100 per cent organic? A sustainable entrepreneurship perspective on the diffusion of organic clothing

• DOI: https://doi.org/10.1108/CG-06-2013-0074
• Date: 14 October 2013
• Published date: 14 October 2013
• Pages: 583-598
• Author: Erik G. Hansen,Stefan Schaltegger
• Subject Matter: Strategy,Corporate governance

100 per cent organic? A sustainable

entrepreneurship perspective on the

diffusion of organic clothing

Erik G. Hansen and Stefan Schaltegger

Abstract

Purpose – This paper analyses the sustainability-oriented transformation of industries from the lens of

sustainable entrepreneurship. The authors investigate the co-evolution between pioneers introducing

radically more sustainable offerings and (mostly large) market leaders with their responses. While

sustainability pioneers introduce new products in niche markets, incumbents advance them into the

mass market, together leading to the transformation of industries, markets and consumer habits.

Design/methodology/approach – The authors apply the sustainable entrepreneurship perspective to

a case study of the German clothing retail industry with a focus on organic cotton. The analysis covers

four of the ten largest German textile retailers. Data collection is based on public available sources.

Findings – The late 1970s saw the foundation of Hess Natur, which pioneered organic cotton practices

and supported the development of sustainability standards in the clothing industry. In the beginning this

was largely a phenomenon in niche markets, but to date some organic practices have diffused amongst

mainstream retailers. This is counter-intuitive, as theory suggests that incumbents only adopt practices

with significantly lower sustainability standards than companies in the niche.

Research limitations/implication – The study suggests that more research should focus on the

co-evolutionary dynamics between pioneering companies and incumbents and examine whether and

how sustainability practices diffuse into the mass market.

Practical implications – The findings can help managers to better understand their organisation’s role

in the transformation of industries towards sustainability and, vice versa, how the transformation may

affect them. Leading the transformation challenge by adopting organic and other sustainable supply

chain practices can be an important measure for market success.

Originality/value – This study is one of the few pieces of research investigating sustainability-oriented

industry transformation from a market-based perspective. Actual data on organic cotton diffusion in

German retail are presented.

Keywords Corporate social responsibility, Supply chain management, Corporate sustainability,

Organic cotton, Sustainability-oriented innovation, Textile industry, Sustainable entrepreneurship,

Integrated production, Transformation, Germany

Paper type Research paper

1. Introduction

The key idea of a sustainable economy is the lasting, worldwide guarantee of individual

opportunities to secure basic needs as well as attain a greater quality of life while at the same

time preserving nature and promoting humane social relationships (cf. for example World

Commission on Environment and Development, 1987). Changed and changing markets and

legal, political and social conditions challenge companies to take greater account of

sustainability. The degree of sustainability-oriented industry transformation varies from one

country to the next; however, it is always influenced or even shaped by changes in and of

corporations. In this context, corporate sustainability does not mean (superficial) ‘‘repair’’ or

‘‘corrections’’ of corporate activities, but instead making deep changes, i.e. making

sustainability principles an integral element of corporate value creation – knowing that

DOI 10.1108/CG-06-2013-0074 VOL. 13 NO. 5 2013, pp. 583-598, QEmerald Group Publishing Limited, ISSN 1472-0701

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Erik G. Hansen is a

Postdoctoral Research

Associate and Stefan

Schaltegger is Professor in

Sustainability Management

and Head of the Institute,

both at the Centre for

Sustainability Management

(CSM), Leuphana

University of Lu

¨neburg,

Lu

¨neburg, Germany.

The authors thank their student

assistants Florian Reinert and

Thomas Sommereisen for their

valuable background research.

engagement is most credible when it is comprehensive and lasting and contributes not only

to social and ecological development but also to corporate success.

Industry transformation towards sustainability has been studied in the literature on

sustainable entrepreneurship. Here, new ventures are considered key to introduce radical,

more sustainable offerings in the market to which incumbent firms react, ultimately leading to

a co-evolutionary process toward industry transformation (Hockerts and Wu

¨stenhagen,

2010). Often it is assumed that new ventures introduce higher sustainability standards

whereas incumbent firms adopt only ‘‘watered down’ ’ versions. While this may be often true,

we also find indications that incumbents may also adopt higher standards. It is our aim to

contribute to this literature by presenting an illustrative examination of the clothing industry,

with a focus on the diffusion of organic cotton through incumbent retailers. The change from

conventional cotton to organic and other more sustainable forms of cotton indeed represents

a strategic innovation to incumbent retailers, as they need to:

Bdevelop sustainability consciousness and purchasing patterns of consumers or to enter

new consumer segments;

Bbuild up new competencies in managing the upstream supply chain (i.e. cotton

cultivation); and

Bcreate or engage in co-operation to increase the cultivation of more sustainable cotton.

The paper is structured as follows: in the second section we present the conceptual

framework rooted in the literature on sustainable entrepreneurship. The third section gives

an overview of sustainability issues and the important aspects of sustainability management

in the clothing industry. Section four presents the case study method. The fifth section

presents the findings of the illustrative case study in the clothing industry.Finally, section six

discusses the findings.

2. Conceptual framing: sustainable entrepreneurship

Corporate innovativeness, triggered by sustainability-oriented business leaders and

processes, has initiated a dynamic process in Germany and many other countries

worldwide. This has shaped growth and change processes in companies, and fundamental

structural change in industries and in the economy as a whole. This in turn has influenced the

kind of management increasingly needed to lead a company today successfully.

Corporate sustainability is about systematic management efforts to make a company’s value

creation and related production processes, products and services more sustainable by

reducing negative and increasing positive ecological and social impacts (Schaltegger and

Burritt, 2005). Corporate sustainability can thus be understood as innovation into the

(normative) direction of sustainability. Processes, products and even business models are

improved or replaced to become considerably more ecological and social than previous

versions (Boons and Lu

¨deke-Freund, 2013; Hansen et al., 2009; Hansen and Große-Dunker,

2013). Thus, not only optimisation, but also a fundamental rethinking of the core business

and revenue logic is necessary (Schaltegger et al., 2012). Unsustainable products and

production processes or even entire technological regimes must be abandoned and new

ones created in their place. In the Schumpeterian sense of the ‘‘creative destroyer’’

(Schumpeter, 2006), a sustainable entrepreneur is expected to take unsustainable

conditions as occasions for creating new and more sustainable products, services, and

organisational forms, which can then replace existing structures, making them unattractive

or even obsolete. This is usually confronted with resistance by most of the actors profiting

from the existing (unsustainable) arrangements or regimes (e.g. legal or political hurdles,

missing finance and initial customer support). Following this line of thought has inspired an

entirely new research field of ecopreneurship (Schaltegger, 2002) and sustainable

entrepreneurship (Cohen and Winn, 2007; Hall et al., 2010; Hockerts and Wu

¨stenhagen,

2010; Larson, 2000; Plieth et al., 2012; Schaltegger and Wagner, 2011).

Following Schumpeter,the ‘ ‘entrepreneurial function’’ is not limited to the owner or founder of

a business – rather it is a person or even a group of cooperating individuals successfully

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