Uncovering relationships between sustainable business practice bundles, organizational culture, and performance

Corporations work to reduce their negative impacts on the environment and society by adopting Sustainable business (SB) practices. Businesses create competitive advantages via practices such as waste minimization, green product design, compliance with regulations, and stakeholder relations. Normative models indicate that businesses should adopt similar sustainability practices, however, contingency theory suggests that effectiveness of practices depends on the context of the business. The literature highlights the importance of organizational culture as a moderating variable between SB practices and outcomes, however this link has not been empirically examined. This thesis presents the development and testing of a theoretical model, using configuration theory, that links SB practices, organizational culture, and financial performance.

Published frameworks were utilized to identify SB practices in use, and the Competing Values Framework (CVF) to identify dimensions of culture. Data from 1021 Corporate Sustainability Reports from 212 companies worldwide was collected for computerized text analysis, which provided a measure of the occurrence of a specific SB practice and the four dimensions of the CVF. Hypotheses were analyzed using cluster, crosstab, and t-test statistical methods.

The findings contribute significant insights to the Business and Sustainability field. Firstly, clustering of SB practice bundles identified organizations at various levels of SB practice awareness. The spectrum runs from a compliance level of awareness, to a set of organizations aware of the importance of culture change for sustainability. Top performing clusters demonstrated different priorities with regards to SB practices; these were in many cases, related to contextual factors, such as location or sector. This implies that these organizations undertook varying sustainability strategies, but all arrived at some successful level of sustainability. Another key finding was the association between the highest performing SB practice clusters and a culture dominated by Adhocracy values, corroborating theories presented in the literature, but were not empirically tested before.

The results of this research offer insights into the use of text analysis to study SB practices and organizational culture. Further, this study presents a novel attempt at empirically testing the relationship between SB practices and culture, and tying this to financial performance. The goal is that this work serves as an initial step in redefining the way in which businesses adopt SB practices. A transformation of SB practice adoption will lead to major improvements in sustainability strategies, and subsequently drive change for improved corporate sustainability.