Regulation in the Process of Building Capabilities

Abstract

To understand how regulation influences competitiveness and upgrading processes, this article focuses on the organizational changes involved in “rewarding regulation.” Through a qualitative study of two clusters in the agrifood industry in Nicaragua, it analyzes two types of regulation and their interaction with small producers’ production organizations: food safety and environmental sustainability. The analysis shows that regulation plays a crucial role in fostering changes in organizational practices and routines. This occurs when local organizations build new knowledge and skills to upgrade products and production processes, while developing new connections among producers and between them to other private and public actors that support economic development. “Rewarding regulation” is part of a process of learning and creating networks that help build local know-how and generate supportive collective resources.

Linking Cluster Characteristics and Organizational Capabilities for Sustainability—Framework Development and Application

“…As presented, companies needed to issue environmental licenses and participate in programs aimed at promoting and preserving the health of employees and the context of clusters in which they were inserted, facilitated these actions. These findings are corroborated in the literature, which argues about the critical role of clusters in enabling companies to respond to regulatory processes [20,21]. In addition, Ko and Liu [70] highlight that companies develop capabilities to overcome institutional pressures.…”

“…Perez-Aleman [21] analyzed two regulatory processes (related to environmental sustainability and food safety) through a qualitative study of two clusters. The analysis showed clusters' critical role in regulatory processes since interactions at the local level helped promote understanding, interpretation and implementation of changes.…”

“…Industrial clusters are recognized for playing a critical role in market competitiveness and economic development [23,25]. In addition to improving performance, the literature has shown that industrial clusters can also further corporate sustainability [21,22,[26][27][28]. However, studies exploring the role clusters play in corporate sustainability are still scarce [29][30][31].…”

The Challenge of Implementing Voluntary Sustainability Standards: A Dynamic Framework on the Tension between Adherence and Adaptation

“…We argue that a closer look at the literature on knowledge transfer (D’Adderio, 2014; Szulanski, 1996, 2000) gives valuable insights for VSS implementation, as this literature illustrates how the tension between adherence and adaptation manifests dynamically over the knowledge transfer process. Moreover, VSS also function as a tool to transfer the knowledge about requirements and how to implement them from standard-setters to adopters, either directly or indirectly, via auditors or other third parties that monitor the VSS implementation (Giuliani et al, 2017; Perez-Aleman, 2011, 2013; Tolentino-Zondervan et al, 2016).…”

“…A second type of decoupling, called means-ends decoupling, spurs from too strict an adherence to the letter of VSS requirements, which may not be adequate for leading to the desired social and environmental outcomes in the context of implementation (de Bakker et al, 2019;Christensen et al, 2017;Wijen, 2014). While VSS aim at defining universal rules to deal with global challenges, implementation happens in idiosyncratic local contexts that do not easily align with global rules (Heimer, 2013;Huising & Silbey, 2011) and that differ significantly in their technologies, ecological and social systems, resources, and capabilities (Corredoira & McDermott, 2014;Perez-Aleman, 2013, 2011. Therefore, even when full compliance is achieved, implementing the requirements might not yield the desired goals, given the context specificities (Wijen, 2014).…”