Applicability and selection of theories to the research context

Organizational theories can be defined “as a management insight that helps explain or describe organizational behaviours, designs, or structures” (Sarkis et al. 2011: 2). The present research context is characterized by the focal firms (larger firms) extending the sustainability requirements to suppliers to achieve a sustainable SC. Stakeholders and prior researches put emphasis on the larger companies who practice sustainability, and focus less on the SMEs, when the latter actually represents the largest percentage of the firms operating in a SC. Thus, the focal firms are expected to manage and control other SC members to engage in sustainability practices. However, the SC relationships are not a dyadic but a triadic relationship consisting of focal firms, direct suppliers and sub- suppliers. In addition, SC activities’ influence goes beyond the confines of the SC by affecting individuals and groups outside of the SC, who equally affect the SC activities. Furthermore, in a triad, there exists no contractual direct relationship between the focal firms and the sub-suppliers. As such, the focal firms only exert

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pressure on the direct suppliers, who in turn are expected to exert pressure on their suppliers (focal firm’s sub-suppliers) to engage in sustainability practices. However, when particular characteristics of SMEs are taken into account, poses problems for transferring sustainability requirements imposed by the large firms to their suppliers. This is because as discussed above SMEs face many challenges as a lack of financial and technical resources, capabilities, expertise and know-how to deal with sustainability issues. They face the dilemma of adopting sustainability requirements posed by their larger customers and at the same time transferring these requirements to their own suppliers. SMEs also face difficulties to engage and seek the cooperation of their suppliers in implementing sustainability activities since they lack the resources, skills and bargaining power (Meqdadi et al. 2012). In addition, SMEs lack formal management structures, and the SME owner/manager’s perceptions and values often affect the way they approach sustainability (Jenkins 2009). Therefore, the requirements for the applicable organizational theories in the present research context may be summarized as follows:

• An applicable theory that should provide a theoretical framework that acknowledges and explains how firms can change SC partners’ practices in accordance with the required sustainability standards.

• An applicable theory that should not be restricted to dyadic relationships. • An applicable theory that should explain additional key factors that

positively contributes to the firm’s objective of changing practices.

Evaluation of the well-established organizational theories reveals a major shortcoming with respect to their applicability to the present research phenomena. This is because they mainly provide explanations for behaviours and outcome in dyadic relationships. For example:

Resource-based view emphasizes the role of resources and capabilities in

forming the basis of competitive advantage (CA), and has been used to address the ability of firms to adopt sustainable practices resulting from internal capabilities/resources (Meixell and Luoma 2015). The resource is something that

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a firm possesses, which can include physical and financial assets as well as employees’ skills and organizational processes. A capability is something a firm is able to perform, which stems from resources and routines. As such, RBV focuses on factors internal to the firm that leads to a sustained CA, and ignores the interaction between a firm and its environment (Hart 1995). However, Delmas (2001) suggests that firms may be responsive to stakeholder pressure that brings access to resources to the firm. Nonetheless, supplier capability/collaboration can enhance a firm’s ability to adopt sustainable practices if a well-developed system is in place (Ehrgott et al. 2011), which cannot be guaranteed among SMEs in developing economies. NRBV is considered as an adaptation of RBV, but it considers the environment. However, it also falls short of the requirements for this study as it is only applicable where a symmetric relationship exists, which may not be guaranteed in the context of present research.

Resource dependency theory suggests that organisations must satisfy the

interests of various resource providers (Pfeffer and Salancik 1978; Sundin et al. 2008). It further suggests that in the SC, member firms should depend and collaborate to seek higher performance gains in the long-run instead of pursuing short-term benefits at the expense of others (Sarkis et al. 2011). That is a firm’s survival depends on its ability to access critical resources from the external environment (Pfeffer and Salancik 1978). The theory seeks to explain the behaviour of a firm in terms of its context, which is determined by two factors: (1)

the resources, defined as anything that is valuable to an organization, and (2) the

dependence of one firm upon another in gaining access to valuable resources (Pfeffer and Salancik 1978). ‘‘Dependence’’ confers a degree of power to the organization controlling the resources required by another (Ulrich and Barney 1984). Therefore, the theory considers the external stakeholders that have no contractual relationship with the firm to influence its behaviour. For example, Frooman (1999) describes how primary and secondary stakeholders using RDT can influence a firm’s behaviour in accessing key resources by determining whether or not the firm will receive the resources it requires using two pathways: direct and indirect. Direct influence strategies are those in which the stakeholder manipulates the flow of resources to the organization and indirect strategies are those in which the stakeholder works with an ally who manipulates the flow of

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resources to the organization by either withholding or using them (Frooman 1999). Withholding and usage strategies are discussed in detail in Section 3.7.2.5, page 99.

Institutional theory examines how external pressures influence organizational

actions by helping to explain how firms adapt to or adopt sustainable practices due to potential coercive, normative, or mimetic pressures. The theory argues that their institutional environment shapes organisations whereby organisations conform to the pressures of this environment and its constituents in order to obtain stability and legitimacy rather than the need for achieving economic efficiency (Dimaggio and Powell 1983; Sundin et al. 2008; Egels-Zandén 2014). Therefore, institutional theory may be used to explain the influence of various stakeholder types under differing institutional conditions (Sarkis et al. (2010). As such, the theory takes a broader focus on institutional fields, hence, multi-tiered SC can be considered as a part of such institutional fields (Grimm 2013). In the context of sustainability practices, the theory has been widely used to analyse and explain organizational responses to environmental and social issues (Hahn et al. 2010).

In relation to this study, institutional theory has shortcomings, which may limit its applicability. For example, government legislation influences sustainability practices by providing tangible incentives for firms to utilize some of their resources toward their stakeholders and be socially responsible and by applying penalties if actions are not taken, or standards are breached (rivers 2009). According to Hamann (2004), legislation increased the commitment to sustainability initiatives in the South African mining industry. Hence, the greater the amount of regulation, the more likely a firm to adopting socially responsible behaviours (Stone et al. 2004). This is logical and applicable in a developed country context, where satisfying legal responsibilities is a necessity of any firm seeking to be socially responsible and the mandatory nature of government legislation makes it exceptionally powerful (Aguilera et al. 2007; Yang and Rivers 2009). However, firms operating in SCs in developing countries with few laws or where laws are not enforced will be less inclined to adopt sustainability practices. In addition, legislations are only applicable to formal firms and not informal ones.

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This can also be seen by NGOs that influence sustainability practices directly by participating in partnerships and indirectly through lobbying. When engaged in partnerships stakeholders work together to find ways of minimizing the environmental and social costs of development (Hamann and Acutt 2003). According to Teegen (2003), there are three requisite conditions that must exist in order for NGOs to yield social capital. These are opportunity, motivation, and ability. Opportunity refers to being in situations where the NGO can use the skills and resources available. Motivation concerns the parties’ willingness to engage in social relations where there is no requirement to do so and ability relates to the capacity of the NGO to produce value. In developing countries, NGOs often do not have the financial resources of their counterparts in developed countries to implement their usage strategy. They are also financially poor and lack technical skills, which negatively impacts their ability to engage in partnerships with firms and their role of translating complex scientific issues into problems that can be understood by the public if they are to pursue lobbying strategy, respectively (Yamin 2001; Teegen 2003; Yang and Rivers 2009).

Finally, employees’ power: employees are interested in human rights, equal opportunities for women and minorities, the training provided, and the health and safety conditions in the workplace (Graafland et al. 2004). Hence they are an important driver of sustainability initiatives through their actions supporting progressive labour relations policies, safety standards, and job security and creating an organizational climate for sustainability (McWilliams and Siegel 2001; Aguilera et al. 2007). In developed countries, their expectations may motivate a firm to adopt sustainability initiatives in an attempt to entice employees. However, in developing countries, employees’ expectations about their employers are low, due to high unemployment, and employees are considered expandable. The workers are not only poorly paid but fear loss of employment as such are unlikely to take action that could lead to accusation by their employer (Nelson et al. 2005; Yang and Rivers 2009).

Stakeholder theory is a system-based view of the firm and its environment which

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during managerial decision making (Nejati et al. 2014). The theory suggests that firms in producing externalities affect stakeholders, both internal and external to the firm, which often cause stakeholders to increase pressures on firms to reduce negative impacts and increase positive ones (Sarkis et al. 2011). As such, stakeholder theory offers a foundation for understanding why firms engage in sustainability practices as a result of stakeholders’ influences and demands. Whereas legislation requires some SMEs to establish formal programs to mitigate their environmental impacts, stakeholders can also promote or put pressure on small firms to practice sustainability. Given the growing environmental problems throughout the world and increased environmental awareness among stakeholders, it is expected that key stakeholders for SMEs would be more concerned about the sustainable practices of firms, hence favouring firms engaged in sustainability practices (Nejati et al. 2014).

According to Jenkins (2006), stakeholder theory offers a framework in which SMEs and sustainability can be better understood. Furthermore, SMEs resides within their residential areas and are closely associated with their stakeholders due to their smaller size, as such the stakeholder perspective encourage a harmonious commercial and social relationship with different stakeholders, which is an essential asset to SME owner/managers (Post et al. 2002). Additionally, the use of stakeholder theory has been shown as a helpful theoretical framework within which SMEs themselves are able to make sense of their activities (Murillo and Lozano 2006). This study aims at providing insights into the stakeholders’ influence on SMEs to engage in sustainability practices in a developing economy, namely, Zambia.

Having examined the different theories that may be employed in examining stakeholders in SSCM, the following section will explore stakeholder theory in more detail from a multi-authors perspective. Stakeholder theory facilitates an examination of all different players and their relationships in a SC, whether it be economic, political, religious or social. Additionally, CSR (as sustainability was formerly called) in SMEs is mostly explained using stakeholder theory (Vo 2011), and in study by Choongo et al. (2017) conducted in same locality as this study

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and in which stakeholders were relevant employed stakeholders theory. However, previous authors only considered large firms and former SMEs, whereas this study examines both formal and informal SMEs. Therefore, stakeholder theory is pivotal focus of this study investigating stakeholders and sustainability practices by SMEs in the SC.