The Role of Institutional Uncertainty for Social Sustainability of Companies and Supply Chains

Abstract

Global sourcing largely occurs from so-called emerging markets and developing economies (EMDEs). In these contexts, substantial leverage effects for sustainability in supply chains (SCs) can be expected by reducing adverse impacts on society and minimising related risks. For this ethical end, an adequate understanding of the respective sourcing contexts is fundamental. This case study of South Africa's (SA) mining sector uses institutional theory and the notion of institutional uncertainty to empirically analyse the challenges associated with establishing social sustainability. The case study research is informed by 39 semi-structured interviews with top management representatives and various state and non-state decision makers in SA. Our findings suggest that (social) sustainability in the institutional field is mainly shaped by the Social and Labour Plan institution, induced by state actors and mining companies' practices. However, four weakening factors were identified that adversely affect this regulative institution, drive institutional uncertainty and allow for mining companies' gradual decoupling. Contrastingly, complementing pressures of non-state actors limit institutional uncertainty and push toward mainstreaming the stipulations of the institution. This study contributes to the business ethics literature by providing an in-depth exploration of institutional uncertainty's drivers and barriers within an upstream SC setting and shedding light on multiple actors' interplay and relevance in sector-wide sustainability. The findings are condensed into three main propositions as well as an analytical framework as a basis for follow-up research. This case study helps practitioners understand and manage complexity that results from actor plurality and institutional uncertainty in EMDEs.

The institutional logic of the sustainable organisation: the case of a chocolate supply network

“…Yet, it is here we expose hidden tensions and potential risks from the dominant economic logic. While stakeholder engagement can advance social logics across a field (Kelling et al , 2020; Longoni et al , 2019; Rodríguez et al , 2016), the prevailing economic framing of power asymmetries, common in business relations, create stakeholder resistance (Touboulic et al , 2014). Our results confirm that economic logics are associated with stakeholder resistance and crucially, also maintain a focal company perspective, in line with the common positioning in the literature (Svensson et al , 2018), rather than adopting a network view.…”

“…Power to influence a network's organising principles bring institutional logics to the fore as they play a key role in setting the rules, values, and success criteria within the system. Hegemonic stakeholders are able to use dominance, authority, and mastery to shape the legitimating ideas and norms within a network, whilst simultaneously limiting the articulation of alternative ideologies (Johnsen et al, 2020 (Kelling et al, 2020), although if these do not sufficiently accommodate the wellbeing of both human and environmental resources, progress is questionable (Silva & Figueiredo, 2017). In broader institutional contexts where there are misaligned social and commercial logics, relational mechanisms can contribute to managing tensions (Longoni et al, 2019) adding further weight to the importance of reconceptualising SSCM in the context of sustainable organisation by accounting for power beyond that which is embedded in dyadic commercial contracts.…”

“…Rather, sustainable organisation represents the collaboration of multiple stakeholders on sustainability initiatives with logics beyond the commercial realm (Laasch, 2018; Schneider, 2015). Non-commercial actors can impose normative demands on the system and have been shown to advance the social dimensions of SCM through acting as a bridge between business and society (Rodríguez et al , 2016), to broaden the spectrum of social issues that are considered and mainstreamed (Kelling et al , 2020).…”

“…Control over logics can become hegemonic if a dominant firm's strategic agenda is accepted in the common interest through a lack of attention on values (Ben-Porat, 2005). Stakeholders' values can influence the mainstreaming of sustainability logics across an institution (Kelling et al , 2020), although if these do not sufficiently accommodate the wellbeing of both human and environmental resources, progress is questionable (Silva and Figueiredo, 2017). In broader institutional contexts where there are misaligned social and commercial logics, relational mechanisms can contribute to managing tensions (Longoni et al , 2019), adding further weight to the importance of reconceptualising SSCM in the context of sustainable organisation by accounting for power beyond that which is embedded in dyadic commercial contracts.…”

Economic Sustainability by Using Life Cycle Cost Information in the Buying Center: Insights from the Public Sector

“…Briefly, OIPT requirements are the artefacts for describing information quality, quantity, timeliness, and the general validity and reliability issues that are related to a specific uncertainty in decision making. Uncertainty is an important topic in sustainability contexts, and it ultimately affects the degree to which organizations deliver sustainability performance [63]. Uncertainty results in ambiguity regarding the organizations and their interpretations and perceptions of the best sustainable decision alternatives.…”