Business Sustainability Transition

BUSINESS SUSTAINABILITY TRANSITION
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Business Sustainability Transition
Background
There is a growing realization in the business world of the challenges of existing organizational activities concerning the natural and social environment. Increasingly, organizations have recognized that businesses have to be more cognizant of their environmental and societal impact and ensure that their core operations are sustainable (Del Baldo and Baldarelli, 2017). This growing realization has brought sustainability transition to the forefront as more companies work towards radical transformation of their activities to address the growing problems confronting contemporary modern societies, including climate change, income inequality, and poverty. The general goal of sustainable development transition is to reconstruct current business policies and practices to positively impact the environment and society while also fulfilling business responsibilities to shareholders.
Business leaders gradually acknowledge the importance of sustainable development transition to tackle the world’s more dire challenges and drive organizational success. Sustainable development transition means committing to focusing on corporate social responsibility and environment protection as much as profits. Organizations must transition to business practices and policies geared towards revenue generation and aim to improve people’s lives and the planet’s well-being (Mossel, Rijnsoever and Hekkert, 2018). Consequently, sustainable development transition consists of three elements: societies, the environment, and profits. It focuses on solving present sustainability issues such as climate change, poverty, youth unemployment, advancing the circular economy, government action, holistic thinking and action, and social justice.
Research Objective
China’s growing global economic influence comes at the cost of several social and environmental challenges, including income disparities, unemployment, regional imbalances, social unrest, corruption, organized crime, water shortages, pollution, air and soil pollution, desertification, etcetera. This phenomenon has drawn scholarly interest into domestic corporate strategies for sustainable development. However, the few studies investigating cultural and local factors affecting Chinese firms’ sustainable development transition process highlight the tacit social contract between organizations and society. This tacit social contract entails an implied agreement between Chinese companies and society where the former have to always consider the social and environmental impacts of their activities in order to be accepted. The unspoken contract relates to the research objective. It serves to illustrate how Chinese collective cultural norms impact business sustainability and a possible source of difference between local and foreign companies. All local Chinese companies are considered part of the society and must therefore factor in the interests and norms of the whole community when making business decisions. While Chinese firms are bounded by societal obligations situated within the broad subject of corporate social responsibility, there is a need to expand current literature on other factors driving sustainable development transition processes.
This research proposal will investigate the sustainable development transition of Chinese enterprises in response to the nation’s social and economic challenges. It will seek to answer the following research questions:
1 How do Chinese collective cultural norms influence sustainable development transition among Chinese enterprises?
2 How do local Chinese companies compare against foreign ones in terms of sustainable development transition?
Literature Review
The literature review on theories of sustainable development will focus on understanding Chinese collective cultural norms and differences between local and foreign companies in terms of the sustainable development transition process. Sustainable development transition is a major socio-technical transition because it involves alterations in business practices’ overall configuration, including technology, infrastructure, transport, cultural meaning, markets, policy, consumer practices, and scientific knowledge. Therefore, it is an intricate and long-term process because restructuring business policies and other policies to better address social and environmental challenges involves other external actors outside the organization (Del Baldo and Baldarelli, 2017). Such major socio-technical transitions have drawn growing attention from theorists and practitioners in diverse domains and resulted in several theories, including the multi-level perspective (MLP) as a useful middle-range structure for evaluating sustainable development transition processes.
The theory incorporates concepts from structuration theory, neo-institutional theory (organizations as deep frameworks on which managers draw in their actions, over and above, structures as both outcomes of organizational actions and context), evolutionary economics (organization niches, routines, trajectories, path dependence, speciation, and regimes), as well as science and technology studies (social networks, sense-making, organizational innovation as a social process influenced by broader societal contexts) (Bolton and Hannon, 2016). MLP considers sustainable development transitions as non-linear processes that arise from the interaction of changes at three analytical levels: socio-technical regimes (the point at which formalized practices and related rules that structure existing systems are located), niches (the point at which radical innovations are situated), and an exogenous socio-technical landscape. The theory considers sustainable development transition as consisting of a network of actors interacting with resources, artifacts, and technologies under the influence of regulative, rational, and normative rules.
While this socio-technical regime coordinates how incumbent firms manage technologies, resources, and artifacts to achieve sustainability, other factors outside the socio-technical system such as demographic trends, societal structures, and political actors affect the change process’s viability (the exogenous socio-technical landscape). According to the MLP theory, innovations geared toward sustainable development often occur in niches that refer to protected spaces where actors are unaffected by the encumbering socio-technical regime (Loorbach et al., 2009). While the MLP theory is widely regarded as the most viable theory in explaining the cultural factors affecting sustainable development transition, it has been faulted for lack of agency, epistemology and explanatory weaknesses, prejudice towards bottom-up change models, and operationalization of regimes (Geels, 2011). Consequently, other researchers have proposed other theories to explain the sustainable development transition process, including the Behavioral Theory of the Firm (BTOF), the Resource-Based View (RBV), Resource Dependence Theory (RDT), and Institutional Theory (IT). All four alternate theories have varying ideologies about firm behavior. However, they help explain diverse modes of behavior by incumbent firms during sustainable business transitions.
The BTOF theory views intra-organizational dynamics as the principal factor influencing healthy behavior: it portrays organizations as combinations of functional groups and people pursuing different goals. Consequently, the sustainable develop...