Business Ethics
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Resources_and_Capabilities_of_II.pdf
Resources and Capabilities of Triple Bottom Line Firms: Going Over Old or Breaking New Ground?
Ante Glavas • Jenny Mish
Received: 12 December 2012 / Accepted: 16 January 2014 / Published online: 30 January 2014
� Springer Science+Business Media Dordrecht 2014
Abstract Supported by a qualitative study of triple bot-
tom line (TBL) firms—those that simultaneously prioritize
economic, social, and environmental objectives—we
investigated the market logic and practices of TBL firms to
better understand how they fulfill their mission and achieve
their goals. We explored if and how TBL firms may differ
in their approach to stakeholders and the management of
their resources, including dynamic capabilities. We
employed a research design that emphasizes the iterative
comparison of narrative data within themselves and with
scholarly literature [i.e., resource-based view (RBV)] to
develop new theoretical insights. Because the RBV is
commonly used to theorize how firms achieve competitive
advantage, we explored whether TBL firms achieve com-
petitive advantage differently from what RBV theory
would predict. Our data suggest that how a firm defines
value has a significant influence on the capabilities it cre-
ates and how it treats its resources. We find that TBL firms
redefine value to not only focus on the end product or
service but also to include the systemic cost of delivering
goods. As a result, TBL firms differ from prevailing
scholarly thought in RBV. They strive to have resources
that are sustainable and therefore imitable, commonly
found, and substitutable. Moreover, they are not only
transparent in their processes but also collaborate with
others in the value chain and in their sector. In doing so,
they deliberately create new markets from which other
firms can benefit. Rather than focusing on competitive
advantage, they focus on collaborative advantage.
Keywords Resource-based view � Corporate social responsibility � Triple bottom line � Sustainability � Social entrepreneurship
Introduction
The debate on whether the corporate sector should address
social and environmental concerns is a long-standing one
(e.g., Berle 1931; Dodd 1932). However, as the scholarly
debate continues, corporations are moving ahead and
making social and environmental objectives part of their
strategy and every-day operations. In the presence of
government failures, corporations have increasingly taken
it upon themselves to care for the civil, political, and social
rights of people (Matten and Crane 2005). Moreover,
numerous stakeholders (e.g., consumers, employees,
investors, suppliers, community, government) are holding
corporations accountable for social and environmental
practices (Brammer and Millington 2008; Sharma and
Henriques 2005). Therefore, a growing number of scholars
have called for the academic community to move away
from debating if and more toward understanding why and
how corporations are integrating the triple bottom line
(TBL) of social, environmental, and economic perfor-
mance (Aguinis and Glavas 2012; Margolis and Walsh
2003; Wood 2010). In this paper, we seek to answer that
call by inductively studying TBL firms.
Although the specific language used varies greatly
(e.g., sustainability, corporate social responsibility, and
Ante Glavas and Jenny Mish have contributed equally to this study.
A. Glavas (&) Department of Management, Mendoza College of Business,
University of Notre Dame, 366 Mendoza College of Business,
Notre Dame, IN 46556-5646, USA
e-mail: [email protected]
J. Mish
All4One Development, Missoula, MT, USA
123
J Bus Ethics (2015) 127:623–642
DOI 10.1007/s10551-014-2067-1
numerous other terms), the vast majority of TBL firms aim
to become more responsive ecologically and socially while
prospering economically. This threefold focus is often
referred to in terms of ‘‘people, planet, profit,’’ or as the
‘‘triple bottom line’’ (TBL) (Elkington 1997). TBL has
gained popularity in the corporate sector, among invest-
ment firms, and in social/environmental accounting (Hult
2011; Norman and MacDonald 2004; Pava 2007; Santos
and Laczniak 2009). 68 % of the 250 largest Fortune 500
firms are using the TBL concept for annual reporting
(Colbert and Kurucz 2007).
The management literature on TBL has focused pri-
marily on the macro level, with a heavy emphasis on
establishing the relationship between financial performance
and other TBL objectives. For example, a meta-analysis of
52 empirical studies found a positive relationship between
sustainability activities and firm performance (Orlitzky
et al. 2003) as did a review of 159 studies (Peloza 2009).
Other scholars have questioned whether a relationship
between financial performance and sustainability can be
established or even properly measured (Margolis and
Walsh 2003; Wood 2010). A more recent meta-analysis
found little, if any, relationship between sustainability and
firm financial performance (Margolis et al. 2009). One of
the reasons that a clear main effect between sustainability
and financial outcomes is elusive is that numerous mod-
erating and mediating variables may influence the rela-
tionship, but have yet to be explored (Aguinis and Glavas
2012). This terrain is complex and in need of further
exploration (Norman and MacDonald 2004; Waddock
2004). More research is needed, especially qualitative
research, to identify the specific activities that produce
TBL value (Peloza and Shang 2011). Moreover, Hart and
Dowell (2011) specifically call for research on TBL-based
strategies using a qualitative, case-comparative approach.
In this paper, we answer the call for qualitative studies
that approach theory gaps on sustainability-based strate-
gies. Therefore, our first contribution is to have learned
from TBL firms with significant on-the-ground experience,
seeking to understand the means by which TBL firms
achieve their ends and to compare this with the means that
would be predicted by existing theory.
Second, we go beyond only exploring how firms inte-
grate the TBL to study how these firms are able to create
win–win synergies between economic, social, and envi-
ronmental goals. Therefore, we answer the call of Margolis
and Walsh (2003) to study how managers and firms deal
with the tension of creating profit while dealing with social
and environmental issues, which are often seen as contra-
dictory objectives. The firms in our study surmount this
apparent contradiction to be sustainable economically,
socially, and environmentally, all at the same time.
Third, using the vast accumulated literature as a proxy
for single bottom line firms (i.e., those that focus primarily
on economic performance), we explore whether and how
TBL firms differ from other firms in the means by which
they achieve their goals. We explore how existing theories
can help explain TBL business strategy as well as what we
can learn from TBL firms to further our theories. Specifi-
cally, we frame our study using the resource-based view
(RBV), which is one of the most dominant theories in
management that is used to explain how firms are suc-
cessful in the marketplace (Barney 1991; Kraaijenbrink
et al. 2010). By using RBV as a proxy for the logic of
single bottom line firms, we are able to compare and
contrast whether and how TBL firms differ. Specifically,
we are interested in the extent to which TBL firms’ strat-
egies and practices can be explained by RBV. In addition,
we respond to recent calls to examine potential limitations
of RBV theory. In a special issue on the future of RBV
(Barney et al. 2011), Makadok (2011) explains that RBV
has been extremely useful for understanding how profit is
generated but that its dominance has also limited scholarly
recognition of other mechanisms, and he therefore pro-
poses further research, such as our current study. To
address this need, we explore how firms can (a) integrate
their operating context (i.e., environmental, social) into
their internal resources and capabilities, (b) proactively
shape their environment in addition to building their
capability to respond to it, and (c) redefine value to focus
not only on the end product or service but also to include
the full systemic costs of delivering goods.
In this study, we specifically research practices of (TBL)
firms that have had long-term success in addressing envi-
ronmental and social issues while creating economic value.
We conducted in-depth case studies using grounded theory
intertwined with literature reviews to identify propositions
for management theory and practice. We investigated the
market logic, guiding perspectives, and practices of TBL
firms to better understand when and how they are most
effective in accomplishing their objectives, what their
insights may suggest about developing capabilities in the
face of uncertainty, and the mechanisms for developing
capabilities for new business models. Building on the
principle of selecting extreme cases in which the topic of
research interest is clearly observable (Eisenhardt 1989),
we chose nine firms demonstrating long-term deep inte-
gration of socially and environmentally responsible
objectives throughout their organizational cultures.
Our article is organized as follows. We first provide a
brief review of the TBL and RBV literatures. Next, we
describe our methods and key findings from our study.
Finally, we conclude with implications for theory and
practice as well as suggestions for future research.
624 A. Glavas, J. Mish
123
Sustainability and RBV
Numerous terms and definitions related to sustainability are
in use in the literature (Carroll 1999; Garriga and Melé
2004; Waddock 2004). For purposes of consistency and
clarity, we will refer to TBL as the practice of sustain-
ability, which we define following Waddock (2004) as
caring for the well-being of others and the environment in
such a way that value is created for the business. A firm’s
sustainability is manifested in the strategies and operating
practices that it develops to operationalize relationships
with and impacts on stakeholders and the natural envi-
ronment. Unlike most other definitions, ours stems from a
combination of stakeholder theory, ethics, and corporate
citizenship (Waddock 2004). Such a systemic definition is
important because the firms in our sample take a holistic
approach, implementing sustainability not only with key
stakeholders, but also with the entire market.
Because a thorough review of all academic work related
to sustainability is beyond the scope of this article, we will
focus on the evolution of sustainability scholarship across
disciplines and how it became integrated into the field of
business. Our purpose is to place the existing management
research on sustainability in a larger scholarly context and
to position our contributions within this stream of
literature.
Sustainability
Interactions between people and the natural environment
have been studied since written records began. As far back
as 10,000 years ago, Agrarian communities that were
reliant on their natural environment explored structures of
permanence and ways to live in co-existence with each
other and the environment (Clarke 1977). Philosophers and
historians through the millennia have explored what has
come to be called sustainability. For example, Aristotle
focused on sustainability at a micro-community and
household level (Ehnert 2009). Historians have docu-
mented innumerable cases in which unsustainable human
economic structures were experienced firsthand at the
household or community level. It is believed that entire
civilizations, such as the Mayan people and the people of
Easter Island, fell because of unsustainable growth com-
bined with decreasing agricultural production (Diamond
2005).
However, beginning with the industrial age and the
urban shift, unintended effects of growth, consumption,
and production on the environment were not always wit-
nessed immediately in one’s own micro-community, and
therefore people usually did not pay attention to the effects.
As a result, environmental scientists (e.g., Carson 1962;
Leopold 1949) began to speak up, attempting to warn
people about the unsustainable consequences of industrial
models of living. In subsequent decades, environmental
science played a major role as researchers began to study
the air, the climate, the land, and the water (Wang and Ho
2011). Similarly, conservation biologists have informed the
public about threats to biodiversity, loss of habitat, and
other negative impacts of modern economic life (Chapin III
et al. 2000; for a review see Meine et al. 2006). Moreover,
these scientists have been holistic and multidisciplinary in
their approaches, drawing on sciences such as atmospher-
ics, biology, climatology, chemistry, ecology, geosciences,
and physics. Despite some lingering public doubt, scientists
are in almost complete agreement that humans have caused
an ominous warming trend in the earth’s climate, one that
is likely to be irreversible (Anderegg et al. 2010; Inter-
governmental Panel on Climate Change 2013).
This wealth of information also brought another chal-
lenge—what to do with the information. Although it can be
argued that much more research is always needed to fully
understand the challenges of sustainability, our current
knowledge and awareness have led to a debate about which
actors will actually step up to resolve these issues. Because
government and inter-governmental agencies have been
identified as possible actors, sustainability has become
among the most important topics in political science over
the last few decades (Bernauer 2013). Prominent research
has emerged in areas such as climate change politics
(Bernauer 2013) and the politics of energy (Hughes and
Lipscy 2013). A group of 520 global climate change sci-
entists has recently come together to plead for government
action, fearing that our future is in great danger (Sanders
2013).
In a review of the literature, Paterson (2007) argued that
political science has evolved from an earlier era (e.g.,
Dobson 1990) that focused on the case for environmental
politics to one where it is time to ‘‘get our hands dirty with
dealing with the complexities and messiness of environ-
mental politics’’ (p. 545). Paterson’s (ibid.) analysis ended
with a dilemma about how to balance the growth strategies
of current capitalist systems with the more radical agendas
of social movements. Moreover, in another review of the
political science research, Bernauer (2013) concluded that
governance efforts have been making slow progress and
that more bottom-up approaches are needed.
Matten and Crane (2005) integrated this political science
debate with management theory to expand the concept of
corporate citizenship and explain the emerging role of
corporations. They argued that due to the failure of gov-
ernments, the corporate sector has been playing an
increasing role in addressing sustainability issues (ibid.).
As an illustration, over 7,000 businesses from 145 coun-
tries have joined the United Nations Global Compact, a
strategic initiative for aligning businesses with principles
Resources and Capabilities of TBL Firms 625
123
of environment, human rights, labor, and anti-corruption
(UN Global Compact 2013). 93 % of Standard and Poor
(S&P) 100 companies are now reporting their ecological
and societal activities, and 66 % are publishing a formal
sustainability report (Social Investment Forum 2009). As a
result, management scholars have increasingly been
studying the role of business in society and the environ-
ment. Over 200 articles on the topic have now been pub-
lished in top-tier management journals with almost half of
those published since 2005 (Aguinis and Glavas 2012).
However, as a number of scholars have noted (Aguinis
and Glavas 2012; Hart and Dowell 2011; Lee 2008; Mar-
golis and Walsh 2003; Wood 2010), most of these studies
have examined whether it pays to be ‘‘green.’’ Even when
TBL capabilities have been explored, the focus has been on
the role of firm capabilities in relation to environmental
pollution strategies that cut costs (Hart and Dowell 2011).
The literature on how exactly TBL firms achieve their
goals is an area that remains undeveloped.
TBL firms offer an excellent opportunity to address the
challenges identified by environmental, political, and
management scientists. From the work of these scholars,
we know that huge environmental challenges exist, and we
understand that the government and inter-governmental
sectors alone will not be able to address these challenges.
Although the business sector has resources and innovative
capabilities, often the pursuit of profits is perceived as
incompatible with sustainability. TBL firms offer a model
for understanding how businesses can address environ-
mental and social goals while also being profitable.
RBV
The RBV is one of the most influential theories in the field
of management (Kraaijenbrink et al. 2010; Newbert 2007;
Priem and Butler 2001). It explores the internal sources of
a firm’s sustained competitive advantage. RBV is articu-
lated and applied through two primary lenses, one
addressing firm’s resources and the other focusing on a
firm’s dynamic capabilities (Newbert 2007). The primary
critique of RBV is that other than the immediate compet-
itive environment, it ignores the context or institutional
environment in which a firm operates. We next briefly
review these two lenses and this key critique to clearly
position our contributions to RBV theory.
Resources
One of the two major streams in the RBV literature builds
on the idea that competitive advantage comes from the
acquisition and control of valuable, rare, inimitable, and
non-substitutable resources—known as the VRIO frame-
work (Barney 1991; for a recent review see Kraaijenbrink
et al. 2010). As posited by Barney (1991) and later
empirically supported by Newbert (2008), value and rare-
ness of resources lead to competitive advantage, which in
turn improves performance. Furthermore, the degree to
which a firm’s resources are inimitable (i.e., costly to
imitate) and non-substitutable leads to sustained advantage
over competitors because they have limited or no access to
those resources. However, in a systematic review of RBV,
Newbert (2007) found that despite the broad acceptance of
RBV, there is a need for alternative conceptual frameworks
to be created and empirically tested. The author suggested
that more contemporary views of RBV needed to be tested
as well. TBL firms offer an opportunity to explore how
resources may be treated differently in practice from the
ways proposed traditionally in RBV theory (Hart 1995).
Dynamic Capabilities
A second important stream of RBV literature has focused
on dynamic capabilities (for a review see Barreto 2010).
Dynamic capabilities refer to ‘‘the firm’s ability to inte-
grate, build, and reconfigure internal and external compe-
tences to address rapidly changing environments’’ (Teece
et al. 1997, p. 516). By ‘‘environment,’’ the RBV literature
typically refers to the competitive business environment
(Barreto 2010) without taking into consideration the
broader social and ecological environment (Hart 1995).
The concept of dynamic capabilities emerged because it
was deemed that firm resources alone are not sufficient to
sustain a long-term competitive advantage. Markets had
become hypercompetitive and high-velocity, making it
increasingly difficult to uphold competitive advantage over
time (Barreto 2010). Therefore, Eisenhardt and Martin
(2000) proposed that dynamic capabilities should be inte-
grated with VRIO. These authors argued that resources by
themselves form no real value to a firm; instead it is the
context and the processes through which resources are
utilized, which allow firms to create competitive
advantage.
As outlined by Barreto (2010), the framework of Teece
et al. (1997) identifies six main characteristics of a firm’s
dynamic capabilities: (1) firm ability or capacity (e.g., role
of strategic management); (2) skill at coordinating, build-
ing, and reconfiguring internal and external competencies
(e.g., routines, organizational learning); (3) ability to
respond to a rapidly changing environment; (4) creation of
organizational processes that build capacities internally (it
is assumed that dynamic capabilities are not usually pur-
chased); (5) variability and tailoring of dynamic capabilities
to a specific firm (i.e., similar to the assumption of VRIO,
resources are considered to be spread heterogeneously
across firms); and finally, (6) the desired outcome of a firm’s
dynamic capabilities is sustained competitive advantage.
626 A. Glavas, J. Mish
123
Although, different conceptualizations of dynamic capa-
bilities have emerged (Barreto 2010), the common thread is
that the starting point is the firm (e.g., its ability, compe-
tencies, processes) and that dynamic capabilities are het-
erogeneous across firms. The possibility of dynamic
capabilities arising from outside of the firm has not yet been
assessed and integrated in this stream of literature.
Institutional Context
Although historically the RBV and sustainability literatures
have been separate, a few conceptual articles have begun to
bridge the gap (e.g., Branco and Rodrigues 2006; Hart 1995;
Hart and Dowell 2011; Maurer et al. 2011). The main critique
of RBV is that it has ignored the interaction between firms
and their broader environment (e.g., society, natural envi-
ronment) (Hart 1995). Although the dynamic capabilities
approach was put forward in part to focus RBV more on the
environment, especially its influence on a firm’s internal
resources and capabilities (Teece et al. 1997), the resulting
narrow focus on the competitive business environment often
led to damage to the broader natural environment in practice
(Hart 1995). Hart and Dowell (2011) later argued that further
understanding is needed about the role of capabilities and
resources for shaping the broader environment (e.g., sus-
tainable product stewardship), not just reacting to it (e.g.,
environmental compliance standards). Maurer et al. (2011)
similarly critiqued RBV for heavily focusing on a firm’s
internal resources and capabilities while almost ignoring its
institutional context. As a result, these authors proposed a
culturally informed RBV. They proposed a model that
explains how social values, triggered by social issues,
influence economic value. According to these authors, RBV
‘‘assumes that human preferences are exogenous, ordered
and stable’’ (p. 434); however, social values challenge these
assumptions because the perception of value is socially
constructed and constantly changing.
As we will explain, TBL firms proactively shape social
issues and thus influence resulting perceptions of value.
Therefore, the research context of TBL firms provides an
opportunity to expand our understanding of how values,
resources, and capabilities not only are shaped by the
environment, but also how firms can shape their environ-
ment. It is to this that we now turn our attention: How do
TBL firms define resources and create capabilities for
turning those resources into value for all their stakeholders
including society and the planet?
Methods
Our qualitative study sought to uncover insights for the
development of new theoretical possibilities, rather than to
test hypotheses derived from existing theory, following
grounded theory methods (Charmaz 2006; Glaser and
Strauss 1967; Strauss and Corbin 1990). Grounded theory
is an appropriate method for research questions that
address the nature of a new construct such as sustainability
in the context of management theory (Charmaz 2006;
Crane 2000; Deshpande 1983; Fischer and Otnes 2006).
Following this method, our design emphasizes the iterative
comparison of narrative data within themselves and with
scholarly literatures, to develop new theoretical insights
(Strauss and Corbin 1990).
As shown in Fig. 1, our study began with a review of
potentially relevant existing theory in several areas with a
focus on the RBV literature. We then conducted in-depth
studies of nine selected firms or cases, as described below.
We analyzed our secondary and respondent data by com-
paring and contrasting them within each firm and between
firms, and by comparing and contrasting them with several
streams of literature, in a layered process, also discussed
below.
1. Conceptualization
• Initial literature: Resource-Based View (RBV) Triple-bottom line (TBL) Sustainable development Stakeholder theory Service-dominant logic (SDL) Market orientation Systems thinking in marketing Theory of firm, markets, and marketing
• Research question
• Study design & selection of firms
2. Data Gathering
• Secondary documents
• Depth interviews
3. Analysis
• Immersion by first author
• Literature analysis Resource-Based View (RBV) Stakeholder Theory Social Movement Organizations
• Immersion by second author
• Literature analysis Resource-Based View (RBV)
• TBL Framework
Fig. 1 Study design and analysis process
Resources and Capabilities of TBL Firms 627
123
Selection of Study Firms
We investigated nine firms in finance, manufacturing,
professional services, retail, and wholesale, representing
diverse product categories. Annual revenues ranged from
less than $100 million to over $5 billion, with most earning
less than $500 million per year. Selected firms featured a
variety of private ownership structures, including three
cooperatives, as well as one publicly owned firm. Differing
growth histories and geographic markets are also repre-
sented, ranging from regional to global, with most serving
the U.S. Nationwide. We followed Eisenhardt’s (1989)
approach of exploring the most extreme cases in which
sustainability was most evident and observable. Therefore,
firm selection criteria were: (1) to be founded on sustain-
ability principles; (2) to have at least 15 years of experi-
ence achieving social and/or environmental objectives on
par with economic objectives; (3) to have at least 5 years of
experience operating with at least three bottom lines (i.e.,
people, planet, profit); and (4) to have maintained conti-
nuity of leadership and ownership throughout the history of
the firm. We characterize these firms as pioneers because
of their early appearance in the marketplace and because
they have demonstrated financial and marketplace stamina
through at least 15 years of existence. The youngest firm in
the study was established in 1991, and the median year of
founding was 1976. Selected firms all enjoyed relatively
stable organizational cultures throughout their operations,
although one took a brief detour by hiring a ‘‘growth-ori-
ented’’ CEO but rebounded with stronger dedication to
sustainability principles after his departure. The selection
criteria were developed with the staff coordinator of Green
America’s Green Business Network (2013), which com-
prises over 3,000 member firms that are screened for sus-
tainability commitments and activities as a condition of
membership. Together with this partner, out of the original
population of 3,000 organizations, we identified 12 TBL
companies that met our demanding longevity criteria, 8 of
which agreed to be included in the study. We tried to find
larger firms for the study but only two public companies
aligned with our criteria, of which one agreed to participate
in the study.
In order to protect confidentiality, the names of study
firms presented in this study are pseudonyms. The only
exception is Equal Exchange, which insisted that their
name be used because they stated that it was part of their
mission to openly share information.
Data Gathering
We gathered over 1,100 pages of written materials as well
as four books written by founders. Documents included
company mission/vision statements, policy statements,
strategy documents, performance indicators, investor and
promotional materials, web pages, press releases, and
media coverage. For each of the nine firms, a depth inter-
view (Cotte and Kistruck 2006) was conducted with a
strategy-level manager. Purposive selection (Miles and
Huberman 1994) was used to select informants, who
included CEOs, sustainability directors, and other senior
leaders with long-term, first-hand strategy-level knowledge
of the firm. Semi-structured interviews that lasted from 30
to 100 min were conducted following the methodology
described by McCracken (1988). To alleviate potential
limitations to depth interviews (Cotte and Kistruck 2006)
such as privacy, we told informants in advance that we
would use pseudonyms, and we invited them to withdraw
or correct any information provided inadvertently or
incorrectly. We also told them that they would have an
opportunity to review the findings. Only one minor cor-
rection was eventually made. Interviews were recorded and
transcribed verbatim.
Data Analysis
Following grounded theory principles and prior scholarship
(e.g., Crane 2000; Galunic and Eisenhardt 2001; Kohli and
Jaworski 1990; Menon and Menon 1997; Workman et al.
1998), our analysis procedures involved iterative compar-
ison both within the data and between the data and schol-
arly literatures in a multi-phase process. The data were
compared and contrasted within themselves until no new
insights emerged. Inductive analysis procedures followed
McCracken (1988) and Strauss and Corbin (1990). Open
coding and constant comparisons were used to identify and
refine salient categories within the data. Axial coding was
used to further explore inter-relationships among the cat-
egories, and to identify implications of informants’ per-
spectives. Next, a detailed comparison was made between
the TBL logic of study firms, and relationships were
identified with the RBV, behavioral economics, and
stakeholder literatures. Then, the second author studied the
raw data and completed an independent analysis, con-
firming the initial categories. Together the authors created
a comprehensive table of themes in the data. At this point,
further theoretical connections were explored and devel-
oped primarily with the RBV literature. Throughout the
analysis, inconsistencies and disconfirming findings were
analyzed and resolved. Research memos were used
throughout to document observations and analytic pro-
cesses. Member checks were done to seek informant con-
firmation of initial findings, and to resolve any remaining
discrepancies.
In summary, we sought a deep understanding of the
viewpoints of TBL pioneers, and iteratively compared
them with existing scholarship to explore how their
628 A. Glavas, J. Mish
123
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h e y
’r e
a c u
st o
m e r
o f
o u
rs . T
h e y
’r e
v e ry
u n
c o
m fo
rt a b
le w
it h
[u s]
y e t
th e y
re a li
z e
th a t
w e ’r
e g
o n
n a
h e lp
th e m
g e t
to a
p la
c e
th a t
th e y
’r e
n o
t a t
ri g
h t
n o
w a n
d th
a t’
s a
g o
o d
th in
g fo
r th
e m
II .
T B
L re
so u
rc e s
R e d
e fi
n in
g a
v a lu
a b
le re
so u
rc e
It ’s
a b
o u
t e c o
n o
m ic
s. It
c a n
a ll
b e
d o
n e .
It ’s
ju st
in st
e a d
o f
se ll
in g
C a sc
a d
e fo
r $
2 .9
9 ,
th e y
’r e
g o
n n
a h
a v
e to
se ll
it fo
r $
3 .9
9 .
B u
t e it
h e r
w a y
w e ’r
e p
a y
in g
fo r
it ,
ri g
h t?
G o
e s
b a c k
to th
a t
sy st
e m
s b
e c a u
se so
m e h
o w
, so
m e
w a y
, so
m e b
o d
y h
a s
to c le
a n
u p
th e
w a te
r a n
d th
e re
’s a
c o
st
a ss
o c ia
te d
w it
h e v
e ry
th in
g
W h
a t
w e ’v
e tr
ie d
to g
e t
a c ro
ss is
th a t
c o
ff e e
is p
ro b
a b
ly o
n e
o f
th e
m o
st u
n d
e rv
a lu
e d
p ro
d u
c ts
o n
th e
fa c e
o f
th e
e a rt
h in
te rm
s o
f w
h a t
it c o
st s
to p
ro d
u c e …
I m
e a n
p e o
p le
p a y
… w
a y
m o
re fo
r w
a te
r
C h
a ll
e n
g in
g c o
n c e p
ts o
f in
im it
a b
il it
y a n
d
n o
n -s
u b
st it
u ta
b il
it y
o f
re so
u rc
e s
W e
sh a re
a lo
t o
f in
fo rm
a ti
o n
w it
h th
o se
p e o
p le
a n
d w
e w
il l
v e ry
o p
e n
ly .
W e ’l
l te
ll th
e m
w h
e re
w e ’r
e g
e tt
in g
o u
r o
rg a n
ic c o
tt o
n .
W e ’l
l te
ll
th e m
h o
w w
e ’r
e h
a n
d li
n g
o u
r e n
e rg
y a n
d w
h e re
w e ’r
e b
u y
in g
w in
d p
o w
e r.
W e ’v
e c o
m p
le te
ly o
p e n
e d
o u
r re
c y
c li
n g
su p
p ly
c h
a in
W e
h a v
e su
p p
li e rs
w h
o c o
m e
to u
s a n
d sa
y :
‘Y o
u tu
rn e d
u s
o n
to so
u rc
e s
th a t
w e
d id
n ’t
k n
o w
e x
is te
d in
th e
w o
rl d
. W
e d
id n
’t re
a li
z e
th a t
w e
c o
u ld
a c tu
a ll
y c re
a te
p o
st c o
n su
m e r
c o
n te
n t
in o
u r
p la
st ic
b o
tt le
s o
f 5
0 %
o r
h ig
h e r’
R a re
re so
u rc
e s
T h
e re
’s a n
A fr
ic a n
h e rb
th a t’
s b
e e n
m a k
in g
a lo
t o
f h
e a d
li n
e s
a n
d w
e ’v
e b
e e n
g e tt
in g
so m
e q
u e st
io n
s a b
o u
t p
ic k
in g
it u
p .
B u
t fr
o m
a
su st
a in
a b
il it
y st
a n
d p
o in
t… it
’s b
e in
g o
v e rh
a rv
e st
e d
a n
d a
lo t
o f
it ’s
b e in
g p
o a c h
e d
II I.
T B
L c a
p a
b il
it ie
s
T B
L m
a rk
e t
in te
ll ig
e n
c e
W e
a re
m a p
p in
g o
u r
fo o
tp ri
n t
a n
d w
e d
o k
in d
o f
in te
rn a ll
y k
e e p
a n
d w
e b
o rr
o w
e d
a lo
t fr
o m
G R
I (G
lo b
a l
R e p
o rt
in g
In it
ia ti
v e )
a n
d w
e h
a v
e
u se
d a
lo t
o f
th e
to o
ls th
a t
a re
o u
t th
e re
p u
b li
c ly
to w
o rk
o n
th in
g s
li k
e ,
p a rt
ic u
la rl
y o
u r
e n
e rg
y fo
o tp
ri n
t a n
d o
u r
c o
rp o
ra te
tr a v
e l
fo o
tp ri
n t
a n
d o
u r
p ro
d u
c t
sh ip
m e n
t a n
d tr
a n
sp o
rt a ti
o n
fo o
tp ri
n t
a n
d a
lo t
o f
th a t
in fo
rm a ti
o n
is fe
d in
to in
fo rm
a ti
o n
a b
o u
t th
e p
ro d
u c ts
T h
e b
ig in
d u
st ri
a l
ro a st
e rs
h a v
e m
a n
a g
e d
to c o
n v
in c e
th e
c o
n su
m e r
th a t
w h
a t
th e y
’r e
lo o
k in
g fo
r is
th re
e d
o ll
a rs
a p
o u
n d
, w
h ic
h is
a b
o u
t
th re
e c e n
ts a
c u
p . A
n d
w h
a t
w e ’r
e tr
y in
g to
d o
is c o
n v
in c e
p e o
p le
th a t
it ’s
w o
rt h
1 2
c e n
ts a
c u
p o
r m
o re
a n
d th
a t
th e y
sh o
u ld
fe e l
re a ll
y g
o o
d
a b
o u
t b
e in
g a b
le to
g e t
th e
w o
rl d
’s b
e st
c o
ff e e
fo r
1 2
c e n
ts a
c u
p a n
d su
p p
o rt
so c ia
l a n
d e n
v ir
o n
m e n
ta l
st e w
a rd
sh ip
in th
e b
a rg
a in
T ra
n sp
a re
n c y
a n
d e d
u c a ti
o n
W e
h a v
e g
e n
e ra
ll y
a b
e li
e f
th a t
th e re
’s a n
o p
p o
rt u
n it
y to
b e
m o
re c o
n sc
io u
s in
h o
w w
e c o
n su
m e ,
a n
d th
a t
d ir
e c tl
y re
la te
s b
a c k
to o
u r
g o
a ls
a ro
u n
d su
st a in
a b
il it
y a n
d th
a t
in a
se n
se is
o n
e o
f o
u r
im p
e ra
ti v
e s
a s
w e ll
in te
rm s
o f
h o
w d
o w
e h
e lp
e d
u c a te
a n
d in
fo rm
so th
a t
w e
g e t
a
le v
e l
o f
m o
re c o
n sc
io u
s c o
n su
m e ri
sm
[T B
L ]
c o
m p
a n
ie s
e n
g a g
e m
o re
in tw
o -w
a y
c o
m m
u n
ic a ti
o n
b e c a u
se th
a t’
s th
e o
n ly
w a y
to tr
u ly
b u
il d
tr u
st a n
d a w
a re
n e ss
a ro
u n
d th
e se
ty p
e s
o f
p ro
d u
c ts
/s e rv
ic e s.
A ll
o th
e r
m e a n
s o
f c o
m m
u n
ic a ti
o n
c a n
e a si
ly b
e g
re e n
w a sh
in g
a n
d c o
n su
m e rs
a re
h a v
in g
a h
a rd
ti m
e k
n o
w in
g w
h a t
is
ri g
h t.
T h
e se
c o
m p
a n
ie s
m ig
h t
e v
e n
b e
b ri
n g
in g
tr a d
it io
n a l
m a rk
e ti
n g
in to
q u
e st
io n
. P
e rs
o n
a ll
y ,
I d
o n
’t b
e li
e v
e a n
y th
in g
I se
e in
a
c o
m m
e rc
ia l
a n
y m
o re
C o
ll a b
o ra
ti v
e d
e v
e lo
p m
e n
t a n
d d
e li
v e ry
o f
T B
L v
a lu
e
W e ’r
e h
e lp
in g
th e m
th in
k a b
o u
t th
e ir
b u
si n
e ss
m o
d e l
a li
tt le
d if
fe re
n tl
y .
A n
d th
e fa
c t
o f
th e
m a tt
e r
is th
a t
if w
e c o
u ld
n ’t
, w
e p
ro b
a b
ly
w o
u ld
n ’t
b e
d o
in g
b u
si n
e ss
w it
h th
e m
in th
e fi
rs t
p la
c e
D e v
e lo
p in
g a
m ic
ro -l
e n
d in
g p
ro g
ra m
fo r
su p
p li
e rs
in o
rd e r
to ‘‘
re d
u c e
th e ir
d e p
e n
d e n
c e
o n
th e
v o
la ti
le c o
ff e e
m a rk
e t
a n
d c o
n fr
o n
t th
e m
o st
p re
ss in
g c o
m m
u n
it y
n e e d
s’ ’
Resources and Capabilities of TBL Firms 629
123
insights might contribute to a theoretical framework for
understanding the mechanisms through which TBL firms
operate. Specifically, we explored how TBL firms acquire
and control resources; how they integrate, build, and
reconfigure internal and external competencies to address
rapidly changing environments; and how they integrate the
institutional context. We also compared how the approach
of TBL firms differs from that described by RBV.
Findings
The analysis presented in this paper emphasizes a partic-
ularly key finding, that managers in the study firms inte-
grate the institutional context, specifically by including
true social and environmental costs in their definitions of
value. This viewpoint frames and influences how they treat
resources and how they develop capabilities. Table 1
provides specific examples from our data to illustrate our
findings in three categories. The first section shows how
TBL firms integrate the institutional context, and how they
shape their context. The second section illustrates how
TBL firms acquire and control resources. The third section
provides examples of TBL firm capabilities.
Institutional Context
The main critique of RBV, as mentioned previously, is that
it has ignored the interaction between firms and their
broader environment (e.g., society, natural environment)
(Hart 1995; Hart and Dowell 2011; Maurer et al. 2011;
Priem and Butler 2001). Our data suggest that the impact
on the external environment and society is central to the
strategy and decision-making of TBL firms. TBL firms not
only consider the environment, but they also actively work
toward shaping it by forming new markets, influencing
peers, and changing societal perceptions.
Integrating the Institutional Context
Integrating the external context (i.e., society, environment)
into the company is central to the mission of TBL firms.
This is different from the traditional assumption of RBV
that firms take into consideration their context only for the
purposes of creating a competitive advantage. According
to RBV, a firm would only consider the environment from
the standpoint of how to manage it so as to maximize
economic gain. The environment is viewed as that which is
external to the firm. The firm is the starting point for
strategy and decision-making in RBV.
In contrast, the strategic starting point for our study
firms is the whole institutional environment. They draw no
clear boundary between the firm and the environment.T a
b le
1 c o
n ti
n u
e d
F in
d in
g s
Il lu
st ra
ti o
n s
fr o
m th
e d
a ta
S ta
n d
a rd
s/ c e rt
ifi c a ti
o n
s fo
r le
g it
im iz
in g
T B
L v
a lu
e
W e ’r
e o
ff e ri
n g
e d
u c a ti
o n
a l
w o
rk sh
o p
s a n
d w
o rk
in g
c lo
se ly
w it
h th
e U
S D
A [t
o ]
c o
m e
u p
w it
h st
a n
d a rd
s …
so [p
ro d
u c e rs
] c a n
a c tu
a ll
y la
b e l
th e
p ro
d u
c ts
a s
a c e rt
a in
le v
e l
o f
a n
im a l
c o
m p
a ss
io n
a te
, a n
d th
e in
te n
ti o
n is
to d
o th
a t
w it
h g
ro w
e rs
fo r
n o
n -a
n im
a l
fo o
d s
[a s
w e ll
]
T h
e re
, p
a rt
ic u
la rl
y to
d a y
, is
a tr
e m
e n
d o
u s
a m
o u
n t
o f
g re
e n
-w a sh
in g
th a t’
s g
o in
g o
n w
it h
in th
e p
ro d
u c t
c a te
g o
ri e s…
le t’
s g
o to
th e
la rg
e st
re ta
il e rs
in th
e in
d u
st ry
a n
d le
t’ s
w o
rk w
it h
th e m
o n
d e v
e lo
p in
g a
se t
o f
st a n
d a rd
s… th
a t
th e y
c a n
c o
m m
u n
ic a te
a n
d a rt
ic u
la te
to th
e ir
c u
st o
m e rs
O rg
a n
iz a ti
o n
a l
c u
lt u
re b
u il
t u
p o
n a
T B
L
in te
ll ig
e n
c e
o ri
e n
ta ti
o n
W h
a t’
s h
a p
p e n
e d
in th
e la
st c o
u p
le y
e a rs
is it
’s re
a ll
y b
e in
g in
te g
ra te
d in
th e
c o
m p
a n
y ’s
D N
A .
W h
e re
th e
h e a d
o f
sa le
s w
il l
te ll
h is
e n
ti re
sa le
s fo
rc e ,
I w
a n
t y
o u
to m
a k
e y
o u
r d
e c is
io n
s b
a se
d o
n th
e se
fi v
e c ri
te ri
a .
a n
d it
ta k
e s
a w
h il
e fo
r th
a t
to h
a p
p e n
in a
c o
m p
a n
y ,
b u
t I
re a ll
y
se e
it
O n
e w
a y
I e d
u c a te
is th
ro u
g h
in te
rn a l
e m
a il
… [a
ls o
] p
e o
p le
g o
t e d
u c a te
d o
n th
e p
o si
ti v
e re
sp o
n se
b y
th e
p re
ss a n
d th
e p
u b
li c
to u
s ta
k in
g ,
b e in
g p
ro a c ti
v e
o n
c li
m a te
, a n
d a s
p e o
p le
, I
th in
k ,
u n
d e rs
to o
d th
e p
ro b
le m
th e m
se lv
e s,
th e y
’r e
p a y
in g
a tt
e n
ti o
n ,
a n
d y
o u
k n
o w
, b
e c a u
se o
f
o u
r w
o rk
a t
G re
a te
r M
u n
c h
, w
h e n
n e w
s c a m
e u
p a b
o u
t g
lo b
a l
w a rm
in g
I th
in k
p e o
p le
p a id
m o
re a tt
e n
ti o
n
630 A. Glavas, J. Mish
123
Rather than taking an individualistic view (e.g., looking at
the environment only in terms of what it can do for the
firm), study firms take a holistic approach. As one infor-
mant explained:
I think that the emerging clarity is really that we are all
part of, this may sound a little strange, but so we are all
part of a greater whole…[which is why] being socially and corporately responsible, and sustainable is part of
our business model. (Future Friendly, July 27, 2007)
In this firm, all decisions are made in a way that considers
the best benefit to the firm as well as society and the envi-
ronment. This management orientation differs from the ori-
entation assumed by RBV. It is also different from the
orientation of firms that have sustainability programs and
initiatives but remain strongly and primarily focused on
financial goals. Another informant (Earthly Eating) explic-
itly rejected Milton Friedman’s assertion that business is
only about the bottom line, explaining that business has a
responsibility not only to shareholders but also stakeholders
and the broader society, and the ecological environment.
Using a non-linear view of economics, our informants do not
see themselves as making a trade-off between business and
social/environmental value. As one manager explained,
You have to think of a third way. (Greater Munch,
July 13, 2007)
Another informant explained that their firm tries to find
both activating and restraining forces. As an example of
this reconciliation approach, Equal Exchange’s ‘‘premiums
paid over market prices’’ are seen as a way to fulfill their
mission, which is as follows:
To build long-term trade partnerships that are eco-
nomically just and environmentally sound, to foster
mutually beneficial relationships between farmers
and consumers and to demonstrate, through our suc-
cess, the contribution of worker co-operatives and
Fair Trade to a more equitable, democratic and sus-
tainable world. (Equal Exchange 2007)
Proactively Shaping the Institutional Context
Our study firms go beyond considering their impact on their
context, they proactively work to shape it. For example, three
of the firms (Coffee Haven, Equal Exchange, Life’s Spice) in
the study see themselves as playing a role in developing the
Fair Trade movement. Many coffee drinkers now willingly
pay higher prices knowing that coffee growers have received
a ‘‘fair wage,’’ even though this product attribute was almost
completely unrecognized by coffee drinkers prior to the
market emergence of Fair Trade coffee in the 1980s. The
estimated global market for officially certified Fair Trade
products reached $4 billion in 2008 (Fair Trade Labeling
Organization 2009). In US markets alone, Fair Trade pro-
ducts earned $37 million in ‘‘community development pre-
miums’’ in 2012, a 70 % increase over the previous year (Fair
Trade USA 2012).
All of our study firms seek to influence others to create
markets and to establish values-based market norms. One
manager said that it is important for the firm to change the
mindset of others regarding sustainability. Another firm has
a goal of ‘‘two million committed participants trading fairly
one billion dollars a year.’’ Yet another has a mission ‘‘to
convert the world to natural and organic products.’’ Instead
of making it a priority to increase Fair Trade coffee market
share, Equal Exchange is creating new Fair Trade markets
for chocolate, nuts, and snacks so as to shape market
structure and behavior (Jaworski et al. 2000) in favor of
Fair Trade goods.
In order to transform the market, study firms depart from a
traditional view of not working with the competition, but rather
see others in the marketplace as important for fulfilling their
social and environmental mission. As one informant stated:
It’s important that we not just work with like-minded
people, but that we look for ways to influence other
businesses that weren’t thinking along those lines to
begin with. (Greater Munch, July 13, 2007)
Influencing others is seen as a way to achieve their
purpose. As an example, one informant spoke about
influencing the mindset of retail chains:
I was with Target yesterday. They’re a customer of
ours. They’re very uncomfortable with [us] yet they
realize that we’re gonna help them get to a place that
they’re not at right now and that’s a good thing for
them. (Future Friendly, July 27, 2007)
TBL Resources
Building on the VRIO framework of RBV, we focus next
on the issue of acquisition and control of valuable, rare,
inimitable, and non-substitutable resources. Our study
firms departed significantly from RBV in how they view
and define a valuable resource. Our study firms in fact
prefer that resources are not inimitable and non-substitut-
able, instead hoping to create resources that will be used
and shared by others, including competitors. Our data,
however, only offered limited and inconclusive evidence
about how TBL firms view the rarity of resources.
Redefining a Valuable Resource
In their interviews, all of our informants expanded the
notion of a valuable resource to be one that is not only
Resources and Capabilities of TBL Firms 631
123
economically valuable to the firm, but also valuable to
society and the environment, both short- and long-term.
This is different from a traditional viewpoint in which
externalized costs are neglected in the value equation. As
one informant explained, the price of a sustainable product
is higher because it is a truer measure of the actual costs of
producing the product:
In the end society has to pay for the costs anyway due
to toxic chemicals being used. (PressPoint, July 16,
2007)
Another informant made the same point about removing
phosphorous from cleaning products, which resulted in
additional costs:
It’s about economics. It can all be done. It’s just
instead of selling Cascade for $2.99, they’re gonna
have to sell it for $3.99. But either way we’re paying
for it, right? Goes back to that systems [view]
because somehow, some way, somebody has to clean
up the water and there’s a cost associated with
everything. (Future Friendly, July 27, 2007)
In addition to redefining what is valuable, key to success
for TBL firms is to help consumers also have the same
definition of value. As an interviewee explained:
What we’ve tried to get across is that coffee is
probably one of the most undervalued products on the
face of the earth in terms of what it costs to pro-
duce… I mean people pay… way more for water. (Coffee Haven, July 13, 2007)
The interviewee went on to explain that the company is
trying to get consumers to pay the full value and to feel
good about supporting the environment and society in the
process.
Challenging Concepts of Inimitability and Non-
substitutability of Resources
Study firms put their mission and values first. In order to
achieve their mission and live out their values (i.e., benefiting
both society and the environment), our study firms move
away from a business model in which they only focus on
short-term financial prosperity. Rather, in order for the planet
to sustain itself, they realize that resources need to be imi-
table and substitutable. Study firms therefore believe that the
only way to achieve sustainability for the planet and society
is by working together. This is counter to a model in which
knowledge is kept to oneself in order to form a competitive
advantage. As an informant explained:
We share a lot of information… very openly. We’ll tell them where we’re getting our organic cotton…
how we’re handling our energy and where we’re
buying wind power. We’ve completely opened our
recycling supply chain… and so we do a lot of that kind of stuff with our peer companies—and… pub- licly so it’s actually available to our competitors too.
(Rugged Travels, August 2, 2007)
Similarly, another interviewee stated:
We have suppliers who come to us and say: ‘You
turned us onto sources that we didn’t know existed in
the world. We didn’t realize that we could actually
create post consumer content in our plastic bottles of
50 % or higher’. (Future Friendly, July 27, 2007)
In other words, rather than trying to fight for as much of
market share that they can acquire, study firms are looking
at how to grow the market—and subsequently everyone’s
share. As an informant explained, it is about realizing that
resources are to be shared and rather than having com-
petitors fighting each other, they want them:
Getting into a room and coming to an agreement that
they need to work together. (Earthly Eating, August
1, 2007)
Rare Resources
One of the four components of VRIO is the proposition that
rare resources (Barney 1991) form a competitive advan-
tage. Due to their missions, TBL firms would be expected
to avoid exploiting rare resources that could lead to their
depletion. Unfortunately, our data only provided one
instance of a reference to rare resources, so we are unable
to complete this portion of the VRIO analysis. In our one
example, the interviewee explained that they avoided a rare
resource despite having the opportunity to profit from it:
There’s an African herb that’s been making a lot of
headlines and we’ve been getting some questions
about picking it up. But from a sustainability stand-
point… it’s being overharvested and a lot of it’s being poached. (Life’s Spice, July 24, 2007)
TBL Capabilities
In the language of economic exchange theory, prior
knowledge about externalized costs may be symmetrical,
known to both parties in an exchange, or asymmetrical,
known by only one party. Asymmetrical knowledge of
negative first-party effects, such as the health effects of
tobacco on the user, can raise ethical and public policy
concerns. Asymmetrical knowledge of positive first-party
effects is often used by companies, including the firms in
632 A. Glavas, J. Mish
123
our study, to delight customers by letting them know about
unexpected benefits to them from an exchange.
TBL firms are particularly concerned with the implica-
tions of asymmetrical knowledge of third-party effects,
such as ecosystem costs of mining, which puts ethical
responsibility for dissemination of this knowledge on the
knowing party. Asymmetrical knowledge of third-party
benefits ‘‘may have few repercussions,’’ according to
Mundt and Houston (1996, p. 84), but these authors suggest
that asymmetrical knowledge of third-party costs leaves the
knowing party with a choice between (1) abandoning the
exchange, (2) taking action to mitigate the third-party
effects, or (3) self-insurance against potential future losses
that may result. The TBL firms in our study practice a
fourth option: they deliberately increase the symmetry of
knowledge of third-party costs, as widely as possible.
In the following section, we outline the capabilities
that TBL firms use to drive TBL markets. Specifically,
TBL firms reveal previously obscured costs and thus
increase symmetry of prior knowledge through market
intelligence, transparency, education, cultural construc-
tion, and marketing.
TBL Market Intelligence
In order to be able to reveal obscured market costs, the
firms in our study demonstrated a strong ability to discover
otherwise obscured market information
In theorizing the service-dominant logic of marketing,
Vargo and Lusch (2004) drew attention to the processes
that tend to obscure market information. In particular, they
detailed the historical evolution of indirect exchange, from
simple direct barter-based markets to complex monetized
markets with long channels involving multiple intermedi-
aries. These authors emphasized that the additional com-
plexity of indirect exchange over time, while increasing
efficiencies and capabilities in many ways, inadvertently
obscured the fundamental importance of service in value
(co-)creation. These authors argued that the presence of
intermediary parties and activities tends to obscure the
essential importance of service (i.e., embedded knowledge
and skill), leaving the impression that the goods themselves
are the unit of exchange. For example, the addition of
intermediaries between farmers and end consumers has
made it difficult for consumers to find out about working
conditions and environmental impacts of the methods used
to produce the food they eat. Our informants see this
obscuration as a pivotal systemic feature of current markets
and a consequence of the prioritization of economic value
above other forms of value. As a result, the direct parties to
an exchange are often unaware of social and environmental
costs that have been incurred upstream in production or
will be incurred downstream during and after use. For
example, an informant explained:
The big industrial roasters have managed to convince
the consumer that what they’re looking for is three
dollars a pound, which is about three cents a cup. And
what we’re trying to do is convince people that it’s
worth 12 cents a cup or more and that they should
feel really good about being able to get the world’s
best coffee for 12 cents a cup and support social and
environmental stewardship in the bargain. (Coffee
Haven, July 13, 2007)
The environmental scanning and market intelligence
needed to recognize and deliver this value involves the
accurate assessment not only of social or environmental
costs and latent demand for their reduction, but also a
detailed understanding of the infrastructure that must be
changed to reduce these costs, which is often complex and
deeply embedded in existing relationships and structures. It
also requires increased complexity and measurement of
non-traditional metrics, as shown by the following example
given by an informant:
We are mapping our footprint and we borrowed a lot
from GRI (Global Reporting Initiative) and we have
used a lot of the tools that are out there publicly to
work on things like, particularly our energy footprint
and our corporate travel footprint and our product
shipment and transportation footprint and…that information is fed into information about the pro-
ducts. (Rugged Travels, August 2, 2007)
Transparency and Education
For TBL firms, it is not enough to gather market intelli-
gence. Our data suggest that once study firms have infor-
mation on TBL value, they see it as their responsibility to
be completely transparent in their communication. As an
informant stated:
…it’s really gotten us to think… about what that means relative to our highest level purpose… how we look and communicate around issues of authenticity
and transparency… and… that in a sense is one of our imperatives…in terms of how do we help educate and inform so that we get a level of more conscious
consumerism. (Future Friendly, July 27, 2007)
They openly share information with others, even com-
petitors, in order to attempt to learn true total TBL costs
because knowledge of these costs may be optimized by
reciprocal openness. Gathering and disseminating such
information is seen as an important accomplishment, often
as part of mission fulfillment, in addition to informing
Resources and Capabilities of TBL Firms 633
123
decisions. As an informant (Earthly Eating) stated, they are
working to educate customers about how their choices are
affecting the world long-term (e.g., fisheries).
Another reason for transparency and education is to
build trust. With the amount of (mis)information present in
the marketplace, it is becoming increasingly difficult for
consumers to know what to believe. In addition, many
consumers do not spend a lot of time choosing between
products so they need to be able to trust the brand. As an
informant stated:
[TBL] companies engage more in two-way commu-
nication because that’s the only way to truly build
trust and awareness… all other means of communi- cation can easily be greenwashing and consumers are
having a hard time knowing what is right. These
companies might even be bringing traditional mar-
keting into question. Personally, I don’t believe
anything I see in a commercial anymore. (Rugged
Travels, August 2, 2007)
To increase transparency, these firms communicate with
many types of stakeholders in a web of connections
reaching beyond primary stakeholders (i.e., direct partners
and customers) to include secondary stakeholders and those
even farther removed from the firm (Clarkson 1995). TBL
firms establish two-way dialogs using activist groups, faith
communities, labor organizations, consumer micro-niches,
and other diverse social avenues to get detailed feedback
about market system conditions overall, not just about
current and future customer needs. For example, New
Vision Bank reorganized so that key decision-makers
would be closer to local communities and better able to
learn about and respond to community development needs
beyond those of direct customers—meeting these needs
was understood as likely to imply lower financial returns,
but the reorganization facilitated ‘‘mission lending,’’ or
delivery of TBL value.
There is strong normative pressure within these firms to
be as open as possible in all matters. They believe in
placing shortcomings, along with successes, squarely in
front of stakeholders, open for scrutiny. For example, one
annual report describes transparency as a ‘‘commitment to
shine the brightest possible light on ourselves so that all
may see us for all that we are—the good, the bad and the
ugly.’’ The integrity of this commitment signals credibility
and group membership to other members of the network/
culture of organizations that share TBL well-being as a
core value. As an interviewee stated:
What we don’t want to see is people who embrace the
marketing and make a token gesture and run with it.
You know, where they offer up something, which is a
diluted version. We’re very critical of greenwashing
and tokenism. And we don’t hesitate to go on the
record to be critical of that. (PressPoint, July 16,
2007)
With all of their stakeholders, study firms put in a lot of
resources to measure and disclose the impacts throughout
the value chain on society and the environment. One
informant talked about a unilateral move by his firm to
disclose all ingredients in an industry where conventional
competitors use environmentally toxic ingredients:
We’re actually taking our labeling to the next level so
that we’re disclosing each and every ingredient and
how it breaks down. (Future Friendly, July 27, 2007)
The aim of these increased disclosures is for previously
hidden environmental costs to become evident and public.
In summary, all study firms demonstrated dedicated
efforts to educate stakeholders about otherwise hidden
impacts of production and consumption on other
stakeholders.
Collaborative Development and Delivery of TBL Value
All study firms actively work with the entire supply chain
to create socially and environmentally responsible offer-
ings. Being pioneers, study firms typically lead their
channels in the development and delivery of these multi-
dimensional forms of value. Such leadership is one form of
influencing others and a pivotal measure of success. For
example, Earthly Eating, a natural supermarket chain, was
not able to source organic milk through existing dairy
channels, but instead had to create a separate, parallel set of
intermediary businesses capable of meeting the specifica-
tions required to deliver ‘‘organic’’ value. Once estab-
lished, this channel was adopted by conventional
supermarket chains to provide organic dairy products to
their customers. Similarly, four of the non-financial firms
have developed financial offerings to support new suppliers
(e.g., loans, certificates of deposit, investment funds) as a
way to improve TBL capacity. Coffee Haven explained
that they developed a micro-lending program to help coffee
farmers ‘‘reduce their dependence on the volatile coffee
market and confront the most pressing community needs.’’
Thus, these firms respond to a broad array of market
intelligence through continuous sustainable innovation and
co-creation (e.g., Prahalad and Ramaswamy 2004) with
customers and other stakeholders.
Even those whose values are not aligned with the TBL
objectives of these firms are seen as potential TBL peers.
For example, an informant stated:
Wal-Mart…if you look at the whole corporate-wide footprint… it’s pretty tragic and I could talk a lot about how evil I think they are. But the little pockets
634 A. Glavas, J. Mish
123
where they’ve tried to do the right thing and do good
stuff, the stores they’ve built, the environmental
performance stores…blow the doors off of everything anybody else is doing, including us. (Rugged Travels,
August 2, 2007)
Study firms monitor the TBL impacts of their actions as
closely as possible, and make regular refinements. For
example, one is highly responsive to emerging environ-
mental problems and sourcing options for hundreds of
herbs and spices. These firms invest in building value chain
resources, and they take on expenses that do not make
short-term economic sense but do make TBL sense. New
Vision Bank sets and meets annual goals for ‘‘mission’’
loans that will not be as financially profitable. Study firms
respond to market conditions by getting their supply chain
to change their mindset through investing in TBL resources
wherever possible, including with customers, non-profit
organizations, employees, and non-TBL partners. As an
informant explained:
We’re helping them think about their business model
a little differently. And the fact of the matter is that if
we couldn’t, we probably wouldn’t be doing business
with them in the first place. (Future Friendly, July 27,
2007)
Standards/Certifications for Legitimizing TBL Value
All of the study firms are fully involved with industry
standards as a way for the entire value chain to be held
accountable. For example, one firm’s name is now used
generically to describe the standards used for sourcing and
selecting products. Other standards, such as Fair Trade and
Shade-Grown for coffee, are established by non-govern-
mental organizations, or by multi-stakeholder coalitions.
TBL managers make time to co-create new standards:
We’re offering educational workshops and working
closely with the USDA [to] come up with standards
… so [producers] can actually label the products as a certain level of animal compassionate, and the
intention is to do that with growers for non-animal
foods [as well]. (Coffee Haven, July 13, 2007)
Five study firms were part of the development of the
USDA Organic standard, which took significant work on
the part of study firms because there was such a variety of
certifications (e.g., self, store, farm, distributor, roaster).
Many informants stated other challenges such as trying to
keep TBL standards at a high level while more conven-
tional rivals were trying to lower the level of standards.
Most study firms participate in multiple standards.
Standards function as instruments that uncover previously
hidden costs throughout the value chain (e.g., production,
consumption), for education, for alignment with partners
and within industries, and as a way for the firm to self-
monitor. In addition, standards help shape governmental
regulations. They also amplify the visibility of social and
environmental costs, and provide accountability tools for
their reduction. As explained by an informant from a firm
that offers ‘‘triple-certified’’ organic, fair trade, shade-
grown coffee:
[Our packaging] tells about each certification, [edu-
cates and makes] independent certification a major
priority rather than trying to make a statement with
graphics….as most companies…try to imply… that connection with the environment through graphic
design instead of…this is a recognized non-profit certification that is independent and directly ties you
to the farmer. You directly support the farm through
this certification. (Coffee Haven, July 13, 2007)
Standards also guard against greenwashing and help
inform consumers. For example, an interviewee explained:
[There] is a tremendous amount of green-washing
that’s going on within the product categories… and really what we’ve done is taken a whole another tack
and said let’s go to the largest retailers in the industry
and let’s work with them on developing a set of
standards… that they can communicate and articulate to their customers around household products.
(Future Friendly, July 27, 2007)
Organizational Culture Built Upon a TBL Intelligence
Orientation
TBL firms build the vision into the culture through com-
munication, being clear on benchmarks, making it a part of
the decision-making criteria, and having a work environ-
ment that reflects internally what they are trying to do
externally in the world. A leader at a study firm discussed
the importance of education as well as stating the rein-
forcing effect of doing good work, being recognized for it
publicly, which in turn, reinforces the internal culture:
One way I educate is through internal email… [also] people got educated on the positive response by the
press and the public to us being proactive on climate,
and as people understood the problem themselves,
they’re paying attention, and because of our work at
Greater Munch, when news came up about global
warming I think people paid more attention. (Greater
Munch, July 13, 2007)
As defined by Kohli and Jaworski (1990), market ori-
entation is ‘‘the organizationwide generation of market
Resources and Capabilities of TBL Firms 635
123
intelligence pertaining to current and future customer
needs, dissemination of the intelligence across depart-
ments, and organizationwide responsiveness to it’’ (1990,
p. 6). The market orientation used by our study firms
appears to require an organizational culture based on a
TBL perspective. This echoes Gebhardt et al. (2006) who
found that organizational culture is the foundation of a
market orientation. As one informant stated:
What’s happened in the last couple years is it’s really
being integrated in the company’s DNA. Where the
head of sales will tell his entire sales force, I want
you to make your decisions based on these five cri-
teria, and it takes awhile for that to happen in a
company, but I really see it. (Greater Munch, July 13,
2007)
To explore the possibility that TBL implies an organi-
zational culture built on a unique market orientation, we
made comparisons with work on stakeholder orientation
(Ferrell et al. 2010; Freeman 1984; Freeman et al. 2010;
Greenly et al. 2005), and sustainable market orientation
(Hult 2011; Mitchell et al. 2010; Viswanathan et al. 2009).
Our data reveal that pioneering TBL firms participate in
and often lead not just organization-wide but channel-wide
intelligence activities because they gather, share, and
respond to information openly and collaboratively across
the channels in which they operate. Furthermore, our study
firms generate, disseminate, and respond to system-wide
intelligence beyond the channel, to include not only that
which pertains to ‘‘current and future customer needs’’
(Kohli and Jaworski 1990, p. 6), but also to understand the
well-being needs of other market system stakeholders.
Indicative examples include a clothing company’s efforts
to induce Chinese suppliers to reduce their environmental
impacts as well as the previously mentioned example of a
study firm’s refusal to overharvest wild herbs that are
needed by other species in their ecosystems. We propose
that a TBL market orientation involves the organization-
wide generation of market intelligence pertaining to current
and future social, environmental, and economic market
system needs, dissemination of the intelligence across
stakeholders, and organization-wide responsiveness to it.
This construct would apply not only to TBL firms but also
to any organization that prioritizes TBL concerns as a
proactive intelligence orientation.
One of our study firms, Equal Exchange, offers a sum-
marizing example of how firms create new markets using a
TBL market orientation and culture. Having helped to
establish a growing Fair Trade coffee market, Equal
Exchange set its sights on developing new Fair Trade
markets for chocolate, nuts, and snacks. The steps involved
in this project began with the channel-wide intelligence
goal of collaboratively identifying social and
environmental costs that could be markedly reduced in
value chains that are similar to coffee, where this firm had
developed competencies. The stated motive was to achieve
mission fulfillment by catalyzing more sustainable prac-
tices in new industries. The costs identified for marketable
reduction were both labor-related social costs and ecolog-
ical impact costs commonly incurred in the production of
chocolate, nuts, and snacks. The next step involved the
collaborative specification of standards with multiple
stakeholders, in order to meaningfully distinguish Fair
Trade almonds, for example, from conventional almonds.
Then, the firm and its value chain partners were able to
develop and implement the processes needed to deliver
products meeting the specifications. Only then could they
be offered to potential buyers, with credible messaging,
using an eco-label to verify the cost reduction as a net
benefit in communications.
Discussion
The primary orientation of the firms in our study is to
produce environmental, societal, and economic value at the
same time. TBL firms use a different strategy from RBV,
which prescribes a sole focus on increasing the future value
of the firm through resources and capabilities that provide a
competitive advantage without taking into account social
and environmental issues. In other words, contrary to the
main underlying assumption of RBV, TBL firms are not
focused on competitive advantage, but rather on collabo-
ration. Specifically, these firms achieve their purpose by
constructing and operationalizing value as a TBL phe-
nomenon, with a long-term temporal dimension, that is
made available to customers in the marketplace in the form
of TBL value propositions. Their effectiveness in doing so
arises from their capabilities to create new markets—which
comprise the abilities to collaboratively increase market-
place transparency about social and environmental costs
and benefits, often using standards and certifications—
based in organizational cultures that reveal both positive
and negative aspects about themselves and offer leadership
for systemic intelligence across the channels and social and
environmental contexts in which they operate. Financial
viability is necessary but was not the starting point in this
business model. Our study firms developed resources and
capabilities that they actively helped others imitate. This
demonstrates that markets provide the democratic freedom
for stakeholders to collaboratively define value.
The findings in this study also expand RBV theory. In a
review of RBV, Kraaijenbrink et al. (2010) find that the
critiques of RBV fall into eight categories. They argue that
five of these categories can withstand critique, but the other
three cannot. These three are the RBV construction of
636 A. Glavas, J. Mish
123
resource, value, and competitive advantage. Our findings
address each of these three critiques and make the fol-
lowing contributions to RBV theory. First, the firms in our
study show how the broader environment can be integrated
into the business model. They demonstrate that the starting
point for value must be external to the firm (i.e., focused on
impacts to the entire ecosystem and society) compared to
RBV, in which the focus was internal and concentrating on
what creates competitive advantage for the firm. Second, as
a result of integrating the institutional context, our study
firms offer a new conceptualization of how to control and
acquire resources. By viewing resources through a collec-
tive lens, TBL firms define them differently than predicted
by RBV. Finally, due to how they view resources, our
study firms go beyond developing dynamic capabilities
solely for the firm but rather develop dynamic capabilities
for the entire market. As a result, not only does the firm
prosper, but so does society and the environment. In the
following sections, we explain in more detail each of these
contributions to RBV theory.
Institutional Context
Our study answers the call for RBV to focus more on the
institutional context (Hart 1995; Hart and Dowell 2011;
Maurer et al. 2011). TBL firms do so by building the
institutional context into the business model. As we know
from management theory (Kerr 1975), employees in a firm
will strive for that by which performance is measured. If
financial performance is what is measured and rewarded,
then employees will prioritize financial performance over
social and environmental performance. On the other hand,
TBL firms equally measure and reward social, environ-
mental, and economic performance. In this way, the insti-
tutional context is not simply reflected in slogans that
appear in an annual report, but instead forms an integral
foundation of the strategy, everyday business, and organi-
zational culture of the firm. Each decision needs to take
into consideration the potential impacts not only on the
firm but also on society and the environment.
TBL firms even go a step further beyond taking into
consideration the institutional context; they actively try to
shape it. They deliberately increase the symmetry of
knowledge of third-party costs, as widely as possible. They
take a proactive stance of openness, as illustrated by Future
Friendly’s strategy, explained as ‘‘stakeholder need-to-
know takes precedence over inconvenience and cost to the
firm.’’ They reveal asymmetrical knowledge to educate
potential customers about third-party costs, and thus cul-
tivate and tap latent market demand for reductions in those
costs. As a result, these firms increase knowledge sym-
metry to influence markets (Jaworski et al. 2000). As
consumers absorb knowledge about third-party costs, their
market behavior may change, which creates and influences
markets, by putting pressure on conventional firms to
reveal and reduce these costs in their own offerings. TBL
firms also influence markets by changing market structure
as well as developing new channels in which transparency
about TBL costs is explicit. They push for standards, cer-
tification, and regulation in order to make TBL part of
market practices for firms.
Resources
Our study also answers the call of Newbert (2007) for RBV
to explore different conceptual frameworks by providing
an alternative framing for resources (e.g., definition of
value as well as inimitability and substitutability of
resources). In a systematic review of RBV, Newbert (2007)
found that value is vaguely defined in most studies and that
future research should explore alternative definitions.
Because of how the institutional context is integrated into
TBL firms (i.e., taking into account societal and environ-
mental value), their definition of value and their strategy
for acquiring and controlling inimitable and non-substi-
tutable resources offer a strikingly different model than
RBV.
TBL firms expand the concept of what constitutes a
valuable resource by going beyond a narrow view of value
from the perspective of a single firm, to include the full
extent of what is valuable to society and the planet. TBL
firms do so by shifting the paradigm upon which value is
determined. Traditionally, an exchange focus was the
dominant viewpoint (Sheth and Uslay 2007). From this
perspective, what is valuable is that which can be eco-
nomically rewarded in the marketplace. However, TBL
firms employ a different viewpoint, which is known as
value creation in the marketing literature (Sheth and Uslay
2007). Our data reveal that TBL value is being offered and
purchased in the marketplace, inclusive of perceived social
and environmental benefits as well as social and environ-
mental costs, across the full life cycle of the offering. Thus,
the traditional notion of what constitutes value is expanded
in the practices of study firms to embrace social and
environmental value through the entire life cycle of the
product or service.
In this conceptualization of value, the role of perception
is especially critical. Whereas the traditional customer
value equation recognizes benefits as a matter of perception
(e.g., ‘‘perceived benefits’’), it assumes that costs are
knowable facts, placing ‘‘total costs’’ rather than ‘‘per-
ceived costs’’ in the denominator. This assumption is roo-
ted in the exchange theory model of markets in terms of
perfect information. In the case of our study firms, the
market is understood as needing correction, including
greater transparency about costs, precisely because of
Resources and Capabilities of TBL Firms 637
123
imperfect information. Their actions challenge the
exchange theory assumption that value is a function of total
costs rather than a function of perceived costs.
This assumption has also been challenged by the
empirical findings of behavioral economists (e.g., Kahn-
eman and Tversky 1979; Thaler 1980). This literature
supports a perception-based view of costs and value, and it
also supports our firms’ non-linear view of potential trade-
offs between bottom lines. For example, consumers per-
ceive it to be fair for firms to benefit financially from
windfalls that reduce production costs without lowering
prices, but unfair for firms to exploit market power by
increasing prices or lowering wages (Kahneman et al.
1986). Our study firms demonstrate the ability to culturally
construct or position themselves as reducing total costs
(i.e., to society and the planet), even though their actual
dollar pricing is often, but not always, higher than that of
conventional competitors. As shown in our data, study
firms believe that their customers understand that eventu-
ally they will bear the costs long-term of unsustainable
business practices.
By integrating the institutional context as well as
expanding how value is conceptualized, TBL firms inher-
ently contradict RBV and the concept that resources need
to be inimitable and non-substitutable. Rather the mission
of TBL firms is such that in order to achieve societal and
environmental harmony, they strive to make their resources
and knowledge imitable. As our data shows, TBL firms
will work with their competitors, their entire supply chain,
their industry, and their broader marketplace by sharing the
newest innovations and other resources in order to help the
market become more socially and environmentally
responsible. Furthermore, it is contrary to the mission of
TBL firms to have resources that are non-substitutable.
Such a paradigm is outside of that described by RBV,
where the goal is to retain as much control as possible over
a resource without allowing competitors to copy it or find a
substitute. The underlying logic in RBV is that if resources
are imitable and substitutable, prices will decrease to the
point that there is no profit. However, if the true systemic
costs (i.e., economic, social, environmental) are rewarded
in the marketplace, then this risk is eliminated.
The TBL approach is supported by recent economic
theory. Nobel-prize winning economist Elinor Ostrom
(1990) challenged the notion of ‘‘tragedy of the commons’’
in which it is assumed that users would destroy the
resources of the planet (e.g., through current models of
competitive markets). Rather Ostrom applied theories from
political science and economics to show that people can
organize and create mechanisms for sustainably and
socially responsibly managing resources. Ostrom studied
examples such as how pastures are managed in Africa and
how irrigation systems are managed in Nepal, as well as
finding numerous other cases of how humans interact with
the ecosystem in order to sustain shared resources and
prevent the collapse of the ecosystem. These systems
focused on imitability and substitutability of resources.
Based on these studies, numerous models have been
developed, but TBL firms provide a theoretical and prac-
tical framework showing how developed western consumer
marketplaces can support society and the environment.
TBL Capabilities
In order to truly integrate the institutional context as well
as to reconceptualize how resources are acquired and
controlled, TBL firms develop a different set of capabilities
that allow them to shape the market. Without the support of
the market, consumers, supply chain, and broader society,
TBL firms would not be able to survive economically.
Therefore, the starting point for TBL capabilities is an
external focus, which is different from that in RBV in
which the starting point is internal (e.g., a firm’s abilities,
competencies, processes).
Our findings also expand our understanding of dynamic
capabilities presented in the RBV literature to show how
TBL firms form capabilities to address the uncertainty and
future sustainability of our markets. Although scholars
have focused on corporate agility as a way to be able to
seize opportunities in changing times (Teece et al. 1997),
the firms in our study aimed to form stable capabilities in
order to create opportunities that did not exist previously.
Specifically, our study firms aimed for long-term TBL
impacts in a marketplace where the demand for TBL value
was highly uncertain. Their normative principles provided
a critical foundation for asserting a new construction of
value and building a critical mass of market recognition
and appreciation for this construction of value. These
accomplishments required alliances based on shared nor-
mative principles, such as transparency, which provided
stable reference points internally and externally for deci-
sion-making and market creation in a competitive context.
Thus, our study firms appear to have used normative
principles as a mechanism for developing dynamic capa-
bilities, new markets, and business models in the face of
uncertainty. Our findings also echo and expand upon those
of Galunic and Eisenhardt (2001) who explored how cor-
porate divisions are restructured by internal social logic
(e.g., helping to strengthen weaker divisions). Like these
authors, we found that dynamic capabilities are formed not
only by economic logics but also by social logics. While
their study focused on internal stakeholders, ours focused
on a social logic informed by external stakeholders (e.g.,
the well-being of the environment, society, and a wide
range of stakeholders) and the resulting reconfiguration of
the firm and its capabilities.
638 A. Glavas, J. Mish
123
Implications for Practice
This article makes the following contributions to practice.
First, it shows that the groundbreaking work of these TBL
pioneers may have broader application to other companies.
Since the time of our data collection, other large companies
have tried to emulate the large company in our study. In
addition, several large multinational corporations have
bought TBL firms in the hopes of learning and spreading
the knowledge and culture to the rest of the organization.
In addition to showing the value of TBL, our study
provides key strategies and practices for managers wanting
to conduct TBL business. Many of these approaches are
counter to the present culture in traditional organizations.
First, value needs to be redefined and the metrics used to
measure performance need to be calibrated to the new view
of value. Currently, most metrics are based solely on fi-
nancials. As we know from psychology, employee behav-
ior is shaped by what is measured and rewarded within a
firm (Kerr 1975). Although we know that sustainability can
lead to profit, if sustainability is not measured and thus
embedded in the culture and mindset of people, the focus
will primarily be on profit—often at the cost of the envi-
ronment and society long-term.
In addition, a culture of transparency within and outside
the firm is needed. This is counter to the current culture in
many organizations, and may be difficult to implement,
especially where managers are constrained by risk-averse
policies as well as norms and fears about legal and public
relations consequences. Nonetheless, it is becoming
increasingly apparent that failing to take decisive and
credible action on sustainability issues exposes a firm to a
variety of risks as well. Without transparency, an oppor-
tunity is missed to form authentic relationships with
stakeholders, which in turn can lead to increased customer
loyalty, innovation advantages, satisfied employees, and
other benefits. Many firms are sincerely trying to be sus-
tainable but still struggle to fully understand or implement
the changes required which leads to a lack of transparency
because they do not want to admit the mistakes they are
making. Thus, the phenomenon of greenwashing has
emerged in which consumers lack trust in corporations and
are legitimately confused about what is truly sustainable.
The cases of the firms in our study suggest that the only
way to gain stakeholder trust is to practice complete
transparency—a radical turnaround for many companies.
Finally, when markets tighten and competitive advan-
tages lead to incremental results at best, thinking ‘‘outside
the box’’ becomes more attractive. We provide insights that
show how TBL companies have built the needed capabil-
ities to create new markets. Perhaps our most counter-
intuitive finding is that collaboration is necessary. Intui-
tively, companies entering the TBL space might wish to
gain first-mover advantage by being secretive about their
intentions. This would, however, eliminate the benefits of
transparency and undermine the building of trust. Building
a new TBL market requires more than one firm; it takes a
full supply chain, along with the support of local and
federal governments as well as non-governmental organi-
zations. It requires system-wide collaboration.
Limitations and Future Research
A limitation of our work that is also an opportunity for
future research is the generalizability of our findings. While
this is a typical limitation of case studies, the firms we
chose are a good representation of TBL firms. One of our
selection criteria was that study firms needed at least
15 years of operations, which we believe contributed to the
quality of the study. However, future studies could select
firms that have been in the TBL space for only a few years
and follow their progress longitudinally. We also see a
need for research on companies transitioning to a TBL
orientation in addition to studies on firms that were foun-
ded on TBL values. Since new ventures in general have
mixed success rates, it would be instructive to compare
new TBL ventures with their traditional counterparts,
attempting to discern best practices and factors leading to
success.
To alleviate potential limitations to depth interviews
(Cotte and Kistruck 2006), we guaranteed anonymity and
used pseudonyms throughout the paper. Future research
might return to these same companies to learn from their
continuing practices and to see if they are willing to col-
laborate to produce case studies and other materials for
public use.
Finally, our study focused on companies based in North
America. Although many of them have an international
presence, future research should explore TBL companies in
other parts of the world. Much innovation is occurring
outside of the US in sustainability (e.g., energy) and social
entrepreneurship (e.g., health, microfinance). Although it
may be useful to study double bottom line firms (i.e., those
aiming for social or environmental objectives, as well as
positive financial outcomes), we advise researchers inter-
ested in further investigation of TBL firms to be thorough
in selecting organizations that are both socially and envi-
ronmentally responsible. The pioneering firms in our study
demonstrate that TBL practice is possible, but it remains
challenging.
Conclusion
Fundamental questions about the nature of markets, firms,
and management are being asked by stakeholders in the
Resources and Capabilities of TBL Firms 639
123
marketplace, and many practitioners are actively seeking
answers to these questions. One of the questions being
asked is if having a normative approach is counter to
agency theory and the primary role of the firm. In other
words, should the focus primarily be on profits? Separating
values from economic models is termed the separation
thesis (Freeman 1994) and it is posited that any decision of
managers about the purpose of the firm and its responsi-
bility toward shareholders is normative, even if the deci-
sion is primarily economic (Freeman et al. 2004). The TBL
firms in our study certainly have normative goals, but
perhaps all firms have normative goals. The assumption
that shareholder value maximization is the sole purpose of
business (e.g., Friedman 1970) has rested at least in part on
an underlying assumption that no other purpose could
withstand the competitive demands of the marketplace.
However, the TBL firms in our study show that it is pos-
sible to have purposes other than maximization of share-
holder returns. Although we are not arguing the purpose of
the firm, nor are we even suggesting that more than a
minority of firms will embrace TBL models, we do argue
that TBL firms demonstrate that an alternative model is in
operation. If an alternative model is possible, then it fol-
lows logically that firms can choose their own purpose and
that such a decision is fundamentally normative. Managers
may believe that they have no choice, however, this is a
separate topic that deals more with sensemaking (e.g., Basu
and Palazzo 2008) than it does with the reality of the
marketplace. Therefore, our paper answers the call of
Freeman et al. (2004, p. 368) for management theory to:
…get back to management—to the understanding of how value gets created and traded—in all of its gory
particularistic detail. Talking about how all value
must get created, or the one and only best way to
organize value creation, or the one and only stake-
holder group whose prima facie rights must always
win, are all intellectual moves that serve neither truth
nor freedom.
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- c.10551_2014_Article_2067.pdf
- Resources and Capabilities of Triple Bottom Line Firms: Going Over Old or Breaking New Ground?
- Abstract
- Introduction
- Sustainability and RBV
- Sustainability
- RBV
- Resources
- Dynamic Capabilities
- Institutional Context
- Methods
- Selection of Study Firms
- Data Gathering
- Data Analysis
- Findings
- Institutional Context
- Integrating the Institutional Context
- Proactively Shaping the Institutional Context
- TBL Resources
- Redefining a Valuable Resource
- Challenging Concepts of Inimitability and Non-substitutability of Resources
- Rare Resources
- TBL Capabilities
- TBL Market Intelligence
- Transparency and Education
- Collaborative Development and Delivery of TBL Value
- Standards/Certifications for Legitimizing TBL Value
- Organizational Culture Built Upon a TBL Intelligence Orientation
- Discussion
- Institutional Context
- Resources
- TBL Capabilities
- Implications for Practice
- Limitations and Future Research
- Conclusion
- References
