RADBOUD UNIVERSITY NIJMEGEN

Article Social Innovation April 2012 Faculty of Management Sciences

Sustainability to stay
How can organizations align their sustainability efforts with organizational performance?
- A literature review of the leading perspectives on the relations between sustainability and organizational performance.-

Author: Msc. Gaston P.A.A. Plantaz

Keywords:
Sustainability, Shared Value, Organizational Performance, Profitability, CSR

Abstract
This article describes how organizations used sustainability efforts in the past and elaborates on the evolution of perspectives which see sustainability as a mean to increase organizational performance. From the old situation where organizations saw sustainability as something they had to do we witness a shift towards a model that integrates sustainability as a core aspect of the business model which enhances profitability and long-term organizational success. The evolution of these perspectives leads to new phenomena like shared value & the network approach. By taking a closer look at empirical findings and two success stories, this article tries to give a valid contribution towards the discussion about sustainability. It addresses the topics of why and how organizations should change. In this way this article tries to make organizations excited about change towards a sustainable but at the same time profitable business.

Preface

While following the course of Social Innovation & Organization, a new world has opened to me. Yet back in my mind I already knew that we as society cannot go on in the way we do right now. The different lectures made it clear to me that we as the new generation of managers are the ones who have to change the way we do business. The several examples given in class, interesting movies, guest speakers and so on, all focussed on the urge to act more sustainable. However, I felt that sustainability is perceived as an obligation towards organizations. Because they have experienced wealthy times in the last decades, they now have to step up to handle and solve upcoming social problems. Although we can accept that these organizations also have a great deal in the birth and development of these problems, it remains a hard task to make them act in a better, more sustainable way. Because profitability lies within the DNA of businesses, I think it is important that organizations find ways in order to act sustainable and be profitable at the same time, and as ultimate goal, making sustainability a necessary means to achieve competitive advantages. Because I think that there is enough descriptive literature discussing all the problems we are going to face in this life or which we pass on to our next generations, I wanted to write an article that makes managers excited about using sustainable efforts, and hopefully guides them to a sustainable path of profit maximization and organizational success. If it is possible to create such a model, with accompanying critical success factors, a huge step can be made. However, in order to achieve this, we have to change our mind-set in multiple ways.

If we take a survey of the greatest actionsin the worldwe shall find the authors of them all to have been persons whose Brains had been shaken out of their natural position.

- John Adams -

Table of content

1. 2.

Introduction ........................................................................................................................ 5 Theoretical framework ....................................................................................................... 8 2.1 The relation between sustainability and organizational performance ............................ 8 2.2 Sustainability, how to make it profitable ....................................................................... 10 2.3 The concepts of Shared value and the Network approach ........................................ 12

3.

Empirical findings and success stories .............................................................................. 15 3.1 Sustainability at Puma .................................................................................................... 17 3.2 Sustainability at Nutreco ................................................................................................ 18

4.

Conclusion & Discussion ................................................................................................... 19

References ................................................................................................................................ 19 Appendices ............................................................................................................................... 24

1. Introduction
In todays world, we increasingly start to recognize the problems that arise from the way we live and do business. To ensure a world where our future generations can live towards a certain standard, we have to change these ways we live and do business. In other words we have to become sustainable. According to the Brundtland Report (1987) Sustainable development is development that fits the needs of the present without jeopardizing the ability of future generations to provide for their needs. Of course we all as individuals need to make contributions to a better world. However in recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems (Porter & Kramer, 2011, pg. 4). Yet the problem is that for social issues like, air pollution, the shortage of drinkable water, food and raw materials, it is hard to account specific companies and industries for these problems and make organizations solving them. Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for societys failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. (Porter & Kramer, 2011, pg. 4) So, even as organizations are increasingly acting in a more sustainable way, they do not find many positive effects for themselves. Many organizations put more effort in acting sustainable by for example: small investments in CSR initiatives, the use of natural energy sources and conducting other CSR practices, like charity events. Yet it is questionable if the underlying reasons for these efforts are right. No self-respecting company nowadays can afford not to pay attention to sustainable entrepreneurship, even though the concepts and practices still differ. Addressing the harsh reality of organising often happens by means of the so-called Triple-P concept: people, planet and profit. (Jonker, 2011, pg. 10). Corporate responsibility programs -a reaction to external pressure- have emerged largely to improve firms reputations and are treated as a necessary expense. Anything more is seen by many as an irresponsible use of shareholders money. (Porter & Kramer, 2011, pg. 5). This implies that organizations feel forced to use some sustainable practices in order of damage control, instead of turning them into opportunities. This is mainly explained by the view that these sustainable operations are often perceived as less-profitable then in the way organizations can 5

operate without them. For the sake of enduring long-term sustainability efforts of organizations it is therefore of great importance to discover ways of sustainable business practices that at the same time prove to enhance organizational performance and profitability. An adequate level of investment in philanthropy and social activities is also acceptable for the sake of profits (McWilliams and Siegel, 2001). When organizations develop a better understanding of social issues and their consequences in the long term, they could explore new opportunities that result from the incorporation of sustainability into the business model. Acute and accurate perceptions of social change, and a high degree of responsiveness to those changes, is essential for business to develop its products and services products and services that are socially responsible because they meet a market need with the knowledge of the wider long term impacts of providing those products and services. (Mitchel, 2007:8) As already mentioned, in the last decade we see that businesses finds new ways to increase their value by acting more sustainable. Yet they continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their long-term success. (Porter & Kramer, 2011, pg. 4). A more long-term focus enables organizations to recognize the different potentials sustainability efforts have to offer. Consumer demand is increasingly focussing on sustainable products, and new eco-friendly technologies offer higher efficiency and reduce the waste of natural resources. Further social investments can eventually lead to new markets. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a social responsibility mind-set in which societal issues are at the periphery, not the core (Porter & Kramer, 2011, pg. 4). We are ready for something new, something that does not just help put sustainability on the agenda, but actually organises it as well; and not just on an organisational level, but perhaps even broader. (Jonker, 2011, pg. 10). This article tries to contribute to the debate by examining the use of sustainability efforts by organizations in order to increase organizational performance and profitability. Though the role of organizations in widely discussed in the literature about sustainability, there is a lot less research about the ways in which organizations can benefit from sustainability efforts. Therefore a closer examination of the existing views within this topic contributes to the existing literature. On the other hand this article tries to provide more insights for 6

organizations by examining the relations between organizations success and sustainability. By a closer examination of empirical findings, and corporate success stories critical success factors can be developed which could give managers new insights in the way they should incorporate sustainability in their business. This outline of this paper is as follows. First the main existing theories about this subject are discussed. By the use of literature review it is explained how existing theories describe the link between sustainability efforts and organizational performance and how these evolved. Subsequently this relation is substantiated by empirical findings. Further, this article will give some practical examples of how Puma and Nutreco managed to effectively use sustainability in order to increase their performance and profitability. In the conclusion the results of this study will be summarized and discussed, and limitations will be given.

2. Theoretical framework
The raison dtre of an organisation is its ability to create value for people within the internal and external environment (Jonker, 2011, pg. 15). Therefore this article describes how organizations can create value with sustainability. First the relation between sustainability and organizational performance is explained. This is done by describing the evolution of perspectives which describe this relation. Then more insights are given in the ways an organization should use sustainability. This will finally lead towards an elaboration on the state-of-the-art perspectives of Shared Value and the Network perspective.

2.1 The relation between sustainability and organizational performance

In describing the relation between sustainability there are some leading perspectives available, to start with Instrumental Theory (IT). This perspective has often been used to describe the sustainable efforts of organizations. As Windsor (2001) has pointed out, a leitmotiv of wealth creation progressively dominates the managerial conception of responsibility (Windsor, 2001, p. 226). IT describes how organizations can use sustainability or CSR as an instrument who gives a valuable contribution to the organization. In the group of Instrumental Theories CSR is only seen as a strategic tool to achieve economic objectives and, ultimately, wealth creation (Garriga & Mele, 2004, p. 53). From this perspective it becomes clear that these CSR practices can create opportunities for organizations to increase their overall performance. However, this perspective is mainly focussing on the direct relation between sustainable efforts and profit maximization. When we take a Stakeholder perspective we find that sustainability can contribute to economic performance in other ways. Concern for profits does not exclude taking into account the interests of all who have a stake in the firm (stakeholders). It has been argued that in certain conditions the satisfaction of these interests can contribute to maximizing the shareholder value (Mitchell et al., 1997; Odgen and Watson, 1999). (Garriga & Mele, 2004, p. 53). The problem with IT and Stakeholder theory is that they do not explicitly explain the relation between certain efforts and profitability. However, past research has discovered a correlation between CSR and corporate financial performance. These findings show a positive correlation between the social responsibility and financial performance of corporations in most cases (Frooman, 1997; Griffin and Mahon, 1997; Key and Popkin, 1998; Roman et al., 1999; Waddock and Graves,1997). Of course, not all CSR 8

efforts contribute in the same way or to the same extend. For organizations it is important to know which investments should be made with the available budgets assigned to CSR. Garriga & Mele (2004, p. 53) note that Any investment in social demands that would produce an increase of the shareholder value should be made, acting without deception and fraud. In contrast, if the social demands only impose a cost on the company they should be rejected. This view describes how organizations choose between different ways of becoming more sustainable but the focus lies within the short-term. Nevertheless these ideas led to the birth of new perspectives. Jensen (2000) has proposed what he calls enlightened value maximization. This concept specifies long-term value maximization or value-seeking as the firms objective. At the same time, this objective is employed as the criterion for making the requisite trade-offs among its stakeholders. (Garriga & Mele, 2004, p. 54). Although these theories describe the underlying reasons for the CSR-strategies organizations pursue nowadays and describe how economical characteristics of different ways of operating influence strategic choices, they lack the incorporation of sustainability into the heart of the organization in the form of a business model. Unless sustainability adds to profits over time, a sustainability agenda will likely fail to gain or hold its traction in the enterprise. (Kiron, Kruschwitz, Haanaes & von Streng Velken, 2012, pg. 72). Therefore it is essential that profitability and sustainability go hand in hand with the business model of firms. Profits involving a social purpose represent a higher form of capitalism -one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure. (Porter & Kramer, 2011, pg. 15) In the article Sustainability nears a tipping point (Kiron, et al., 2012) it is described that the so called sustainability movement reaches a critical tipping point. This tipping point can be defined as: the point at which a substantial portion of companies not only see the need for sustainable business practices but are also deriving financial benefits from these activities . (Kiron, et al., 2012, pg. 70). This tipping point is essential in the development of new theories who take a new integral perspective of sustainability within the organization.

2.2 Sustainability, how to make it profitable

The question that remains is; in which ways can organizations make money from sustainability? Garriga & Mele (2004, p. 54) state that all the different efforts can be categorized within three overarching approaches. First they mention social investments in competitive context. This approach is based on using the Porter model on competitive advantage (Porter, 1980), and applies this well-known and widely accepted model to the competitive context of organizations. Porter & Kramer (2002, pp. 6061) themselves mention philanthropic investments by members of cluster, either individually or collectively, can have a powerful effect on the cluster competitiveness and the performance of all its constituents companies. It will be in the long run interest of a corporation that is a major employer in a small community to devote resources to providing amenities to that community or to improving its government. That makes it easier to attract desirable employees, it may reduce the wage bill or lessen losses from pilferage and sabotage or have other worthwhile effects. (Friedman, 1970) The second approach refers to the natural resource-based view of the firm and its dynamic capabilities. The resource-based view of the firm (Barney, 1991; Wernerfelt, 1984) maintains that the ability of a firm to perform better than its competitors depends on the unique interplay of human, organizational, and physical resources over time. (Garriga & Mele, 2004, p. 54). To coordinate and control these resources, organizations have to focus on dynamic capabilities. The dynamic capabilities approach presents the dynamic aspect of the resources; it is focused on the drivers behind the creation, evolution and recombination of the resources into new sources of competitive advantage (Teece et al., 1997). Based on this perspective, some authors have identified social and ethical resources and capabilities which can be a source of competitive advantage, such as the process of moral decision-making (Petrick and Quinn, 2001), the process of perception, deliberation and responsiveness or capacity of adaptation (Litz, 1996) and the development of proper relationships with the primary stakeholders: employees, customers, suppliers, and communities (Harrison and St. John,1996; Hillman and Keim, 2001). (Garriga & Mele, 2004, p. 54) 10

The final approach that is mentioned in the article are strategies for the bottom of the pyramid. Prahalad (2002) describes how organizations, by the means of sustainable investments, can create new markets. There is a huge potential of new customers in the bottom of the pyramid countries, like for example Brazil, Russia, India & China. This approach tells us something about how for example new sustainable technologies, can offer huge growth potential for firms who at this moment oversee the market of poor people in this world. Organizations can also use specific innovations or investments to increase the value that can be captured. By creating value for the people in this Bottom of the Pyramid, these people become wealthier and in this way potential new customers. Disruptive innovations can improve the social and economic conditions at the base of the pyramid and at the same time they create a competitive advantage for the firms in telecommunications, consumer electronics and energy production and many other industries, especially in developing countries. (Hart and Christensen, 2002; Prahalad and Hammond, 2002).

Another way of using sustainability efforts for the sake of profits is cause-related marketing which can be defined as the process of formulating and implementing marketing activities that are characterized by an offer from the firm to contribute a specified amount to a designated cause when customers engage in a revenue-providing exchanges that satisfy organizational and individual objectives (Varadarajan and Menon, 1988, p. 60). Its goal then is to enhance company revenues and sales or customer relationship by building the brand through the acquisition of, and association with the ethical dimension or social responsibility dimension (Murray and Montanari, 1986; Varadarajan and Menon, 1988). A great example of this way of marketing is offered by the company TOMS1. TOMS is a brand that sells shoes and sunglasses. Their marketing strategy is: With every pair you purchase, TOMS will give a pair of new shoes to a child in need. One for One.1 and With every pair you purchase, TOMS will help give sight to a person in need. One for One.1 By the use of this strategy TOMS became a trend and increased their sales and profits.

From these different perspectives it can be concluded that there is a shift in the way organizations look towards sustainability. The most recent literature describes how

Retrieved from: http://www.toms.com

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sustainability should be incorporated, and is therefore in relation to the presuming perspectives rather prescriptive than descriptive. This change in mind-set led to the upcoming phenomena of shared value and the network perspective

2.3 The concepts of Shared value and the Network approach

In their paper Creating Shared Value (Porter & Kramer, 2011) the concept of shared value is introduced. Shared value can be defined as Creating economic value in a way that also creates value for society by addressing its needs and challenges. [] Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. (Porter & Kramer, 2011, pg. 4). In that way this perspective is different than preceding views, which stressed that organizations, according to their responsibility have to put effort into CSR. Shared value explains sustainability as something that organizations should do to remain competitive and capture more value for themselves and the society. A growing number of companies known for their hard-nosed approach to business such as GE, Google, IBM, Intel, Johnson & Johnson, Nestl, Unilever, and Wal-Mart have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance. (Porter & Kramer, 2011, pg. 4). So it can be concluded that large corporations start to recognize and act upon the opportunities the concept of shared value has to offer. The question however is: How can organizations create this shared value? First it is important to mention that creating shared value is not about specific actions an organization has to perform in order to end up with shared value. It has to be seen as a process that takes place in the long term, by incorporating sustainability in the whole line of operations. Realizing it will require leaders and managers to develop new skills and knowledge such as a far deeper appreciation of societal needs, a greater understanding of the true base of company productivity, and the ability to collaborate across profit/non-profit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it. (Porter & Kramer, 2011, pg. 4).

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To create shared value organizations have to step back from their existing view that their strategy must mainly focus on profits, but align their goals to create shared value. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again (Porter & Kramer, 2011, pg. 4). Shared value, then, is not about personal values. Nor is it about sharing the value already created by firmsa redistribution approach. Instead, it is about expanding the total pool of economic and social value. (Porter & Kramer, 2011, pg. 5). Of course, in order to change the mind set of companies, they have to recognize that creating societal value will eventually contribute to their own goals. Long-term vision and strategy is therefore essential. Managers focus mainly on short term goals, in order to increase shareholder-value, because this defines their own performance. But for the sake of long term growth, organizations must face that societal problems can harm the value chain in the future. A companys value chain inevitably affectsand is affected bynumerous societal issues, such as natural resource and water use, health and safety, working conditions, and equal treatment in the workplace. Opportunities to create shared value arise because societal problems can create economic costs in the firms value chain. (Porter & Kramer, 2011, pg. 8) Besides that, investing in social issues can provide new opportunities in the form of new markets and customers. The societal benefits of providing appropriate products to lowerincome and disadvantaged consumers can be profound, while the profits for companies can be substantial (Porter & Kramer, 2011, pg. 8). In their article Porter & Kramer (2011) mention three ways an organization can create economic value by creating societal value. These ways are: reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the companys locations. Although the new concept of shared value offers a very interesting perspective on how to look towards businesses, it treats the organization as an entity that can create this shared value by itself. But it is important to note that due to factors as globalization and vertical disintegration within the value chains the business environment is rapidly changing. Organizations increasingly operate within networks with competitors, suppliers, customers, 13

NGOs and other institutions like governments. Therefore in order to create this shared value academics increasingly focus on a network perspective instead of treating organizations from a focal point of view. McVeau and Freeman (2005:59) state: In an economy that is increasingly influenced by the role of networks, it is ever more important to view firms as networks of relationships that extend well beyond the traditional boundaries of the organization. It is therefore of great importance that organizations adjust their strategies in order to create as much social & economic value within the network they operate in. Wouldnt it be better to start thinking in terms of networks of companies; that is, configurations of (inter) dependent actors connected with each other on the basis of place, means and transactions? Indeed, this is not particularly simple. Therefore, it is a good thing that we simultaneously experiment with new ways of organising, such as transversal teams, various sustainability alliances between organisations and new configurations of stakeholders in old and especially new networks. (Jonker, 2011, pg. 12)

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3. Empirical findings and success stories

In the article Sustainability nears a tipping point (Kiron, et al., 2012) empirical research is conducted about how organizations, which manage to use sustainability in a way that creates value, differ from organizations that did not. The dataset included 2,874 respondents, which are all from commercial enterprises. These organizations are worldwide located and represent different industries. For more information about the dataset see (Kiron, et al., 2012). In this research the authors refer to these successful organizations as Harvesters. These are the organizations that have found a way to improve business performance by the use of sustainability efforts. The article describes in which ways these Harvesters differ from other organizations. First they mention that these Harvesters are much more likely to embrace sustainable activities than the organizations which are more cautious to adapt to these efforts. Often this embracing is done by the use of a business model which is focussed on sustainability. To describe the differences between Harvesters and other organizations, the authors placed their empirical findings under three dimensions. The first concepts relates to the organizational support. Compared to non-Harvesters, Harvesters are three times as likely to have a business case for sustainability [...] they are also 50% more likely to have CEO commitment to sustainability, twice as likely to have a separate sustainability reporting process and twice as likely to have a separate function for sustainability [...] and harvesters are also 50% more likely to have a person responsible for sustainability in each
Figure 1: Retrieved from: Organizational Support Kiron, et al., (2012), pg.

business unit and nearly 2.5 times as likely to have a chief sustainability officer. (Kiron, et al., 2012, pg. 5). (See Figure 1)

Furthermore, the authors give research results which show how Harvesters manage to link sustainability to their organizational performance and profitability. 15

Compared to the organizations that other survey respondents are part of, Harvesters are twice as likely to clearly communicate who has responsibility for sustainability, are more than twice as likely to have operational and personal key performance indicators linked to sustainability, and are 60% more likely to link sustainability with financial incentives [...] Also, Harvesters are more than twice as likely to say that sustainability has increased their
Figure 2: Retrieved from: Link sustainability, performance & Profits Kiron, et al., 2012, pg. 72

collaboration with internal business units across geographies. (Kiron, et al., 2012, pg. 73). (See Figure 2) Finally the authors describe how

sustainability can increase intra- and inter-organizational collaborations,

which eventually contributes to the firms performance. Harvesters are more than twice as likely to say that sustainability collaboration Harvesters collaborating has with are increased competitors likely with to their [] be

also

more

customers,
Figure 3: Retrieved from: Sustainable practices improve collaboration Kiron, et al., (2012) pg. 73

suppliers, government,local communities and NGOs as a result of sustainability [] Also, Harvesters are more than twice as likely to say that sustainability has increased their collaboration with internal business units across geographies. (Kiron, et al., 2012, pg. 73). From the data analysis the authors further found that compared to nonHarvesters, Harvesters adopt their business model to sustainability. The specific focus of these organizations is towards: increasing competitive advantage, higher innovativeness, expanding market boundaries and the increase of market share. On the other side non16

Harvesters focus more on brand related concerns. It also becomes clear that Harvesters manage to create more value from sustainability because they recognize that in order to make these specific efforts profitable, their focus must lay on the long-term. To conclude the findings of their research some other findings implicate that sustainability contributes to organizational success. Two-third of our respondents said that sustainability was critically important to being competitive in todays marketplace, up from 55% in our 2010 survey (Kiron, et al., 2012, pg. 70). Further they found that about 31% of the respondents said their companies are currently profiting from sustainable business practices (Kiron, et al., 2012, pg. 70).

3.1 Sustainability at Puma

Puma, which is a worldwide brand in sports goods, is a good example of a company who integrated sustainability into their business model. For a long time our mission has been to become the most desirable Sportlifestyle company. With this next phase of our sustainability program we have evolved our mission to be the most desirable and sustainable Sportlifestyle company in the world, said Jochen Zeitz, Chairman and CEO of PUMA2. Recently Puma faced problems with the packaging of their sport shoes. Because Puma has a strong incentive to act more sustainable, the existing way of packaging was not in line with their ambitious long-term sustainability program. Therefore Puma designed a new way of packaging called the Clever Little Bag (see appendix 1). The new innovative solution will significantly reduce the amount of waste and CO2 emissions that traditional product packaging such as shoe-boxes and apparel polyethylene bags generate and underpins PUMAs target of reducing carbon, energy, water, and waste by 25%, and developing 50% of its international product collections in footwear, apparel and accessories according to best practice sustainability standards by 2015.2 On the one hand this new way of packaging offered many positive effects from a societal point of view. The introduction of PUMAs innovative packaging and distribution system will reduce the paper used for shoeboxes by 65% and carbon emissions by 10,000 tons per year the remaining packaging materials used will be fully sustainable by 2015.2 However on the other side it increased profitability, and effective use of resources. Less packaging means fewer raw materials, less use of water and energy to produce, and less weight to ship and to be disposed of.2 Further it can be reasoned that by promoting this new
2

http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yves-behar/

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sustainable way of packaging is a good way to attract customers. This example clearly shows, that sustainability can offer opportunities instead only expenses.

3.2 Sustainability at Nutreco

Nutreco, which is the global market leader in animal nutrition and fish feed, has as its slogan Feeding the future3. This company is one of the leading organizations in incorporating sustainability in their overall business strategy. In 2009, Nutreco made a strategic choice to embed sustainability throughout Nutreco operations. We began by formulating a sustainability policy, set targets for the managers and initiated a programme to facilitate the embedding process and ensure it is change that last. [] It is important to note that we interpret the term sustainability to include harmony with our environment and having good relations with our employees, our neighbours and wider society as well as economic sustainability., says CEO Wout Dekker.3 Nutreco should be seen as a good role model for other organizations, in the way they embedded sustainability in their business model. Their long-term focus is expresses in the goals they made for the year 2050. They closely work together with different kinds of stakeholders in order to increase the efficiency of their sustainability efforts. In an interview4 CEO, Wout Dekker states: sustainability lies within our DNA. Nutreco recognizes the need to incorporate sustainability and invest in different initiatives in order to ensure future business. In the same interview4, Wout Dekker says: I am convinced that it is possible to increase the production of livestock and fish farming while at the same time reduce the negative impact on the environment. This phrase directly relates to the concept of shared value. Nutreco is a nice example of an organization that recognizes the need to create shared value, from a network perspective.

3 4

http://nutreco-sustainabilityreport.ireports.nl/en http://managementscope.nl/magazine/artikel/548-wout-dekker-nutreco-sustainability-dna

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4. Conclusion & Discussion

In this article the main topic is the relation between sustainability and organizational performance, which often is measured by economic results. The development of social problems like for example poverty, pollution, hunger and the shortages of water and raw materials, is strongly connected to the way organizations operate. In the past organizations often did not take their responsibilities regarding these social problems. Hence, it can be said that organizations now increasingly start to recognize the need to contribute to a more sustainable world. However the way they give form to sustainability is not in line with the opportunities the concept has to offer. Organizations use CSR efforts and other sustainable initiatives mainly because they are forced by the market. From an Instrumental perspective it can be argued that sustainability should be effectively used to create economic gains. The Stakeholder perspective contributes to this view that by stating that creating value from sustainability not only depends on the direct relation between sustainable efforts and profits. Organizations that create social value for their stakeholders indirectly contribute to their own organizational success. These two perspectives have led to the upcoming phenomena of Shared Value and the Network approach. These new concepts describe how organization s can achieve organizational success and simultaneously create societal value by incorporating sustainability in their business model and network. Findings from the empirical research of Kiron, et al. (2012) substantiate these new perspectives. What we witness nowadays is that pioneering organizations like Puma and Nutreco, have managed to create shared value within their network. We can conclude that the way organizations look towards sustainability is constantly changing. Organizations increasingly recognize that sustainability has a lot to offer. Not only for the sake of being social responsible but also as a mean to ensure profitability and growth of the firm. Of course, the incorporation of sustainability within the core of the business is a very complex process. Further it remains unclear whether these new ways of sustainability eventually can solve social problems. It is even questionable whether the influence of specific sustainable business models is sufficient to fight up against the growth and development of these problems. The rapid growth of the world population, and the fast depletion of raw materials, food and water, will lead to a quick and strong development of societal problems. Solving these problems needs much more effort than contemporary businesses can offer by themselves. The main limitation of this research is that it is mainly focussed on commercial 19

enterprises. Other organizations like governments, NGOs, regulating institutions and of course the individual, all have a large stake in making the world more sustainable. Further research, which applies the new perspectives of shared value and network approach towards these groups, can give valuable new insights. This article does not provide the holy grail, in the form of a clear path towards a sustainable environment. Nor is it providing fixed critical success factors that enhance the creation of shared value. It tries to give a valuable contribution to the scientific and practical discussion, by providing different perspectives about how businesses should incorporate sustainability. It shows that sustainability is a concept that has to be continuously developed in order to create a better world while simultaneously enhancing organizational success.

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Appendices
Appendix 1

Clever Little Bag by Puma Retreived from: http://vision.puma.com/us/en/2010/04/puma-launches-new-sustainable-packaging-designed-by-yvesbehar/

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