Sustainability in the Face of Institutional Adversity: Market Turbulence, Network Embeddedness, and Innovative Orientation

Abstract

Drawing from research on strategic choice, this study investigates the relationship between market turbulence and firms’ sustainable behavior, in the context of sustainability-related institutional adversity. It argues that the relationship between market turbulence and sustainability is mediated by network embeddedness, and this mediating role in turn is moderated by a firm’s innovative orientation. Data collected from a sample of Ontario restaurants inform predictions about firms’ propensity to adopt local wines in their portfolios, despite the limited market and normative support that these wines receive compared with imported wines. The study shows that market turbulence enhances sustainable firm behavior, through the development of strong network relationships. Furthermore, the mediating effect of network embeddedness is particularly salient among firms that exhibit a stronger innovative orientation. These findings reveal how and when turbulent market conditions can contribute to a firm’s sustainable behaviors in the presence of limited institutional support for such behaviors.

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Fig. 1
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Notes

  1. 1.

    The proxy items for the four focal constructs were: “I try to source goods and ingredients that leave a small environmental footprint” (sustainable behavior), “Our customers regularly ask for new products and services” (market turbulence), “I maintain personal, close contacts with external partners, such as wineries, LCBO, wine writers, and wine tasting events” (network embeddedness), and “In general, I am among the first in my circle of friends to purchase a new wine” (innovative orientation).

  2. 2.

    In restaurants, these decisions are often made by restaurant owners, but in some cases, they may be delegated to chefs or sommeliers. The targeted respondents were restaurant owners, but we explicitly stated in the invitation letter that someone else could complete the survey, if the owner was not in charge of the restaurant’s wine selection. In the small business context of this study, it is reasonable to assume that the respondents were knowledgeable about their firm’s strategic decisions with respect to sustainability and wine and that their external network relationships and innovation propensities significantly influenced their firm’s decision making (Frazier and Huddleston 2009; Lahdesmaki and Suutari 2012).

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Correspondence to Dirk De Clercq.

Appendix: Measurement Items

Appendix: Measurement Items

Sustainable Behavior

Please indicate to what extent you agree with the following statements pertaining to the environmental impact of your restaurant’s wine-related decisions:

  • Running my business in an environmentally sustainable manner is important to me.

  • I try to source goods and ingredients that leave a small environmental footprint.

  • When selecting wines for my wine list, I choose those produced in an environmentally sustainable manner.

  • Choosing local wines for my wine list is one way I try to run an environmentally sustainable business.

  • I would be willing to sacrifice some profits to ensure a clean environment.

Market Turbulence

Please indicate to what extent you agree with the following statements:

  • Changes in our industry are intense.

  • Our customers regularly ask for new products and services.

  • In our competitive market, changes take place continuously.

  • In a year, nothing has changed in our competitive market. (reverse coded)

  • In our industry, product differentiation is a key competitive weapon.

Network Embeddedness

Please indicate the extent to which you maintain personal, close contact with the following parties:

  • Wineries

  • LCBO (Liquor Control Board of Ontario)

  • Wine Council of Ontario

  • Wine Writers

  • Slow Food initiatives

  • Wine tasting events

  • Ontario Restaurant, Hotel and Motel Association.

  • Provincial or federal government.

Innovative Orientation

Please indicate to what extent you agree with the following statements:

  • In general, I am among the first in my circle of friends to purchase a new wine.

  • If I heard that a new wine was available through a local store, I would be interested enough to buy it.

  • Compared with my friends, I do lots of shopping for new wine.

  • I would consider buying a new wine, even if I hadn’t heard of it yet.

  • In general, I am among the first in my circle of friends to know about the latest wine trends.

  • I know more about new wines than other people do.

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De Clercq, D., Thongpapanl, N. & Voronov, M. Sustainability in the Face of Institutional Adversity: Market Turbulence, Network Embeddedness, and Innovative Orientation. J Bus Ethics 148, 437–455 (2018). https://doi.org/10.1007/s10551-015-3004-7

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Keywords

  • Sustainability
  • Market turbulence
  • Network embeddedness
  • Innovative orientation
  • Strategic choice