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W4386782456 abstract "Abstract This book chapter takes an institutional perspective on competing logics in global markets concerned with sustainability values and how market actors in the form of buyers and sellers attempt to solve these conflicting situations. We do this by identifying competing institutional logics in global market contexts aiming for sustainability values, together with techniques for navigating these competing institutional logics in the organizational field studied. As an empirical illustration, we use a case study of buyers and sellers in two different markets where sustainability has come into focus for their market relationships. This viewpoint allows us to better understand how global market actors deal with the competing institutional logics in their market context. We make three contributions with this research: firstly, we identify the institutional logics in global markets towards sustainability; secondly, we demonstrate how global market actors prioritize among the competing logics and their market relationships and thirdly, we outline what this means for the relationship between buyers and sellers in global markets towards sustainability. Keywords Sustainability varieties Institutional logics Competing logics Global markets Buyer and seller relationships Case study Citation Cerne, A. and Elg, U. (2023), When Institutional Logics Collide: How International Firms Navigate Sustainability Values in Global Markets, Ghauri, P.N., Elg, U. and Hånell, S.M. (Ed.) Creating a Sustainable Competitive Position: Ethical Challenges for International Firms (International Business and Management, Vol. 37), Emerald Publishing Limited, Bingley, pp. 153-175. https://doi.org/10.1108/S1876-066X20230000037009 Publisher: Emerald Publishing Limited Copyright © 2023 Annette Cerne and Ulf Elg License This work is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of these works (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode. Introduction Is it possible to create sustainability through global market practices? Research on international business and global markets has for long assumed an efficiency-based logic, prevailing in global markets, stressing financial as well as rational market performance (Buckley & Casson, 2001; Dunning, 2000; Eden & Lenway, 2001; Ruigrok & Van Tulder, 1995). Lately, however, new values based on sustainability have been found to also influence market values (Buckley & Ghauri, 2004; Ioannou & Serafeim, 2015; Kemper & Ballantine, 2019; Lichtenthaler, 2022; Margolis & Walsh, 2003). For international firms active in global markets, formal policies and implementation processes towards sustainability have become particularly valuable (McLoughlin & Meehan, 2021; Silva & Nunes, 2022). For instance, ensuring sustainable supply chains, facilitating sustainable consumption, encouraging sustainable investments and providing sustainable employments (Boyd et al., 2007; Cerne & Jansson, 2019; Elg & Hultman, 2011). However, variances between the value systems of organizations from different countries and parts of the world are also often stressed by international research (Elg et al., 2015; Håkansson & Johanson, 2001; Lee et al., 2018; Palmer & Quinn, 2005). What is considered to be the desired behaviour in a certain context may, thus, not correspond with values held by actors in another part of the world (Bondy et al., 2012; Meyer & Peng, 2016). Moreover, using market-positioning strategies based upon a social dimension requires legitimacy, not only among other market actors such as financial investors or consumers but also among stakeholders outside markets, involving social and political actors (Du et al., 2007; Elg et al., 2015; Freeman, 1984; Mellahi & Wood, 2003; Suchman, 1995). Meanwhile, market values have been demonstrated as dependent upon learning and institutionalization, leading to powerful institutional logics (Zajac & Westphal, 2004). For sustainability in global markets, this has been stressed as of particular relevance since, in global markets, not only do the institutional settings in different countries vary (Kostova, 1999) but also the institutional logics market actors follow (Busenitz et al., 2000; Dacin et al., 2002; Kolk & van Tulder, 2010). In this book chapter, we conceptualize varying sustainability values as contrasting institutional logics when these sustainability values come into conflict with each other. An institutional logic is a set of values, norms and beliefs that are shared by a particular group of actors (Friedland & Alford, 1991; Thornton & Ocasio, 2008), influencing their behaviour (e.g. Genin et al., 2021; Shekhar et al., 2020). Some logics may be shared by a society or a nation in general, such as basic views about the family and what is right and wrong, whereas others may develop within a certain industry or even within the same organization. Earlier research shows that within a certain area, such as a market, an industry or the public sector, different and contradictory institutional logics are likely to exist (e.g. Genin et al., 2021; Leite & Ingstrup, 2022; Thornton, 2002). The institutional logics approach is, thus, a further development of institutional theory, stressing that actors – from individuals to organizations – can respond in different and conflicting ways when there are competing logics. From this perspective, we can expect different and competing logics to exist in global markets, involving different organizations, actors and market practices, such as buyer–seller relationships in global markets. One of the more important difficulties that international firms can expect, in terms of sustainability in global markets, is how to understand and bridge these competing institutional logics. Our main purpose in this chapter is, therefore, to explore the institutional logics of sustainability as a global market practice, focussing on competing institutional logics, and how market actors deal with this situation. This is important for explaining and preparing for difficulties in attempts to achieve sustainability in global markets. For this, we discuss logics on different institutional levels: on a general societal local and global level, on an organizational level and on the market relationship level between buyers and sellers. The chapter will, thus, (a) identify competing logics in global market practices with sustainability, (b) trace different logics as the basis for how sustainability is understood and dealt with in global markets and (c) demonstrate how global market actors overcome competing logics in global market practices with sustainability. This is accomplished by using a case study to demonstrate how buyers and suppliers navigate sustainability variations in global markets. We use navigation as an analytical perspective, since this opens up the existence of varieties in institutional logics within a field, without these competing institutional logics necessarily being changed. Literature Review Sustainability Values in Global Markets When the concept of sustainable development was globally spread through the Brundtland Report (Brundtland, 1987), it embraced both a global perspective and the inclusiveness of the business sector in the achievement of its goals (Cerne & Jansson, 2019). With the passage of time, this concept has come to be known as business sustainability, which includes not only economic but also environmental and social responsibilities that are expected of businesses (Kolk, 2016; Margolis & Walsh, 2003; Shrivastava, 1995). However, the goals of sustainable development, as outlined in global policies and strategies such as the United Nations’ Global Impact initiative, can be interpreted in a variety of ways (Ghauri, 2022; Nederveen Pieterse, 2010). In this way, despite sustainability being institutionalized in the field of business (Brown et al., 2009; Etzion & Ferraro, 2010; Larrinaga et al., 2020), the combination of economic, ecologic and social sustainability in international business has been difficult (Meyer, 2004; Montiel et al., 2021; Strike et al., 2006). Hence, despite its inherent competing values, sustainability in international business has a common goal of integrating the logics of economic, ecological and social market values (Kolk, 2016). Multiple logics may occur due to variations in the understanding of national sustainability goals, the role of institutions and the economic context (Demirbag et al., 2017; Yang & Rivers, 2009), opening up not only to variations in institutional logics but also for competition between the different logics. Competing Logics for Sustainability in Global Markets The institutional logics perspective (Friedland & Alford, 1991; Genin et al., 2021; Leite & Ingstrup, 2022; Thornton & Ocasio, 2008) emphasizes the competition between different logics that may exist in a certain context. Here, logic generally refers to broader cultural beliefs and rules that structure cognition and decision-making. The institutional logic can be regarded as initiated by the three institutional pillars introduced by Scott (2013). They will, thus, draw upon regulative as well as normative and cultural/cognitive beliefs. Some parts of an institutional logic may be shared broadly within a society, whereas they may also be competing logics within a certain organization. For example, Lounsbury (2007) showed that financial management firms in New York City and Boston were based upon different institutional logics regarding long-term versus short-term perspectives and the level of risk-taking. In this chapter, we focus on global markets as an organizational field (DiMaggio & Powell, 1983), with its own particular institutional order while also being interlinked with other institutional orders, hence being part of an interinstitutional system (Friedland & Alford, 1991). This means that while we can understand global markets as an organizational field connecting local, domestic markets into a transnational order of price as a source of legitimacy, using shareholder activism as a source of authority, and having self-interest as its basis of norms, global markets as an organizational field are also connected to the institutional order of state for redistribution mechanisms, based on democracy as a legitimation source, with bureaucratic domination as the source of authority, and citizenship as its basis of norms. The third institutional order in this interinstitutional system is the corporation, based on hierarchy, with the market position of the firm as its source of legitimacy and top management as its source of authority in combination with firm employment as its basis of norms (Thornton et al., 2012). We can also see a fourth institutional order connected in this system, which is one of the profession, that is frequently interlinked with organizational fields and the institutional order of markets (Suddaby et al., 2007). This international dimension has been investigated by Tan and Wang (2011) in how multinationals deal with varying organizational logics across markets. They found that sometimes subsidiaries are exposed to institutional pressures to adapt to cultural and legal norms contradicting the firms’ domestic market ethical practices. An institutional logic dissonance between the state and firms has also been discovered in the development of a high-speed train sector in China (Genin et al., 2021). Diverging expectations between buyers and sellers can also lead to different expectations concerning long-term orientation, the level of support, quality and dependability between the partners due to the institutionalized views on how to make business (Andersen et al., 2009). Moreover, institutional perspectives can sometimes also explain the development and integration of a global supplier network based on a shared system of norms and values (Deligonul et al., 2013). Organizational fields like global markets can, in turn, be challenged by demands on sustainability values. For instance, Silva and Figueiredo (2017) have demonstrated how sustainability can be understood as an emerging practice that challenges the institutional logic within an organization. Consequently, the dominant logic in an organizational field can change towards sustainability (McLoughlin & Meehan, 2021). In this way, sustainability in global markets has developed from competitive isomorphism into institutional isomorphism (DiMaggio & Powell, 1983; Tolbert & Zucker, 1983), suggesting sustainability as a corporate social responsibility expected as an institutional logic (Du et al., 2007; Ioannou & Serafeim, 2015). However, with the institutionalization of sustainability as a corporate social responsibility, the dominant logic of a field, for instance, social movements, can also become changed into a market logic (Bondy et al., 2012). Hence, the meaning and relevance of sustainability in different institutional contexts can be negotiated, redefined or adjusted to different developing market contexts in order to gain legitimacy (Child & Tsai, 2005; Collinson & Wang, 2012; Crilly et al., 2016; Gifford & Kestler, 2008; Kolk & van Tulder, 2010; Lee et al., 2018). This means that a market institutional order may challenge a corporate institutional order in an attempt to achieve alignment for long-term sustainability (Powell, 2011). Navigation Techniques Among Competing Institutional Logics Towards Sustainability We see the landscape of sustainability in global markets as a network in which global market actors, such as buyers and sellers, make instrumental choices while being situationally constrained by this social network in which they are embedded, based on Granovetter’s (1985) theory of the social embeddedness of rational choice. In line with Bourdieu’s (1990) logic of practice, we suppose that global market actors have multiple social identifications that they use in markets, in attempts to create a moral landscape (Cerne, 2021), including sustainability, reproducing and transforming institutional logics according to how this agency is embedded in the institutional logics landscape (Giddens, 1984). For this analysis, we are inspired by Thornton et al.’s (2012) typology of change in field-level institutional logics. This typology includes changes to institutional logics through replacement, blending, assimilation and elaboration. The technique of replacement means that the user substitutes one institutional logic with a logic found in another institutional field, for instance, an editorial logic with a market logic (Thornton, 2004). Blending as a navigation technique refers to how institutional logics users combine logics from different institutional fields for an explanation, critique or other purposes. An example of this is the blending of professional logics with market logics (Lounsbury, 2005). The navigation technique of blending is similar to that of assimilation in that different logics are combined, although here the difference is that the core elements of the dominant logics remain, including new practices and symbols in the new logic, for instance, the change of academic logics with the help of market logics (Murray, 2010). Finally, the technique of elaboration means that an institutional logic as a dominant logic is developed with new practices, reinforcing this institutional logic rather than changing it, for example, independence in shareholder value logics (Shipilov et al., 2010). While we see these as possible techniques for handling competing institutional logics in global markets towards sustainability, we understand these techniques as not necessarily changing the institutional logics but rather helping market actors navigate them towards legitimacy in terms of sustainability in global markets. In this sense, we are inspired by paradox research, suggesting that paradoxes may remain while social actors handle this situation in different ways (Smith & Lewis, 2011). This means that global market actors sometimes solve the problem with competing institutional logics rather than the logics themselves. This navigation technique typology is used to analyse a case study of competing institutional logics in global markets towards sustainability. Our Theoretical Perspective Fig. 1 summarizes the theoretical perspective based on previous research, as outlined above. Opens in a new window.Fig. 1.Balancing Competing Institutional Logics on Different Levels. From this perspective, it is not uncommon that sustainability values collide in global market practices towards sustainability due to different economic, ecological and social values. These values are likely to influence rational choice in market decisions, while rational choice in organizational fields has also been found to be socially embedded (Granovetter, 1985; Uzzi, 1997; Zukin & Dimaggio, 1990). Also, we add Thornton et al.’s (2012) suggestion of a community logic as an order of institutional logic, based on the understanding that sustainability goals may vary between the local and the global in international business, leaving the community as an order of institutional logic as a basis for sustainability practices in global markets (Husted & Allen, 2006). Finally, we include the profession’s institutional order, which is that of a relational network, with personal expertise as the source of legitimacy and professional associations serving as an authority and emphasizing status in the profession as the basis of attention (Thornton et al., 2012). In this chapter, we focus on when the involved institutional logics collide and how relevant market actors solve this situation. We do this through an analysis of navigation techniques in global markets characterized by competing institutional logics in terms of sustainability. Case Study of Competing Institutional Logics in Global Markets Towards Sustainability The analysis was applied to a case study of international firms and their sustainability practices in global markets. Considering that our aim is to capture the practice of how conflicting, institutional logics are handled in global markets where buyers and sellers meet, we are influenced by Bourdieu’s (1977) practice theory, opening up a case study consisting of real-life situations in global markets (Flyvbjerg, 2011). Our case study aims in this way to understand market building (Mair et al., 2012), requiring an approach that allows for deeper insights into complex phenomena where traditional statistical analysis is not helpful for theory development (Merriam, 1998). Our case study includes international firms in the form of two retailers with headquarters in Sweden and a selection of their suppliers with headquarters in the People’s Republic of China, more specifically in the Guangdong province. Due to confidentiality reasons, all involved international firms will be kept anonymous. While one of the retailers was active in the garment industry, categorized as a fashion retailer, the other retailer was part of the home improvement industry, categorized as a do-it-yourself (DIY) retailer. Both retailers source their products in global supply markets, mainly in China, where these retailers suggested that we observe their meetings with relevant suppliers in the People’s Republic of China (Guangdong province) and conduct interviews with nine of the selected suppliers. We, therefore, followed a snowball approach in our case study, letting one instance of empirical material collection inform the next (Dusek et al., 2015; Farquharson, 2005). The fashion retailer (Retailer 1) in this study is one of the top 10 market leaders within the Swedish garment industry. In 2020, it had a turnover of approximately 500 million Euro and around 4,000 employees. Swedish retailers within the garment industry typically source globally, rebrand the globally sourced items within their retailer brand and often sell internationally – a process similar to most other European and North American fashion retailers, who generally focus on similar social issues in their sustainability communication, mostly on working conditions on supplier sites and the environment (Cerne, 2019). The fashion retailer in this study expanded internationally through global sourcing and opening stores in their closer geographical environment, like other Scandinavian countries and Northern Europe. Their business strategy was to offer fashion clothing of a reasonable quality at rather low prices through bulk buying. The home improvement retailer (Retailer 2) is an internationally expanding firm that is almost 100 years old. It is one of the leading market actors in Sweden and has over 200 stores in Sweden, Norway, Finland and the United Kingdom. With a total turnover of approximately 800 million euros and 4,500 employees in 2020/2021, the firm is one of the largest home improvement chains in Scandinavia. The home improvement retailer sells approximately 15,000 items through both physical stores and online sales. It focusses on five product categories (hardware, home, multimedia, electrical and leisure), and a combination of own brands and manufacturer brands. Just like the fashion retailer, the business model is built on excellence in distribution rather than production. In 2020, the firm sourced its range from around 1,200 suppliers. About 50% of the range was sourced from Asia. The work with sustainability for the studied fashion retailer was initiated at the end of the 1990s by media attention and pressure from social movement organizations, which expressed concern about working conditions at supplier sites. Extensive work with policies and guidelines, as well as employee education, was initiated both at the Swedish headquarters and in overseas offices. For the home improvement retailer, sustainability work was initiated after two critical and investigative reports regarding their purchasing operations in China were published by a social movement organization. It was argued that the home improvement retailer had no systematic and well-developed approach for following up on social and environmental responsibilities in relation to suppliers in distant markets. This initiated substantial internal activities within the home improvement retailer in order to develop and implement a sustainability approach covering supplier relationships. The home improvement retailer published guidelines describing what was expected from suppliers and the responsibilities that consumers could expect from this retailer in relation to suppliers. The empirical material consists of interviews in Sweden and overseas offices in Hong Kong, together with interviews and field notes from observations in the People’s Republic of China (Guangdong Province), as well as corporate documents in the form of reports, agreements and guidelines published in English. All the empirical material was constructed into written text, including transcripts of interviews, field notes from observations and documents already existing in text form. We treat them as accounts (Laplume et al., 2008; Meyer & Rowan, 1977; Scott & Lyman, 1968) of how international firms handle competing institutional logics in global markets towards sustainability. In the next part of this chapter, we outline our analysis of how these market actors navigate competing institutional logics in global markets towards sustainability. In this analysis work, we first classified the material based on the institutions that were traced. Thereafter, we identified the logics expressed regarding these institutions. After this, we tracked the logic that clearly collided in the accounts. Thereafter, we used the navigation techniques approach as described in the part foregoing this case description, illustrated in Table 1, to find the solutions used by the studied market actors to solve these competing logics. Table 1. Navigation of Competing Institutional Logics in Global Markets Towards Sustainability. Competing Institutional Logics Navigation Techniques Solutions Results on How to Keep Market Relationships Intact Global market economy Blending + replacement Legitimacy through explanation Cognition Local law Global social Local community Replacement Legitimacy through correct moral acts Moral arguing Global social Moral Local legal Assimilation Legitimacy through alternative logic Variation Global social Economic market Local education Replacement Legitimacy through suggestions for new competencies in markets Suggesting modification of network into a hierarchy Global education Global market Local sustainability Blending Contesting global market logic of control Stressing local competence Local legal Local community Local professional Blending Contesting with professional competence Stressing global sustainability policies as impossible to implement Global professional Local professional Global market rights Replacement Contesting with moral rights Relocation of priorities in market practices Local market rights Global market competence Local business Elaboration + replacement Contesting global market cultures Taking advice Global market Local sustainability business Navigating Competing Institutional Logics in Global Markets Towards Sustainability In this part, we present our analysis of how buyers and sellers in global markets navigate contradictory institutional logics with the help of the various navigation techniques of replacement, blending, assimilation and elaboration. We group these activities into one where market actors use these techniques to support global market practices as a way towards sustainability, and a second one where market actors use these navigation techniques to contest global market practices as a way towards sustainability. We outline this below and summarize this analysis in Table 1. Supporting Global Market Practices Towards Sustainability with Institutional Logics Navigation In the first category of how market actors use navigation techniques for handling competing institutional logics, we share examples of how this was expressed by the market actors in their accounts, together with the techniques we found as their way of handling the competing logics. One frequently upcoming issue in terms of sustainability in global markets was social conditions at local production sites, and how buyers in the global market sometimes felt that it could be difficult to implement economic compensation for overtime in the supply network, as in the following example: [A]ll these factories work on piece-rate, being paid for how much they produce. If you work forty hours, you are paid what you produce in these forty hours, if you work a hundred hours, you are paid for that. But we push for paying them overtime as well, and to be able to pay the overtime, you have to register the working time. ‘Why should I do that? I am on piece-rate!’. This is the kind of discussion you get into; where you have to explain why, and then they may be unaware of that this is Chinese law, giving everyone the right to paid overtime. (Manager 2 in Retailer 1, interview) In this account, a manager at Retailer 1 describes how the market in which the buyer and the seller operate is based on agreements to pay per piece rather than per hour used in the production of the pieces. There is an economic logic in the global market to pay per piece produced. Meanwhile, demands on sustainability, based on the social wellness of employees in the production, are based on how many hours employees work in the production. This leads to differences in economic logics due to global sustainability demands based on a different logic (social globally). This social sustainability logic is supported by the local (Chinese) law, which the buyer here describes as a solution and institutional logic to follow in the business negotiations. In this way, we see that the buyer here first uses the technique of blending to demonstrate how the economic logic (paying per piece) in this organizational field is changed by the entry of a social logic (paying per hour). To overcome this, the buyer uses a replacement technique, suggesting that while the seller is described here as having cognitive problems with the competing economic and social logics, the institutional logic of the law as connected to the local environment in the form of the People’s Republic of China, works as an explanatory factor. In this way, the buyer indirectly suggests that this collision of logics can be handled and is of minor importance in this relationship. Another manager at the same international firm (Retailer 1) describes a situation where the same competing logics can be solved in a different way: After a lot of ifs and buts, he [the seller] then admits that he has prepared the [accounting] books for us, and then, after a lot of ifs and buts, he shows us the real ones. And then we usually say that, in order to get the real books, we say that, ‘We accept the overtime hours you have, as long as we can see the real books’. In some way it is …. We have to winkle out the real books too, in order to say that we accept them. And once we can see the real books, and the real hours, we start a …. We try starting a work with the suppliers to reduce them [the overtime hours]. And then we say that ‘Well, try reducing these hours now, for the next time we come back, by 10%, and pay the overtime hours …. If you take 10% this year, you can pay 10% next year’, so that we kind of work on it, both to reduce the overtime hours and to pay for the hours. (Manager 1 in Retailer 1, interview) This manager also blends different institutional logics," @default.
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W4386782456 title "When Institutional Logics Collide: How International Firms Navigate Sustainability Values in Global Markets" @default.
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