Inside-out perspective

E) A management toolbox for coping with fragmented sustainability governance is derived but needs further refining and adaptation to corporate needs and capabilities

Paper I provides an overview and categorization of management approaches (coordination, convergence & integration and meta governance) which can be used by governance makers to proactively deal with unwanted and negative effects of fragmented sustainability governance (Heidingsfelder & Beckmann, 2019). In more detail, the management toolbox provides instruments to all types of governance makers such as governments, civil society organizations and also companies. Hence, the management toolbox offers initial guidance for companies on how to proactively cope with negative effects of fragmented governance in their role as governance makers. However, the majority of the identified management tools are so far primarily tailored for and used by governmental bodies, NGOs and international organizations (Heidingsfelder & Beckmann, 2019). Although companies are now equipped with an initial guidance to address fragmented sustainability governance, they still need to translate and potentially adapt those instruments to their specific corporate needs and capabilities. Furthermore, the toolbox focuses on governance makers. Therefore, companies which are still greatly functioning as governance takers need to find additional management instruments to cope with downsides of governance fragmentation in their role as governance takers, e.g. considering the handling of multiple sustainability schemes or an overwhelming burden of audits (Heidingsfelder, 2019). To complicate matters further, successful management instruments need to be adjusted to the configuration of fragmented sustainability governance (Paper I) in the respective context of the business firm.

Against this background, companies are encouraged to refer to existing management instruments and routines in other business contexts (e.g. considering supply chain management practices) to further develop and ‘customize’ their very own set of management instruments to deal with fragmented sustainability governance. Put differently, firms can foster the intra-firm transfer of knowledge and best practices to cope with the rather novel phenomenon of fragmented sustainability governance (see Spraggon & Bodolica, 2012; see van Wijk, Jansen, & Lyles, 2008). Again, the ability to manage knowledge within the firm is of great importance

and an adequate knowledge management system can help to store and provide guidance for management approaches to deal with governance fragmentation.

F) Linking the dual role of companies as governance makers and takers with aspects of strategic and operational management

Paper I, II and III employ the distinction of companies as potential governance makers and takers (Beckmann et al., 2014; Eberlein et al., 2014; Scherer et al., 2014) and their possible interlinkages with fragmented sustainability governance. Yet, the challenging question remains how to connect these two roles to aspects of operational and strategic business management. This section therefore elaborates on selected linkages between the role of governance taker and operational management and between governance maker and strategic management, respectively.

Starting with the perspective of governance making, Paper III argues that companies, in their role as governance makers, can be engaged in multiple discourses to influence rule-finding processes (which issues and topics require regulation?) for their respective value creation activities and sustainability challenges. On the one hand, this might resemble a charming possibility for business firms because the engagement in rule-finding processes offers considerable leverage on the resulting (or missing) rule-setting processes. In other words, companies could proactively use the possibility to engage in rule-finding discourses to put their topics and issues on the agenda. Hence, the engagement of the firm in rule-finding discourses can be linked to the strategic management of the business firm, as companies can use this engagement to impact governance in the long run and thus shape the ‘rules of the game’ according to the firm’s interests. On the other hand, it remains questionable if a) the majority of companies is willing to actually engage in rule-finding processes – as this might inter alia imply a need for more transparency and opening up to external stakeholders and potentially even competitors – and if b) companies are capable to simultaneously engage in different rule- finding discourses, as this might include varying languages, cultural perspectives, values and assumptions in the respective discourse arenas (Heidingsfelder, 2019).

Moreover, considering the actual development and implementation of sustainability governance approaches, Paper III emphasizes that companies can contribute to rule-setting processes, e.g. by engaging in individual and/or collective governance approaches. By doing so, companies can (at least to a certain degree) shape the resulting sustainability schemes and standards and match them with their respective governance needs or wants. Again, the engagement of companies in individual and/or collective rule-setting activities can be

considered as an important field of strategic management. Here, companies have to some degree the possibility to create or choose specific governance approaches for their respective governance needs which might considerably impact the firm’s ability to take value chain responsibility and successfully run its value creation activities (see Moratis, 2016). Companies are therefore encouraged to integrate both aspects of rule-finding and rule-setting engagements into their strategic agenda and thus allocate more importance and resources to these rather novel forms of engagement. Eventually, governance making could even resemble an element of gaining a competitive advantage which again emphasizes the relevance of governance making for strategical considerations in the firm.

In addition, the potential integration of rule-finding and rule-setting engagements into strategic considerations of the business firm relates to the wider debate on a potential political role of the business firm (as outlined in Paper III). Given the engagement of companies in various forms of rule-finding and rule-setting activities, a key managerial implication of this dissertation is to rethink the actual role of the business firm. In more detail, this dissertation encourages business practitioners to add aspects of a political role of the firm (Mena & Palazzo, 2012; Pies et al., 2014; Rasche, 2012; Scherer & Palazzo, 2007; Scherer et al., 2009; van Oosterhout, 2010; Whelan, 2012) into the organizational thinking and understanding of the firm. By doing so, practitioners might find more adequate ways to succeed and take VCR in light of (fragmented) sustainability governance.

Regarding the firm’s role as a governance taker, Paper III shows how companies can face detrimental effects of fragmented sustainability governance for their conventional value creation activities as well as their capability to take value chain responsibility. In order to deal with negative effects of fragmented sustainability governance, companies need to understand the drivers behind governance fragmentation (which is covered for one commodity sector in Paper II). Moreover, they need to find and adapt instruments to cope with governance fragmentation, e.g. referring to structuring decision processes for choosing sustainability schemes or streamlining internal processes between different departments that are affected by sustainability governance requirements (e.g. the purchasing department and quality department). Hence, governance fragmentation can be considered a worthwhile field for operational management. However, although companies might be able to optimize and refine their operational management responses to fragmented sustainability governance in a rule- following context, Paper III argues that long-term and fundamental improvements need to be found in the rule-finding and rule-setting processes. Therefore, companies are once again

encouraged to participate in precisely these processes and treat them as an issue of strategic management.