The formulation and implementation of sustainability ...

The formulation and implementation of

sustainability strategies in the cosmetics

industry:

A comparative multiple case study of MNC’s and

SME´s

BACHELOR THESIS WITHIN: Business Administration

NUMBER OF CREDITS: 15 hp

PROGRAMME OF STUDY: IM & SED

AUTHOR: Rebeka Matukevica, Ekaterina Piitulainen & Alina Yassin

JÖNKÖPING May 2021

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Acknowledgments

We thank every person who took part in helping and guiding us throughout the way. We want

to express our great respect and gratitude to our tutor Gershon Kumeto who put in a

considerable effort and invested much time in our work. We appreciate every help and piece

of advice given by our tutor. In addition, we want to thank the teachers who supported us with

workshop lectures and provided excellent feedback about different aspects of the study. In

addition, we want to thank program examiner Anders Melander for the great course structure

and instructions which guided us throughout the process. We want to emphasise that the help

and support provided by every professor empowered us to complete the research and provide

future readers with relevant information. Moreover, we want to thank case companies for

allowing us to collect data to complete the study.

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Bachelor Thesis in Business Administration

Title: The formulation and implementation of sustainability

strategies in the cosmetics industry

Authors: Rebeka Matukevica, Ekaterina Piitulainen and Alina Yassin

Tutor: Gershon Kumeto

Date: 2021-05-24

Key terms: sustainability strategies, formulation and implementation of sustainability

strategies, cosmetics industry, MNC, SME

Abstract

Background:

Today as awareness about sustainable development increases, more attention is drawn towards

sustainability strategies of the companies. However, prior research has not investigated the

formulation and implementation of sustainability strategies within companies of different size

and scope as existing studies are skewed towards the perspectives of large firms even though

SMEs mark up more than 90% of the market.

Purpose:

The main objective of this study is to gain an in-depth understanding of sustainability strategy

formulation and implementation within the cosmetics industry from the perspectives of both

MNCs and SMEs.

Method:

To fulfil the purpose of the study, exploratory qualitative research is performed, using a

multiple-case study design where several cases are selected to develop a more in-depth

understanding of the research topic.

Conclusion:

Based on the collected data, it can be concluded that sustainability strategies are initially driven

by an environmentally conscious founder who has translated personal beliefs into the

organizational culture. Furthermore, the analysis results show the relationship between the

driver of sustainability with formulation and implementation mechanisms applied within the

company.

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TABLE OF CONTENTS

INTRODUCTION.................................................................................................................... 1

1.1 BACKGROUND .............................................................................................................................................. 1

1.2 PROBLEM DISCUSSION .............................................................................................................................. 3

1.3 RESEARCH PURPOSE .................................................................................................................................. 3

1.4 RESEARCH QUESTIONS ............................................................................................................................. 3

1.5 DELIMITATION ............................................................................................................................................. 4

FRAME OF REFERENCE ..................................................................................................... 5

2.1 LITERATURE REVIEW ................................................................................................................................ 6 2.1.1 STRATEGY ............................................................................................................................................... 6 2.1.2 SUSTAINABILITY STRATEGY ............................................................................................................. 6 2.1.3 FORMULATION OF SUSTAINABILITY STRATEGY ......................................................................... 7 2.1.4 IMPLEMENTATION OF SUSTAINABILITY STRATEGY .................................................................. 8 2.1.5 SUSTAINABILITY STRATEGY IN COSMETICS INDUSTRY ........................................................... 9 2.1.6 SMEs .......................................................................................................................................................... 9 2.1.7 SUSTAINABILITY STRATEGY IN SME ............................................................................................. 10 2.1.8 MNCs ....................................................................................................................................................... 10 2.1.9 SUSTAINABILITY STRATEGY in MNCs ........................................................................................... 11

2.2 THEORETICAL FRAMEWORK ............................................................................................................... 12

METHODOLOGY ................................................................................................................ 15

3.1 RESEARCH PHILOSOPHY ........................................................................................................................ 15

3.2 RESEARCH APPROACH ............................................................................................................................ 15

3.3 CASE STUDY DESIGN ................................................................................................................................ 16 3.3.1 CASE SELECTION ................................................................................................................................. 17

3.4 DATA COLLECTION .................................................................................................................................. 18 3.4.1 PRIMARY DATA COLLECTION: INTERVIEWS ............................................................................... 18 3.4.2 SECONDARY DATA COLLECTION ................................................................................................... 20

3.5 DATA ANALYSIS ......................................................................................................................................... 21

3.6 RESEARCH QUALITY ................................................................................................................................ 21

3.7 ETHICAL CONSIDERATIONS .................................................................................................................. 22

DATA PRESENTATION ...................................................................................................... 23

4.1 CASE A ........................................................................................................................................................... 23 4.1.1 DRIVERS OF SUSTAINABILITY STRATEGIES ................................................................................ 23 4.1.2 SUSTAINABILITY STRATEGIES ........................................................................................................ 24 4.1.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES ..................... 24

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4.2 CASE B ........................................................................................................................................................... 25 4.2.1 DRIVERS OF SUSTAINABILITY STRATEGIES ................................................................................ 25 4.2.2 SUSTAINABILITY STRATEGIES ........................................................................................................ 26 4.2.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES ..................... 26

4.3 CASE C ........................................................................................................................................................... 27 4.3.1 DRIVERS SUSTAINABILITY STRATEGIES ...................................................................................... 27 4.3.2 SUSTAINABILITY STRATEGIES ........................................................................................................ 27 4.3.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES ..................... 28

4.4 CASE D ........................................................................................................................................................... 28 4.4.1 DRIVERS SUSTAINABILITY STRATEGIES ...................................................................................... 28 4.4.2 SUSTAINABILITY STRATEGIES ........................................................................................................ 28 4.4.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES ..................... 29

4.5 CASE E ........................................................................................................................................................... 29 4.5.1 DRIVERS SUSTAINABILITY STRATEGIES ...................................................................................... 29 4.5.2 SUSTAINABILITY STRATEGIES ........................................................................................................ 30 4.5.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES ..................... 30

ANALYSIS ............................................................................................................................. 33

5.1 DRIVERS OF SUSTAINABILITY STRATEGIES ................................................................................... 33

5.2 SUSTAINABILITY STRATEGIES ............................................................................................................. 34

5.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY STRATEGIES...................... 35

DISCUSSION ......................................................................................................................... 37

6.1 LIMITATIONS .............................................................................................................................................. 37

6.2 THEORY ........................................................................................................................................................ 37

6.3 IMPLICATIONS FOR FUTURE RESEARCH ......................................................................................... 40

6.4 IMPLICATIONS FOR PRACTICE ............................................................................................................ 40

CONCLUSION ...................................................................................................................... 41

REFERENCES ....................................................................................................................... 43

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Figures

Figure 1: Sustainability as an integral part of strategy (Bonn and Fisher, 2011) .................... 13

Figure 2: Corporate sustainability strategy implementation (Engert & Baumgartner, 2016) .. 14

Figure 3: Primary Data Collection ........................................................................................... 20

Figure 4: Sustainability strategies among companies in cosmetics industry ........................... 38

Tables

Table 1: Literature review conducted by authors ...................................................................... 5

Table 2: Profile of the case study companies........................................................................... 18

Table 3: Interview summary .................................................................................................... 19

Table 4: Summary of Sustainability Strategies of the case study companies .......................... 32

Appendix

Appendix 1: Interview Guideline............................................................................................. 52

1

INTRODUCTION

This section aims to present a general introduction to the topic of this thesis. First, the background to

the topic on sustainability strategy formulation and implementation is presented, followed by a

description of the research problem and the resulting research questions. Finally, the purpose of this

research study is specified.

1.1 BACKGROUND

Sustainability is a broad concept that includes social, economic, and environmental aspects.

Hence, every element must be taken into account to act genuinely sustainably (Portney, 2015).

Environmental sustainability indicates responsible interaction with the environment that

sustains the functioning of ecosystems and the protection of biodiversity by the precautionary

principle. It also assesses that the state of the environment should not be degraded to economic

and material needs (Basiago, 1998). Furthermore, economic sustainability focuses on long-

term and sustainable growth that is not based on indebtedness or over-spending. Sustainable

development nurtures national wellbeing, thus is the basis for social sustainability. Therefore,

social sustainability engages the stakeholders in promoting well-being and equal conditions

from one generation to another (Basiago, 1998).

Moreover, a sustainable company operates on the principles of sustainable development, which

are defined according to the 1987 definition of the UN Brundtland Commission: "Meeting the

needs of the present generation without compromising the ability of future generations to meet

their own needs" (International Institute for Sustainable Development, 2020).

A sustainable future for people has a solid interconnection to a sustainable future for

businesses; it is evident that companies that implement sustainability strategies into their

operations are more likely to achieve a competitive position in the market. For instance,

sustainable companies attract more customers and qualified employees and potential investors

(Bonn & Fisher). Therefore, sustainable companies tend to have better credibility, relationships

and strong brand awareness (Weidinger, Fischler & Schmidpeter, 2013).

Furthermore, consumers are becoming sustainability-conscious and favour companies that

operate sustainably (Nath et al., 2013). Hence, consumption patterns are changing, consumers

are more aware and demand more knowledge on the companies' activities. The origin,

production methods, and safety of product raw materials are questioned. Thus, with the rise of

education and broader access to the internet, the assessment of information is easier than ever

before (Sahota, 2014).

Hence, companies need to adapt to meet the changing consumer demands by implementing

sustainability strategies. The strategy is an integral part of business operations. Strategy

implementation is often complex and is made with uncertainty prevailing (Johnson, Scholes &

Whittington, 2005). Thus, success requires strategic decision-making to support the objectives

that guide the action. There are several definitions of strategy. Johnson, Scholes & Whittington

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(2005) define strategy as a firm's long-term plan to achieve benefits in a changing operating

environment by identifying and purposeful positioning of the company's resources and

capabilities. At the same time, the company must consider the expectations of its stakeholders

and strive to meet them. Grant (2010) argues that constant change of the operating environment

is in its strategy definition. He defines strategy as a way for the company to be aware of the

critical objectives while considering the guidelines for action in a rapidly changing world.

However, visible results and competitive position in the market can only be achieved by

implementing strategies designed for sustainability (Galpin, Whitttington & Bell, 2015).

Formulation of sustainability strategies are defined as consideration of environmental,

economic, and social aspects into product and processes as a critical element of long-term

product innovation strategies and daily practices (Küçüksayraç, 2015).

A multinational company (MNC) is a company that owns production units in several countries,

a company that engages in foreign direct investment and has branches in two or more countries

(Mayrhofer & Prange, 2015). In addition, MNCs tend to employ local small and medium-sized

enterprises with their components, subcontracting and service orders. They are said to help

developing countries achieve better production levels (Ferdausy & Rahman, 2009). However,

the effects on the working force in the country have often been called into question. With

MNCs, capital, experience, knowledge, and technology scurry from one country to another

(Sönmez, 2013). The economic influence of MNCs is considerable, they tend to relocate the

production facilities according to where costs, such as labour costs and taxation, are lowest.

The pursuit of the most favourable production location quickly leads to a situation where

governments compete for the favour of companies (Zhao et al., 2014). Some MNCs tend to

ignore human rights issues such as working hours, pay, trade unions and occupational safety.

The solution to this problem has been the requirement of MNCs to comply with the legislation

of each country in which they operate (Colovic et al., 2019).

Different sustainability regulations provide strict operational standards for companies; for

instance, the European 2020 Sustainability Strategy aims to create a knowledge and innovation-

based economy, encouraging a low-carbon, resource-efficient, competitive economy, and is

cultivating social and territorial stability in a high-employment economy (European

Commission, 2020). Essentially, organisations are required to ensure that, under pressure from

public policy and increasing legal enforcement, they not only sustainably perform business on

their own but all their partners - including vendors and sub-suppliers - do so as well (Andrecka

& Mitkidis, 2017).

As markets are changing, small and medium-sized enterprises (SMEs) also recognise the need

to implement sustainability. SMEs are characterised by having less than 250 employees and a

turnover of up to EUR 50 million. (European Commission, 2021). However, SMEs account for

more than 90% of all EU enterprises, hence playing a vital role in sustainable development

(OECD, 2019). Therefore the formulation and implementation of sustainability strategies in

SMEs warrant as much empirical investigation as MNCs.

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1.2 PROBLEM DISCUSSION

The increasing recognition of the importance of sustainability creates a need for companies to

redesign their strategies. However, prior research on the formulation and implementation of

sustainability strategies mainly focused on MNCs (Wayland & Cole, 1997). Perhaps this gap

in the literature results from the fact that MNCs have a more visible environmental footprint

and often are the targets of pressure from consumers and governments (Andrecka & Mitkidis,

2017). However, the authors of this study argue that it is equally important to study

sustainability strategy formulation and implementation from the perspective of SMEs as they

have a significant market share, and the impact that SMEs have on sustainable development is

often underestimated in the literature. Hence, the value of such research is crucial. One

approach to bridging this gap in the literature is a comparative study between MNCs and

SMEs.

Moreover, research on sustainability strategies is often presented from a global perspective,

and there is a lack of research on the cosmetics industry (Bager & Lambin, 2020; Movassaghi

& Bramhandkar, 2012). There were no significant studies found that would examine the

formulation and implementation of sustainability strategies of cosmetics companies. According

to Ridder (2020), the revenue generated by cosmetics companies in the US is around 42 billion

US dollars in 2020. According to Sahota (2014), the market for cosmetics is overgrowing. In

addition, cosmetics have a substantial environmental impact, generating many emissions from

product production and distribution. Equally important is that most of the packaging is not

recyclable (Sahota, 2014).

Furthermore, women play a significant part in the consumption of cosmetics. They tend to

spend around 300 US dollars monthly (McLintock, 2020). Hence, the authors argue that

formulation and implementation of sustainability strategies within the cosmetics industry are

crucial to investigate as women are more environmentally concerned and tend to make more

sustainable purchasing decisions (Bloodhart & Swim, 2020).

1.3 RESEARCH PURPOSE

The purpose of this study emerges from the above research problem discussion. Based on the

identified gap, this study aims to investigate the formulation and implementation of

sustainability strategies in a comparative study between MNCs and SMEs in the cosmetics

industry. The main objective is to gain an in-depth understanding of sustainability strategy

formulation and implementation within the cosmetics industry. Hence the authors aim to

conduct exploratory research where qualitative methods of data collection are employed.

1.4 RESEARCH QUESTIONS

To fulfill the above research purpose, the following questions will form the basis of our

research:

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Research Question 1: Why do MNCs and SMEs in the cosmetics industry adopt sustainability strategies?

Research Question 2: What sustainability strategies are implemented in MNCs and SMEs in the cosmetics industry?

Research Question 3: How do MNCs and SMEs formulate and implement sustainability strategies in the cosmetics

industry?

The main focus of this thesis is to investigate the formulation and implementation of

sustainability strategies. The purpose of the thesis is exploratory research, denoting that

qualitative methods are implemented to collect and analyse present literature along with

primary data collected from interviews with cosmetic companies. This thesis will undertake an

exploratory qualitative multiple case study and thus aim to determine drivers of sustainability

strategies and formulation and implementation of sustainability strategies within the cosmetics

companies. Furthermore, the relationship between the size of the company and the scope of

sustainability strategy formulation and implementation will be examined through the cross-

case analysis of MNCs and SMEs.

1.5 DELIMITATION

This research has three main delimitations. Firstly, the authors will analyse companies within

the cosmetics industry. Therefore, findings and primary data collection methods are limited to

the cosmetics industry. Secondly, the qualitative method used for this study sets limitations on

the research generalisability. Lastly, business perspectives on the formulation and

implementation of sustainability strategies are analysed, limiting research and excluding direct

data collection of the consumer perspectives.

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FRAME OF REFERENCE

The purpose of this section is to provide an overview of the existing literature about the topic of this

thesis. First, the authors present the process of literature selection. Further, the literature review is

conducted presenting research done in the field of strategy formulation and implementation. Finally,

theoretical frameworks are outlined.

Table 1: Literature review conducted by authors

In order to construct a frame of reference, a systematic approach was used in the process of the

literature review. This was done by first defining the scope of the search words, followed by

identification of the key literature, and finalised by the review of the literature.

In order to be able to assess the literature, databases such as Primo and Google Scholar were

utilised for this research. Furthermore, to ensure that all the relevant articles are included in the

review, academic journals that are more relevant to the topic of this study were examined,

journals such as Sustainability, Strategic Management Journal, and Business Strategy and the

Environment. Furthermore, to establish a high quality of the study, the focus lies primarily on

academic, peer-reviewed articles.

The search process implied using multiple applicable search terms and various combinations

to obtain relevant and essential studies in the research field. Focus lay in getting articles that

are relevant in the formulation and implementation of sustainability strategies. For this reason,

the search process included the following search terms: Strategy, Sustainability Strategy,

Sustainability Implementation, Sustainability Strategy Implementation, Formulation of

Theoretical area Search words Database (nr books and articles found)

Selected articles

& books

Strategy “What is strategy” Primo (12 912) Google

Scholar (19 300) 6 articles

Sustainability Strategy “Sustainability

Strategy” Primo (5,383) Google


Sustainability

Implementation “Sustainability Implementation”

Primo (633) Google


Sustainability Strategy

Implementation “Sustainability Strategy Implementation”

Primo (43) Google

Scholar (307) 5 articles

Sustainability Strategy

in SMEs “Sustainability

Strategy” in SMEs Primo (968) Google


Formulation of

Sustainability Strategies "Sustainable Strategy Formulation"

Primo (11) Google


Sustainability in the

Cosmetics Industry

“Sustainability in the

Cosmetics Industry”

Primo (18) Google


Sustainability Strategy in

MNCs

“Sustainability

Strategy” in MNCs

Primo (229) Google

Scholar (2 920)

5 articles

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Sustainability Strategies, Sustainability Strategy of SMEs, Sustainability Strategy of MNCs,

Sustainability in the Cosmetics Industry.

The key literature was selected by evaluating titles, abstracts, and summaries of the articles

obtained by the search results. The chosen literature was in-depth analysed and structured

systematically to identify relationships, define subtopics, and summarise the significant

academic findings within the research field. Ultimately, the frame of reference served as the

basis for the data collection and analysis, which helped fulfil the purpose of the research.

2.1 LITERATURE REVIEW

2.1.1 STRATEGY

The word strategy originally comes from the Greek word ‘strategos’, meaning the skill of

leading and winning in war (Strategos, 1991). Strategy is crucial for business; strategy outlines

policies that have to be followed to achieve goals (Porter, 1980). According to Mintzberg and

Quinn (1996), strategy is a pattern of decisions and actions whose resulting behaviour can be

identified. Johnson, Whittington and Scholes (2012) define strategy as a direction and scope of

an organisation over the long term. They emphasise the importance of strategy to determine

the use of resources so that stakeholders' market requirements and needs can be met.

On the other hand, Harvard Business School Professor Michael Porter underlines the

combination of organisational resources, skills, and competencies to create a competitive

advantage (Stonehouse & Snowdon, 2007). A strategy forms the basis on which the company

plans, implements and monitors its strategic activities towards the desired target state. It is a

way to anticipate the future and be prepared for different scenarios while maintaining a

competitive advantage (Bukhari, 2019).

2.1.2 SUSTAINABILITY STRATEGY

Sustainability has greatly influenced strategy development within companies (Engert &

Baumgartner, 2016). Previously companies focused on short-term profit maximisation.

However, demand for companies' environmental and social long-term sustainability is

increasing (Eccles, Perkins & Serafeim, 2012; Engert & Baumgartner, 2016). Sustainability

becomes an essential factor of overall success in the long-term (Galpin, Whitttington & Bell,

2015). Studies show that ‘high sustainability’ companies outperform their competitors. Hence

there is a relationship between the sustainability performance of a company and its overall

growth (Eccles, Ioannou & Serafeim, 2014; Baumgartner, 2014). More companies consider

sustainability a source of competitive advantage and are disposed to making business more

sustainable (Lloret, 2016).

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However, to achieve sustainability, it has to be addressed in corporate strategy and included in

the strategic decision-making processes (Bonn & Fisher, 2011; Galpin, Whitttington & Bell,

2015). Epstein and Roy (2001) refer to sustainability strategy as one aiming “at balancing the

social, environmental and economic needs of both the company and society”. The authors state

that successful sustainability strategies have to be viewed over a long-term period for indicators

of efficiencies to be studied. Through careful identification of key performance drivers, the

process can be improved. Furthermore, Baumgartner (2014) argues that focus should not lie on

´why the company has to be sustainable´ but rather on ´how it can become more sustainable.

The challenge is to identify a sustainability strategy that is altered to the individual firm (Engert

& Baumgartner, 2016). Furthermore, sustainability has to be embedded into the organisational

strategy, extending opportunities that create value for the company (Lloret, 2016).

Sustainability is becoming the strategic imperative of the 21st century. Many companies have

declared their strategic commitment to sustainability, yet for these strategies to meet success,

they require creating infrastructure that reflects and reinforces these initiatives. Hence,

sustainability strategies' formulation and implementation stages are crucial (Galpin,

Whitttington & Bell, 2015).

2.1.3 FORMULATION OF SUSTAINABILITY STRATEGY

There is no standardised sustainability strategy applied by any company to bring the desired

results (Steger, Salzmann & Inonescu-somers, 2005). Hence, the choice of the sustainability

strategy and its careful adjustment to the specific companies circumstances is one of the

significant challenges that the company faces (Engert & Baumgartner, 2016).

The theory on strategic management states that a company should perform internal and external

analysis to identify objectives while formulating the strategy (Mintzberg & Waters, 1985).

However, the formulation of ‘regular’ strategies and sustainability strategies is different as

sustainability strategies are driven mainly by external stakeholders rather than current customer

demands and the long-term nature of the issue. Thus sustainability strategies are more difficult

to form (Egels-Zandén & Rosén, 2015). By understanding the complex issue of sustainability,

researchers agree that sustainability is a ´wicked´ problem (Frame, 2008), which identifies that

sustainability can have unforeseen, unique consequences. Sustainability strategy seldom is

made in a planned manner, and emergent strategy-making has to be taken into account in

sustainability strategy formulation (Neugebauer, Figge & Hahn, 2016).

However, companies that distinguish the importance of implementing sustainability into their

business activities attempt to bypass the complexity of the process and seek more accessible

solutions where sustainability is only an addition to its core strategy rather than fully integrated

into one. Companies' sustainability views and the companies’ strategies often contradict one

another (Galpin, Whitttington & Bell, 2015). Studies state that for a company's strategy to be

sustainable, sustainability has to be fully integrated into the firm's strategy. At the strategy

formulation stage, the company has to look at every component of the strategy through the

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sustainability lens (Figge, et al., 2002; Behnam & Rasche, 2009; Galbreath, 2009; Engert &

Baumgartner, 2016). Furthermore, Engert & Baumgartner (2016) highlight the importance of

companies having a clear definition of sustainability on the stage of sustainability strategy

formulation and a vision that integrates sustainability into the company's culture.

While the formulation stage of the sustainability strategy is recognised and analysed by

researchers, research lacks practical implementation of these processes (Engert &

Baumgartner, 2016). Epstein and Roy (2001) argue the significance of moving from strategy

into action, which confirms the need of filling the gap between the formulation and the

implementation of sustainability strategies.

2.1.4 IMPLEMENTATION OF SUSTAINABILITY STRATEGY

According to Hrebiniak (2006), implementation of the strategy is a complicated process that

plays a crucial role in the overall success of the business strategy. Strategy implementation is

about how well-developed plans are turned into actions (Engert & Baumgartner, 2016).

According to Jarzabkowski (2005), the strategy includes both firms’ plans and actions,

meaning that a formulated strategy should be implemented as regular organizational activity.

Managers are facing difficulties during the implementation process due to the lack of practices

in handling various obstacles. In addition, problems can happen due to several reasons, such as

managers having a lack of knowledge from the practical perspective; the strategy formulation

and implementation are two independent strategy-making processes that are mistakenly

thought to be connected. The strategy implementation process takes more time than the

formulation because it includes various obstacles that can be faced (Hrebiniak, 2006).

Furthermore, understanding sustainability concepts do not mean that companies can easily

implement them in the core of the business activities. If a company wants to implement

sustainability, it should develop a strategy execution plan to bring the theory into practice

(Bonn and Fisher, 2011). Implementing sustainability strategies has become a challenging part

of accomplishing (Engert, Baumgartner, 2016). Despite the obstacles that can be faced while

implementing the strategy, it is still possible to overcome them by developing the guidelines

that will support the process (Hrebiniak, 2006). To successfully implement sustainability

strategies into the core of business activities, companies should examine expenses of meeting

the requirements over the business’ profitability. Even though organizations should be

responsible for the impact which their products or services cause, the cruciality of still earning

profit should not be underestimated (Epstein & Roy, 2001).

Although the nature of the sustainability strategy itself differs from business to business, the

importance and positive effect of integrating sustainability into strategy and implementing this

concept as a day-to-day business activity should be considered by every organization

(Radomska, 2015).

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2.1.5 SUSTAINABILITY STRATEGY IN COSMETICS INDUSTRY

During the past decade, the cosmetics industry has shown reasonable growth and is one of the

largest industries in the world (Melo et al., 2013). Consumer demand has grown, both in

developed and developing countries. However, the cosmetics industry is known for the heavy

use of plastics, toxic chemicals, and waste generation. The cosmetics industry’s production

cycle has high CO2 emissions and significant energy and water consumption patterns

(Fortunati, Martiniello & Morea, 2020).

Due to the significant impact on the environment, the cosmetics industry has been affected by

the sustainable approach of business operations, both in environmental and social issues

(Fortunati, Martiniello & Morea, 2020). Sustainability impacts the entire cosmetics supply

chain (Bom, Ribeiro & Marto, 2020). The need for resource efficiency and demand for

sustainable goods as ethical consumerism is rising is pulling the cosmetics industry towards

sustainable development (Sahota, 2014; Sharma, 2020). The 21st century has become a turning

point for the cosmetics industry, and there is an increased interest in sustainability (Sharma,

2020).

Nowadays, much attention has reserved sustainable innovation within the field. Companies are

looking for environmentally friendly solutions to find renewable and biodegradable ingredients

that will not harm society or the environment (Sharma, 2020). Moreover, this is influencing at

large the overall industry trends. Large enterprises in the field are maintaining the change and

are committing to sustainability. It is done by introducing new product lines and redesigning

strategies in sustainable terms, which indicates a bright future for the industry and leads to

innovative solutions (Sharma, 2020).

2.1.6 SMEs

Small and medium-sized enterprises (SMEs) are usually defined by the number of employees

(World Bank, 2011). The workforce ranges between a minimum of 1 to a maximum of 250

employees per organization (Inyang, 2013). According to the World Bank (2011), SMEs can

also be defined by the number of maximum sales or loan values. European Commission (2016)

divides SMEs based on three categories: an enterprise is an autonomous, a partner, or a linked

enterprise. A company will belong to the autonomous category if it is ”completely independent

or has one or more minority partnerships”. Meanwhile, partner SMEs are those where

minimum holdings with other enterprises start at 25% and are up to 50% (European

Commission, 2016). Additionally, the last category defined by EC is linked, which includes

SMEs that have at least 50% of other enterprise holdings. However, the definition of SMEs

can vary from the country and economy it is operating in, meaning that there is no one global

united description that will precisely define SMEs (World Bank, 2011). According to European

Commission (2016), SMEs create most of the job market where 9 out of 10 enterprises are

micro, small, and medium-sized. Consequently, the importance of encouraging the operation

of SMEs in different countries and assisting them with the correct governmental practices

becomes crucial in improving an economic context (Issa, Lucke & Bauernhansl, 2017).

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2.1.7 SUSTAINABILITY STRATEGY IN SME

According to European Commission (2012), SMEs produce around 70% of all industrial

pollution made by different companies in Europe. Since the global needs are changing, SMEs

should adapt their strategies to meet the requirements (Shields, & Shelleman, 2015). According

to Brammer, Hoejmosr, and Marchant (2012), SMEs are trying to implement sustainability

strategies alongside large enterprises revising their strategies and adapting sustainability

concepts in primary operations. Consequently, SMEs’ sustainability strategies create

competitiveness in the market (Shields & Shelleman, 2015). Those strategies bring many

advantages that SMEs receive, such as being highly competitive, encouraging large enterprises

to consider small companies as sustainable investments, and being efficient in their operations

(Fiksel, 2006).

Moreover, by being a sustainable SME, a company gains the privilege of catching up with a

rapidly changing market environment and attracting future potential customers who are not yet

a part of the current market (Ács, 1999). According to European Commission (2007), SMEs

tend to shift towards more sustainable ways to produce and sell goods, meaning that most

investments go to social and environmental capital and human resource management. Based

on the research done by Moore and Manring (2009), implementing sustainability strategies in

SMEs is represented by the ability to maintain the dynamic balance between creating value for

the society and future generation while at the same time remaining profitable.

However, SMEs face some challenges while implementing sustainability strategies (Shields &

Shelleman, 2015). For instance, lack of financial and human resources makes implementing

sustainability strategy complicated for SMEs (Nicholas, Ledwin, & Perks, 2011). The lack of

knowledge and experience within sustainable practices that SMEs face leads to difficulties in

implementing sustainability into real-life operations (Becherer & Helms, 2014). Moreover,

approaches used to guide large companies during sustainability implementation might not be

applicable for smaller companies (Shields & Shelleman, 2015). Although SMEs are trying to

implement sustainability strategies, the lack of research on how practically those strategies can

be implemented in SMEs makes the process challenging (Chowdhury & Shumon, 2020).

Additionally, the gap in the literature regarding SMEs and the implementation of sustainability

strategies in the core of their business activities is identified (Lawrence, 2006).

2.1.8 MNCs

The development of a domestic manufacturing company into a multinational company (MNC)

usually includes three stages: export, foreign production, and global phase. Usually, a company

starts internationalization with direct or indirect exports. Once exports have started well, and

the market potential has been identified, the company usually sets up an independent export

unit. Next step is to create an entire export department that is as large as a domestic sales

department. Next, the company will set up sales units and if possible product assembly

11

operations abroad. This export phase ends when the company decides to enter foreign markets

through its production unit (Root, 1978). According to Buckley and Casson (2009), an MNC

has operations in two or more countries. They also argue that MNCs are often focused on high-

skilled industries characterized by high product development, marketing investments and a

skilled workforce (Buckley & Casson, 2009). These features are not surprising in the sense that

Stephen Hymer already wrote in the 1960s that MNCs should hold some sort of possession

competitive advantage over local companies, especially when it sets up production units abroad

to offset the initial situation (Welch, Benito & Petersen 2007).

According to Hood and Young (1979), the company has to make foreign trade multinational.

However, the company must have operations in more than one country to qualify as an MNC.

Thus, the amount of foreign direct investments determine MNC. MNC is, therefore, a company

that owns and controls in whole or in part its foreign direct investments in more than one

country. At the same time, the company is connected to international production by financing

direct foreign investments across national borders (Hood & Young, 1979).

2.1.9 SUSTAINABILITY STRATEGY in MNCs

MNCs play a significant role in sustainable development. The decisions of MNCs,

governments and municipalities regarding sustainable development have a substantial impact

on the environment. Forsgren (2013) argues that international companies have many adverse

effects on the environment, human rights, and the workforce and its well-being. However, some

people see the impact of MNCs on society as positive, such as an essential creator of change,

a significant driver of globalization, a creator of economic growth and national well-being

(Forsgren 2013).

According to Duran and Bajo (2014), in the case of MNCs, the main limitation to sustainability

strategy formulation is the legal rules, a different set of values, and economic structures of the

host countries. Some countries have more established institutions than others and thus have a

better basis for sustainability strategy formulation and implementation. MNCs frequently

adjust global sustainability strategies based on standardized sustainability practices across all

countries in which the company operates. This strategy enables the company to achieve the

cost advantage due to economies of scale since there is no need to modify the strategy for

different countries separately. In contrast, a multidomestic sustainability strategy is focused on

adapting the activities to the local environment of the host countries while allowing subsidiaries

autonomy to establish their sustainability strategies (Duran & Bajo, 2014).

12

2.2 THEORETICAL FRAMEWORK

To understand the drivers of sustainability strategies within the companies, the authors applied

the institutional theory (Scott & Mayer, 1984) when analysing the data. According to Martínez-

Ferrero and García-Sánchez (2017), the social environment significantly impacts the

companies' motivation concerning sustainability practices undertaken and reported by

companies. The theory has also been extended to the neo-institutional approach, which

provides a framework for isomorphism analysis in organisational behaviour by recognising

ignored elements such as cultural values, arguing that cultural support for an organisation is

highly correlated with legitimacy. The legitimacy can be enhanced via three isomorphic

institutional forces such as law (coercive), moral compliance (normative) and the industry-

related accepted behaviour pattern (mimetic).

According to Martínez-Ferrero and García-Sánchez (2017), the legal system, the stage of

cultural development and the level of industry’s concerns about sustainability aspects impact

the companies’ voluntary assurance in their sustainability reports. Voluntary assurance

provides arguments for the credibility of sustainability reports to gain a greater audience and

social confidence in the information provided. Martínez-Ferrero and García-Sánchez (2017)

show that the greater demand from stakeholders, the more likely management of the companies

will tend to include an assurance process to legitimise the sustainability report and meet the

requirements of the external environment. Implying that companies with similar institutional

structures will adopt homogenous behaviour patterns in their sustainability strategies.

Neo-institutional theory and its implication in the Martínez-Ferrero and García-Sánchez’s

(2017) study are essential for this study: it allows the authors to consider the external factors

that guide the companies towards operating more sustainably. The legal and cultural contexts

are setting the requirements for sustainable operations. Meaning that, in this study, the authors

shall keep in mind that understanding sustainability differs depending on the culture.

Mintzberg’s (1973) three modes theory is used by the authors of the thesis when exploring the

approaches adopted by SMEs when formulating sustainability strategies. According to

Mintzberg (1973), the strategy-making process can be divided into three modes:

entrepreneurial, where an individual decision-maker makes bold decisions; adaptive, where a

group of decision-makers responds to the pressure of the environment by adopting minor

changes to the strategy; and planning, where analysts incorporate strategic decisions into

structured strategies. Entrepreneurial mode is characterised by bold, reckless behaviours

prevalent in emerging businesses or new markets. The aggressive scanning for new

opportunities is central to the entrepreneurial mode strategy. Opportunities determine strategy,

whereas challenges are secondary and often neglected. Adaptive mode often shares power

between divisional managers and other stakeholders in the organisation. These organisations

lack clear goals, and stakeholder feedback is always crucial to decision-making, and the focus

is on short-term strategies. The planning mode of strategy growth is mostly seen in mature

organisations. The long-term strategy of an organisation is described using complex analysis

13

accompanied by formalised decision-making. The developed strategy is constantly reviewed

and changed if needed.

To analyse the implementation of sustainability strategies, the authors utilised a framework by

Bonn and Fisher (2011). The framework that can help managers integrate sustainability into

the strategy. The framework suggests addressing the different aspects of sustainability at the

organisation's strategic level, both during the strategic decision-making process and as part of

the strategy content at the corporate, business, and functional levels. Emphasis is placed on

integrating economic, environmental, and social factors into strategy and the continuous

consideration of these factors in all business activities.

Figure 1: Sustainability as an integral part of strategy (Bonn and Fisher, 2011)

According to the framework (Bonn and Fisher,2011) (Figure 1), an enterprise´s vision consists

of shared sustainability values that forms a basis for the design of sustainability strategies and

their implementation. A defined concept creates a tool for making strategic decisions

concerning sustainability, including economic, environmental and social considerations in all

decision-making processes. With sustainability as a core value, the strategy must include

activities in an organization's corporate portfolio that address the global sustainability issues so

that the corporate portfolio balances the economic, environmental, and social goals of the

organization. On a business level, different business units must be aligned with the

organization's sustainability strategies. This implies that sustainability strategy sets guidelines

for the products and services that can be offered to the market. Furthermore, existing products

and services must be modified according to the sustainability guidelines or removed from the

product line. On a functional level, sustainability strategy should guide managers within

finance, human resource and marketing activities. Eventually, organizational culture is formed

based on the vision and sustainable strategy supported by the norms, values and beliefs of the

organization and its people. And as a result, the behaviour of managers and employees will

14

reflect these norms and values. The goal of the framework would be for the organization to

guide these sustainability principles inside and outside of the organization and promote

sustainable behaviour in economic, social and environmental contexts.

A similar study was performed by Engert and Baumgartner (2016) (Figure 2) that identified

the core success factor for sustainability implementation into strategy. Organizational structure

and culture together with leadership, management control, communication, employee

motivation and qualification form a basis for sustainability assessment of the strategy and guide

towards efficient sustainability implementation into strategy. The framework aims to raise

managers' awareness when designing the implementation of the sustainability strategy and help

reduce the overall difficulty of this multi-dimensional task.

Figure 2: Corporate sustainability strategy implementation (Engert & Baumgartner, 2016)

15

METHODOLOGY

This section presents the methodological approach that was obtained to gather empirical data. First,

the research philosophy is explained. Then a research approach is presented, followed by a case study

design explanation. Further, the data collection and analysis are presented. Lastly, discussing research

quality and ethical considerations.

3.1 RESEARCH PHILOSOPHY

Philosophical research paradigms lay in the foundation for research and outline the researchers'

perceptions and beliefs that guide the design, collection, and analysis of data. There is a broad

spectrum of philosophical views adopted by researchers. These are frequently expressed in the

literature as philosophical paradigms between positivism on the one end of the spectrum and

interpretivism on the other end.

Positivism is the philosophical perspective often adopted in experiments, quantitative research,

and empiricism, all of which look at knowledge objectively and aim towards non-biased results.

In the positivism paradigm, the researcher believes in proven facts and that social reality is

objective (Ryan, 2018). In contrast, interpretivism is occasionally called anti-positivism.

Interpretivist believe that knowledge is subjective and can be influenced by culture, historical

background, experience, and personal understanding. The interpretivism paradigm suggests

that the researcher has influence when data is collected, interpreted, and analysed.

For this study, the interpretivist research paradigm is adopted as the case study implies

investigation of individual company's perception of sustainability strategies and their journey

towards sustainable development. As the authors will explore drivers and motives of

formulation and implementation of sustainability strategies in the cosmetics industry, this

exploration is somewhat subjective, as several companies will be analysed and compared to

fulfil the research purpose; hence there is no single truth. Consequently, the interpretivist

research paradigm is the more appropriate choice.

3.2 RESEARCH APPROACH

To proceed with further data collection, qualitative or quantitative methods should be chosen.

A quantitative approach is used when authors of a study are aiming to collect data based on the

distribution of variables meaning that the main focus is on how many variables exist based on

the specific characteristic, at the same time, the conclusion is based on the numerical data

collected through the process (Smeyers, 2008). However, numerical data and exact numbers

are not always relevant for a particular study and are hard to identify. As a result, a qualitative

research approach is used for some types of studies. Using a qualitative approach, the authors

of a study tend to use interviews, work documentations and other non-numerical methods for

gathering in-depth data. Both qualitative and quantitative methods are equally reliable and

valuable for conducting a research study. In addition, those approaches are used to find a

solution to a problem and answer questions in society (Taylor, 2005). The qualitative research

16

approach is more appropriate in this study to answer research questions stated in chapter 1,

which deal with qualitative issues regarding sustainability strategy formulation and

implementation.

Furthermore, an inductive, deductive or abductive approach should be chosen. Woiceshyn and

Daellenbach (2018) stated that the deductive approach is characterised by “moving from the

general to the particular” and aims at testing an existing theory. Meanwhile, the inductive

approach is about “moving from the particular to the general” and aims at developing a theory.

The abductive approach is utilised when authors strive to analyse a particular observation and

find a credible explanation (Aliseda, 2007).

The reasoning used in this study is abductive as authors start by analysing data through the lens

of existing theories. Furthermore, patterns in the observations and relationships between

change in conditions are identified. Hence the authors theorise the investigated phenomenon.

Lastly, the purpose of the study can be explorative, descriptive or explanatory. Exploratory

research is characterised by the intention to find and analyse new insights in a particular

observation. The explanatory type of research analyses various variables and their relationships

(Easterby-Smith & Thorpe & Jackson, 2015). Descriptive research mainly focuses on existing

theories, hypotheses or situations (Ghauri & Grønhaug, 2002). The research purpose of the

given study is exploratory because the aim is to gather insights from particular companies in

the cosmetics industry to analyse the formulation and implementation of sustainability

strategies.

3.3 CASE STUDY DESIGN

A case study is a research strategy in which the purpose is to study in-depth one or a few objects

or a set of phenomena. A case study is a crucial data acquisition strategy for studies based on

qualitative research methods (Hyett, Kenny & Dickson-Swift, 2014). A case study is loosely

defined and can be implemented using various analytical data collection methods and

combining different materials. These different data collection methods can be interviews,

questionnaires, and observations (Eisenhardt 1989).

According to Eisenhardt & Graebner (2007), multiple case studies provide a more

comprehensive understanding of theoretical evolution and research questions. Moreover, a case

study often creates a more compelling hypothesis when the suggestions are more intensely

grounded in further empirical evidence.

Thus, the authors of this thesis have chosen multiple case study designs to obtain high-quality

material from which results can be drawn. Furthermore, the multiple case design will help the

authors study the phenomenon within the real-life context, hence offering the broader discovery

of theoretical evolution and research questions. The main goal is to understand the

sustainability strategies in the cosmetics industry utilised by MNCs and SMEs. Hence a

comparative multiple case study is conducted.

17

3.3.1 CASE SELECTION

The purposive sampling technique is utilised in this study, meaning that samples are chosen

based on researchers’ preferences based on the purpose of the study (Tongco, 2007). The

authors use the purposive sampling method to identify and select cases related to the

phenomenon of interest. Using purposive sampling, the authors could choose a subset of

interest that best contributed to the study. The cases used in the research correspond to the

authors’ judgments and preferences, meaning that results are limited to the sample categories

and cannot be generalised for the whole industry (Bornstein, Jager, & Putnick, 2013).

Cases were selected based on the five criteria. The first criterion is the industry in which the

company is operating. Since the study only focuses on the cosmetics industry, companies

sustainably operating in other industries were not included in the research. The second criterion

is the presence of sustainability strategies within the business. To select companies in the

cosmetics industry that operate sustainably, the authors studied the companies' websites and

published data on the Internet. By the presence of sustainability strategies, the sample was

selected. The third criterion is the market where companies are operating. This criterion had

two subsets, as the study aims at comparing MNCs and SMEs. The authors first selected

companies that are operating internationally. Further, companies operating locally within

developed countries were selected. The fourth criterion is the size of companies. Since this

research study focuses on comparing MNCs and SMEs, the authors selected companies'

correspondence to be defined as MNC and SME. The last criterion is the language which is

further considered a limitation. The authors of the study are using English as the only language

to collect data. Due to this reason, companies were selected based on the ability to provide

information in English.

18

3.3.2 PROFILE OF THE CASE STUDY COMPANIES

A summary of the selected cases is presented in Table 2.

Table 2: Profile of the case study companies

3.4 DATA COLLECTION

To achieve sound results, both primary and secondary data was used. Saunders (2012) has

stated that various data collection methods improve the data quality and lead to more reliable

results. Moreover, primary data is gathered and arranged for the purpose of the study.

Meanwhile, secondary data is collected based on the information collected from publicly

available sources, such as websites, social media accounts, and mass media publications

(Saunders, 2009).

3.4.1 PRIMARY DATA COLLECTION: INTERVIEWS

The interview is a commonly used data collection method in a qualitative study (Gill et al.,

2008). It is a purposeful discussion between people. Many factors can support its use: during

the interview, direct interaction with the interviewee allows the interviewer to gather the

information directly and highlight the underlying response motives. In a face-to-face interview,

the interviewer is able to interpret the non-linguistic messages of the respondent. The

interviewer can clarify the answers and deepen his knowledge by asking additional questions

or asking for reasons and motives for the interviewee's opinions (Gill et al., 2008).

The authors of this study conducted semi-structured interviews with respondents from the

selected companies to gather primary data. Semi-structured interviews were conducted to allow

COMPANY NAME ORIGIN SIZE (nr of

employees)

YEAR

FOUNDED MARKET

CASE A

UK

14 000

employees

1995 Global

CASE B

UK

10 000

employees

1976 Global

CASE C

US 2 employees 2019 US, Canada,

Australia, Denmark,

UK

CASE D

UK Family

owned and

operated

2020 UK

CASE E US 2 employees 2016 US, Canada

19

a discussion rather than straightforward question and answer format (Creswell, 2013). Due to

Covid-19 pandemic restrictions, face-to-face meetings were unfeasible to arrange. Hence,

primary data was collected through Google Meet/Whatsapp and sending follow-up questions

by email to interviewees from the selected companies. Interviews and further communication

were held with employees who have the position that tackles sustainability processes within

organizations. Table 3 shows the summary of the primary data collection process.

Table 3: Interview summary

The conducted interviews were guided by the questions that authors have prepared in advance

(Appendix 1), meaning that the conducted interviews were a semi-structured thematic

interview (Harrell & Bradley, 2009). However, questions asked during the interview were

adapted to the company's size and operation range to gain valuable insights on the topic of

interest. The thematic interview is targeted to specific themes to be discussed. In this study, the

themes are formulation and implementation of sustainability strategies within the company and

across the industry.

Invitations for an interview were sent between January 11 and February 13, 2021. If no

response to the invitation was received within a week, a reminder message was sent. A

maximum of two emails were sent to the interviewees, one was a reminder message. A total of

50 companies were contacted, 18 companies declined, 24 companies did not respond, and eight

interviews were confirmed. However, three companies rejected the interview at the last minute

due to different reasons within the company.

Case companies Interviewee Interview

Date Mode of interaction Duration

Data confirmation

with respondent

CASE 1 The Head of

sustainability

team

2021/03/15 Video interview

(Google Meet)

50 min 2021/05/10

CASE 2: The Head of

Brand and

Activism

2021/04/12 Telephone interview 25 min 2021/05/10

CASE 3: The Managing

Director

2021/03/23 Answered questions

via email

2021/05/10

CASE 4: The Founder 2021/04/22 Answered questions

via email / Telephone

interview (through

Whatsapp)

15 min 2021/05/10

CASE 5: The Founder 2021/04/23 Answered questions

via email / Telephone

interview (through

Whatsapp)

15 min 2021/05/10

20

Figure 3: Primary Data Collection

The authors successfully conducted interviews with 5 companies. After the data collection, the

authors maintained communication with the interviewees to gather additional data during the

analysis stage. After the analysis was performed, data was confirmed with respondents, and

permission for publishing the analysis was asked.

After collecting data from 5 interviews, the researchers concluded that additional interviews

would not add any new valuable insight to the information obtained from the already conducted

interviews. This phenomenon is called the point of data saturation, meaning the stage of the

data collection, where the collection of extra data adds nothing new to the understanding of the

research topic (Guest, Bunce, & Johnson, 2006).

3.4.2 SECONDARY DATA COLLECTION

Secondary data helps collect more information about the research field and increase the data

quality and help avoid researchers bias. At the same time, data gathered through secondary

sources show different perspectives regarding the topic and provide detailed background about

the field of the study. Additionally, it is essential to identify the relevant information which

should be used in the research. (Church, 2002).

To gather additional data about case companies, the companies’ websites were researched.

Furthermore, the companies' social media accounts were examined, collecting data that would

help analyse and gain more detailed data on sustainability strategies of the case companies. In

addition, mass media sources and publicly available news platforms were investigated to gain

secondary data.

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3.5 DATA ANALYSIS

The authors used the 'RADaR' technique (Watkins, 2017) because it helps to manage large

amounts of qualitative information into the systematically analysed and structured data. The

first step was to design all of the data transcripts in the same way for more accessible data

screening. So the transcripts of the recorded interview material were created. In the second

step, transcripts were placed in one document, making it easier to analyse the responses and

see them in the whole context. This way, the unnecessary data can be easily visible and then

removed. The third step involved gathering the remaining data and screen it again to find

focused themes and concentrate on them. The transcripts were printed and each interview was

read through and important themes were marked with coloured pencils and highlighters. Each

colour code was marked up to make it easier to see directly in what context the themes are

popping up. Next, the authors browsed through the interviews for each question at a time and

opened the answers in an Excel spreadsheet. The themes that arose were also written down in

the created Excel table and other important points from the interviews. After making Excel, the

result was a precise analysis of the study and the necessary information for conclusions.

To analyse the collected data, the authors decided to utilise within-case and cross-case analysis.

Within-case analysis allows researchers to investigate each case separately with the help of in-

depth gathered data (Byrne and Ragin, 2009). In addition, within-case analysis is used to

examine cases according to their complexity and individual characteristics that cause a

different outcome of each case analysis. However, the within-case analysis does not give an

exact answer to the purpose of the research.Consequently, authors seeking a straightforward

output of qualitative research use cross-case analysis which strengths the results found during

investigation (Byrne and Ragin, 2009). Cross-case analysis helps authors bring meaningful

outputs and results from gathered data with the help of comparing cases with each other (Khan

and Wynsberghe, 2008). The comparison is based on the information found within-case

analysis, meaning that cross-case analysis gives a general assumption about cases based on the

characteristics found earlier (Khan and Wynsberghe, 2008). The authors of this study firstly

utilised within-case analysis that helps to scrutinise each case. Secondly, the authors did cross-

case analysis to find similarities and differences between cases.

3.6 RESEARCH QUALITY

Qualitative research focuses on depth and aims to understand behaviour, opinions and

motivations (Renz, Carrington, and Badger, 2018). This kind of data can not be mathematically

proven or quantified, so there is a need to discuss and justify the quality of findings—

furthermore, a need for methods that would allow qualitative research to be trustworthy.

Criteria to assess the trustworthiness of the qualitative study were addressed by Lincoln and

Guba (1985), which are credibility, dependability, confirmability, and transferability.

Crucial aspect of assess the trustworthiness of the qualitative research is credibility (Connelly,

2016; Shenton, 2004; Renz, Carrington, and Badger, 2018), where the researcher can link the

22

study's findings with reality and can justify why the research findings are accurate and what

makes the study accountable. To ensure credibility in the thesis authors used triangulation.

Triangulation aims at strengthening qualitative research by using multiple approaches (Collis

and Hussey, 2014). Data was gathered from different sources and data was collected from both

primary and secondary sources. Furthermore, in this research, investigator triangulation was

applied, as a team of three authors was making coding, analysis, and interpretation decisions.

That way, the credibility issues of the study were addressed (Shenton, 2004) as qualitative

research conducted by using triangulation tools ensures the quality of research findings.

Another criteria addressed in this thesis was transferability which identifies the degree to which

the results of qualitative research can be transferred to other contexts or settings with other

respondents. In this thesis, the authors in section 1 Introduction and section 3 Methodology

made a thorough description of the research contexts and assumptions central to the research

making it possible to 'transfer' the results to a different context.

Furthermore, dependability includes the aspect of consistency and establishes that the findings

of the research are repeatable and confirmability examines the neutrality of the study and

concerns the interpretation of findings. Researchers have to make sure that findings are not

biased at this stage, as findings have to be grounded in the collected data rather than researchers

personal viewpoints (Lincoln and Guba, 1985). To ensure dependability and confirmability of

the findings, the authors are thoroughly describing the data collection and analysis process and

providing the raw data collected as all of the primary data collected through interviews have

been recorded and stored on the software supplied by Jönköping University. The researchers

also discussed and received feedback from their thesis supervisor and colleagues to construct

the interview guide to ensure that it is an effective instrument for collecting relevant and valid

data for this study.

3.7 ETHICAL CONSIDERATIONS

Ethics is an essential part of the research. Hence, the research was carried out in full compliance

with good research ethics. It has been declared that none of the participants has imposed any

risk of physical or psychological harm during the process. Before the data collection,

participants were informed about the background and the purpose of the study. Each participant

was informed about the further use of data shared and acquainted that they have the right

without giving any reason to conclude the interview at any point of data collection.

Participation in the study was voluntary and did not imply any monetary or other rewarding.

All of the interviews were arranged in advance and held in a private setting. The reserved

information was handled with confidentiality and not used outside of the research setting.

23

DATA PRESENTATION In this section, empirical data for the five cases is presented. Every case is described in a separate

subsection. It has a short introduction of the company, including background information of their

sustainability practices and a summary of the data collected through interviews. In this subsection, the

authors present information gained from interviews on the formulation and implementation of

sustainability strategies within each case. Summary of Sustainability Strategies of the case study

companies is presented in table 4.

4.1 CASE A

Case A is UK-based cosmetics company operating since 1994 and has expanded into a global

chain company. Currently, the company has more than 930 stores in 49 countries. Company

mainly sells cosmetics for consumer use, but in the UK and US has also beauty salon services.

Products are handmade at their factory in England from fresh raw materials by hand. The

products use little or no packaging, preservatives, nor synthetic raw materials. Company

manufactures its products solid whenever possible to reduce packaging materials.

Moreover, all products are vegetarian, with a large range of vegan products, and 65% are naked

(i.e. packaging-free). Used raw materials are only purchased from companies that do not carry

out animal experiments. The company’s product range includes traditional bar soaps, shower

gels, shampoo and hair conditioners, bath bombs, face and body creams, and face masks.

Moreover, from the beginning, the company had sustainability at the core of its brand. The

company has emphasized the importance of animal rights and produced products without

packaging to minimize waste.

4.1.1 DRIVERS OF SUSTAINABILITY STRATEGIES

“Why would you want to destroy the planet with your business?”, says the head of the

sustainability team, by explaining that motivates and drives all of the sustainability-related

strategies introduced. As presented in Table 4, the company has an understanding of the effects

it has on society and environment hence undertaken actions are evaluated to be inline with the

overall vision of the company. Furthermore, the company notices the engagement of the young

audience in the sustainability issues and sees support from them. Hence benefits from applying

and communicating the sustainability strategies are seen. However, the initial driver for the

sustainability strategies is internal, brought in by the company CEO. Thus, company proceeds

to share the sustainability values throughout the years and focuses on hiring like-minded

people. As the importance of making stakeholders proud is in the core of the company. The

company creates an open space for sustainability implementation, allowing employees to share

their values and concerns, to be heard, and have an impact. Hence, employees are also affecting

sustainability implementation within the company. By engaging people and making campaigns

that raise awareness about environmental and social challenges brings attention to important

issues and attract like-minded people, who concecuantually become the driver of sustainability

within the company. Furthermore, customers also find the sustainability values of the company

24

attractive and support them, allowing the company to grow economically as evidenced by its

constantly growing revenue. Hence, the positive response of the customers has become an

external factor that is driving the sustainability work done by the company.

4.1.2 SUSTAINABILITY STRATEGIES

According to the head of the sustainability team, the packaging-free cosmetics products were

an invention of the company, which created a pioneering role for its sustainability work.

Moreover, the company opposes animal testing and does not test products or raw material on

animals. Furthermore, it is participating and having an active position in boycotts that spread

awareness about the issue. Even though animal testing and excess packaging have been

standard components of the industry, these were contradicting the values of the company.

Ethical concerns and products without packaging were always in the brand's DNA and in the

core of any strategies introduced in the company, making brand unique from its competitors.

The company does not compromise on these values and furthers to lower the environmental

impact of the company.

The sustainability strategy is maintained by investing in employee training, and thus all of their

employees are carrying the same passion towards sustainability strategy. Additionally, it strives

to provide the most ethical and environmentally friendly raw material options and always

justifies its choice of raw materials. This is why when it comes to sustainability strategy, the

company emphasizes the importance of looking deeply into the supply chain and design supply

chains that protect, restore and regenerate ecosystems. Moreover, ongoing sustainability

practices include activities such as recycling, design of sustainable packaging, removal of

glitter and solid microplastics, recycling of the packaging received back from the customers

and using renewable energy for manufacturing.

The company strives towards “making life wild again”. However, the company emphasises the

issues that are solvable now rather than setting up long-term goals and ignoring the present.

The only long-term goal that has implemented into its strategy is to be carbon positive by 2030

(Table 4).

4.1.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY

STRATEGIES

The formulation and implementation of sustainability strategies is an ongoing process, as the

company allows its employees to partake in this process. The central aspect that drives the

formulation and implementation of sustainability strategies is the vision to hire passionate

people, activists, who care about sustainability. This strategy allows an ongoing discussion

about sustainability issues and ways these issues can be solved. The company created an

environment where employees from different departments can brainstorm, so-called

25

‘ThinkTank’. An environment that emerges with great ideas and projects. Forming the

sustainability strategies and afterwards forwarding them to the board.

The current strategy the company has been working with is about the centre of life, called

“Losing the world lusher than we found it”. The strategy focused on biodiversity and wildlife,

as issues like carbon footprint, water, chemicals, and land use are considered. The idea is to

make sure that everyone in the company understands the policy and how they can have an

impact. The company has always been interested in environmental and social issues, and

sustainability is a massive part of the brand. Hence, the company aims to expand its

sustainability strategies to a greater extent.

One of the main components of sustainability strategy is the design of its supply chain. The

company understands that to acquire the ingredients consistent with its sustainability

requirements, they have to find them by themselves and not be content with what the market

has to offer. The company has put effort into developing its supply chain to ensure the

sustainability standards of the raw materials. The company have their sourcing team that

provides the best quality and ethics of the ingredients. This often requires creative thinking and

the search for non-standard solutions. This is why it constantly practices thinking activities

during ‘ThinkTank’ events where professionals from different positions come together and

brainstorm. Other activities include active participation in boycotts as well as charity events.

4.2 CASE B

Case B was established in 1976 in England. She was an activist with strong beliefs that business

should do good for the world and society. According to the company's website, the company

has around 10 000 employees and operates in 70 countries with about 3000 stores globally.

The company's founder has created the brand with strong sustainability concerns that made the

company a responsible company. The company produces beauty products following

sustainability policies that the company utilizes. In addition, products are not tested on animals.

The brand was created to empower women to become the best version of themselves by

enjoying the products produced. Another important fact about the brand is the community fair

trade pioneering program, a common practice for the company since 1987. The company is a

Bcorp certified business, meaning that the company meets high standard social and

environmental practices for people and the planet while being transparent in its operations.

4.2.1 DRIVERS OF SUSTAINABILITY STRATEGIES

Case B was founded as a sustainable company. The founder of the brand has established a

strong ethical and responsible culture which has been successfully operating within the

organization. The importance of implementing sustainability into the core business operations

was the main idea of the brand. Even though many businesses did not pay attention to reducing

the footprints and taking care of the impact companies can have on the planet, the company

has differentiated itself in the market. The main driver to act sustainably was an idea that

26

business can do good for a planet and with the help of businesses many world wide problems

can be solved. The company was created by activists, as a consequence all actions done by the

company are results of activism campaigns created by the founder. Drivers of sustainability

strategies are internal and not related to the shifts in the cosmetics industry or adaptation to

those changes. Consequently, it can be fairly treated as a self-motivated company which drives

sustainable actions in the industry by occupying the leading place as a trusted global sustainable

brand (Table 4).


According to the Head of Brand and Activism, the company always employed sustainability

strategies as a core concept of the business. The whole idea of being a sustainable and

responsible brand has started from the founder of the brand and is counting till nowadays. As

a result, sustainability practices are not something new for the company, instead it is a common

concept which has been utilized for more than 40 years. As summarised in Table 4 it is a Bcorp

certified business, all activities within such aspects of the business as logistics and supply

chain, ingredients, sales and overall business strategies are done with sustainability concepts

behind it. In addition, the company is striving towards continuous improvements in reducing

the footprints business can cause to the world such as increasing the amount of recycled

materials, taking care of human rights, animal rights and improving the supply chain

mechanism. The whole way of product from the farms to the store is done responsibly and

sustainably by the company. Moreover, the company is using a triple bottom line approach

which represents the idea of measuring people, profit and planet equally and working on the

three aspects at the same level.


STRATEGIES

The importance of understanding formulation and implementation of sustainable strategies is

crucial as it is continuously improving its sustainable operations. The company is B-corp

certified since 2019, meaning that it meets the highest standards of social and environmental

activities. In addition, the company is utilising a triple bottom line approach that makes the

brand perform equally on people, planet and profit. The company is using a community fair

trade pioneering program in order to source high quality ingredients from sustainable suppliers.

As a consequence, sustainable strategies of the company are formulated in a way to meet all

standards set by the company. Sustainable strategies of the company are formulated by special

teams who are responsible for creating new strategies and monitoring old ones. However, all

stakeholders are responsible for implementing them and working in accordance to set

standards. The importance of getting stakeholders inline with the sustainability practices is

extremely important. According to the Head of Brand and Activism, the company is

using ‘intro practices’ which are helping new employees working in different departments to

understand the company and its values. As a result, employees have their own interest in acting

responsibly and support the vision of the company. Based on the information gathered through

the interview, the company is continuously trying to diminish footprints of the business and

encourage other organisations to do good for the world. The company is always working on

27

new sustainability strategies, one of them is the concept of using upcycled and recycled

material for their shops and reducing the amount of plastic used in the packages by finding

more sustainable materials such as aluminium. In addition, the company is developing a long-

term sustainability strategy for 2030 which has not been announced yet.

4.3 CASE C

Case C is a small cosmetics company established in 2019 by climate activist, Stevie Van Horn

in New York, US. The company has two employees, yet the team is planning to expand soon.

The company focuses on the production of beauty products with high standards when it comes

to the sustainability of materials used within the life cycle of the products. The company has

always had a zero-waste philosophy and strives towards waste-free production, where no

harmful, toxic, non-organic ingredients are used. The company is plastic-free and is concerned

about their environmental footprint. Products are sold in 50+ stores around the US and multiple

international stores and various online platforms. The company focuses on in-house

production and on online sales of their products.

4.3.1 DRIVERS SUSTAINABILITY STRATEGIES

As the founder of the company is the face and main ambassador of the brand, it has been

essential to bring a qualitative and eco-friendly product that fulfils the brand's core principles.

Hence sustainability is above all else. The company also has a mission of educating

stakeholders on the importance of environmental issues. Referring to the managing director,

the main drivers of the sustainability strategies are very tied to the personal beliefs of the

founder as it has been crucial for the founder to not compromise on the less sustainable options.

The company sees the positive effects of implementing sustainability strategies as customer

demands are growing and interest in the company is rising. The company sees that chosen

sustainability strategies attract customers, which becomes a crucial driver of the future

formulation and implementation of other sustainability practices applied by the company.


According to the managing director, the company has been established with sustainability in

mind. It started when the brand founder could not find a product that would not cause allergic

reactions. The founder realised that products found in stores use harsh ingredients with plastic

packaging. These weren't products the founder of the company would like to buy and support.

Hence she started her own company that would be in line with the personal values. The goal

of the company is to offer safe, natural, calming and earth-friendly products. This, from the

beginning, has the vision of the company. Hence all of the sustainability strategies implemented

are striving towards supporting this vision. Yet, the company is relatively small and aims at

growing and expanding the product line and customer base with the same ethical and

sustainable strategies at the core. Today it strives towards zero-waste production and is willing

to offer their consumers re-use or re-fill options of their products to close the loop and move

towards a circular business model (Table 4).

28


STRATEGIES

To fulfil the formulated sustainability strategies focus lies on research and choice of the best

available options that do not contradict the brand's DNA. Like most ingredients, packaging,

materials are being outsourced. The company puts effort towards choosing partners that are in

line with the brand's overall mission, which brings up challenges such as increased costs and

finding a balance between making a profit and having an affordable product that doesn't harm

the environment. Yet as the company has been zero waste in their production from the

beginning, it is essential for the company to choose partners wisely to support other businesses

with similar vision.

4.4 CASE D

Case D is a family-owned and family-operated business established in 2020 in England. The

company offers its consumers natural handmade soaps, bath salts, and eco-friendly accessories

produced in-house. As a sustainability-conscious business, the company strives towards zero-

waste production, does not use harsh, harmful, or toxic materials when making its products.

The company initially chose to be plastic-free and has a wide range of vegan products. All of

their products are cruelty-free. As a well-known local business, the company is socially

conscious and supports the local community by raising awareness and donating part of earnings

to the local NHS trust. Recently, the company has been recognised on social media, and

products offered by the company are presented on multiple online shopping platforms and

hotels around England.


According to the company's founder, the main driver of the sustainability strategies within the

company is the will to offer people natural products that do not cause environmental harm.

According to the founder, customers notice that the brand offers them a better alternative,

making the founder proud; hence, more sustainability efforts are made. As the company is

family-owned, the company wants to translate their personal beliefs into the offered products.

“I like to follow my heart, especially when it comes to sustainability,” says the founder. She

also adds that the love for the planet is endless and gets stronger, affecting the way

sustainability is perceived within the company. By having sustainability in the core of their

business activities and one of the most crucial factors when making decisions, the company

notices the value added to their products and the whole company.


According to the founder, sustainability has always been in the vision of the company. As the

founder herself is very sustainability-conscious, it was crucial to share these values through the

offered products. Hence, the company provides all-natural products and never uses plastic

29

when delivering the products to the customers. The company is continuously evolving in its

sustainability strategies and sees the value that sustainability adds to its business. Hence, they

are making investments into the ingredients used and choosing other sustainable companies

when it comes to sourcing. It is done to support businesses with the same ethos and build

relationships that would last. According to the founder, the more they grow, the more

sustainable actions they see and strive towards. Yet, due to the company's circumstances, it

faces challenges in determining its sustainability strategies. The fact that the company is small

has limited resources and storage affects their sustainability strategies and the environmental

effects of their business activities. Hence, they are developing new sustainability strategies that

will be implemented as soon as they can invest. They plan to reduce their carbon footprint by

moving to a more extensive workshop, buying in bulk, and going completely plastic-free.

Furthermore, a central water filtering system would minimise waste use and install solar energy

sources. According to the founder, these things will help the company be more gentle on the

environment as it is the vision of the company (Table 4).


STRATEGIES

As the company is small, all of the sustainability decisions are made by the founder. As it is an

essential part of the business, many resources are aligned to careful source selection and choice

of partners. According to the founder, many challenges arise regarding sourcing materials, as

there is a need to have the best available solution in line with the company's principles and

values. Hence strategies are constantly evaluated and evolved. As the company is small and

limited in resources, they seek to make small available changes, choose the best available

partners, support other small sustainable businesses, and collaborate only with those who share

their values, hence growing stronger and helping the environment in the scope they can today.

“We believe that small changes can help,” says the founder.

4.5 CASE E

Case E is a cosmetics brand located in North Carolina, US. The company was founded in 2020

and has two employees. It offers a range of makeup and skincare products. The company is

concerned about the benefits their products bring to the consumers, hence conscious when

developing their product formulas. As sustainability is implemented in the core of the company,

they strive towards minimising waste as much as possible and environmentally friendly

outsourcing materials. The company has been supporting environmentally sustainable projects

and raising awareness about environmental issues. Products offered by the company are

presented on multiple online platforms as well as 40+ stores around the US, Canada and

Australia.


The goal is to see people and other brands shifting towards a sustainable way of thinking and

making all possible contributions to sustainable development. Hence the company chooses to

30

educate and share values with their stakeholders. And the positive effects of these practices are

noticed, as customers understand more the value that sustainability is bringing. According to

the founder, the customer mindset is slowly changing, which indicates areas of growth. The

more they are in the business, the more they find like-minded people and continue to evolve

their sustainability strategies. As the founders, through their brand, are translating their

personal beliefs and values. The main driver of their sustainability strategies is producing less

waste and bringing quality products to the market. The founders believe that sustainably

minimizing packaging is the only possible way of operating within the business they choose to

continue and progress in their sustainable actions (Table 4). Furthermore, the customer

appreciation of their sustainability effort is noticed. Hence it is one of the drivers of the

sustainability strategies implemented as the sales are increasing. There is more recognition of

the brand, which allows the company to expand and put more resources into the formulation

and implementation of new sustainability strategies.


According to the founder, being a sustainable brand has always been a goal. Because it comes

from a personal and cultural setting, where the founder, when creating a company, was inspired

by products that she would like to buy. The primary sustainability strategy of the company is

clean ingredients and sustainable packaging that is plastic-free and does not require more

materials than are needed to package the product. According to the founder, the industry set-

up is wasteful, where to sell a tiny bit of the product, companies package it in large plastic

containers wasting unnecessary materials to make the product more appealing to the customer

and increase sales, at the same time polluting the environment and wasting materials. This set-

up is unacceptable for the company. Hence the goal is to produce less waste and minimise

packaging as much as possible. The company is even more focused on researching ways of

minimising waste and making investments into straightforward ingredients. Hence no harsh

chemicals are used. The company focuses on simplicity, starting from keeping ingredients

simple, having a multi-use product range (i.e. one product can be used in different ways),

having products with a simple design and only necessary packaging, and having customer and

the planet in mind when making decisions, as according to the founder these small efforts make

a change.


STRATEGIES

As the company is small, it focuses on short-term goals and is constantly rethinking

implemented strategies. The focus lies on the question, “Where can we reduce our waste even

more?”. This mindset is adopted as the company believes that the small things have a

significant effect and that every company in ideal circumstances should have the same

philosophy. If so, the sustainability challenges faced by the planet would be solved. Hence the

company wants to start from their everyday actions and focus on the little things that can be

improved. As the production is done in-house, they can control all practices during the

production, packaging, and delivery of the products. These steps are carefully monitored,

31

which allows instant improvement. When challenges arise, they do the best to be always in line

with their vision. For example, when production flows appear, and some products are

´imperfect´, the company chooses not to waste these products but sells them to customers at a

discount to minimise waste.

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Table 4: Summary of Sustainability Strategies of the case study companie s

Cases Drivers of Sustainability Strategies Sustainability Strategies Formulation vs emergence

of sustainability strategies Implementation of sustainability strategies

Case A - DNA of the brand: fresh,

ethically concerned production

and minimal packaging;

- Customer response & public

demand

Long-term sust. goal: To be carbon positive by 2030. Design a

supply chains to protect, restore and regenerate natural

ecosystems.

Sust. Motor: ‘making life wild again’

Sust. Strategies: use ethical and environmentally friendly raw

material, recycling products & packaging, design of sustainable

packaging, removal of glitter and solid microplastics, using

renewable energy,

- Placing emphasis on the

issues that can be solvable

now rather than setting up

the long-term goals and

ignoring the present

-employee trainee programs -Events for employees brainstorming and

speaking up - Integrating sustainability strategies into

supply chain operations -Sourcing team which controls quality and

ethics of ingredients -Careful selection of suppliers -Sustainable culture as a part of

organizational environment

Case B -The founder was an

environmental activist who had a

strong personal beliefs that

business should do good for the

world and society as a whole

-Customer response & public

demand

Long-term sust. goal: by 2025 all bath and body products will

be fully recyclable; zero-waste packaging

Sust. Strategies: use of natural ingredients; empowering

women; Fair Trade programme; recyclable packaging;

eliminating plastic; waste reduction; sustainable delivery boxes;

ethical and environmentally friendly raw material;

Formulate sustainability

strategies as a core concept

of the business using a

triple bottom line approach

- community fair trade pioneering program - Maintain a Bcorp certified business - empowerment of women and equality as a

core concept of the brand - promoting circular economy - making packaging 100% recyclable by using

different materials - developing zero waste packaging - employee trainee programs

Case C The founder environmental

activist, who wanted to offer the

market safe and natural products

without compromising on the

environment and helping others to

live in a sustainable way.

Long-term sust. goal: creating wildlife rehabilitation center

Sust. Motor: “offer safe, natural, calming and earth friendly

products”

Sust. Strategies: waste free production, plastic free packaging;

use of natural ingredients; educate stakeholders; sourcing

sustainable materials, from eco-friendly suppliers

Sustainability as a core

concept of the business,

where company focuses on

moving towards circular

business model, hence

simultaneously helping our

earth in small, simple ways

- researching ingredients

- constant communication with stakeholders

- partnerships with sustainable brands

- zero waste production

Case D The founder personal beliefs and

will to offer natural products that

do not cause environmental harm.

Long-term sust. goal: reducing carbon footprint, go plastic-free,

zero-waste

Sust. Motor: “small changes can help”

Sust. Strategies: plastic free packaging, 100% natural

ingredients; recycled, biodegradable labels and tapes,

sustainable sourcing;

Placing emphasis on small

changes that can be

evolved, and making sure

that actions are in line with

the vision of the company

- supporting local NHS trust

- relationships with sustainable companies

- recycle waste

- sourcing sustainable materials

- investing in 100% natural ingredients

Case E The founders personal beliefs and

will to make a change in peoples

mindset

Long-term sust. goal: see people and other brands make more

effort

Sust. Motor: “keeping things simple”

Sust. Strategies: clean ingredients, sustainable packaging,

minimum packaging, reduce waste (such as business cards)

Placing emphasis on

reducing waste in every

little possible way, focus of

small things

- researching ingredients

- minimum packaging

- sustainable packaging solutions

- waste reduction

- monitoring of production process

- constant improvement of production

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ANALYSIS The following section presents a cross-case analysis of the empirical findings where the sustainability

strategies of the cases are compared and contrasted. The findings of this analysis are then discussed

through the lenses of the theories discussed in section 2. These include institutional theory explaining

the coercive, normative and mimetic drivers of institutional adaptation (Martínez-Ferrero and García-

Sánchez, 2017) which is applied to sustainability drivers, furthermore, Mintzberg’s theory (1973) on

strategy-making in three modes and a framework by Engert and Baumgartner (2016), arguing the

success factors of sustainability strategy implementation.

5.1 DRIVERS OF SUSTAINABILITY STRATEGIES

Based on the collected data, all cases have sustainability strategies. Further, the authors analyse

drivers of sustainability strategies and differences and similarities within MNCs and SMEs.

Data is viewed through the lens of Scott & Mayer (1984) theory and its implication in

sustainability, according to Martínez-Ferrero and García-Sánchez (2017).

Three types of organisational behaviour that explain why companies strive towards more

sustainable operations have been identified (Scott & Mayer, 1984; Martínez-Ferrero and

García-Sánchez, 2017). Three dimensions that can be used to analyse drivers of sustainability

strategies in the cosmetics industry are coercive isomorphism, normative isomorphism and

mimetic isomorphism

According to the five cases, sustainability is at the core of the business due to interconnection

with the founders' sustainability beliefs. According to the theory, it is a normative isomorphism.

The approach often applied by young companies, as in the beginning, the founder is the

company's face. It usually is the only decision-maker within the company, hence why the

founder and his beliefs have a strong relationship with the principles and values of the

company.

Cases C, D, and E showcase this relationship. The founder is the only decision-maker,

translating personal values. Cases C, D and E are SMEs. In these cases, the founder is the main

ambassador of the brand; hence, the founder's beliefs have a strong relationship with the

company's values. Founders of these companies are environmental activists that argue for zero-

waste, natural, safe production. Hence these values are translated to the sustainability strategies

implemented across cases C, D, and E.

Moreover, cases A and B were founded with sustainability at the core as the founder translated

personal beliefs into the company's values. However, drivers of sustainability strategies within

cases A and B have been expanded. As case A and B are MNCs, they significantly impact

society and the environment; hence, more pressure and media attention are drawn towards

them. According to publicly available news platforms (Booth, 2006; Hope, 2017; Zhou, 2020),

cases A and B have been claimed of unsustainable behaviour; hence to remain trustworthy,

34

these companies have had to justify their actions, and the public opinion becomes a crucial

driver of sustainability strategies implemented across these cases. Hence, companies A and B

are adapting coercive isomorphism. Customer demands and the public become an external

driver of the sustainability strategies within cases A and B.

Moreover, within case A the mimetic isomorphism is also one of the drivers of sustainability

strategies. The company emphasises the issues that are solvable now rather than setting up

long-term goals and ignoring the present, however as the SDGs (Sustainable Development

Goals) have influenced industries to set long-term environmental targets companies have

utilised this approach, making it a standard practice of the industry, hence within case A the

long-term environmental goal has also been set, indicating the mimicking drivers of the

sustainability strategies.

Additionally, sustainability is becoming a fast-growing trend in many industries. As the

consumer demands for sustainable offering are rising, the companies feel pressure to follow

these demands; hence it becomes an additional driver for the implementation of sustainability.

Even though all of the case companies have had normative isomorphism as the main driver of

sustainability strategies, coercive isomorphism is also noticed across the cases.

5.2 SUSTAINABILITY STRATEGIES

Based on the collected data, many common trends are identified in sustainability strategies.

Nevertheless, the authors aim to compare strategies within the MNCs and SMEs and study the

potential relationship between the size of the company and the scope of sustainability strategy

formulation and implementation.

As cases A and B are MNCs, many similarities are identified between them. Both companies

are mature, have a wide range of operations, and more resources. This leads to broader

environmental and social impact. Hence they are more concerned about the effects of their

business actions and because the available resources can implement these strategies on a larger

scope. Case A and B widely work with evaluating their supply chain by supporting

communities and ensuring that their suppliers are in line with their sustainability work. Within

both cases, sourcing is ethical, and companies support Fair Trade suppliers. It is done because

companies feel the responsibility for the actions they are taking. As sustainability is

implemented in the companies' core values, they have the goal of having a supply chain in line

with these values. Furthermore, as companies A and B have worldwide operations, they receive

more recognition from the public hence have a lot of mass media attention drawn to them and

pressure put from the social perspective. According to publicly available online news platforms

(Booth, 2006; Hope, 2017; Zhou, 2020), both cases have been distrusted. The sustainability of

both cases has been questioned by media sources and other stakeholders of these companies.

Hence, reputation is crucial for these companies. They have reacted to the claims by publishing

press releases and drawing more attention towards discounting these claims.

35

On the other hand, cases C, D, and E are also communicating externally through their social

media platforms and websites. Yet as the attention towards these companies is somewhat lower,

they have not been involved in sustainability scandals. However, according to the case

companies' social media channels, they justify choices made to eliminate the distrust towards

their sustainability intentions. Moreover, cases C, D, and E are concerned about their suppliers

of packaging and aim towards the sustainable options available. They are committed to having

plastic-free packaging when plastic is still used within cases A and B. Yet, companies are using

recycled materials and making all of their plastic packaging fully recyclable. Another common

trend across cases A and B is the goal of the circular business model, that way closing the loop

of material flows and generating less waste. The topic of zero-waste and carbon footprint is

noticed across all cases. They want to reduce the negative effects of their business operation

on the environment and set it as a long-term goal. All of the companies are working with

strategies that aim to decrease waste from operations and production. However, according to

data collected from interviews and data collected from company websites, cases A and B are

setting long-term sustainability goals and companies are making long-term promises to their

stakeholders. However, as cases C, D and E, are young and small enterprises, it is noticed that

long-term goals are not communicated through social media or websites, rather than kept only

within the company's internal stakeholder. This occurs since companies are young and have

been operating only for 1-3 years, showcasing that the older the company gets, the more

stability it experiences and can set long-term promises.

Companies share sustainability issues, challenges and implementing strategies with the internal

and external stakeholders within all of the cases. It can be assumed that sustainability

communication is a crucial part of the sustainability strategies within the company without

regard to the size of the company. According to company social media channels and websites,

companies are positioning themselves as sustainability conscious companies. According to

companies, sustainability communication is done for a few reasons, as it educates stakeholders,

attracts like-minded people, makes internal stakeholders proud, and is used as a marketing

strategy.

5.3 FORMULATION AND IMPLEMENTATION OF SUSTAINABILITY

STRATEGIES

To analyse the empirical findings and compare the formulation and implementation of

sustainability strategies within MNCs and SMEs, two models will be applied. Starting from

the Strategy-Making in Three Modes Theory by Mintzberg (1973) and framework by Engert

and Baumgartner (2016) when analysing success factors of strategy implementation.

Based on Mintzberg’s theory (1973) of strategy-making in three modes (entrepreneurial,

planned and adoptive), it can be concluded that companies fall into all of these three categories

at some stages during their journey on sustainability strategy formulation. The cases studied

tend to suggest that the sustainability strategies formulate as a planned manner and an emergent

strategy-making process. For instance, in cases A and B, the main driver for sustainability

strategy implementation has come from an individual will of a bold decision-maker, the

36

company's CEO. And this vision has formed a basis for the sustainability strategy

implementation. Starting from entrepreneurial mode and going through adaptive mode where

the strategy is also adapted to external factors and moving towards the planning mode where

the strategic decisions are analysed before implementing into strategy is the journey that

business must go through to formulate and implement sustainability strategies. At the present

moment, case A and B are already operating in a planning mode, meaning that their

sustainability strategies are planned and analysed based on internal and external drivers for

sustainability before being implemented. In comparison to case A and B, younger companies,

cases C, D and E, are still in the entrepreneurial-adaptive mode because of the young age of

the companies and limited resources. Eventually, they will go through all of the stages if they

are striving towards company development.

Findings are viewed through the lens of the framework developed by Engert and Baumgartner

(2015) that enables authors to analyse the success factors of strategy implementation. Namely,

consider factors such as employee motivation, organisational culture and structure, leadership,

management control, and communication. From the case analysis, it can be concluded that the

common circumstances that determine sustainability strategies of studied cases are the age, size

and available resources of the businesses. For instance, MNCs (case A and B) have more

experience, resources, and influential power due to the pioneering role in the sustainability

strategy implementation compared to the other cases that are only in the process of strategy

formulation. This means that larger companies can commit more time and resources into

detailed planning and formulation of sustainability strategy, meanwhile smaller and younger

companies are not able to invest as much resources into sustainability strategies due to the

importance of other business development strategies that are crucial for business survival.

Moreover, for all cases, the other vital factor for successful sustainability strategy

implementation is employee motivation and open communication within the company. With

open work environments where there is a possibility for people within the organisation to voice

their values and take the entrepreneurial approach, successful strategies can emerge and be

implemented. For instance, case A has been practising the ´ThinkTanks´ in their workplaces

where people working at case A from different positions can get together and brainstorm to

come up with new strategy ideas, which supports strategy formulation. Case B has

implemented a similar mindset everyone in the company can have an impact and has a

responsibility to work with a sustainability strategy in mind.

When it comes to sustainability strategy implementation, the practical implication factors vary

within the studied cases. Throughout the analysis of all the cases, the difference in the scope

of sustainability strategy formulation and implementation can be noticed. This difference can

be explained by the sizes as well as the age of the companies. In case A and B, a separate

division is responsible for sustainability strategy formulation and implementation. In contrast,

in cases C, D and E, the vision is to operate in all business activities sustainably from the

beginning and having a sustainability strategy as a guiding principle for every other area of the

business.

Thus, it can be said that all of the cases see sustainability strategy formulation and

implementation process as an ongoing activity that concerns everyone within a company and

must be implemented in every aspect of the business operations.

37

DISCUSSION

The following section describes limitations and presents the theory derived by the authors based on the

conducted analysis. Finally, the theoretical and practical implications of this study are discussed.

6.1 LIMITATIONS

When conducting qualitative research, there is a problem of obscurity when interpreting the

findings since there are no clear guidelines. Rather than measured scientific findings, our study

would be an interpretation of the empirical evidence gathered. The accuracy of the collected

qualitative data is difficult to determine since it was obtained through interviews.

When conducting interviews, it is impossible to know if the interviewee remembers facts right,

hiding parts of the truth, or not telling the truth. These specifics are important because the

people interviewed have held high positions in the organisations and may prefer to keep some

information. Furthermore, since the interviewee may be overwhelmed and has a short time slot

for the interview, the interviews may provide biased information. A significant limitation to

this study is the worldwide Covid-19 pandemic. Companies are occupied with issues brought

by this crisis, and thus, participation in university studies is not their primary concern.

Moreover, interviews were conducted only via online meeting platforms due to the covid

restrictions. And in this way, the authors could not thoroughly analyse the collected data, e.g.

non-verbal messages of the respondents, which means that observation of body language and

certain facial expressions was impossible.

Additionally, there is a chance of the response bias being present during the data collection

process since, for example, two of the respondents represented very well known cosmetics

companies. They may feel pressure to provide socially acceptable answers.

6.2 THEORY

Based on the multiple case study, the authors established a relationship between drivers of

sustainability strategies employed and the formulation of sustainability strategies. Furthermore,

the connection between this approach and the implementation mechanism for sustainability

strategies has been identified (Figure 4). Figure 4 showcases the relationship between the three

factors (driver, formulation and implementation); as visualised in Figure 4, the drivers of

sustainability strategy determine the approach to sustainability strategy formulation, defining

the sustainability strategy implementation mechanism.

When a company is in a mature stage and is well-established in the industry, it has a well-

known product and loyal customer following. When it has normative drivers of sustainability

strategies, it employs a planning approach to the formulation of sustainability strategies; hence

the implementation mechanisms are management control, employee motivation and

communication.

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However if same normative drivers occur while a company is in the startup stage startup stage

and has not yet been well-established in the industry, it has an entrepreneurial approach to

sustainability strategy formulation; hence, sustainability strategies will be implemented

through strong leadership, employee motivation, and emphasis on building organisational

culture. When a company has mimetic drivers, the formulation of sustainability strategies will

have an entrepreneurial approach. Hence, sustainability strategies will be implemented through

strong leadership, employee motivation, and emphasis on building organisational culture.

Furthermore, coercive drivers lead to an adaptive approach; hence sustainability strategies are

implemented through organisational structure and management control.

Figure 4: Sustainability strategies among companies in cosmetics industry

According to all of the case companies, from the startup stages of the business, the founder had

a significant impact on the sustainability scope of the company, as in all cases the founder is

an environmentally conscious activist, he/she translated personal values throughout the

business operations. Hence the company had normative drivers of sustainability strategies. This

is also the case in the beginning stage of the business. The founder is often the face and primary

ambassador of the brand. As a result, during this stage, the founder tends to share personal

beliefs. Therefore sustainability has been a crucial part of the business from the beginning and

has been implemented in the core operations.

Furthermore, the approach to the formulation of sustainability strategies depends on the drivers

of sustainability strategies and the maturity stage of the company. Companies that have

normative drivers in the startup stage are employing an entrepreneurial approach when

formulating sustainability strategy. An individual decision-maker - the founder, makes bold

decisions as the founder in all cases is an environmental activist with strong sustainability

views. These views are communicated across the business's operations, leading to

39

sustainability strategy implementation mechanisms interconnected with the companies' strong

leadership and internal motivation. Companies employ the inside-out approach by following

this path, and outside sources do not influence sustainability decisions. The company is making

these decisions exclusively by following core principles set by the founder.

Although, companies tend to change the entrepreneurial approach to planning. That happens

due to reasons such as the company level of maturity and experience. Since companies are

growing and tend to increase the number of stakeholders, the entrepreneurial approach is not a

reliable mode to utilise. Even though normative drivers remain the same, the planning approach

is the better mode to use during the strategy formulation stage due to changes in organisation

size and structure. The larger a company's operations are, the more exact plan should comply

with core operations with sustainability vision. The increased amount of resources leads to

increased opportunities regarding the strategy planning process, meaning that companies can

move from the entrepreneurial approach to planning.

As a consequence of changing an approach, companies will need to rearrange sustainability

strategy implementation mechanisms. Employee motivation and trainee programs play a

crucial role during successful strategy implementation. To get every stakeholder involved in

the strategy implementation process, the management team should create training programs to

help understand new aspects of strategies and keep people motivated. In addition, strong

communication between top-level managers and employees helps control the implementation

process, which reduces the number of issues that might occur. Strong management control is

needed during the planning approach since the plan's implementation requires stakeholders'

high involvement and resources to arrange activities successfully. To shed light on the above,

normative drivers can lead to two types of strategy formulation and implementation, depending

on organisations' maturity level. SMEs tend to utilise the entrepreneurial approach from the

beginning. However, they are used to change it within time to a planning approach. Meanwhile,

MNCs are implementing a planning approach since all resources are available for successful

implementation.

However, with the growth of the company, the sustainability strategy drivers tend to change or

expand. Based on the analysis of the case companies, the coercive drivers are established at the

large organisations, as their operation are spreading across multiple markets, their social and

environmental impact is significant comparing with the SMEs. Hence more public and

governmental regulations are imposed on the business. Social media and news portals are

pressuring and distrusting large organisations and maintaining their reputation, and coercive

isomorphism drives sustainability strategies. As a consequence of this driver, the adaptive

approach for the formulation of the strategy is utilised. The company responds to the pressure

of the environment by adopting minor changes to the sustainability strategy that way using

organisational structure as a sustainability strategy implementation mechanism.

The derived theory showcases how different drivers affect the formulation and implementation

stages of sustainability strategies within the companies; explains the relationship between

40

factors affecting the reasons behind sustainability strategies and the further progression within

the company. Based on examined cases, companies can have different drivers of sustainability

strategies at various stages of maturity. Hence, different formulation approaches and different

implementation mechanisms are used, depending on the initial cause of the sustainability

strategy. Different sustainability initiatives are driven by various factors, which identify that

different approaches and implementation mechanisms can be used simultaneously while

dealing with different issues. Suppose some strategies are implemented by the own will of the

company. In that case, others can be imposed by outside sources, and some strategies are

dictated by the competitors or the industry.

6.3 IMPLICATIONS FOR FUTURE RESEARCH

The conducted study can serve as a stepping-stone into future research of both quantitative and

qualitative nature. An essential aspect of sustainability strategy implementation was the

influence of individuals. As every individual is unique, the study found that individuals play a

huge part in determining a sustainability strategy implementation success. Thus, future research

could concentrate on addressing the limitations of this study and build upon the findings. For

instance, an exciting research field could be ‘individuals’ role as key contributors to

sustainability strategy formulation and implementation’. The additional potential areas for

future research could be as follows: for instance, this analysis may be conducted with larger

sample size, allowing for the inclusion of other industries in the sample. This could lead to

greater cross-industry generalisability. Another interesting research will be to empirically

analyze SMEs that do not incorporate sustainability strategies and the organizational cultural

characteristics that impact the sustainability strategy formulation and implementation.

Moreover, the study revealed that SMEs are implementing sustainable practices deeper into

their business model than MNEs. Thus this could be a discussion for further research and a

suggested research question for the reader.

6.4 IMPLICATIONS FOR PRACTICE

Based on the results found during the study, it can be witnessed that the derived theory can be

applied in practice. The information provided in this study can help managers understand the

drivers of sustainability strategies and ease the formulation and implementation process. In

addition, entrepreneurs who sustainably develop their business can use the derived theory to

understand the relations between drivers, formulation, and sustainability strategies. In addition,

managers responsible for policymaking in companies can use the information provided in this

study as an example of possible ways to develop and implement a sustainable strategy.

41

CONCLUSION

This section contains information that answers research questions of this study. The authors present

findings based on the data gathered throughout the research process. The conclusion part aims to shed

light upon the investigated topic and provide readers with valuable research answers and conclusions.

This section concludes the study by providing answers to the questions that help to understand

the sustainability strategy formulation and implementation process. To provide an answer for

the purpose and the research questions of this thesis, the following questions were addressed

and concluded by the researchers.

Research Question 1:

Why do MNCs and SMEs in the cosmetics industry adopt sustainability strategies?

Based on the above analysis, both SMEs and MNCs implement sustainability strategies

regardless of the size of the companies. The main driver for adapting sustainability strategies

within SMEs has been identified as the personal beliefs of the founder. For MNCs, in addition

to internal factors such as the personal beliefs of the founder, the sustainability strategy drivers

are expanding, and sustainability strategies are driven by customer demands and external

pressure towards the company. However, sustainable companies are initially driven by the

normative factors, meaning that a sustainability-conscious founder is translating personal

values that way, positioning sustainability in the core of strategic decisions of the business.

Thus, it can be concluded that internal factors drive the sustainability strategies of MNCs and

SMEs within the cosmetics industry.


What sustainability strategies are implemented in MNCs and SMEs in the cosmetics industry?

As this study investigates cases of SMEs and MNCs that have implemented sustainability

strategies into their business operations, the sample shows the difference in sustainability

strategies that MNCs adapt in comparison to SMEs due to the resource restrictions. MNCs

focus on both internal and external sustainability strategies since MNCs have the resources to

assign, delegate and invest in initiatives for sustainability. Meanwhile, SMEs focus mainly on

internal strategies due to scarce resources. For instance, by concentrating on sustainability in-

house.

Additionally, the strategies differ based on pressure for the external environment as larger

companies tend to face these issues more than smaller companies as they do not have similar

visibility. Thus, the strategy varies from planned to situational by the external factors faced by

MNCs.

Furthermore, companies share sustainability issues and challenges with the internal and

external stakeholders within all of the cases. For this reason, it can be assumed that

42

sustainability communication is a crucial part of the sustainability strategies within the

company without regard to the size of the company.


How do MNCs and SMEs formulate and implement sustainability strategies in the cosmetics

industry?

Data analysed through the lenses of previous theories presented in this research showed that

for MNCs, two out of five studied cosmetics companies are behaving similarly when it comes

to sustainability strategy formulation and implementation. This tendency was concluded to be

present due to the similar size of the companies (MNCs) and the amount of resources available

at their disposal. On the other hand, similarities in the behaviour of the remaining three

companies (SMEs) studied were also found.

Empirical samples revealed that success for implementation comes from employee motivation

and open communication within the business environment. Findings suggest that the primary

motivation that works as a driver for formulation and implementation of sustainability strategy

in the cosmetics industry is the individual will of bold decision-makers. This will is present in

an entrepreneurial mode where the strategy formulation process begins. Later, the strategy

formulation process goes through adaptive mode, where the strategy is also adapted to external

factors. Then, it moves towards the planning mode, where the strategic decisions are carefully

analysed before implementing into strategy. The described process is the entire journey that

business must go through to formulate and implement sustainability strategies.

It can be concluded from the findings that sustainability strategy implementation starts from

the one individual who has a will and vision to do business in a sustainable way. This happens

in entrepreneurial mode, where the vision for the strategy is created. After, at an adaptive stage,

this individual creates an environment of co-thinkers and activists who adopt the sustainability

strategy to the external factors and demands. The sustainability strategy is carefully planned in

later stages, taking the external and internal factors into account before implementing the

strategy.

43

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APPENDIX

Appendix 1: Interview Guideline

General questions:

1. Describe your company

2. Describe your position and responsibilities.

What sustainability strategies are formulated and implemented in SMEs in the cosmetics

industry?

3. What kind of vision regarding sustainability did your company have from the

beginning?

4. Has your sustainability vision changed or evolved over the years?

5. Which are the most effective strategies made by your company in relation to

sustainability?

6. What is ambition? Where do you hope to see the company and its brand grow from

here?

7. What future sustainability strategies do you believe will be used in your company?

8. Would you say that the cosmetic industry is experiencing sustainability change? How

do you adopt strategic decisions in regards to this industry trends?

Why do SMEs in the cosmetics industry adopt sustainability strategies?

9. Why is it important for your company to have a sustainable brand image, has sustainability

always been a core part of the business?

10. What are the main drivers of your sustainability strategy?

(forced to implement(governmental restrictions, consumer demands), (normal) inside-out

approach or mimicking industry?)

11. How has the company benefited from using a sustainability approach to business?

How do SMEs formulate and implement sustainability strategies in the cosmetics

industry?

12. Who is responsible for the formulation and implementation of sustainability in your

company?

13. How do you make sure that stakeholders are inline with sustainability (trainee programs..)

14. How is sustainability implemented?

15. What strategic steps does your company undertake in order to comply with your vision

regarding sustainability? (Provide a time when you revised a sustainability policy. How did

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that benefit your company?)

16. How do you understand that sustainability strategy is working?

17. Are there (or have there been) any challenges in implementing your sustainability strategy? If yes, how do you deal with these challenges?

The formulation and implementation of sustainability ...

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