Building Theory at the Intersection of Ecological Sustainability and Strategic Management

Broadly, an anthropocentric perspective is characterized by the notion of human exemptionalism: Humans, unlike other species, are exempt from the constraints of nature, and the whole of nature exists primarily for human use, with no inherent value of its own. This perspective is manifested as a belief in abundance and progress, unlimited growth, and prosperity, faith in science and technology, a commitment to a laissez-faire economy, limited government planning and intervention, and private property rights. It illustrates the modern, Western worldview, which posits that land not used for economic gain is wasted and that individuals have the right to develop land for economic profit and do with it as they see fit (Kilbourne 1998; Purser et al. 1995).

Purser et al. (1995) note some limits to anthropocentrism. The most worrying aspect is that there seems to be no overall survival plan (Kilbourne 1998; Purser et al. 1995). The consumption rhetoric is a means to an end that lacks an endpoint. From this perspective, economic growth continues unlimited and unchecked until it reaches the complete destruction of the physical environment and natural resource base (Diamond 2006), as the ultimate end result of anthropocentrism (Banerjee 2003; Capra 2004; Du Nann Winter and Koger 2004).

A key tenet of the anthropocentric perspective is the human–nature dualism, reflecting the assumption that humans are above other animals in a socially constructed hierarchy (Purser et al. 1995; Schultze and Stabell 2004; Starik and Marcus 2000). This hierarchy allows people to construe humans as morally superior to nonhumans, thus providing a justification for the domination of nature (Purser et al. 1995). The anthropocentric attitude denies that nature has any inherent worth (Gladwin et al. 1995), even though ecosystems and other species are part of the biophysical world and have properties and needs that exist independent of humans.

The anthropocentric perspective also leads human society to embrace a particular set of cultural values, beliefs, and institutions that collectively provide social lenses through which individuals and groups interpret the social world. This perspective is the current dominant social paradigm (DSP) in Western industrial society (Kilbourne 1998). A DSP serves to legitimize and justify existing institutions, thus serving as a mechanism to justify specific social, political, or economic courses of action (Padelford and White 2009).

Ecocentrism is characterized by the belief that ecosystems have inherent worth for maintaining planetary homeostasis and all life. It reflects notions of holism, integration, and synthesis, according to which human cultural systems must function within the safe operating limits dictated by ecosystems. In this perspective, the integrity of ecosystems is paramount; consequently, animals and plants have as much right to exist as humans. There is also an underlying belief in the need for responsibility toward plants, animals, wilderness, and the planet (Dunlap et al. 2000; Purser et al. 1995).

The ecocentric perspective represents a radical departure from the anthropocentric perspective and DSP, in that it is explicitly concerned with emancipating ecosystems from the effects of human mismanagement, overuse, and exploitation. As a means of fostering deeper appreciation and the intrinsic valuation of nature, ecocentrists seek to effect change at the level of human beliefs, values, and ethics (Iyer 1999). Ecocentric values align with movements to reduce excessive human population growth and human overconsumption, preserve wilderness areas, protect the integrity of biotic communities, and restore ecosystems to a healthy state of equilibrium, referred to by Spilhaus (1972) as ecolibrium.

A healthy ecosystem is dynamic but also ecologically sustainable, because member organisms flourish in their respective niches, free from distress. In turn, they have the capacity for self-renewal, self-management, and self-regulation in a self-perpetuating, closed-loop cycle (continual cycling of nutrients and energy) (Borland 2009). Healthy ecosystems do not require constant repair, upkeep, or management by humans. In contrast, unhealthy ecosystems require environmental management, constant doctoring, and engineering. As Rolston (1994) explains, from an ecocentric perspective, the main issue is conserving natural values that do not place the health of ecosystems at risk. This shift in perspective places primary emphasis on the value of ecosystem integrity (Ketola 2008). Human cultural development is encouraged, as long as ecological integrity or ecosystem health is sustainable (Linnenluecke and Griffiths 2010). In this case, the focus is on ecological sustainability, rather than sustainable development or environmental management; it is ecological sustainability that ultimately supports human existence (Bansal and Roth 2000; Porritt 2007). The ecocentric perspective is thus holistic, with a view toward the importance of the whole ecosystem and not its individual members or parts. As a result, it decentralizes humans as the sole locus of value, requiring a transformation of their anthropocentric beliefs about ecosystems.

In addition to these two worldviews or paradigms, multiple others could inform our research, such as technocentrism, humanism, biocentrism, or an embedded view (Dryzek 1997; Marcus et al. 2010; O’Riordan 1981; Pirson and Lawrence 2010). With the anthropocentric and ecocentric perspectives, we aim to capture two very different worldviews—a choice that is not intended to be polemic but rather to illustrate the extent of the different worldviews and establish two ends of a paradigm continuum, along which individuals and companies can position themselves (Dunlap et al. 2000). On this continuum, we can conceive of potential movement through developing (or changing) viewpoints, beliefs, values, and attitudes. In moving toward an ecocentric end of the continuum, the scope of justice expands (Du Nann Winter and Koger 2004), to encompass the needs of other species and measures other than financial ones. Measures of success for ecocentric business performance include financial (profit and cost savings), reputational, longevity, justice-based, and societal; however, all these measures of success are predicated on ecological success, which provides the life support system on which we and all other beings depend.

Karatas-Ozkan and Murphy (2010) also argue for paradigm fluidity and movement over time, cautioning that Burrell and Morgan’s (1979) original concept of four mutually exclusive enclaves as paradigms (functionalist, interpretivist, radical humanist, and radical structuralist) may not be salient for researching scientific, social, and organizational phenomena, because polarizing paradigms cannot fully reflect their complexity. Similar to Patton (2002), they suggest a synthesis across approaches, achieved by revisiting Kuhn’s (1970) thesis of scientific activity as a process of movement in which new paradigms emerge, so that the substantial continuity and overlap between paradigms can be acknowledged in research practice. Kuhn (1970) also notes the importance of scientific evolution as a succession of paradigm shifts, each of which completely reorganizes the mental models of the community of practitioners in the scientific field. For these reasons, we argue that anthropocentrism and ecocentrism are ends of a continuum, along which individuals and companies can view and continually review their changing philosophical positions. In turn, we believe theory building at the intersection of ecological sustainability and strategic management is a worthwhile exercise for expanding the strategic management field.

A fundamental assumption for firms that use conventional business strategies is that the economy is a “closed circular flow in which ever-abundant resources, products, and services can, forever, flow from businesses to households without stressing the Earth’s social and ecological systems” (Stead and Stead 2010, p. 491). Such strategies are not concerned with ecological sustainability; examples of firms that adopt this approach include Netto and Aldi. Traditional frameworks embedded in industrial organization economics, such as the five forces (Porter 1980) or the value-chain model (Porter 1985), emerge from such assumptions. The processes involved in applying these frameworks are linear and static (Teece 2007). For example, the process of selling a product and making a profit begins with procuring component parts and finishes with the use of the product by the end consumer, without any consideration of the disposal process or the exploitation of raw materials that make up the product. This linear process is thus a cradle-to-grave process; it also can be described as an open loop, because it does not close the circular loop of life and leaves used products as waste, from a human perspective. Nature lacks a concept of waste though, so high entropy, waste materials become a problem; because natural processes do not recognize them, they cannot break them down (Stead and Stead 2004). The firm and its business economy operate as though it were a separate, closed system, without any interaction, interrelationship, or responsibility toward society or natural ecosystems.

Transitional business strategies reflect anthropocentric assumptions and can be readily identified in today’s corporate arena, with examples such as Marks & Spencer, Procter & Gamble, Unilever, and Tesco. They operate in a linear, cradle-to-grave, open-loop fashion, but with the assumption that eco-efficiency should be pursued (McDonough and Braungart 2002). Unlike traditional strategies, this strategy introduces the 5Rs: reduce, reuse, repair, recycle, and regulate (see Table 1). In one respect, this positive approach encourages reductions in the use of precious commodities (e.g., metals, fuels, electricity, gas), and it also considers what should be done with waste materials, such as recycling them. However, these assumptions do not fundamentally change how firms make products or how consumers dispose of them. Most recycled products eventually end up in landfill sites or incineration plants, because recycling generally downgrades the fibers and materials to the point that ultimately they become useless for making new products.

Businesses that use transitional strategies still operate within a closed business system with very little interaction, interrelationship, or responsibility toward society or natural ecosystems. The products are still made conventionally, with little consideration for raw materials, the environment whence they come, the disposal process, or the environment to which they go (Martin and Kemper 2012). Therefore, 5R activities are add-on options to deal with the problems of waste and toxic material from products, after they have been created, sold, and used. This eco-efficiency process (McDonough and Braungart 2002) implies that firms are trying to be less bad than others operating according to the traditional mode. Businesses try to reduce their negative impact on the environment rather than eliminating it, such as by not creating toxic materials in the first place. The end result thus remains a physical environment cluttered by waste products and damaged by toxic production processes. Transitional strategies slow down the rate of damage and destruction to the environment, other species, and soil, water, and atmosphere—and thus to homes, leisure places, workplaces, and the quality of life.

Because the emphasis of this strategy is on resources and 5R activities, a transitional strategy reflects the RBV of the firm (Barney 1991; Levitas and Ndofor 2006; Lockett et al. 2008), and more specifically a natural RBV of the firm (Hart 1995). Hart (1995) argues that firms can achieve superior performance by managing their relationship with the natural environment and thereby developing valuable, rare, difficult-to-imitate, non-substitutable resources related to pollution reduction, product stewardship, and sustainable development. These 5R activities, with their focus on limiting damages, reflect an argument about whether it is worthwhile, from a profit perspective, to adopt an environmental strategy. Although the natural RBV embraces the idea of the natural environment, it is essentially static and designed to minimize firms’ impact on the environment, then enjoy the advantages of doing so; it does not embrace the quest for no or a positive impact on the environment. As duly noted by Hart and Dowell (2011, p. 1476), this version may not be sufficient anymore:

…most firms continue to focus on incremental strategies such as eco-efficiency, pollution reduction, product stewardship, and corporate social responsibility. As important as these corporate initiatives have been, it is now clear that such incremental sustainability strategies will simply not be sufficient. Companies and management scholars are being challenged increasingly to develop breakthrough strategies that actually resolve social and environmental problems, rather than simply reducing the negative impacts associated with their current operations.

The assumption behind transformational strategies differs: They develop from ecocentric assumptions (Purser et al. 1995). They embrace ecological sustainability, working within the constraints of natural ecosystems (Wittneben et al. 2012). The assumption is that business strategies should seek to eliminate waste and toxic chemicals from ever being created or deposited in the environment. Businesses seek to achieve eco-effectiveness (McDonough and Braungart 2002) by continually cycling only safe, bio-materials in the ecological system while keeping anything that nature does not recognize and cannot break down, or techno-materials, out of the ecological system and circulating them solely in the industrial system. To achieve eco-effectiveness, a different set of 5R activities thus may be required: rethink, reinvent, redesign, redirect, and recover (see Table 1). Rather than closing the economic and business system off from society and nature, the aim is to open it and thereby integrate, emulate, and mimic natural cycles, which would allow materials and nutrients to pass through ecosystems. Such cycles are cradle-to-cradle and closed-loop. For example, when a leaf falls from a tree in autumn, it is broken down by worms and soil microbes, which release nutrients into the soil that become available for reuse in exactly the same form in which they were released. In spring, the nutrients may be taken up by the tree and made into new leaves. This process is a perfect closed-loop, cradle-to-cradle cycle, with no waste and no unrecognizable chemicals, which makes it sustainable: Trees only grow if enough nutrients, water, soil, and sunlight are available. Discarded nutrients get taken up and used again and again, with no waste. The assumption for businesses that opt for a transformational strategy thus is that resources are finite and limited, so to become eco-effective, these firms must use the resources again and again, without downgrading them, discarding them, or producing toxic compounds that nature cannot process.

Moreover, a successful transformational strategy requires the organization to adopt a sustainability vision (Hart 1997; Hart and Milstein 2003). Managers need a long-term mindset, in which the planet’s homeostatic balance is the most important consideration, and there is no separation between the social and the biophysical world. They must believe that nature and humans together form ecosystems, and their business organizations have roles to play in sustaining and enhancing those ecosystems. Therefore, the businesses must engage creatively with physical and human ecosystems to sustain competitive advantages for the future and achieve ecological sustainability.

Commercial benefits become apparent from such a transformational strategy, including the reduced need for and reduced cost of purchasing raw materials. The increasing costs of purchasing virgin, raw materials worldwide makes it more attractive for firms to find a position in which they do not need raw materials or at least need very limited quantities. In addition, such firms reduce their costs of disposal of waste materials, and particularly toxic waste materials, which represents an increasing expense for most firms. Another benefit stems from the positive effects on corporate image and reputation. With a transformational strategy, firms can claim genuine sustainability status for their products rather than greenwashing. Finally, firms can adjust their business model, from a model for selling products to one for renting products, and for such service-based firms, product return at the end of its life is an integral step. Thus, a television manufacturer would sell 10,000 h of viewing, rather than a television.

The emphasis of a transformational strategy thus is on operating in an open living system economy (business interacts directly with ecosystems without harming them) (Stead and Stead 2010). Sustaining and enhancing ecosystems in an eco-effective way implies a managerial mindset toward ecological sustainability and a quest for a sustainability vision that develops out of transformational strategies that encourage ecocentric leadership, innovation, collaboration, and a competitive advantage based on sustainability. This proactive environment strategy, to use Aragon-Correa and Sharma’s (2003) term, is a dynamic capability: It allows the firm to refresh and renew its resource base (Ambrosini and Bowman 2009; Helfat et al. 2007; Wang and Ahmed 2007; Zahra et al. 2006).

In the next section, we provide a practical example that illustrates a move from a traditional anthropocentric approach to a transformational ecocentric approach; we also examine the 5Rs of transformational strategies using a dynamic capabilities lens and illuminate ways to enhance the dynamic capabilities framework to transform it into an ecocentric dynamic capabilities framework. That is, we borrow and extend, in an effort to transform dynamic capabilities literature (Zahra and Newey 2009). We examine the transformational strategies instantiated by one company: Ricoh UK.

The dynamic capabilities view is an appropriate theoretical framework for grounding business strategies for ecological sustainability (for reviews of the dynamic capabilities view, see Ambrosini and Bowman 2009; Barreto 2010). Teece (2007, pp. 1319–1320) suggests that dynamic capabilities constitute a three-stage process: “the capacity (1) to sense and shape opportunities and threats, (2) to seize opportunities, and (3) to maintain competitiveness,” such that they “embrace the enterprise’s capacity to shape the ecosystem it occupies.” The sensing, seizing, and reconfiguring dynamic capabilities are salient for ecocentric strategies, because they explain how firms can transform themselves. We illustrate this application using the Ricoh case and reveal how three of the 5Rs—rethink, reinvent, and redesign—map onto Teece’s (2007) dynamic capabilities of sensing, seizing, and reconfiguring. However, the framework as it stands may be too restrictive, because an ecosystem refers to a business ecosystem, which Teece (2007, p. 1325) defines as “the community of organizations, institutions, and individuals that impact the enterprise and the enterprise’s customers and suppliers.” For firms to be eco-effective and ecologically sustainable, their ecosystem, even in a dynamic capabilities framework, must extend to a global, natural ecosystem that embraces both human and biophysical worlds. Thus, we propose an ecocentric dynamic capabilities framework to help businesses become ecologically sustainable.

Taking an ecocentric view means that the manufacturing and value-chain process becomes a closed loop, which in turn demands additional steps in the dynamic capabilities framework. The dynamic capabilities also must allow for the final two steps of the 5Rs, redirect and recover. We describe these additional dynamic capabilities as remapping and reaping, as illustrated in Table 2 and with the Ricoh example.

Remapping is part of closing the loop; it requires managers to understand the difference between the biological and technical cycles of materials, the nature of the chemical make-up of those materials, and how to keep them separate. It also demands that managers find ways to rechannel waste materials “correctly” from earlier generation of produced products to reuse those materials (with the same quality as virgin materials) or dispose of them safely without chemical damage to the environment. This remapping dynamic capability extends to the capability to embed an ecocentric business model into the manufacturing of other products in the company’s portfolio; as illustrated in the Ricoh example, the embedding also might involve another product line as a result of reorganization.

The reaping dynamic capability impresses on managers the notion that pursuing an ecocentric agenda need not be a sacrificial or profit-negative activity. As with any new initiative, there are implementation costs attached, but the return on investment and profit opportunities (or cost reductions) arise from both ecocentric and traditional product and process developments. If cost reduction and profit opportunities exist for both traditional and ecocentric developments, why should a manager opt for the ecocentric opportunity? At the very least, does this argument involve an appeal to the “better nature” of the managers? Yet such opportunities exist in addition to the primary profit opportunities associated with the product being sold (which, if a genuine ecocentric and sustainable product, should command a price premium). Therefore, these features constitute additional profits or cost-reducing activities, and they also provide non-financial advantages, in the form of awards, accolades, recognition, exemplar status, and helping others. As the Ricoh example shows, they bring about a new kind of competitive advantage: an ecocentric competitive advantage or competitive advantage for sustainability.

The two new dynamic capabilities of remapping and reaping, similar to sensing, seizing, and reconfiguring, highlight the importance of leaders and managers in organizations. The leadership of a company and its ability to take risk, engender trust, or create an organizational culture that embraces change is essential (Pablo et al. 2007; Rosenbloom 2000; Salvato 2003). Because of the DSP of anthropocentric assumptions, ecocentric leaders and individuals who deploy dynamic capabilities must be ecologically embedded (Whiteman and Cooper 2000). The argument that leaders and managers are critical determinants of the deployment of dynamic capabilities already is widespread in dynamic capabilities literature (Adner and Helfat 2003; Ambrosini et al. 2009; Eisenhardt and Martin 2000), as emphasized by the expression “dynamic managerial capability,” which refers to “the capacity of managers to purposefully create, extend or modify the resource base of an organization” (Helfat et al. 2007, p. 24). Specifically, it is managers who must sense the environment and changes in technology, customers, suppliers, and so forth. This sensing ability, and their subsequent choice of dynamic capability deployment, depends on managers’ motivation and experience (Zahra et al. 2006, 2011), their beliefs and mental models (Adner and Helfat 2003; Bruni and Verona 2009), and their willingness to change and break from old paths (Zahra et al. 2006). Using our explanation of the difference, compared with the DSP of anthropocentric logic, of ecocentric beliefs that underlie ecocentric dynamic capabilities, we argue that the role of cognitive framing is critical for predicting which strategies for ecological sustainability managers likely choose. Developing an ecocentric mindset represents the first step toward deploying ecocentric dynamic capabilities.