Organic pioneers and the sustainability transformation of the German food market: a politically structuring actor perspective

1. Introduction

The organic food market is an impressive example of the socio-ecological transformation of a fast-moving consumer goods market in Germany. Organic food sales grew from 2.1 billion euros in 2000 to 15 billion euros in 2020 (Statista, 2021), with 22.3% growth in 2020 being the most recent annual increase (BÖLW, 2021). This recent significant growth is commonly attributed to the entry of large food retailers into the organic market (Trávnícek et al., 2021). However, the market was previously co-developed over several decades by organic pioneers who either began as start-ups or converted existing small- and medium-sized enterprises to organic food production to become established and successful brands in the sustainable food sector after several years.

This paper explores the socio-ecological co-evolution and transformation of organic pioneers (micro-level) and the food market (meso-level) through in-depth interviews with four founders and business leaders of German organic food processing companies who, as organic pioneers, have helped shape the development of the organic sector in recent decades. Their strategic actions and measures are examined with the help of Uwe Schneidewind’s (1998) theory of the “enterprise as a politically structuring actor”, and the interactions between the micro-level (enterprise) and the meso-level (regime) are illuminated (Geels, 2002; Loorbach and Wijsman, 2013). The focus is thus on niche-level actors and how they have developed their own businesses and helped develop the organic market.

The literature claims a lack of empirical evidence and practical studies about actors (especially enterprises) and their activities in practice and how they influence or shape their market environment (Dias et al., 2019a, 2019b; Habicher, 2021; Hörisch, 2018; Johnson and Schaltegger, 2020; Lau et al., 2012; Loorbach and Wijsman, 2013). To address this gap, our study examines the following research question: “What strategies and design elements were used by organic pioneers to develop their business and help change structures in the organic market?”. By exploring how sustainable strategies are shaped in practice (rather than writing about how they should be shaped), our study makes a contribution to the practice research literature (e.g. Behnam and Rasche, 2009; Galbreath, 2009). It examines the micro-processes that are usually taken for granted (Golsorkhi et al., 2015) and sheds light on the micro-level activities for organisational (Egels-Zanden and Rosen, 2015; Kasim et al., 2021) and market transformation towards sustainability.

This paper is structured as follows. Section 2 describes our theoretical-conceptual framework: the politically structuring actor approach by Schneidewind (1998) and the literature on sustainability transformation. Section 3 presents the design of our study, including qualitative content analysis (the method of data analysis). Section 4 presents the results of the in-depth interviews, which (in Section 5) are subsequently discussed regarding the politically structuring and transformative sustainability impact of companies. In the final section (Section 6), we provide our conclusions and offer their implications for corporate practice.

2. Theoretical-conceptual framework

We use the concept of Uwe Schneidewind (1998) to understand organic pioneers as politically structuring actors who actively shape the environment in which they are placed. We take up a multi-level perspective (MLP), as reflected in Schneidewind’s approach that combines the entrepreneurial with the market point of view, to allow for a more comprehensive picture of transformational change over time. Furthermore, when examining how change is managed by organic pioneers and is strategically influenced at the meso-level, our analysis draws upon the literature that Johnson and Schaltegger (2020) termed “entrepreneurship for sustainable development”. More specifically, we use Schneidewind’s framework for an empirical analysis of strategies and design elements used by organic pioneer companies to help change structures in the organic market. The use and interweaving of theoretical perspectives is a common characteristic in the emerging field of entrepreneurship relating to issues of sustainable development.

3. Study design and methods

The following section explains how the study was designed, including selecting companies and using in-depth interviews to obtain data related to how organic pioneers have managed and developed their businesses during the co-evolution of the organic sector.

The data were collected through interviews with four organic pioneer companies that are considered crucial players and drivers in the German organic market and are widely known for their product development and production innovations. They are considered organic pioneers in various public sources and academic literature (e.g. Brehl, 2020). Two of the four companies took over long-standing family businesses from their parents approximately 40 years ago, one of which had long been run employing an anthroposophical approach, while the other was subsequently converted to organic (both beverage producers producing organic soft drinks and juices; abbreviated as BP-A and BP-B). The other two pioneers (food processors producing dry goods, spices, tea, bakery goods, cereals and cookies; abbreviated as FP-A and FP-B) founded their companies approximately 40 years ago and built them up as organic businesses. All four companies, each with 130–250 employees, are among the most traditional organic companies in their sector and have developed into leading brand manufacturers in the organic food and natural products sector. For many years, however, they have also successfully pursued strategies for distribution in other markets, including international ones. They represent companies that, as Hörisch (2018, p. 1155) puts it, have achieved “relatively comprehensive changes … via reconfigurational pathways of transitions”.

The corporate cases were also selected because the pioneering companies are not only known to the public for their transformative innovations but are also characterised by particularly high growth figures in their industries, including double-digit growth in recent years. Such a dynamic role of companies in transforming markets is often accompanied by major challenges in developing balanced corporate strategies (Gond et al., 2012) and sustainable business models (Schaltegger et al., 2016). Of further interest was to investigate whether (and if so, how) companies ensure that no “mission drift” occurs in the implementation of their growth strategies (Schaltegger et al., 2016), which could potentially reduce corporate sustainability performance and affect corporate values.

Following Schneidewind’s (2010) study, in-depth interviews with longstanding, well-established organic food companies are suitable for identifying retrospective and current management practices and strategies regarding the design rules of a progress-oriented structural policy organisation. An exploratory approach was suitable because no other studies addressed our research question. With the assumption of Schneidewind’s approach that all players in the market place are actors who influence their environment and the structural policy, it was necessary to collect more than one perspective in order to determine views and understandings of the market and doing business. Considering that actors are involved simultaneously in the same structures and that they attempt to influence them at the same time, it was suitable to collect some different actors’ views (instead of only one, for example) (Schaltegger et al., 2016). We therefore employed semi-structured in-depth interviews (as also done, for example, by Debor, 2018 and Hörisch, 2018) to focus on the history and experiences of the organic pioneers and how they position themselves and their role in the organic market and movement (i.e. regarding other actors and structures).

The aim was to get an “inside view” to meet our research interest – not an “outside view” as provided by quantitative questionnaire surveys or qualitative content-analytical studies of secondary data such as media and marketing material. Using an interview guide, the interviews addressed the following themes: biography of the entrepreneur, leadership style, corporate vision and purpose, organisational structure, strategy/strategic goals, performance assessment and management systems. These themes were explored retrospectively and with regard to the current situation of the company (including company succession) while paying particular attention to changes over time and the reasons for these changes.

All interviews took place within the company to provide a familiar environment for the interviewees and were carried out by two researchers (one of whom is the co-author of this study) in 2018. The interviews lasted a total of 419 min, while individual interviews with the managers and owners of the organic enterprises each lasted from 77 to 129 min. The audio recordings were fully transcribed by an external service provider and analysed using qualitative content analysis and MaxQDA software (also used by Debor, 2018), which is a helpful tool for data and knowledge management to systematically examine and code large amounts of text. All interviews were conducted and transcribed in German and the statements relevant to this study were translated into English.

Content analysis of the data was carried out following the approach of Mayring (2010), except for the first step, when one of the authors inductively marked and coded statements that seemed potentially relevant to the research interest. This preliminary open coding served to break open the data and was intended to create broad and initially less ordered access to the data material (Strübing, 2014). Such a small-step sequential examination of the text makes it possible to open dimensions of meaning behind the often taken-for-granted surface of the manifest text.

In the next step of reading and coding, concrete correspondences between the marked text passages of interest and the concept of the politically structuring actor (which served as a theoretical-conceptual basis) were worked out. This was done using the theory-guided framework (like a “deductively obtained set of categories”, Gläser and Laudel, 2013), whose individual components function as categories (see Table 1). In this way, the statements of interest for the research question were ultimately identified and categorised using the framework on structural policy elements (Table 1).

4. Results

This section explains which design elements the companies used to achieve their goals for each dimension of Schneidewind’s (1998) politically structuring actor concept. In doing so, the connection between the development status of the company and the organic market and the companies’ approaches to action is revealed.

5. Discussion

Schaltegger et al. (2016) pointed out that the growth of sustainable companies in consolidated markets automatically leads to structural changes that can increase sales of sustainable products or the displacement of actors selling less sustainable products. Building on this, the results of the present study allow for further, differentiated consideration of a possible transformative scope for action, considering the constellation of different actors and providing valuable indications for the design of future transformation processes. For example, the organic pioneers (especially the beverage producers) particularly emphasised the importance of establishing networks (such as producer groups or orchard associations), even if it initially seemed economically questionable (at least in the short term) due to limited sales volumes. The creation and dissemination of knowledge and long-term consolidated or newly emerging partnerships provided advantages: for example, farms interested in conversion, which appear as new actors and partners in the market or increase the share of those actors who farm sustainably or are starting to do so. In this way, but also through the active promotion of new and spin-off companies, lasting relationships can be built up with producers and suppliers that support and consolidate the growth strategies of local companies. This was observed with FP-A, who enabled the regional cultivation of raw materials (previously only available internationally) by starting a production facility in the vicinity of their company. Our study demonstrates that, from the very beginning, organic pioneers have used the co-design of actor constellations as a strategic approach to control the co-evolution of the business environment and their positioning in the market.

Moreover, in the initial phase, namely, when setting up a business or converting to organic farming, high risks were taken in using allocative and authoritative resources. In all these pioneer enterprises, there has been evidence – especially in the start-up or conversion phase, but also in the further development phase – of a strong willingness to invest allocative (e.g. financial, personnel and knowledge-related) and authoritative (e.g. image) resources with an uncertain and sometimes even unclear outcome or return to be able to help build up the respective pioneer enterprise and its environment. As identified in this study, there are many and various reasons for this: from the spirit of innovation and pioneering (new products and production processes), to the possibility of building up and even increasing allocative production capacities in the long term (conversion of additional arable land in the supply chain), to the ethical motivation of sustainability-oriented entrepreneurs (see also Boons and Lüdeke-Freund, 2013; Hockerts and Wüstenhagen, 2010).

In this context, growth appears to be unhindered in the early phase of business. According to Hockerts and Wüstenhagen (2010), this could be due to the business model initially not offering sufficiently attractive or visible market opportunities for already established companies (incumbents). However, as the size of firms increases and the organic market grows, our results also show a clearer and more active exclusion of certain actors, such as investors or banks. This is exemplarily demonstrated by BP-A’s attempt to revolutionise a traditional quality standard in his sector: the organic pioneer wanted to enforce a (legal) “organic production standard” for the manufacturing process and announced this step in a nationwide press conference. In doing so, rules and standards would have changed (the regulation was to apply to all producers of this product), while the corresponding public relations work ensured “agenda-setting”, as the pioneer received great press coverage across industry boundaries. Furthermore, competitors were challenged, and their long conserved production habits questioned – which can also be interpreted as an approach to attack or marginalise certain players.

Our findings demonstrate that the exclusion of actors will be pursued currently and into the future (after the transfer of the business): if financial investments appear to make economic sense (risk hedging), then this is only done via investors who prove to be particularly interested in (and competent in) sustainability issues and who also have family-related values and characteristics or via family-internal succession solutions regarding management and ownership. Likewise, corporate foundation solutions are chosen to maintain the value orientation that has been built up. Accordingly, the statement by Schaltegger et al. (2016, p. 276) that the growth of organic pioneers is made possible by incumbents who are “unable to cope with sustainability-related market opportunities” can be differentiated from the practice perspective underlying this study. The growth potential in the organic market being exploited by the pioneers over many years – almost undisturbed by competitors – is not due to the (lack of) capabilities of already established market actors, but rather to the structural policy actions of the organic pioneers. The power-related expansion of structures based on the use of allocative resources, the innovating abilities of the pioneers and the set of rules shows the conscious, active exclusion of others.

Moreover, while the literature on sustainability pioneers refers to the risk of growth phases affecting the sustainability and quality of products and company services (Schaltegger et al., 2016), the results of our study demonstrate that organic pioneers can benefit from a growing demand for organic products by using a second brand strategy to serve the rapidly growing demand for organic products without undermining their core market or neglecting their value orientation. Sales of organic products can be increased overall in this way, and the position of the company is strengthened – regarding both the changing overall market and an ongoing leading role in the organic market or natural food trade. Growth can thus be achieved while preserving the authoritative resources (image and networks) of the pioneers. In this context, an interpretive scheme also comes into play, which emphasises the importance of balanced values by labelling them as “organic growth” (FP-B), thus demonstrating that the organic pioneers do not want to become a “mass player”, nor want to be pushed into the background. Instead, the pioneers, through the interplay of awareness and further development of standards and proactive standard setting, for example, try to stay ahead of others while preventing a simple mainstreaming of the organic industry.

Although the growth of sustainable entrepreneurs is, according to Schaltegger et al. (2016, p. 275), “the straightest form of contributing to a sustainability transformation of the market” compared with other evolutionary processes, the present analysis shows overall that the impact and functioning of micro-political structures in social contexts with recourse to power is extremely complex. With the help of the politically structuring approach, insights were gained into the steering of corporate success in an emergent environment that was significantly co-designed by the organic pioneers. However, the co-design of structures also poses great challenges to the internal organisation (see also Grubnic et al., 2015) – challenges met by professionalisation efforts in organisational development after initial room to grow.

The classification of purchasing expertise or advice in a politically structuring sense is complex. It could be seen as an expression of discursive responsibility and self-reflection (“somehow I cannot do it alone”, BP-B) or as an attempt to help shape or shift the interpretation of professional management and good entrepreneurship. Furthermore, hiring the same consulting firms that advise other companies in the sector can reinforce certain values and business attitudes or counteract other understandings. This underpins sets of actors and habits (several actors in the market draw on the same set of ideas and the same basis of advice and values) and makes it clear that consultants and experts also have a significant power to be effective in terms of structural policy – by advising and steering content, selecting clients and strongly carrying knowledge, experience and values from one organic company to the next.

Regarding the literature on ecopreneurship and transformation (e.g. Schaltegger and Petersen, 2001), interestingly, the organic pioneers did not specifically pursue the strategy of conquering the mass market. Rather, they first tried to understand how to move towards the mass market as a relatively small enterprise. In differentiation from the scene member and mass market provider, our results prove the niche position of the pioneers, in which they repeatedly confirm themselves, for example, when they distinguish themselves from the (growth-driven) regime (the market at the meso-level) with alternative interpretive schemes.

In many statements, after initial scene affiliation, a consolidated niche provider role and the will to maintain specialisation are evident. However, marketability and a certain striving for profit or growth are indispensable to achieving entrepreneurial goals (especially the continued existence of the business and the sustainability transformation of today’s society). The specialist organic food and natural goods sector is also addressed as a niche threatened by the entry of large food retailers, but which should continue to exist and receive exclusive supply and support. However, to do justice to the simultaneous development of a mass market supplier, several of the interviewed organic pioneers additionally pursued second brand strategies to serve the mass market.

These organic pioneers move on the threshold between their niche and the mass market and want to enlarge their niche (more organic space) and increasingly “green” the mass market (set higher standards). Conversely, they do not want to give up their niche and only want to participate in the mass market to a limited extent (through higher market shares, through second brands and through cooperation in order to be bigger). Johnson and Schaltegger (2020) also highlight this in their literature review, in which transformations of markets are identified as one of the most crucial areas of attention for the research field in terms of “entrepreneurship for sustainable development”.

Contrary to the assumption that entrepreneurs can only sustain themselves or grow until they are bought out (by Goliaths), our results demonstrate that organic pioneers actively work against this themselves. They use plenty of resources and involve themselves in networks, discourse and the sector. Additionally, they exclude undesirable actors and deliberately refuse to cooperate if necessary. This demonstrates that they have an (active) strategy to avoid being swallowed (or defeated) by the competition. Secondary brands, for example, have proven to be a successful means of balancing the tightrope walk between niche and mass markets (and thus maintaining their value orientation). This confirms that organic pioneers pursue transformative strategies and have developed them proactively.

Our study thus also supports Loorbach and Wijsman’s (2013, p. 20) thesis that “a transition management perspective for business offers a way to systematically conceptualise this transformative strategy and pro-actively develop it, … in actively pursuing a transformative role, businesses can simultaneously help shift the market they operate in as well as transform their own business. In doing so, they can contribute to actively shape transitions towards sustainability”.

6. Implications, conclusions and limitations

This work aimed to understand the design elements that organic pioneer companies (micro-level) use to co-design transformative and co-evolutionary processes in their environments (meso-level). Micro-political strategies for co-designing structures and a socio-ecological co-evolution or transformation have hardly been analysed empirically thus far. Previous studies have mostly focused on business models (e.g. Zott et al., 2011) and rarely attempted to examine the strategic development of companies and markets and their interplay from a practice perspective (Loorbach and Wijsman, 2013). Hörisch (2018), one of the few exceptions with a study of the organic egg market that takes a more internal perspective using supplementary interviews with business managers, points out that “so far most MLP research is conceptual and exploratory, rather than using primary data”. He also identified “a knowledge gap on the roles of different actors in sustainability transitions”.

The present study used in-depth interviews with four business managers to analyse (from both micro-political and practical perspectives) which strategies were used to contribute to the change of structures in the organic market and how the companies themselves reacted to the structural influence of the changing environment. This was done considering the MLP and the approach of business models for sustainability by Schaltegger et al. (2016). In doing so, the study demonstrates how the different approaches can be linked and used in (sustainability) transformation research in the future.

Regarding theory and the literature on sustainability transformation and (organic) pioneer research, this paper offers important insights into how entrepreneurial actors contribute to transformation in business practice. Through the micro-perspective and the focus on activities in practice, it was possible to demonstrate how existing and growing in a niche and resisting the mainstream are actively shaped by entrepreneurs and managers. By investigating which strategies individual (also smaller) practice actors use and how they implement them, we have learned that there is a very broad spectrum of tools already used in practice and that it makes little sense to focus on the uniformity or frequency of tools in research.

As Geels (2011, p. 25) states: “Sustainability transitions are necessarily about interactions between technology, policy/power/politics, economics/business/markets, and culture/discourse/public opinion”. However, this multidimensional perspective has not been sufficiently considered in research on sustainability transitions. Our study fills this gap, as it demonstrates that the value-oriented organic pioneers interviewed have not only structurally influenced their market environment but also focused on their business success. In contrast to previous business model case studies and analyses of market transformations or environmental innovations, our results also demonstrate the importance ascribed by pioneers to activities in the social, public and political contexts (non-governmental organisations’ campaigns, educational work, resource protection and legal standards on embedding business in social, cultural or political contexts; see, e.g. Sadeghi et al., 2019). Moreover, the organic pioneers continuously raise expectations and standards (see also Hörisch, 2018), which is not only aimed at a singular competitive advantage but also concerns legal frameworks and societal interpretive schemes in general. This perspective enables the application of Schneidewind’s concept, which locates the business environment not only in the arena of the market, but also in the arenas of politics and the public sphere.

Conclusions for practice and policy can also be drawn from the results. For example, we identified strategies on how respondents deal with growth without losing their values: they seek external advice and expertise (in time); they focus on moderate “organic” growth; they spread their business risk more broadly, investing not only in one thing but also in external start-ups, in internally grown ideas (which are spin offs at low risk) and in direct and trustworthy partners (suppliers as well as customers and distributors). In this way, they make themselves as least dependent as possible on investors and banks – even if this means that their (purely financial) success could come to fruition less quickly.

These examples can be of great help to small businesses that may currently be struggling with growth and loss of value. Even after decades, organic pioneers promote “doing business together” instead of competing with other companies, and they communicate their values and work on them constantly and actively. However, they also participate in the drafting of regulations and create codes of conduct, even if this restricts their actions. In this way, our paper, like those of Schaltegger et al. (2016, p. 271) and Debor (2018), demonstrates that not only do large players have the possibilities and scope to influence and change the market and structures, but so do small pioneers, beyond the boundaries of their niche (or scene). The numerous opportunities and tools we have identified could also be applied in other sectors – at least by enterprises that want to operate in a value-oriented and sustainable manner – thus enabling companies to help shape their own environment and thereby compete in the long term.

Our study also has limitations. While the results are based on extensive in-depth interviews, they are only based on a small number of cases (four), all of which are in the same niche market (organic food). Other secondary data sources were used only to a limited extent (e.g. newspaper articles and company reports for selecting and preparing interviews). We refrained from using such data for data triangulation, as they cannot be understood and analysed on the same level as interviews conducted orally, which are characterised by spontaneity and sometimes unconsciousness. Moreover, the data used were purely retrospective. To obtain a more appropriate temporal perspective, organic pioneers could be accompanied and interviewed over a longer period. Finally, the research design of future studies could incorporate methodological elements from action research (e.g. MacIntosh et al., 2010) and participatory and ethnographic research (e.g. Jarzabkowski et al., 2015) and apply a strategy-as-practice approach (e.g. Kasim et al., 2021). Other research designs might allow to more comprehensively analyse causal relationships between market entry barriers and decision-making (e.g. Amoozad Mahdiraji et al., 2021) or use mixed qualitative-quantitative methods (e.g. Garousi Mokhtarzadeh et al., 2020).

Our findings also point to further research avenues and research questions. For example, we explained strategic challenges, such as building, maintaining and using resources to shape actor constellations and professionalise management. In the context of the latter two, the roles of (corporate) consultants and experts stood out. These are commissioned as additional and powerful actors and have unlocked the potential to influence structures. The role of these and other actors – or networks and initiatives in the agricultural context, for which Lans et al. (2018) call for more research – was not analysed in more depth in this study, which focused on entrepreneurial actions of the interviewed organic pioneer companies or studied the role of other actors from the perspective of the pioneers. Future studies could build on this and apply empirical research designs that include a broader involvement of different actors, such as in Debor (2018), as this appears promising for a more comprehensive understanding of sustainability transformations.