Dissertations, Theses, and Capstone Projects

Date of Degree

6-2023

Document Type

Dissertation

Degree Name

Ph.D.

Program

Business

Advisor

Ivan Montiel

Committee Members

Ivan Montiel

Elena Vidal Branciforte

Alvaro Cuervo-Cazurra

Jared L. Peifer

Sankar Sen

Subject Categories

Business Administration, Management, and Operations | Business Law, Public Responsibility, and Ethics

Keywords

strategy, sustainability, externalities, nongovernmental organizations, partnerships, divestitures

Abstract

This dissertation investigates the intricate relationship between business strategies and sustainability. A growing awareness has emerged among firms about the importance of embracing sustainability—integrating the environmental, social, and economic implications of their actions and decisions into their core strategies—to attain long-term success and competitive advantage. In this context, strategic management research has primarily concentrated on the benefits that firms and their stakeholders can derive from adopting and executing sustainability initiatives. Despite the numerous efforts made by firms to tackle sustainability concerns, pressing issues persist. This situation raises questions about the effectiveness of strategic management research in guiding firms to embed sustainability in business strategies and the apparent disconnect between the slow progress toward sustainability and the optimistic tone found in current strategic management literature.

To address these questions, this dissertation contends that strategic management scholarship has oversimplified the complex sustainability actions pursued by firms. Furthermore, I argue that scholars should differentiate between reactive and proactive actions undertaken by firms in addressing sustainability. This distinction is essential because reactive actions taken by firms tend to be slower and may not comprehensively address sustainability concerns, while proactive actions can facilitate faster and more significant change. Thus, the dissertation further lays the foundation for scholars to identify how firms can adopt a more proactive approach to addressing sustainability concerns.

To better explain the distinction between reactive and proactive sustainability actions, the dissertation consists of three essays centered on strategic concepts—externalities, partnerships between businesses and non-governmental organizations (NGOs), and divestitures. Essay 1 investigates the historical progression of societal attitudes toward negative externalities, unveiling the importance of sustainability for businesses and their strategic initiatives. The analysis reveals that while modern businesses have become more proactive in tackling sustainability issues, limited progress is partly attributed to firms maintaining a reactive approach to sustainability concerns. Essay 2 offers a potential solution for encouraging firms to take more proactive steps toward sustainability through partnerships with NGOs. This work builds on an extended Resource-Based View to develop a framework that explains how companies can create robust partnerships with NGOs to effectively design and implement sustainability interventions and make progress on sustainability in emerging economies. Essay 3 draws insights from the Behavioral Theory of the Firm to examine how firms reactively or proactively address environmental sustainability challenges by divesting assets that are environmentally cleaner or dirtier relative to the other assets in their portfolio. The choices made in divestiture are influenced by the tension between the firms’ primary goal of attaining financial success and the secondary goal of improving environmental performance.

In summary, this dissertation enhances our understanding of how firms can effectively incorporate sustainability into their strategies by emphasizing the distinction between reactive and proactive sustainability actions taken by firms. By shedding light on this distinction, the study highlights the unique opportunity for firms to advance sustainability as both a driver and an outcome of their strategies, ultimately generating value for a sustainable society that extends beyond immediate profitability or financial performance. Hence, the research holds significant implications for scholars, practitioners, and policymakers striving to better comprehend and encourage business strategies that promote sustainability.

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