Master Thesis
Making sense of sustainability tensions in
supply chains
A qualitative research into sensemaking of sustainability
tensions in Dutch dairy farming
Supply Chain Management
University of Groningen, Faculty of Economics and Business Department of Operations
24 June 2019
Author: Manon Berenbroek Student Number: S2706075 Email: m.m.berenbroek@student.rug.nl
Supervisor: Dr. K. Peters Co-assessor: Dr. ir. P. Buijs
Word count: 8.687
ABSTRACT
Purpose: The purpose of this paper is to increase understanding of how different actors within
supply chains make sense of sustainability tensions. By shedding light on the transition area from an instrumental to a paradox approach this study aims to advance the literature on sensemaking of sustainability tensions.
Methodology: This study uses an inductive case study approach. Multiple semi-structured
interviews were conducted. In addition to this primary data, secondary data from previous master theses and sustainability reports of companies were used.
Findings: We show that a paradox approach to managing sustainability tensions is still the
exception rather than the rule and that decision makers need time to think more paradoxically. We observed that decision makers developed alternative responses to managing sustainability tensions by trying to adapt sustainability requirements to make them more ‘workable’ in practice. We argue that developing a more workable solution is a first step of decision makers to move away from their basic approach.
Practical implications: This study highlights the importance of adopting a paradoxical
approach to managing sustainability tensions in order to move towards true sustainability in practice. However, this study also acknowledges that, when addressing sustainability tensions, in some cases choices need to be made about which sustainability elements are going to be addressed.
Originality/contributions: The findings of this study add to the literature about sensemaking
Table of Contents
1.
INTRODUCTION... 4
2. THEORETICAL BACKGROUND ... 6
2.1 Sustainability in Supply Chains ... 6
2.2 Stakeholder Theory ... 7
2.3 Sustainability Tensions within SCM ... 8
2.4 Making Sense of Tensions ... 8
2.4.1. Business case frame ... 10
2.4.2. Integrative approach and Paradoxical frame ... 11
2.4.3. Contextualizing ... 11
3. METHODOLOGY ... 13
3.1 Research Design... 13 3.2. Case Selection ... 13 3.3 Data Collection... 14 3.4 Data Analysis ... 164. RESULTS ... 17
4.1. Prioritizing one sustainability element ... 18
4.1.1. Social (animal welfare) first ... 18
4.1.2. Instrumental approach ... 18
4.2. Developing a more workable solution - instrumental to paradox ... 20
4.3. Paradox approach ... 22
4.4. Developing a more workable solution – paradox to instrumental ... 24
5. DISCUSSION AND CONCLUSION ... 25
5.1. Theoretical and Practical Implications ... 26
5.2 Limitations and Future Research ... 27
6. REFERENCES ... 28
APPENDIX 1. Interview Protocol ... 35
APPENDIX 2. Questionnaire ... 36
APPENDIX 3. Coding Tree ... 40
APPENDIX 4. Quotes ... 41
1. INTRODUCTION
From 1880 till 2012 the average global temperature has risen with about one degree (0.85°C) (IPCC, 2013). This temperature increase has caused extreme changes to natural and human systems, e.g. rising sea levels, biodiversity losses and increases in extreme weather, floods and droughts. The dominant cause of global warming is human influence on climate (IPCC, 2013). Globalization and the rapid development of underdeveloped countries are putting more and more pressure on the earth’s natural resources (Meixell & Luoma, 2015). These changes are leading to high risks for vulnerable communities (Allen et al., 2018). For example, people living in underdeveloped countries experience a decrease in food security (IPCC, 2012).
Over the last decades, the increases in free flow of information and transparency has boosted stakeholder awareness about the above mentioned sustainability problems (Meixell & Luoma, 2015). Stakeholders are more and more demanding that organizations increase their sustainability standards (Meixell & Luoma, 2015). As a result, an increasing number of organizations are actively engaging sustainability into their activities and strategies (Dangelico & Pontrandolfo, 2015). However, a significant gap exists between sustainability actions and ambitions (Corbett, Webster, & Jenkin, 2018). From literature we know that this gap can be explained by various reasons. Businesses and decision makers are struggling to take appropriate action, because they often disagree on the existence and/or severity of climate change (York, Vedula, & Lenox, 2018). Also, many decision makers lack the knowledge about what sustainable business initiatives encompass or the impact of these initiatives on processes and practices (Svensson et al., 2016). Most importantly, sustainable initiatives are ambiguous, meaning that organizations need to focus on achieving conflicting yet interrelated objectives concurrently (Hahn, Preuss, Pinkse, & Figge, 2014).
Predominantly firms make sense of sustainability tensions from an instrumental perspective point of view, by ignoring tensions and putting economic goals over environmental and social goals (Gao & Bansal, 2013; Hahn et al., 2015; Xiao et al., 2019). However, for many firms the need to become truly sustainable is obvious (Shevchenko, Lévesque, & Pagell, 2016). So, there needs to be a transition towards other approaches to sensemaking of sustainability tensions (Hahn et al., 2014; Xiao et al., 2019). Yet, this transition area is unexplored (Xiao et al., 2019). Xiao et al. (2019) identified an alternative response, which they named as ‘contextualizing’, that makes sustainability requirements more workable in practice and can help decision makers to move from instrumental towards paradoxical sensemaking. However, the focus of this study was the manufacturing industry in an emerging market, which limits the generalizability to other industries. This study aims to further explore the grey area between an instrumental and paradoxical approach to managing tensions. Therefore, the research question of this paper is:
how do different actors within supply chains make sense of sustainability tensions?
2. THEORETICAL BACKGROUND
This section first explains sustainability in supply chains in general and then elaborates more on increasing stakeholder pressures towards sustainability. Then sustainability tensions, as a result of stakeholder pressures, will be discussed. Subsequently, how actors can make sense of these tensions will be elaborated on in more detail.
2.1 Sustainability in Supply Chains
Sustainability has been introduced to a broad public for the first time in 1987 by the Brundtland Commission. In their report the commission provided a definition of sustainability that is:
“development that meets the needs of the present without compromising the ability of future generations to meet their needs” (WCED, 1987, p. 8). Although this is the most adopted
definition, it is very general and therefore less useful for firms and supply chains. Literature that defines sustainability in supply chains follows in general two stances: the instrumental perspective and the ecological perspective. These two stances indicate that tensions already arise when defining sustainability, as will be explained next.
From an instrumental perspective, Sustainable Supply Chain Management (SSCM) is defined as ‘‘the management of supply chain operations, resources, information and funds in order to
maximize the supply chain profitability while at the same time, minimizing the environmental impacts and maximizing social well-being’’ (Hassini, Surti, & Searcy, 2012, p. 70). This
definition balances the three sustainability elements of the Triple Bottom Line (TBL), i.e., people, profit, planet, from a microeconomic point of view (Elkington, 1998). The planet element demands of organizations that they reduce their negative impact on the natural environment by concurrently reducing their costs and enhancing their resource productivity (Rodriguez, Svensson, & Eriksson, 2018). The profit element focusses on the achievement of financial gains and the related benefits through future growth or new markets (Roberts & Tribe, 2008). The people element refers to organizational responsibilities toward society as a whole, which is embodied in the ethical, legal, economic and discretionary accomplishments of organizations (Carroll, 1979).
supply chains can become less unsustainable (Pagell & Shevchenko, 2014). Montabon et al. (2016) argue that following the instrumental logic will never lead to true sustainability in practice, since it prioritizes profits over the society and the environment. Therefore, in response to the weaknesses of the instrumental logic, Montabon et al. (2016) developed the ecologically dominant perspective where social and environmental interest overrule economic interests. According to this perspective “a truly sustainable supply chain would at worst do no net harm
to natural or social systems while still producing a profit over an extended period of time; a truly sustainable supply chain could, customers willing, continue to do business for-ever”
(Pagell & Wu, 2009, p. 38).
2.2 Stakeholder Theory
Stakeholder theory, a concept introduced by Freeman (1984), suggests that organizations need to manage important stakeholder relationships in order to be effective and survive over time. Stakeholders of an organization are any groups or people that have an interest in the organization and can influence, or may be influenced by, its operations (Freeman, 1984; Slack, Chambers, & Johnston, 2010). According to stakeholder theory there should be a fit between the societal issues, the expectations of stakeholders and the values of the business and its managers, which will determine the ability of the firm to sell its products or services (Freeman, 2004). Nowadays, organizations are confronted with increasing sustainability demands and pressures from diverse stakeholder groups (Ansari, Wijen, & Gray, 2013; Yu & Ramanathan, 2015). These demands put pressure on companies to achieve not only economic goals, but also focus on social and environmental concerns (Meixell & Luoma, 2015).
actors do not directly provide any essential means of support for the organization but are able to influence primary stakeholders to withdraw essential support, causing the organization to fail (Garvare & Johansson, 2010). Examples of secondary stakeholders are the government, non-governmental organizations, communities, media, competitors, trade associations and investors (Meixell & Luoma, 2015). These primary and secondary stakeholders have diverse sustainability interests and will demand different things of organizations.
2.3 Sustainability Tensions within SCM
Stakeholder pressures can be considered as an important source of sustainability tensions, which are imbedded in supply chains nowadays (Van Der Byl & Slawinski, 2015). Since different stakeholders demand different things of organizations, firms need to address social, environmental and economic outcomes concurrently, which creates different desirable but interrelated objectives (Elkington, 1998). So, organizations experience sustainability tensions between the TBL factors (Slawinski & Bansal, 2012), as addressing one factor could lead to negative outcomes for the other factors (Newton, 2002).
Stakeholders often have different sustainability goals than organizations, leading to tensions for organizations. According to Xiao et al. (2019) suppliers can experience tensions when implementing their buyer’s sustainability standards. For instance, sustainability standards of Western buying firms about not using child labor can conflict with sustainability standards of suppliers operating in emerging markets, where child labor is sometimes regarded as an additional educational system. Also, sustainability pressures towards animal welfare can result in tensions. Consumers highly value animal welfare and as a result, farmers are pushed to act in favor of their animals (Dijkgraaf, 2018). However, increasing animal welfare conflicts with some aspects of environmental sustainability (Mcglone, 2001; Tucker, Mench, & Keyserlingk, 2013). For instance, during grazing, the welfare of dairy cows is increased since the cows are able to behave naturally (Van Calker, Berentsen, Giesen, & Huirne, 2005). Nevertheless, it is argued that cattle grazing is harmful to local biodiversity (Pyke & Marty, 2005).
2.4 Making Sense of Tensions
use “to understand and to share understandings about such features of the organization as
what it is about, what it does well and poorly, what the problems it faces are and how they should resolve them” (Feldam,1989 IN Weick, 1995, p. 5).
The sensemaking process consists of three interconnected phases: scanning, interpreting and responding (Hahn et al., 2014; Thomas, Clark, & Gioia, 1993). In the scanning phase, first information is gathered by decision makers and afterwards the complexity and amount of this information is reduced (Hahn et al., 2014; Thomas et al., 1993). Nevertheless, decision makers are usually exposed to more information than they can process because of their cognitive limitations (Mintzberg, 1973). Different decision makers notice different aspects of a situation, which leads to differences in information processing and interpretations of the situation (Hahn et al., 2014). “Interpretation is the act of carving out meaning from ambiguous cues and is the
very core of the sensemaking process” (Porac & Thomas, 2012, p.178). In the interpreting
phase any given situation may be perceived by one as relevant, whereas by the other perceived as irrelevant (Barr & Huff, 1997). This level of perceived relevance has consequences for the third phase of the sensemaking process, the decision makers strategic response (Hahn et al., 2014). In the responding phase, decision makers act based upon the interpretation of the sustainability issue (Hahn et al., 2014).
2.4.1. Business case frame
Decision makers with a business case frame focus on the social and environmental aspects that align with economic objectives (Hahn et al., 2014). In the first phase of the sensemaking process, the scanning phase, decision makers with a business case frame perceive a limited amount of information about a sustainability issue (Hahn et al., 2014). They focus on absorbing information in detail they perceive as being relevant for business, often expressed in economic objectives (Daft & Weick, 1984). Information is collected from a limited number of sources and scanning breadth is limited (Hahn et al., 2014). In the interpreting phase, decision makers perceive a high level of control over the small number of sustainability issues they have noticed in the scanning process (Hahn et al., 2014). The positive or negative interpretation will be based on whether the aspects of the sustainability issue demonstrate a clear positive or negative contribution to the financial performance of the firm (Hahn et al., 2014). Accordingly, decision makers will either actively approach (in case of positive interpretation) or avoid (in case of negative interpretation) a sustainability issue (Cacioppo, Gardner, & Berntson, 1999). As a result, the business case frame limits the contribution of organizations to sustainable development because it puts financial outcomes over environmental and social concerns (Hahn, Figge, Pinkse, & Preuss, 2018). Therefore, the business case frame can be linked with the instrumental approach on sustainability, see Figure 2.1.
2.4.2. Integrative approach and Paradoxical frame
According to Hahn, Pinkse, Preuss and Figge (2015) the integrative approach, see Figure 2.1, has been developed in response to the instrumental view dominance in literature. Whereas the win-win approach avoids tensions and the trade-off approach eliminates tensions by demanding a choice, the integrative approach seeks to bring the sustainability elements together without favoring any one of these elements over another (Van Der Byl & Slawinski, 2015). So, tensions are managed by shifting the focus from economic elements to environmental and/or social elements (Van Der Byl & Slawinski, 2015).
Managers with a paradoxical frame have more ambivalent interpretations of sustainability concerns and respond more cautiously to these concerns in contrast to managers with a business case frame (Das & Teng, 1999; Hahn et al., 2014). This is due to their better awareness about tensions and risks (Hahn et al., 2014). In the scanning phase, decision makers observe a large number of features of many sustainability issues (Hahn et al., 2014). Information browsing is broad, however with a lack of detail (Hahn et al., 2014). In the interpreting phase, decision makers interpret sustainability issues more ambivalently as compared to decision makers with the business case frame and perceive a moderate level of control over these issues (Hahn et al., 2014; Plambeck & Weber., 2010). In the responding phase, similar like the integrative approach, decision makers accept the sustainability tensions and try to integrate the social, environmental and economic aspects of the TBL (Hahn et al., 2014). However, paradoxical sensemaking goes a step further and tries to understand the nature of the sustainability tensions by delving deeper into these tensions (Hahn et al., 2014; Van Der Byl & Slawinski, 2015), see Figure 2.1. Also, decision makers will consider responses that breach with traditional business practices (Hahn et al., 2014).
2.4.3. Contextualizing
paradoxical sensemaking (Xiao et al., 2019). When decision makers engage in contextualizing they try to develop a more workable solution by adapting or bypassing sustainability rules (Xiao et al., 2019). By doing so, sustainability requirements are suppressed and become somewhat relaxed (instrumental), whereas the goal behind the sustainability requirement remains intact (paradox) (Xiao et al., 2019).
Figure 2.1. Perspectives on sensemaking adopted by Hahn et al. (2014), Van Der Byl & Slawinski (2015) Xiao et al. (2019).
As can be seen in the above, different approaches with different terms as to how tensions are managed are identified in literature (Hahn et al., 2014; Van Der Byl & Slawinski, 2015; Xiao et al., 2019). From now on the term approach will be used to refer to these different terms in order to link the articles and their approaches to each other and to the general sustainability stances in literature. In Table 2.1 an overview of these linkages can be found.
Table 2.1. Sensemaking approaches linked with each other and with general sustainability stances.
3. METHODOLOGY
3.1 Research Design
The aim of this research is to provide insights into how different actors make sense of sustainability tensions in dairy supply chains. In order to find answers, an inductive multiple case study was used for three reasons. First, case study research is a suitable method for answering this thesis’ “how” question as it enables researchers to gather data from multiple sources to make sense of the perceptions and behaviors of actors on sustainability tensions (Xiao et al., 2019). Second, detailed data is needed about how actors scan, interpret and respond to sustainability tensions and can be best collected from in-depth interviews (Langley, 1999). Lastly, numerous questions arise regarding sensemaking as discussed in the theoretical background. With a case study approach, multiple data sources can be used to create a thorough understanding of sensemaking of sustainability tensions in the dairy industry (Eisenhardt & Graebner, 2007). Since the aim of this research is to use the different phases of the sensemaking process to advance the literature on sensemaking of sustainability tensions, this case study can be typified as theory refinement (Karlsson, 2016).
3.2. Case Selection
Figure 3.1. Overview of actors within a dairy supply chain (Lüschen, 2018)
Cases have to fulfill several selection criteria to be eligible for this research. Since this research is part of a larger research project, this paper adopted the research project’s case selection criteria. These selection criteria are traceability, accessibility, Life Cycle Assessment (LCA) availability and cradle-to-grave. Traceability of the supply chain implies that the produced product could be traced back to a single producer and supplier. Accessibility means that the supply chain should be relatively easy to access and that actors within the supply chain are willing to participate in the interviews. LCA-availability implies that LCA studies need to be available for both supply chains to assess and compare the environmental impact of cases (Tannous, Manneh, Harajli, & El Zakhem, 2018). Cradle-to-grave means that the available LCAs should only measure impact from raw material extraction until consumption and no further (Tannous et al., 2018).
Furthermore, the cases have to be companies that operate in the same dairy supply chain. Also, all interviewed actors in the supply chain need to be located in the Netherlands, due to resource and time constraints of this study.
3.3 Data Collection
In order to get a supply chain wide view of how different actors make sense of sustainability tensions, interviews were conducted with different parties in organic, non-organic and hybrid dairy supply chains, see Table 3.1. Consumers are left out of the scope of this research since a large amount of literature already exists on consumer psychology (Luchs & Kumar, 2017; Rowe, Wilson, Dimitriu, Charnley, & Lastrucci, 2019). Also, retailers are very knowledgeable about what consumers want and do not want (Beckeman & Olsson, 2011). In addition, a soil improver company (input firm) was interviewed, since this company is a supplier of sustainable products to farmers in the dairy supply chain.
Suitable respondents of a firm are persons who are the owners of the company or are responsible for sustainability in the company. These persons are considered as most knowledgeable about sustainability tensions and how the company makes sense of these tensions. To find these respondents, e-mails were sent to companies in dairy supply chains. In this e-mail the purpose of the research was explained and what type of respondents were needed for this research.
In appendix 1 an interview protocol can be found which was send to the respondents beforehand. This protocol consists of an introduction to the research topic and the way the interview will be conducted regarding the way of processing data and duration. The interview itself, see appendix 2, started with general and open questions to prevent guiding respondents in a certain direction. During the interview the questions became more specific. The questions were formulated based on constructs that were explained in the theoretical background. The respondents were asked beforehand whether they agree with recording the interviews by means of a phone and laptop recorder. The duration of the interviews was between 45 minutes and 90 minutes, see Table 3.1.
Table 3.1. Overview of interview data
3.4 Data Analysis
4. RESULTS
In this section a detailed analysis is presented of how different actors within supply chains make sense of sustainability tensions. The analyzed data relies on two aggregate dimensions: sustainability tensions and approaches to managing sustainability tensions. In Appendix 3 a coding tree, with the 2nd order themes and first order concepts of these aggregate dimensions
can be found. In Appendix 4 a table can be found with the quotes per first order code.
4.1. Prioritizing one sustainability element
4.1.1. Social (animal welfare) first
There was one case found, the organic farmer, who prioritizes the social sustainability element when making sense of sustainability tensions. The organic farmer experiences tensions around the costs of sustainability. He explained: “Sustainable products/initiatives are very expensive.
The biological milk price we receive is now about 10 cents higher than the milk price conventional farmers receive. However, the conventional farmers feed a chunk [to their cows], which costs 26 cents [per kg] and a similar but sustainable chunk that we need to feed [to our cows] costs us 43 cents [per kg]. […] So, that [more sustainable feed] is very expensive.” He
responds to this tension by prioritizing social sustainability, animal welfare, above economic sustainability. He explained that the welfare of his animals is most important and that he often has to choose between earning a profit or increasing animal welfare. When he is presented with this trade-off he chooses to increase animal welfare.
4.1.2. Instrumental approach
Predominantly, firms make sense of sustainability tensions from an instrumental perspective point of view, see Table 4.1. This is in line with the findings of Van Der Byl & Slawinski (2015) and Xiao et al. (2019). From the interviews it appeared that sustainability is not considered as the main priority by firms who have an instrumental approach. Although these actors acknowledged that sustainability is getting more and more important, they have no sustainability department or a dedicated sustainability function. The retailer reported: “We do
not have people in our own company who are specialized in sustainability”. Often sustainability
is seen as a supplementary task for which the actors only have little time and resources available. Also, these firms do not link sustainability to objectives nor measure the impact of their sustainable initiatives. Furthermore, they mentioned that sustainability plays no or only a limited role in selecting their suppliers and customers. A milk processor reported:
“sustainability is not a reason to not approve a supplier. […] We have other more important criteria, [such as price and quality], for [approving a supplier] right now (Milk processor 2).”
As a result of this instrumental approach, firms consider the costs of sustainability as the most serious tension. Sustainable initiatives and products are considered as more expensive when compared to conventional initiatives and products. The smallest feed producer reported: “Costs
soon pay one or two euros more per hundred kilos [when compared to the conventional product]. […]So,in the end more sustainability only results in more costs for every link in the chain (Feed producer 5).” Actors with an instrumental approach respond to this economic
tension by prioritizing the economic element. So, tensions are not managed but avoided through optimization of one sustainability element (Van Der Byl & Slawinski, 2015). The retailer reported that he treats this tension as a trade-off: “So, first we have to make money and then we
are going to think about other things, [e.g. implementing sustainability]. So, if earning profit is going well, there is room for other actions, [e.g. implementing sustainability]. And we recently dealt with a crisis, so we didn’t make a lot of money. And then it is important to sell and not to spend money on sustainable products/initiatives that cost a lot of money in the first place.” The
other respondents mentioned that sustainability actions need to be economically attractive otherwise they would not implement them, meaning they see the economic tension as a win-win situation. The smallest feed producer reported: “If a raw material is more sustainable and
cheaper [compared to the conventional product], only then we will purchase that raw material. It is basically about the economic idea [of saving costs] (Feed producer 5).” Furthermore, a
large feed producer reported: “Sustainability can also result in profit. For example, in Myanmar
we are the largest private investor in solar panels. We do that because we think it generates money (Feed producer 2).” In order to find out whether an action is economically attractive
often a business case is made. The same large feed producer mentioned: “Of course costs are
considered. In the end it is also about economic sustainability. Then a business case is made to decide whether it is a profitable decision (Feed producer 2).”
There were also actors with an instrumental approach that experienced tensions between winning (in case of implementing sustainability) or losing (in case of not implementing sustainability) profit and presented this tension as a trade-off. They respond to this tension by implementing sustainability. The largest milk processor sometimes implements a sustainable initiative when there is no choice as a result of a law: “Or implementing more sustainability
must be a law or a regulation, then we just have to comply (Milk processor 1).” When he does
fact that these actors implemented sustainable initiatives, their approach to sensemaking is still instrumental since the reason for these actors to implement sustainability is to ensure their profits.
4.2. Developing a more workable solution - instrumental to paradox
An alternative way of responding that was identified in this research is that actors with an instrumental approach also try to ‘develop a more workable solution’. Respondents emphasized they feel they lack the resources and power to deal with the sustainability tensions they face. The medium sized feed producer reported that they are simply too small to make a difference:
“When I look at our company, we are unable to say we are going to change that. In our current business phase, we are also, in a sense, not a pioneer in sustainability because we simply do not have the power or size to make the difference (Feed producer 4).” Since most of the
respondents feel they can do little about the sustainability tensions they face, they try to develop more workable solutions (either through lobbying, seeking other raw materials or finding loopholes in the law) to deal with these tensions.
A tension that was identified from the interviews is that decision makers in the dairy supply chain, who pressure for more sustainability, lack the right sustainability knowledge. Milk processors push for more sustainable products but don’t think about the consequences for the entire dairy supply chain. An example that is often mentioned is the EU28 concept of Milk Processor 1, which demands that soya in the produced feed can only be bought and used from Europe. However, feed producers have their doubts about whether this soya is more sustainable. The medium sized feed producer explained: “For instance, Milk Processor 1, that is a
competitor of Milk processor X to call it that way. That milk processor has a concept with a retailer: The Euro 28 concept. They want that all raw materials that we use to produce feed for their concept come from Europe. In itself that is a noble target, but it brings a lot of difficulties. They are not transparent about the CO2 emissions of soya from Brazil compared to soya from Europe. When you compare these, you see that there are also numbers who say that soya is best cultivated in Brazil under good circumstances, such as no deforestation etc. The climate is better in Brazil and the sector is well equipped for it. In Europe we are better at producing other things. This is a tension that played really strong last year (Feed producer 4).”
EU28 concept. Buying a more sustainable product could lead to a shortage of supply according to a small feed producer: “Plus the fact that you say Europe sounds very nice, but suppose we
have a dry summer in Europe like last year and we have to get everything from Europe. That is simply not possible, so what will you do then? Last year the supply just wasn’t there. I mean that that drought just made sure that the resources were used up, there was never enough, so you limit yourself very much (Feed producer 3).” Small feed producers deal with this
sustainability tension by lobbying Milk processor 1 in a very early stage to come to a solution that is more workable in practice. One small feed producer reported: “You can go into dialogue
[with your stakeholders] and if you do this early in the process [when the tensions appear] then you can ensure that it remains practical. […] Eventually there was a lobby with the Eu28. Like, raw materials from Eu28 is okay but then Ukraine must be included as well. There has been a very strong lobby from the animal feed side to include Ukraine in Europe as a continent, because the European Union is just a political thing. If for instance England gets out of the EU with the brexit than the Eu28 becomes Eu27. So, take the whole continent of Europe than we have more choice [where to get our raw materials from]. So, in this way we were already involved in a very early stage in the process and we could think along constructively. (Feed
producer 3).” Also, the small and medium sized feed producers mentioned that the advocacy organization, all feed producers are a member of, speaks out in defense to sustainability tensions for the entire feed sector. Members deliver input about their opinion and then the organization defenses the common stand. The medium sized feed producer deals with this delivery security tension by seeking other alternative raw materials for supply of soy from Europe.
Furthermore, all actors within the dairy supply chain mentioned the tension that as a result of a lack of knowledge of decision makers, sustainability discussions are mostly based on emotion instead of ratio. The medium sized feed producer mentioned: “There is a lot of emotion and
little ratio [in the sustainability discussions]. That is the feeling that we currently have with sustainability (Feed producer 4).” Feed producers respond to this tension by informing decision
These above mentioned responses of lobbying and seeking for other raw materials can be linked to contextualizing of Xiao et al. (2019) since these responses try to adapt or bypass sustainability requirements to make them more workable in practice, while still keeping the goal behind the sustainability requirement intact. As such, developing a more workable solution is used by actors to move away from the instrumental approach towards a more paradoxical approach to sensemaking of sustainability tensions (Xiao et al., 2019), see Figure 4.1.
There was one extreme case found, the smallest feed producer, who is very creative in developing a more workable solution for its company. This feed producer tries to find loopholes in the law when new sustainability requirements are created by the government. By doing so, this feed producer avoids implementing sustainability for as long as possible. This way of developing a more workable solution cannot be linked to contextualizing of Xiao et al. (2019) since the aim behind the sustainability requirement does not remain intact. As such, this company does not move away from their instrumental approach by finding loopholes in the law.
4.3. Paradox approach
The second basic approach to managing sustainability tensions that was identified is synergizing all three sustainability elements. Only 2 cases, feed producer 1 and the soil improver, have this approach to managing sustainability tensions, see Table 4.1.
Feed producer 1 defines sustainability as license to operate in the future and tries to balance the social, economic and environmental aspects of sustainability. This feed producer has a pioneering role in sustainability and links sustainability to objectives, uses sustainability as supplier selection criteria and measures the impact of their sustainable initiatives. As a result, in contrast to the actors who suppress sustainability elements, feed producer 1 does not consider the costs of sustainability as a tension: “We have good arguments [for why we should implement
A tension that feed producer 1 mentioned is that “Sustainability has a high complexity. There
are so many different parameters you have to involve and consider when making a decision”.
Literature on sustainability already acknowledged that sustainable decision making is more complex and uncertain compared to conventional decision making since sustainability deals with a large number of criteria (de Magalhães, Danilevicz, & Palazzo, 2019). In addition, feed producer 1 mentioned: “When you change one thing [in terms of sustainability], a lot of other
or further changes come with it along”. To deal with this complexity of sustainability, feed
producer 1 tries to balance all three sustainability elements: “We do have a valuation process.
Yes, that is correct. And we take all three pillars. So, of course, the social pillar. That is the most difficult, I think, if you want to quantify your goals. Because that is more, in many cases, a qualitative approach actually. And that is very complicated to define it as a KPI. Economical, you have to grow as a company. Sustainability, otherwise you have a problem within the company, and that is not good, neither for the employees nor for the external and internal stakeholders. And of course, ecological. That can be emission measurements or less biotics.”
Also, they consider out of the box responses that breach with established business practices:
“We have to [consider actions that breach with established business practices when implementing sustainability]. Dealing with sustainability tensions is all about innovation and it is all about new ideas. […] We put professionally highly educated people together and think out of the box [when dealing with sustainability tensions]. […] Innovation is necessary for the future to make the difference. You can say that another person is stupid when they invented the wheel, but sometimes you have to invent the wheel again yourself, especially in science. A lot of innovations and ideas pop up every day, and that is fantastic.” So, feed producer 1 has a
paradox approach to managing sustainability tensions (Van Der Byl & Slawinski, 2015).
Interestingly, even though feed producer 1 knows that in theory sustainability elements should be balanced, they acknowledge that in practice sometimes choices need to be made about assigning priority to sustainability elements. As such, feed producer 1 has a pragmatic stance when dealing with sustainability tensions. They explained: “The importance of the
sustainability factor really does depend on the project.” So, feed producer 1 both has a paradox
approach and a pragmatic stance to managing sustainability tensions, which has seemingly not been identified in earlier studies.
4.4. Developing a more workable solution – paradox to instrumental
The soil improver sells a product that improves the soil, and thus the environment. Within their company they try to balance the sustainability elements and therefore the soil improver has a paradox approach to sensemaking of sustainability tensions. This soil improver focusses on: “making the outside world more sustainable with our sustainable products”. However, they are very dependent on their customers to achieve this goal. As a result, the most important tension they experience is “the short-term [cost focus] of our customers, the farmers, and the
long-term focus of sustainability”. This tension impedes them from achieving their idealistic goal of
making the outside world more sustainable. As such, they have to compromise and make their goal more workable in practice. They respond to this tension by exerting pressure on farmers to use their sustainable products by visiting them and informing them about their products. Furthermore, they provide lectures, are present at fairs and do very heavy public relations. In this way they develop a more workable solution for themselves and try to make the world more sustainable one step at a time. As such, the soil improver steps away from the paradox approach, see Figure 4.1.
5. DISCUSSION AND CONCLUSION
This study has explored how different actors within dairy supply chains make sense of sustainability tensions. The main response to managing tensions that was identified in this research is prioritizing the economic element. The main reason that was given was that sustainability actions need to be economically attractive, otherwise companies would not implement them. Therefore, this case study of companies in dairy supply chains confirms that the dominant perspective on sustainability is still instrumental, which is in line with previous research (Golicic & Smith, 2013; Hahn et al., 2015; Montabon et al., 2016; Xiao et al., 2019). However, it is unlikely that following the instrumental perspective will lead to true sustainability in practice (Pagell & Shevchenko, 2014). Therefore, we agree with Xiao et al. (2019) that adopting a paradoxical approach is needed to create true sustainability in practice. Yet, decision makers need time for this transition. This thesis has attempted to find answers about how decision makers make this transition.
From the interviews it appeared that multiple approaches to managing sustainability tensions are used by the same actors, depending on the nature of the sustainability tension. Although actors have a basic approach to managing tensions, either instrumental or paradox, they do have multiple options to move away from their approach. Therefore, in contrast to current literature (Hahn et al., 2014; Van Der Byl & Slawinski, 2015), this study thus claims that responding does not follow one approach. Responding is dynamic and approaches of an actor to manage sustainability tensions can change depending on the nature of the tension.
more workable solution. As a result of the instrumental approach their customers hold, this company is impeded from achieving their idealistic goal. They respond to this tension by compromising and adjusting their goal. As such, this response can be regarded as a step of this actor to move away from the paradoxical approach.
Interestingly, it was found that actors with a paradox approach also respond pragmatically to sustainability tensions, which has seemingly not been identified in earlier studies. Hahn et al. (2014) argue that actors with an instrumental approach adopt a pragmatic stance on sustainability tensions. However, this research has found the opposite. There was one case with a paradox approach that adopted a pragmatic stance on sustainability tensions. This case acknowledged that sustainability elements cannot always be balanced and that sometimes choices need to be made about prioritizing one of the sustainability elements. As such, this finding advances the insights about paradoxical sensemaking.
Actors develop a certain response, but not all with the same convictions. Some put economic sustainability above social and environmental sustainability because otherwise they would go bankrupt, and others do it because their main focus is on earning more profit. A possible explanation could be that the attitude towards sustainability is most decisive for the actions that will be taken to manage tensions. However, more research is needed to confirm this possible explanation.
5.1. Theoretical and Practical Implications
The findings of this study add to the literature about sensemaking of sustainability tensions by improving the understanding of how different actors within supply chains make sense of sustainability tensions. We show that a paradox approach to managing sustainability tensions is still the exception rather than the rule and that decision makers need time to think more paradoxically. We observed that decision makers developed alternative responses to managing sustainability tensions by trying to adapt or bypass sustainability requirements to make them less stringent and more ‘workable’ in practice. We argue that developing a more workable solution is a first step of decision makers to move away from their basic approach.
dairy products are among the products that contribute the most to environmental issues (Rohmer et al., 2019) it is very important that a paradox approach to managing sustainability tensions is adopted among practitioners in the dairy supply chain. However, this study also acknowledges that in some cases choices need to be made about prioritizing one of the sustainability elements.
5.2 Limitations and Future Research
One of the respondents (Feed producer 3) was a product manager of cattle and not involved in the sustainability practices of the company he works for. He had limited knowledge about the sustainability tensions the company experiences and how the company manages these tensions. He tried to answer as much questions as possible, but at the end of the interview a few questions remained unanswered. He asked a colleague to answer these remaining questions. It appeared that his colleague was more knowledgeable about all the sustainability tensions the company experiences and how the company responses to these tensions. The insights that could be obtained from this interview are therefore questionable and limited.
The secondary interview data of the retailer could not be completely used since this data did not primarily focus on sensemaking of sustainability tensions. The insights that could be obtained from this interview are therefore limited.
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APPENDIX 1. Interview Protocol
• Key members of the dairy chain will be identified by following the case selection criteria as described in the method.
• The potential respondents will be contacted by mail and/or by phone to seek approval and to confirm their participation in this study.
• Either via e-mail or via the phone appointment(s) for the interviews will be made. The date, time and place will be confirmed by e-mail and an explanation of this study will be included.
• The interview questions will be sent to the respondents beforehand, so that the respondents can get familiar with the questions.
• The interviews will be conducted by one or two interviewers. They will visit all respondents and conduct the interviews.
• All interviews will be recorded. In case of a second interviewer, the interview will still be recorded and the seconds interviewer will take notes.
• All interviews will be conducted face-to-face at the respondent’s place of work
• The interviews will take approximately 30 to 60 minutes.
• At the beginning of the interview, the study will be explained to the respondent(s) and the respondent(s) will get the chance to ask questions.
• After the interview has taken place, the interviews will be transcribed immediately.
APPENDIX 2. Questionnaire
[ ] = questions from previous interviews.
Before start: we will anonymize the interviews so your name will not appear and therefore we would like to ask if it is okay if we use the data for our research.
Explain what tensions in sustainability is. Explain that we have four topics.
Topic 1: Introduction
1. [ What is your function/position in the company? ]
2. What is your (personal) vision/view on sustainability? And Why? 3. Is it important for your organization to be sustainable? Why?
Topic 2: Sustainability at the company
“We would now like to ask you about practices or actions you take for sustainability. “
4. What are the sustainable goals of the company?
o How do these goals translate to practice? Which actions did you take? o To what extent do you consider these actions as equally important?
5. What motivated you to take these mentioned actions?
o What considerations did you make before deciding about these actions and why? o Which consideration was most important? Was dat ook de doorslaggevende
factor?
6. Did you measure the impact of your sustainable actions?
o Do you measure things like GHG emissions and water usage, energy etc.)? 7. Did your sustainability actions have the desired effect?]
o Did it improve your sustainability and/or economic performance? 8. Where do you get your information about sustainability?
o Do you go to some specific meetings/third parties/other companies in your supply chain for information? How do you interact with each other and share knowledge?
10. What do you consider as the main challenges and risks or insecurities of managing and or implementing sustainability?
o How do you deal with them?
11. Do you take risks when implementing sustainability?
Conclusion:
- Sustainable opportunities in new products or adapting current products?
- New sustainability opportunities or only implementing sustainability when profitable? - Sustainability activities as a routine or as an experiment with unknown outcomes? - Enough current skills or in need of new skills?
Stakeholder pressures
12. Who are your most important stakeholders?
13. Do you feel any pressures from your environment regarding sustainability? o Do you experience contradictions between these pressures?
o Public institutions, NGOs, end-customer, SC-customer, suppliers, employees your community?
14. To what extent do these pressures influence the sustainability actions that you take/took?
15. Do you sometimes feel that these pressures you are facing are conflicting with what you believe is truly sustainable?
Topic 3: Tensions in sustainability
16. Do you consider decision making regarding sustainability more complex as compared to daily decisions?
17. What kind of role does sustainability play in the processes of supplier/buyer selection and supplier/buyer evaluation? Please compare sustainability with other performance dimensions, such as price, quality and delivery.
o To what extent do you perceive tensions among them?
o Personal vs organizational agenda’s o Elections
o Long term focus vs short term profit.
19. How do you deal with these tensions? What do you do? Why this way?
Topic 4: Making sense of tensions
E.g. implementing sustainability was not profitable or pressures from stakeholders who demand different things.
Scanning
20. What kind of information (economic objectives or sustainability objectives) do you normally gather (about the issue/initiative)?
21. Do you collect information from multiple sources? If yes: how many? 22. Is the information you gather normally very general or very detailed? 23. Do you gather extra knowledge or advise from colleagues or third parties?
Conclusion:
- Economic information or sustainability information?
Interpreting
24. What level of control did/do you perceive about the issue(s)? 25. When do you perceive a sustainability issue as relevant?
26. Based on what criteria do you interpret an issue as positive or negative?
o What about when the issue has a positive financial result, do you interpret it as positive?
o Experience? o Education?
Conclusion:
- Perceived level of control about the tension high, medium or low?
Responding
27. How do you deal with sustainability tensions?
▪ Do you put one sustainability element over the other? (e.g. economic objectives over environmental/social objectives)
28. From your experience in the past years, if you have to analyze the investment decisions, how do you deal when there is not a clear short-term benefit but maybe it has a long term one?
29. Do you consider actions that breach with established business practices?
Conclusion:
- Do you approach tensions or avoid them?
- Do you put economic goals above social and environmental goals?
30. Are there any other relevant themes we did not consider and discussed yet, and which could important to mention?
