Business, society, and the need for stewardship orientation

Organizational change involves optimizing a firm’s sustainability performance. The purpose of this paper is to explore how strategic orientations concerning the interface between business and society influence organizations’ sustainability performance. To explain how different strategic orientations – especially stewardship and instrumental orientations – impact sustainability performance, dynamic managerial capability theory is explored.

Ours is an inductive, qualitative study based on the template analysis of interviews conducted among sustainability managers from stock-listed multinational corporations headquartered in the Eurozone.

Corporations with a stewardship orientation develop different dynamic managerial capabilities underlying sustainability performance than corporations that apply a more instrumental orientation. Results also show an “in-between” position: an equidistant orientation.

This study proves the emergence of different dynamic managerial capabilities that depend on companies’ strategic orientation, but follow-up research based on appreciative inquiry is needed to investigate the development of these capabilities over time.

For achieving a higher level of sustainability performance, a stewardship orientation offers a stronger foundation than an instrumental orientation. Also companies with an equidistant orientation have a better sustainability performance than companies with an instrumental orientation, but based on a more central corporate level. The strategic orientation must be grounded in the development of fitting dynamic managerial capabilities that include an emphasis on shared cognition of long-term objectives, inclusion of stakeholders and setting objectives. Also strong internal and external ties, leadership of the CEO, educational background and how to deal with lack of knowledge are important aspects of managerial social and human capital.

Due to its focus on the sustainability performance of companies and the identification of the supporting dynamic managerial capabilities, this paper is socially highly relevant.

Previous research has focused on strategic orientation, but little to no research has investigated how various strategic orientations toward the interface between business and society impact sustainability performance or what role dynamic managerial capabilities might play in the related change process.