Corporate Sustainability
Referring back to the system-level concept of sustainable development (WCED
1987), Bansal (
2005) defines corporate sustainability as the intersection of the three principles: environmental integrity, social equity, and economic prosperity. While for-profit firms play a key role in sustainable development, because they represent the productive resources of the economy (Bansal
2002), “individual organizations cannot become sustainable: Individual organizations simply contribute to the large system in which sustainability may or may not be achieved” (Jennings and Zandbergen
1995, p. 1023). By definition, corporate sustainability thus represents a level-spanning concept that links organizational activities to outcomes at overarching societal and natural systems in that “business firms are expected to improve the general welfare of society” (Schwartz and Carroll
2008, p. 168).
Corporate sustainability is furthermore characterized by a multitude of different economic, environmental, and social objectives that all appear desirable in isolation but are “inextricably connected and internally interdependent” (Bansal
2002, p. 123). The ambition of sustainability to address these multiple objectives simultaneously results in tensions since progress on one sustainability issue might have detrimental effects for other sustainability issues. Moreover, sustainability is based on a long-term orientation to include the needs of future generations instead of the oftentimes short-term focus of firms (Held
2001; Slawinski and Bansal
2015). It also seeks equitable development opportunities for developed and less developed regions (Zuindeau
2007). As a consequence, corporate sustainability is inherently laden with tensions between different dimensions at different levels that reside at different temporal and spatial scales (Berger et al.
2007; Hahn et al.
2015).
Paradox Perspective
Whereas the existence of inherent tensions in corporate sustainability, and in related concepts such as corporate social responsibility, has been highlighted by numerous authors for quite some time (Aram
1989; Kaptein and Wempe
2001; Vilanova et al.
2009; Margolis and Walsh
2003; Calton and Payne
2003; Kallio
2007; Haffar and Searcy
2015; Van der Byl and Slawinski
2015), only recently has paradox theory been used as a theoretical lens to conceptualize corporate sustainability (Hahn et al.
2014,
2015; Gao and Bansal
2013; Slawinski and Bansal
2015). Paradox theory in management posits that paradoxes, i.e., “persistent contradiction between interdependent elements” (Schad et al.
2016, p. 6), are ubiquitous phenomena in organizations, resulting in tensions between various aspects that “seem logical in isolation but absurd and irrational when appearing simultaneously” (Lewis
2000, p. 760). A paradox perspective “explores how organizations can attend to competing demands simultaneously” and argues that the long-term success of an organization “requires continuous efforts to meet multiple, divergent demands” (Smith and Lewis
2011, p. 381). Organizations and decision makers may either respond defensively or proactively to paradoxical tensions, yet Smith and Lewis (
2011) argue that generative outcomes where the “awareness of tensions [triggers] a management strategy of acceptance rather than defensiveness” (p. 391) depend on the ability to embrace tensions instead of avoiding them.
Building on these foundations in paradox theory, we propose the following definition:
A paradox perspective on corporate sustainability accommodates interrelated yet conflicting economic, environmental, and social concerns with the objective of achieving superior business contributions to sustainable development. Rather than seeking to align environmental and social aspects with financial performance to eliminate tensions (as the business case does), a paradox perspective fosters strategies that accept tensions and attend to different sustainability objectives simultaneously, even if they are conflicting (Gao and Bansal
2013; Hahn et al.
2015). At its core, the paradox perspective provides the conceptual foundations for an approach to corporate sustainability that accepts tensions between economic, environmental, and social concerns that reside at different levels and operate at different temporal and spatial scales in order to achieve more substantive business responses to multiple sustainability challenges. It invites firms and decision makers to accept and live with tensions in sustainability and enables them to address multiple environmental and social concerns, even in the absence of immediate business benefits, for instance by addressing sustainability challenges early on when business benefits are still unclear (Rivoli and Waddock
2011) or by engaging with fringe stakeholders with little or no direct business relevance (Hart and Sharma
2004).
While it alleviates the constraint of immediate business benefits from corporate sustainability, a paradox perspective does not mean that firms abandon a profit orientation altogether. Rather, “paradoxical resolution denotes purposeful iterations between alternatives in order to ensure simultaneous attention to them over time” (Smith and Lewis
2011, p. 392). A paradox perspective thus creates leeway for more substantive corporate contributions to sustainable development by purposefully balancing and combining instrumental initiatives—where addressing sustainability issues yields business benefits—with moral initiatives—where firms address environmental and social issues in their own right (Hahn et al.
2016). In this way, firms will address a wider range of sustainability issues to a fuller extent because they will not only focus on those that offer immediate business benefits.
As Lüscher and Lewis (
2008, p. 234) find, accepting and “working through” paradox enables organizational change, not by “eliminating or resolving paradox, but [by] constructing a more workable certainty” when dealing with tensions. By doing so, it alleviates the paralysis that decision makers often experience when confronted with tensions. Accordingly, a paradox perspective on corporate sustainability proposes that accepting and working through the tensions around sustainability enables change in, of, and by firms toward sustainable development. To illustrate how sustainability concerns can be addressed through a paradox perspective, we apply Smith and Lewis (
2011) four types of paradoxes: paradoxes of belonging, learning, organizing, and performing.
Paradoxes of belonging refer to tensions around individual and collective identities and between different values and roles (Smith and Lewis
2011). In the context of corporate sustainability, such tensions occur, for instance, when organizational members hold competing values and identities with regard to environmental and social concerns (Aguilera et al.
2007; Wright et al.
2012; Ghadiri et al.
2015; Allen et al.
2015). Where such tensions of belonging are perceived in terms of either/or-dilemmas between personal and organizational views, one will be subordinated to the other, and organizational members are likely to disconnect from or even overtly oppose the organization’s sustainability activities (Rodrigo and Arenas
2008).
By contrast, accommodating conflicting personal and organizational identities and values around sustainability can foster change for sustainability, since the coexistence of conflicting identities and values within the organization can drive cognitive organizational reorientation (Fiss and Zajac
2006), organizational creativity (Woodman et al.
1993) and organizational learning (Huzzard and Östergren
2002). Firms can foster the coexistence of competing identities and values, for instance, by creating structures and temporal pockets in the organization where alternative individual identities and values can flourish—and eventually feed back into the organization so that the confrontation with diverging identities and values nurtures a productive process of progress (Sundaramurthy and Lewis
2003). Such a productive engagement with sustainability is unlikely to occur if tensions of belonging are undermined or eliminated by seeking to align personal values or identities with the dominant organizational ones.
Paradoxes of learning describe tensions between existing and novel activities during processes of renewal, change, and innovation (Smith and Lewis
2011). Since sustainable development involves a transition from currently unsustainable to more sustainable business practices and requires firms to fundamentally alter their current patterns of activity, paradoxes of learning are highly relevant for corporate sustainability. In firms, tensions around learning for sustainability occur between the need to radically depart from currently unsustainable business practices and products and the need to build upon existing routines and systems (Kolk and Pinkse
2008). Pursuing an either/or logic results either in an excessive reliance on radical and disruptive innovation—which jeopardizes the feasibility and widespread dissemination of sustainable innovations—or in a bias toward incremental change—which falls short of the scale of change that is required to effectively address sustainability challenges.
Change toward more sustainable business models (Boons and Lüdeke-Freund
2013) requires simultaneously building upon and destroying current activities (O’Reilly and Tushman
2008) to create novel, more sustainable organizational forms and practices. From a paradox perspective, such “tension between […] existing business models and the radical innovations necessary to achieve systemic innovation towards long term sustainable development” (Midttun
2007, p. 409) can be addressed through organizational ambidexterity, i.e., the ability to simultaneously pursue explorative and exploitative activities for sustainable innovations (Maletič et al.
2014). Accordingly, engaging with paradox has been found to foster creativity and innovation (Miron-Spektor et al.
2011).
Paradoxes of organizing stem from the structure and leadership of organizations and manifest themselves in tensions around collaboration and competition, empowerment and direction, and flexibility and control (Smith and Lewis
2011). There is an ongoing debate as to how sustainability activities should be organized and structured and to what extent sustainability activities can be integrated into the core structure of the organization (Yuan et al.
2011; Griffiths and Petrick
2001). If organizations decide to either fully integrate or completely separate sustainability activities, they either subdue sustainability initiatives to the dominant commercial logic of daily business operations—leaving no leeway for longer-term and more fundamental considerations—or they marginalize sustainability initiatives at the periphery of the organization.
A paradox perspective keeps the tension between structural separation and integration open. While some sustainability activities become integrated with core business routines and structures to allow for commercial benefits, other activities are deliberately kept separate to create space for sustainability initiatives to “flourish independently of prevailing business practices” (Yuan et al.
2011, p. 77) in order to address sustainability concerns beyond commercial considerations (Hahn et al.
2016). In addition, tightly and loosely coupled structures can be coordinated through cross-functional interfaces and network structures that combine different independent units horizontally (Griffiths and Petrick
2001; Gupta and Govindarajan
2000). Living with the tension between different structural forms of sustainability activities through a paradox perspective thus enhances the simultaneous pursuit of commercially beneficial sustainability measures on the one hand and morally driven ones on the other.
Finally, paradoxes of performing refer to tensions around the plurality of competing organizational goals in the face of divergent stakeholder demands (Smith and Lewis
2011). Paradoxes of performing touch the very heart of corporate sustainability and its ambition to contribute to a diverse set of potentially competing sustainability issues, such as climate change, biodiversity conservation, poverty alleviation, public health, or education. Following an either/or perspective, firms will perceive these tensions as multiple dilemmas. Given the dominance of a commercial logic in business organizations, firms will seek to eliminate these dilemmas by selectively picking those environmental and social concerns where business benefits can be expected, dismissing all other sustainability concerns in the process.
A paradox perspective on performing tensions embraces conflicts between different performance domains in sustainability and seeks to attend to multiple competing sustainability goals simultaneously. To work through performing paradoxes, firms engage in ongoing improvisation to attend to the multiple performance areas in a balanced way (Beech et al.
2004; Clegg et al.
2002). Sustainability concerns that might be in conflict with the organizational goal of profitability will thus not be excluded. Rather, contradictory sustainability aspects are juxtaposed without emphasizing one aspect as “best option.” In this way, the performing paradox is kept open and works as an invitation to simultaneously act on multiple economic, social, and environmental outcomes.
Beyond the Business Case
It is evident that a paradox perspective on corporate sustainability stands in stark contrast to the dominant business case perspective. While early writings on corporate sustainability were deeply embedded in a systems logic that takes into account the level-spanning and multifaceted nature of corporate sustainability (Purser et al.
1995; Gladwin et al.
1995), over the last two decades “[m]uch of the research on organizational responses to social and environmental issues […] has been framed around an instrumental logic, i.e., how firms can benefit from addressing societal concerns” (Gao and Bansal
2013, p. 241). The business case for sustainability is based on the dominance of economics language (Ferraro et al.
2005) and appropriates sustainability in terms of narrow business interests (Banerjee
2008; Welford
1997). The business case logic conceptualizes corporate sustainability solely at the organizational level and seeks to eliminate tensions by aligning environmental and social concerns with the end of improving corporate financial performance (Hahn et al.
2014).
Most importantly, under a business case logic, environmental and social concerns are not seen as having intrinsic value. Consequently, contributions to sustainable development will be limited to those sustainability aspects that promise to result in positive effects on the economic performance or the market position of the firm within a comprehensible timeframe (McWilliams and Siegel
2011). This reductionist and instrumental logic of the business case leaves little room for radical shifts in business practices since it seeks to translate responses to intricate sustainability issues into measurable and controllable management tasks that fit with conventional business models and practices. This selective and purely instrumental alignment of sustainability aspects with business outcomes and established business routines limits the scope and scale of corporate contributions to sustainable development: Business case strategies consider sustainability objectives only if, and only to the extent that, they promise business benefits. Hence, as Nijhof and Jeurissen (
2010, p. 618) succinctly summarize, the “business case approach results in opportunism, leaves institutional blockades intact and drives out the intrinsic motivation for engaging in [sustainability]”.
Overall, a paradox perspective on corporate sustainability not only considerably widens the scale and the scope of corporate contributions to sustainability; it also offers the theoretical foundations for a conceptualization of corporate sustainability that removes the limitations that result from the primacy of business benefits over environmental and social concerns.