view (RBV) and the
institutional view
 Sharma and Henriquez (2005) researched stakeholder influences
upon managers in the decisions made about which corporate
sustainability initiatives to adopt and the financial and timing aspects
that influenced firms to alter their strategies

17. Financial Performance
Majority of articles use RBV to best explain and utilize
the concept of dynamic capabilities in an effort to
establish a competitive advantage
Environmental initiatives  financial performance
 When looked at through the lens of the RBV of the firm,
proactive environmental strategies have been shown in some
cases to have a positive correlation with financial performance
 Evidence also when mediated by dynamic capabilities
• (Galbreath & Shum, 2012; Hart, 1995; Sharma & Vredenburg, 1998;
Wagner, 2005)

18. Financial Performance Research
 Positive between CSR and financial performance (Moskowitz,
1972)
 Negative (Bragdon & Martin, 1972; Vance 1975)
 No relationship/Neutral findings (Aupperle, Carroll & Hatfield, 1985;
McWilliams & Siegel, 2001)
 When they flipped the arrows (McGuire, Sundgren, Schneeweis,
1988) found financial performance to be a neutral predictor CSR
• CBA
 Positively related half the time, rarely negatively related (Margolis
and Walsh, 2003)
 Klassen and McLaughlin (1996) found a correlation in over time
periods
• Authors suggest that a competitive advantage may be obtained by
capabilities other than just greater efficiencies

19. Financial Performance conclusions
While these previous studies found mixed results, more
recent meta-analytic studies determine a clear positive link
between environmental performance and financial
performance (Orlitzky, Schmidt, & Rynes, 2003)
Some scholars (Aguilera, Rupp, Williams, & Ganapathi, 2007) take this to
signify the end of long-standing debates about sustainability and
corporate financial performance (Margolis & Walsh, 2003; McWilliams &
Siegel, 2000, 2001; Ullmann,1985)
However, literature still lacks clarity and many scholars have
persisted (Hart & Dowell, 2010; Hart & Milstein, 2003)

20. Intrinsic motivators
Because it is the right thing to do, it is their
desire to contribute to society, it is their
responsibility
Ghoshal (2005)
• Bad management theories spur bad management practices
• Leaves little room for few positive intrinsic motivators for
engaging in sustainable development practices
Some firms are driven by concern for the social good
• Individuals and leadership (Andersson & Bateman, 2000;
Buchholz, 1993; Lampe et al., 1975; Winn; 1995; Wood, 1991)
• Ex. Tom’s shoes & Whole Foods

21. Legitimacy
Utilize institutional theory (DiMaggio & Powell, 1983) and
stakeholder perspective (Freeman, 1984) to analyze an
organization’s quest to meet norms and satisfice expectations
 “Public perceptions of environmental problems along with increased
environmental legislation are two key reasons why the environment
became an important issue for corporations” (Banerjee, 2008: 66)
 Theoretical relationship: perceived firm legitimacy  long-term firm
survival (Zucker, 1987)
• A competitive advantage (Westley & Vredenburg, 1991)
• An unsystematic risk decreasing mechanism (Bansal & Clelland, 2004)
• Organizations are motivated to display interest in environmental
initiatives, but only if their stakeholders are exhibiting
scrutiny/pressure upon them (Chiu & Sharfman, 2011)

22. Conclusion & Discussion

23. Conclusion

24. Discussion (cont.)
Institutional theory posits that organizations attain
social legitimacy as a much needed resource
• Given the lack of consensus in the financial performance
realm and the rarity of intrinsic motivation –
• Perhaps sustainable development is nothing more than
a legitimacy seeking process

25. If the dominant rationale for engaging in sustainability is the
pursuit of legitimacy via institutional pressure then
sustainability risks existence as a myth-infused fad, one that
can be delegitimized as easily as it has gained legitimacy over
the past two decades.
Or perhaps the future is not so bleak
If sustainable development in organizations is indeed a
reflection of broader social values, then perhaps we as society
have a more active role in the future of organizational
sustainability

26. Challenges
 The complexity of the interdisciplinary issue has made
agreement difficult and challenges still exist (Etzion, 2007)
• Broad definitions of sustainability constructs (Banerjee, 2008)
• Limitations in theory building (Etzion, 2007)
– Short supply of good data
– Difficulty in which environmental issues have the ability to
influence research
• Operationalization and measurement issues (Banerjee, 2008)
• Narrow research focus on the private, industrial sector (Starik &
Marcus, 2000)
• Little international research, what about developing countries?
(Etzion, 2007)

27. Future Directions
 Financial performance  sustainable development and
intrinsic motivations  sustainable development
 Coercive and normative pressures
 Create a conceptualization of performance that includes
sustainability
• The problem is not whether sustainability improves performance; the
real problem is that our conceptualizations of performance ignore
sustainability
 New sustainability paradigms
 Collaborative efforts between social and physical/natural
scientists (Foster, Jermier, & Shrivastava, 1997)

28. Progress Since Submission

29. Progress Since Submission
Propose a classification model of sustainability that
reviews and critiques research approaches and
corporate motivations to engage in sustainability
2x2 matrix
Organize the field using the dimensions of corporate
motivations and by contrasting the assumptions of the business
versus the green narrative
Introduce the ‘environmental restoration’ approach, which
consists of discourses such as ‘natural assets’ as opposed to
natural resources.

31. Environmental Restoration approach:
 Performance measurements
 Paradigm
• Requires a new mindset and subsequent new actions
• Moves towards normative theory and away from
instrumentality

32. Questions?