Resilience for sustainability as an eco-capability

2.1 Dynamic capability

Dynamic capability theory arises from the need to explain how companies react to an environment that is constantly changing. This theory attempts to understand how changes in the macro environment interfere with organizational changes and how organizations can keep up with such changes (Augier and Teece, 2008). It aims to provide an understanding of the differences in companies such as the capability to adapt that some have shown and the difficulty of others to adapt (Teece and Pisano, 1994). The support of unique processes and skills by the individuals who are part of the company explains these differences (Augier and Teece, 2009).

Another explanation for differences in the dynamic capabilities is how evolved some process are (Zollo and Winter, 2002). The coevolution of tacit knowledge over experiences, the knowledge shared with employees about the impact of their acts in the organizational competence performance and the codification of knowledge are some indicators of the development of different dynamic capabilities in companies (Zollo and Winter, 2002). According to the authors (Zollo and Winter, 2002), these organizational activities are responsible for developing and adapting processes and routines, allowing the ability to manipulate resources into strategic value creation (Eisenhardt and Martin, 2000).

Strategic value creation is essential in highly competitive times, creating new products, processes, new organizational forms and business models. The consequence of these are the implementation of new capabilities to the long-term competitiveness as the maintenance and the ability to conduct a dialogue with employees and customers and the development of the ability to integrate their knowledge in processes, products, services and business strategies (Ayuso et al., 2006).

These capabilities require processes that encourage communication and openness to change in identifying future risks (Ayuso et al., 2006). The management skills to perceive risks, opportunities and other changes that could influence operations are required, and these mainly achieve the realization of changes in routines, decreasing organizational vulnerability (Teece, 2007).

As pressure grows to embrace sustainability, so does the competition to define sustainability and the scope of its embrace (Roper, 2012). Sustainability is an aspect that is part of the organizations’ environment, so organizations need to build eco-capabilities to deal with sustainable demands. Features such as the commitment of managers, directors and the president for environmental issues, flexible labour and a shared sense among members about the benefits of sustainable activities are essential for developing eco-capability in human resources (Gabler et al., 2015).

Dynamic capability believes that competitive advantages can be achieved through high organizational process knowledge and the ability to manage resources (Eisenhardt and Martin, 2000). The decision of following sustainability as a strategic value requires the development of capabilities that constantly assess the implemented results and solutions. The dynamic capabilities rise as a potential to solve sustainability problems (Barreto, 2010).

As maintaining long-term sustainability is a critical component for organizations (Fiksel et al., 2014), the sustainable practices need adaptability. Resilience can be a dynamic capability that brings new skills and abilities to help in the sustainability of organizations (Chousa and Castro, 2011). With resilience, companies can renew their organizational practices well in advance (Chousa and Castro, 2011), as the concept allows the monitoring and assimilation of changes before they compromise the organization’s future (Fiksel, 2003). Innovating sustainable actions has become a philosophy, and resources are managed to create a favourable environment for organizational adaptations to new environmental conditions that have been imposed (Eisenhardt and Martin, 2000; Lengnick-Hall and Beck, 2005). Figure 1 summarizes and shows the different practices of each kind of dynamic capability.

Figure 1 explores the loop on which the paper theory relies. Dynamic capabilities can be expressed by shared and decoded knowledge that an organization could absorb through constant and past occurrences (Eisenhardt and Martin, 2000; Zollo and Winter, 2002; Ayuso et al., 2006; Teece, 2007). This allows for prevention and attempts to build reliance under different scopes. The indicators can be explicit when an organization presents the ability of holding a dialogue and understands stakeholder needs regarding the business process. In addition, when top executives pursue these capabilities to foster changes, complex adaptation mitigation and, of course, resilience building, occurs. When examining the green area in Figure 1, it is possible to observe the similarity of the actions undertaken by dynamic capabilities and eco-capabilities (Chousa and Castro, 2011; Gabler, Richey and Rapp, 2015). In a way, this possibly affirms that a sustainable context forces an organization to develop capabilities that could make them resilient to future environment.

2.2 Resilience for environmental sustainability

Maintaining sustainability management requires constant updating of the means to meet it because there no set of organizational practices that symbolizes the full compliance of sustainability (Winnard et al., 2014). The organization needs to create internal ways to maintain a sustainable path under construction. There are four pillars of organizational resilience for sustainability: diversity strategies, adaptability, cohesion and eco-efficiency (Fiksel, 2003).

The first component of resilience for sustainability comprises the long- and short-term strategies that can be used to circumvent the risks that climate change imposes on the future maintenance of many organizations’ activities. The long-term business planning needs to consider climate change that could potentially affect the company (O’Connell and Hou, 2015). For this, companies increase their knowledge of the natural system and develop plans to mitigate threats (Linnenluecke and Griffiths, 2010).

Mirfenderesk and Corkill (2009, p. 157) stated that there are many reasons that require new forms of strategic thinking when dealing with the issue of climate change, such as:

• Predicted changes to the characteristics of the socioeconomic and environmental systems owing to climate change are highly uncertain.

• Climate change happens along with other local, regional and global changes. How to account for these future changes and how they will interact with climate change to produce an impact is a problem that needs to be addressed.

• Some of the social and ecological impacts of climate change-induced flooding cannot be easily measured by monetary terms alone. Therefore, it is difficult to compare these impacts with those that are quantified in terms of monetary value. Finding a common metric for all types of effects remains a problem that needs to be addressed (Mirfenderesk and Corkill, 2009, p. 157).

In addition to the preparation of plans, frequent updates or re-evaluations are necessary to identifying possible improvements in processes (O’Connell and Hou, 2015). Knowing how tasks are performed internally helps senior management to evaluate the strategies implemented because it is real information and it allows seeing the operational gaps that can pose risks to the organization.

Possessing accurate knowledge of the external reality of the organization also helps avoid surprises in performance. The external reality can be understood through historical accidents caused by companies in the same sector or other sectors to benefit the understanding of current risk reviews (Crichton et al., 2009). Thus, the development of new solutions to problems can be magnified (Juechter et al., 1998).

Adaptability is another component of resilience and involves the ability to learn, decide and act (Bettini et al., 2015). Learning can be developed in a participatory management based on shared decision-making, information sharing, consultation with the various hierarchical levels and sharing authority (divided power) and risks (Galappaththi and Berkes, 2015). The organizational communication becomes an essential tool for the company to be successful in gaining information that can bring solutions to the problem (Bettini et al., 2015).

In this participatory approach, different sources of information can be consulted as essential practice for building resilience (Aldunce et al., 2015) Civil organizations, governments and customers can contribute to the problem solving and revitalization of a business, so there is the need to strengthen relations with various institutions (Aldunce et al., 2015). Working with different networks of those common to the organization increases the variety of experiences that add in building resilience (Aldunce et al., 2015).

This begins the building of the ability to decide what best reflects the new knowledge acquired on shared goals and action plans (Bettini et al., 2015). The ability to act is linked with the creation of new ways for the implementation of the solution. To facilitate this implementation, it is necessary to find support from those involved in the change processes; collaboration increases the chances of a result (Bettini et al., 2015). A resilient business depends on the development of talent inside and outside the organization to generate responses. Thus, alliances and partnerships are critical items, and need to be sustained (McCann et al., 2009).

Cohesion is another component of resilience for there to be sustainability, and it can be understood as something that is shared between people resulting in the formation of a group. Within the organizational environment, managers seek to produce cohesion in his/her employees in support of organizational objectives and results.

A mean of producing such cohesion is using the organizational culture (Freitas, 1991) in an extremely sophisticated control mechanism, because it seeks to direct the behaviour of its employees with the construction of values, beliefs and convenient conditions for the organization to achieve its results.

The behaviour of leaders is the concrete expression of the organizational culture, and it is how employees learn how they should act. The challenge is to act in the way that directs the behaviour of employees to the values considered most important. It is based on the example set by managers that employees draw what is important to the organization (Schneider et al., 1994).

Cohesion is particularly important to disasters, as they can potentially become the basis for successful models and programmes that can be put into place to be achieved (for instance, disaster resilience). Hence, identifying levels of resilience and cohesion in communities that have experienced disasters has the potential to inform us about the significance of these concepts to disaster preparation and recovery (Townshend et al., 2015). In the same direction, cohesion of thinking and action can build resilience on organizations to promote eco-efficiency, one of the dynamic capabilities towards sustainability.

Eco-efficiency is responsible for incremental innovations to reduce emissions that generate greenhouse gasses; the use of hazardous substances; waste; and the consumption of electricity, water, fossil fuels and raw materials (Aguado et al., 2013). The reduction of negative external effects of production results in the company gaining the approval of society and reducing the costs of its business activity (Chornomaz et al., 2016). In the case of climate change, for example, eco-efficiency improvements may come too late to prevent extraordinary ecological, social and environmental dislocations. In the event that global warming (or some unforeseen catastrophe) is inevitable, the only successful strategy will be adaptation, transformation and evolution. To the extent that eco-efficiency investments embitter industrial systems to undermine resilience pathways, they may be counterproductive (Korhonen and Seager, 2008).

Table I summarizes the practices found in the literature review for each pillar.

4.1 Research design and cases

This study adopts the multicase study approach (Table II), which is appropriate when investigating “how” questions related to contemporary issues (Eisenhardt, 1989). The sampling strategy adopts a purposeful selection of a manufacturer’s large companies, whereas the dynamic capabilities concepts are more likely the observed ones such as path dependence and routine-based processes (Teece et al., 1997). However, in terms of industry and geographical scope, the study seeks maximum variation, which means that instead of selecting random cases from the population, it chose contrasting cases (Strauss and Corbin, 1998). This allows the study to understand the same phenomenon in distinct environments.

4.2 Research protocol

The research protocol represents the general rules respected by the authors to guarantee the study’s reliability. The protocol has an overview of the research project and contains field procedures and a script for collecting data and a guide to report the data. These sections were selected based on the study by Yin (2013). The first section (overview) intends to explain the main purpose of the research.

To accomplish the research goal, four interviews with managers of four different enterprises were conducted. The researchers decided to first define who would be the managers. Determined by connections, the researchers chose managers known to them or to other researchers. Second, they made a decision about the necessary resources, such as a computer and a recorder, required for conducting the interviews. The next step was to schedule the interviews according to managers’ availability. The two sub-sequential items explain in detail the data collection process and analysis (Langley, 1999) as follows.

5.1 Technological capabilities

Constructing long-term plans that take climate change into consideration is a resilient action (O’Connell and Hou, 2015). Companies 3 and 4 had long-term plans that were no longer than six years to implement actions to support the preservation of forests and the reforestation of deforested areas: “We made a commitment to halve deforestation in our soybean chain by 2020 and by 2030 end any kind of deforestation in our chain” (speaking of the management 3, 2016).

Company 4 has a current long-term plan for sustainability. According to Manager 4, this plan began in 2010 and has four pillars: packaging, agriculture, water and climate. The packaging pillar refers to two main fronts. The first one is to ensure that used containers are suitable for recycling and are composed of more sustainable materials, the second front is to ensure packaging recycling at the end of its life cycle.

The agriculture pillar is the only one that does not have clear goals to perform, that is why detailed goals for this area began development in 2016. One of the main initiatives for the agriculture pillar is taking care of the most important raw material: milk and milk protein. The project is still at an early stage and its long-term goal is protecting groundwater so that milk suppliers have availability and future quality of water.

The water pillar seeks the preservation of watersheds and ecosystems, especially the basins that the company makes to perform abstraction of water for bottling and marketing. The climate pillar is focused on the emissions issue. Company 4 aims to reduce 50 per cent of its carbon emissions of its entire value chain, reduce 60 per cent of its energy consumption in industrial plants and eliminate its cooling systems’ gases containing hydrocarbons. Company 4 aims to achieve all these goals by 2020, as its plan stated in 2010.

Reduction of carbon emissions and the preservation of water sources are the main goals of the long-term plans. Thus, the long-term plans aim is to contribute to the deceleration of climate change. The recent achievement of long-term plans for sustainability suggests that a new drafting process was introduced to enable the sustainability strategy. Thus, the long-term plans for sustainability is a technological capability that contributes to the sustainability of the company (Gabler et al., 2015).

Another resilient action is to update those plans by reviewing their goals. The plans have been recently implemented at Companies 3 and 4. Therefore, only Company 4 held updates to better define previous goals that were not so detailed. This resilient action is within the technological capability (Gabler et al., 2015). According to the authors, it is part of the eco-capability to use resources to evaluate the performance. Thus, the update is a way to evaluate whether the established plan continues consistently with the preservation needs of the environment for the company and for the world.

As for efficient eco features implemented by the companies, there was great concern for optimizing the use of water and energy, especially the energy savings, as it deals with the emissions factor. These actions are considered eco-efficient and a technological eco-capability. The second biggest concern seen by the discourse with the managers is the fulfilment of legal demands. Some eco-efficient actions are not implemented because of legal reasons. The example comes from Company 4, which being in the food industry, agreed that the use of recycled packaging in their products may compromise food safety rules set by regulators. Respecting the laws and regulations is eco-efficient. These resources provide information to employees about the progress of implemented sustainable processes and help to build technological eco-capability in organizations according to Gabler et al. (2015). Under an active perspective, it seems that these actions generate capabilities that support organizational sustainability continuously through resilience (Table IV).

5.2 Organizational capabilities

Participatory management through dialogues with people from the same area or different areas and hierarchies and meetings conducted fortnightly, monthly or quarterly are another eco-capability. All organizations surveyed were open to receiving suggestions for improvements in its operations by their stakeholders. This practice is seen as an organizational capability. Dialogues with stakeholders is an important source to improve sustainability (Gabler et al., 2015).

Manager 1 cites the initiative by the environmental staff to promote a campaign throughout the organization by collecting ideas for improving the organization’s sustainability. One of the highlights comes from an employee who suggested to reuse an effluent generated because of the machine lubrication process: “One was the reuse of effluent that we generated in the lubrication of machines process and equipment, buying a filter type, we could reuse the effluent”. If the campaign had not been performed, probably the environmental team would not be aware of this reusable option.

Another example from Company 1 was the institutionalization of an internal environmental committee where directors from all areas participate. The committee is responsible for assessing whether the decisions taken are in line with the principles of sustainability. This initiative was a suggestion of Manager 1. The same campaign that made it possible to reuse an effluent generated the committee idea:

Environmental committee that is just made up of people (director of marketing that has to do with sales, industrial director on the operational side, the HR directors, and technical directors that oversees engineering, quality, environment) committee evaluates the decision making geared to sustainability (speaking of Management 1, 2016).

In Company 2, a similar initiative was founded. The environmental staff have promoted a project called “Eyes Open” in which different departments can suggest improvements on various environmental aspects. This programme works as follows: fliers are left in different sectors of the factory so that people can leave their suggestions for environmental improvement. Every day the environmental team collects the filled-out fliers, evaluates the suggestions and thus decides which to implement.

Among the suggestions for improvement achieved by the “Eyes Open” campaign in Company 2, a popular idea that was implemented by Manager 2 was focused on the economy generated by the disposal of chemical containers. Manager 2 described that the production line personnel were given chemicals in small packages. Therefore, they suggested purchasing the product in large packs and the subsequent distribution in smaller amounts gradually. The decision to implement this idea generated savings of 400 kg with packaging disposal for the company:

The staff line used a chemical that was a tiny package so they gave the idea of buying a larger pack and go segregating the product gradually. Instead of people generate waste 500Kg, we started to generate 100 kg (speaking of Management 2, 2016).

Company 3 decided to implement a long-term plan to end any kind of deforestation in its soy production chain on the basis of the demand of their European customers, mainly requiring the certification of grain purchasing and also because of the goals of large enterprise customers seeking zero deforestation. Civil associations also exerted pressure to conduct an increasingly sustainable Company 3:

Our customers were also doing this kind of commitment, customers who use our products worldwide. We also needed to collaborate with the goals of these clients. Moreover, there is strong external pressure from civil society seeking zero deforestation […] we have many customers who demand from us soy sustainability, major customers such as Unilever, Danone and BRF and we try to meet this kind of demand also they are important stakeholders for our business in Brazil. In addition, also have external customers, mainly in Europe that demand of people also initiatives and sustainable positions. Moreover, certification process which is a demand from Europe who want a guarantee that our soy complies with indicators that are even above the law (speaking of Management 3, 2016).

Company 4 has a virtual platform with global access (i.e. all employees can access this platform called “Voice Manifest”). It is through this platform that employees can suggest improvements to existing projects or suggest entirely new projects.

This platform had a positive impact in a project coordinated by Management 4. A person on the platform “Voice Manifest” had criticized the selective collection project; through the comment, the group responsible for implementing it developed improvement actions in the project. The actions included the redesign of waste disposal sites, e-mails explaining about what was or was not recyclable and an explanation the sorting of waste for cleaning staff:

One of the people of the divisions suggested that we were not doing here in the office effective communication of the issue of selective collection, which was messy and they did not know where they were going the materials. So it was done all a communication plan, not only e-mail communication, but reimagine the places where are the bins, put what’s what will not, had an entire communication plan with the cleaning staff to do this (separation the garbage), this was one of the points that came to Brazil (speaking of Management 4, 2016).

Exchanging information with competitors is another action of resilience, particularly for getting information about incidents caused by others companies to prevent them from happening. Companies 1, 2 and 4 have acquired this information through benchmarking with other people from other companies, industry events or by participating in forums and associations; even the media is used to hearing about this kind of information. These benchmarking strategies made by companies are a favourable organizational eco-capability (Gabler et al., 2015).

Involvement with universities and research institutes is configured as information sources in Companies 2, 3 and 4 to discover new industrial processes to increase efficiency and reduce the natural impact. Maintaining close relationships with clients is an important information source for Company 3 because through this relationship, it can keep up with the demands of sustainability required while improving their value chain.

All these sources of information contributed to how companies decide on issues for improvement regarding sustainability. The industries have implemented environmental committees, adopted long-term plans and improved operations, which demonstrate the capability of incorporating knowledge from the stakeholders into processes and strategies, thus innovating them for sustainability (Ayuso et al., 2006) (Table V).

5.3 Human capabilities

To develop cohesion among members of the organization is a resilient action, because of the sharing of values and generation of commitment (McCann et al., 2009). The leaders’ behaviours embody being subjective and provides organizational members an example of how to act and think within the organizations (Schneider et al., 1994). Managers 1, 2 and 4 reported the behaviour of the leaders to be that of role models with organizational thinking. Company 4 specifically has shown a strong organizational culture with values and sustainable principles rooted in the daily lives of all employees and encourages employees to always look for ways to improve the sustainability in the company. Features such as commitment of managers, directors and the president towards environmental issues and shared sense among members about the benefits of sustainable activities are part of building sustainable human resource capabilities (Schneider et al., 1994; Gabler et al., 2015).

In the dialogues with Managers 1 and 2, the importance of leadership involvement with sustainable issues became clear. Company 1 is a family business, and despite being large (about 7,000 employees), the owners are always present in the company. Manager 1 reported that they have grown within the organization, and they know even the technical ways to impress the leadership:

Our directors and the owners are very involved in environmental issues so that just gives you discuss with him technically. We had a problem at the station, the owner was passing by and said, “do this and that.” They grew up in the business and know everything, they are very involved (speaking of Management 1, 2016).

Another example of leadership is in the daily intermediate team political talk about the environment and safety. The environmental team is responsible for developing a monthly booklet and a section is read daily by leaders along with their subordinates. This booklet has a different theme each day about work safety and environment:

We have some tools, the simplest calls DDSMA (daily dialogue safety and environment). Every month end, we have prepared a booklet, every day with a different theme both work safety as environment and every day before starting the work shift is the first, second or third shift. The leader of the area, the people of the area, they see this DDSMA so that they all have an interest, something 15 or 10 minutes for everyone to have a daily training of safety and environment, is the same dialogue (speaking of Management 2, 2016).

Company 3 has sustainability well institutionalized. This shows that the values of sustainability have been adhered to by the company’s management, as seen in this transcript:

We have a corporate person responsible for the environment, in all our factories we also have a person responsible for the environment. These people in the factory do not report to me, they report to this corporate environment manager. We have other people responsible for sustainability with a different scope, they report to another manager. There is also the sustainability manager who is corporate who at some point works together with other sustainability people from other businesses and at some time totally separate (speaking of Management 3, 2016).

The culture of Company 4 involved the role of inculcation sustainability behaviour in its employees. According to Manager 4, sustainability is present in the company’s history, and the first president of the company reinforced the idea to care about not only what happened at the factory gates, it is also necessary to think beyond. His successor declared that a company could not survive in a desert of resources and people. The current president reinforced the issue of a double project involving social and environmental aspects in all organizational processes and throughout the value chain.

When an employee enters Company 4, it goes through an integration and process of immersion in the culture and the main points of sustainability valued by the company. Culture is considered an internal north for developers to consider how continuously to improve internal sustainability, as the transcript of Manager 4 shows: “we believe that (sustainability) is part of day to day, much more than conceptually, we believe in sustainability throughout our value chain, in all the processes that we do” (Table VI).