Strategies for sustainability initiatives: why ownership matters

Abstract

Abstract Purpose The purpose of this paper is to explore how the risk management objectives of the firm's owners influence the organization's sustainability strategies with a particular focus on new sustainability related initiatives. Given shareholder objectives direct firm attention to refine organizational focus, the paper's main premise is that ultimately it is the ownership structure of the firm that sets the agenda in terms of sustainability initiatives. Considering the broad distinctions between family/founder ownership, corporate ownership and institutional ownership, the overall ownership structure of the firm will strongly influence the motivations and temporal considerations of the firm vis-à-vis sustainability related initiatives. Design/methodology/approach Within a resource-based view, the authors link first-mover advantages and sustainability strategies as a reflection of owners' perceptions of risk management and underlying motivations. Findings The authors postulate that firms with predominant family/founder ownership undertake sustainability-related initiatives as patient investors based on their ideological motivations, while corporate owners undertake initiatives with capabilities building orientation, with institutional owners adopting sustainability-related initiatives as a risk mitigation strategy. Practical implications Managers charged with developing sustainability strategies may add a further consideration, namely taking into account the risk management objectives of the owners of the firm, in choosing and justifying the type of sustainability innovation. Originality/value This conceptual paper provides a novel link between the first-mover advantage of sustainability initiatives and the ownership and governance of the organization. It contributes to the limited strategy research on ownership impact on sustainability initiatives and provides guidance to managers in developing appropriate strategies.

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