Salome Zimmermann
Turn on the Spotlight: How Vocabularies of M otive S h a p e Sustaina b le P ractices
Working Paper
Fakultät für
Wirtschafts-
wissenschaft
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Turn on the Spotlight: How Vocabularies of Motive Shape Sustainable Practices
This is a work in progress. Please do not cite without permission of the author.
Salome Zimmermann
FernUniversität in Hagen, Universitätsstr. 41, 58097 Hagen, Germany
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Turn on the Spotlight: How Vocabularies of Motive Shape Sustainable Practices
Abstract
This article aims at providing a deeper understanding of how vocabularies of motive in institutional logics shape sustainable practices. Drawing on an embedded case study comparing the market, community, state, religious, and sustainable logic, I contribute to an in-depth understanding of the crucial role of vocabularies of motive in shaping sustainable practices. The analysis reveals that each institutional logic implies different vocabularies of motives for sustainability, which in turn become manifest in different institutional toolkits for sustainability. The toolkits differ considerably in terms of degree and the kind of sustainable practices. The findings underline the crucial role of language in shaping sustainable practices and consequently in maintaining differences within an institutional field. This paper thus not only advances the institutional logics and related vocabulary perspective, but also contributes to a broader picture of what is known from the literature on sustainable behaviour of organisations.
1. Introduction
Institutional logics, generally defined as “cultural beliefs and rules that structure cognition” (Marquis & Lounsbury, 2007: 799) provide actors with a taken-for-granted understanding of the means and ends of acceptable behaviour (Friedland & Alford, 1991;
Thornton, Ocasio, & Lounsbury, 2012). There is ample empirical evidence that logics can indeed powerfully affect the practices of organisations (Almandoz, 2014; Battilana &
Dorado, 2010; Reay & Hinings, 2009). Within the institutional logics perspective, a growing number of researchers emphasise the role of communication in the processes by which logics impact on practices; and likewise the role of language in constituting logics.
Drawing on that literature stream labelled as communicative institutionalism (Cornelissen, Durand, Fiss, Lammers, & Vaara, 2015), this article places the vocabulary perspective in the forefront.
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Defined as socially accepted intentions for present, future, or past practice (Loewenstein, Ocasio, & Jones, 2012; Mills, 1940), vocabularies of motive (VoM) yield meaningful categories of conventions of appropriateness, and thereby reproduce and potentially change both institutional logics and practices (Ocasio, Loewenstein, & Nigam, 2015). VoM provide social actors with a shared knowledge that is essential for the coordination of social action (Loewenstein et al., 2012; Tilba & Wilson, 2017). Ocasio and colleagues even argue that practices are not feasible without conventions about the appropriateness of such vocabularies (Ocasio et al., 2015).
It is thus argued that the vocabulary perspective provides the theoretical underpinning for a better understanding of differences among organisations that belong to the same institutional field, as it offers an explanatory approach for both “institutional emergence and change” (Schoeneborn, Morsing, & Crane, 2019b: 17). The vocabulary perspective therefore has the potential to provide insights that are of the utmost interest to organisational theorists.
While the literature is very consistent about the relevance of VoM in shaping sustainable practices (Tilba & Wilson, 2017), previous research that examines institutional logics in the context of sustainable practices does not elaborate on which VoM within the various institutional logics, provokes which specific pattern of sustainable practices. This blind spot, however, hampers an in-depth understanding of how cultural structures at the macro-level, i.e., institutional logics, are instantiated, and thus become material at the organisational level through the implementation of practices. Gaining knowledge of these mechanisms by which logics’ VoM unfold their effects on sustainable practices would enable us to better explain both the change and maintenance of sustainable practices implemented by organisations, than was previously. This paper thus investigates these mechanisms through an exploration of the VoM for sustainable practices that actors use in different institutional logics. The research question dealt with in this article is therefore:
How do VoM in different institutional logics shape sustainable practices?
Empirically, I use an embedded case study on sustainable practices among German banks.
I chose this particular research setting, because it contains different types of banks, each of which is exposed to different institutional logics. This context thus provides an insightful research setting for the study of VoM and the question of how they unfold their effects on practices. Specifically, I compare different banking types, which enable studying the
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VoM implied by the ideal types of logics of the market, community, state, religion, and sustainability.
By analysing how banks reason their sustainable practices, I find that institutional logics provide specific VoM which in turn become manifest in specific kinds of sustainable practices. That is, VoM, as a valid agreed on reasoning schema (Thornton et al., 2012), direct the organisational focus on specific sustainable practices. While some VoM direct the attention to sustainable practices within the core business (e.g., exclusion criteria for lending and investment in banks), other logics rather imply a focus on practices within the business periphery such as philanthropic activities or corporate volunteering. Thus, each institutional logic provides a different institutional toolkit, which is mediated by the specific VoM. The findings thus underline how different VoM put the spotlight on different sustainable practices while casting shadows on others. Ultimately, VoM set the boundaries to an institutional toolkit. The function of VoM thus goes beyond being
“carriers of institutional logics” (Lammers, 2011: 159) as they equally envelop the institutional toolkit of a logic.
Discussing these findings against the background of the vocabulary perspective not only allows theorising on how VoM contribute to shaping organisational practices, but also on the role of VoM in maintaining heterogeneity within an institutional field. The study thus contributes to the literature emphasising the constitutive role of communication for sustainability (Cooren, 2018; Haack, Schoeneborn, & Wickert, 2012; Schoeneborn et al., 2019b) and organisations (Cooren, Kuhn, Cornelissen, & Clark, 2011; Schoeneborn, Kuhn, & Kärreman, 2019a) by illuminating the processes which connect logics, VoM and practices. In addition, the findings have implications for our understanding of different forms of institutional complexity. Finally, I contribute to the literature on sustainable practices in organisations.
The article proceeds as follows. First, I introduce the institutional logics perspective and the VoM as a lynchpin in meaning-making processes in institutional logics. In the following section, I review the business and society literature that has been using the institutional logics perspective as a theoretical framework. Then, I present the methodological approach of the embedded case study. Next, the findings section describes and compares the VoM for sustainability and the related sustainable practices across the various institutional logics. I continue by discussing my findings against the background of the
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institutional logics and vocabulary perspective. Finally, I draw conclusions and suggest directions for future research.
2. Theoretical Backdrop and Literature Review 2.1 Vocabularies of Motive in Institutional Logics
The concept of institutional logics was first introduced by Friedland and Alford (1991) who define them as “a set of material practices and symbolic constructions [that]
constitute organizing principles” (Friedland & Alford, 1991: 248). Logics can be seen as cultural toolkits or cognitive maps guiding managerial attention and providing actors with VoM. Thornton and colleagues distinguish between seven ideal types of institutional orders within contemporary Western societies: the market, the corporation, the profession, the state, the religion, the family and the community. Each of them set the rules of the game, because they shape interests, categories, and options of action.
Institutional orders differ regarding several building blocks, such as sources of legitimacy, authority, identity, basis of norms, attention, strategy, and the economic system (Thornton et al., 2012).
Inherent to each logic are specific values, goals and intentions which are reflected in VoM (Friedland & Alford, 1991; Mills, 1940). Such VoM thus play a central role, as they provide meaning to practices tied to institutional logics (Loewenstein et al., 2012;
Lohmeyer & Jackson, 2018; Misangyi, 2016; Ocasio et al., 2015; Tilba & Wilson, 2017).
Specifically, VoM are based on pragmatic reasoning schemas – a concept Thornton et al.
(2012) define as “generalized sets of rules defined in relation to specific domains of action or classes of goals” (p. 89). VoM thus trigger practices by setting intentions and creating the reference points for social relations, which form the fundament for organised collective action. As such, VoM are defined as socially accepted intentions for present, future, or past practices (Loewenstein et al., 2012; Mills, 1940). This implies that under institutionally different conditions, different VoM and practices are deemed appropriate (Tilba & Wilson, 2017).
Being communicated, VoM recursively instantiate institutional logics as they draw upon the social conventions inherent to a logic (Ocasio & Joseph, 2005). This assumption is key
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to the vocabulary perspective as well as to other theoretical approaches grouped under the umbrella of the communicative institutionalism (Cornelissen et al., 2015). Several streams of literature dealing with the role of language in institutions, some implicitly, some explicitly, posit that “speech and other forms of symbolic interaction are not just seen as expressions or reflections of inner thought or collective intentions but as potentially formative of institutional reality” (Cornelissen et al., 2015: 11). VoM thus are necessary for the social construction of meaning which is why they are fundamental to both practices and institutions. Constituted by words and the meaning associated to them (Loewenstein et al., 2012), VoM do not strictly refer to the use of certain words, than rather to the “invocation of particular institutional reasons to describe or explain particular practices or patterns of practices” (Misangyi, 2016).
Furthermore, VoM are organised in systems that provide coherent principles for communication and action. Therefore, motives can be understood as “significant determinants of conduct” (Mills, 1940: 908), as they both restrict and stimulate behaviour. For instance, Tilba and Wilson (2017) find that VoM give rise to different pension fund investment practices by invoking different temporal perspectives. Equally, Ocasio et al. theorise that practices generate and convey conventions. They argue that coordinating, as one of the four communicative functions of VoM, includes creating both collective attention and shared intentionality (Ocasio et al., 2015: 33). However, they do not deal with how such attention and intentionality are provoked. This blind spot, however, hinders an in-depth understanding of how cultural structures at the macro-level, i.e., institutional logics, are instantiated, and thus become material at the organisational level. Gaining knowledge about these mechanisms, however, would enable us to better explain both changes and maintenance of logics.
2.2 Institutional Logics and Sustainable Practices
The institutional logics perspective has been used extensively in the business and society field. Three different streams within that literature can be identified. First, institutional logics have been used to explain the development of hybrid logics found in social enterprises (Battilana & Dorado, 2010; De Clercq & Voronov, 2011; Stubbs, 2017; Tracey, Phillips, & Jarvis, 2011). Second, the logics concept serves as a lens for studying micro- processes within organisations when a specific sustainable practice is implemented
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(Arena, Azzone, & Mapelli, 2018; Corbett, Webster, & Jenkin, 2018; Kok, Bakker, &
Groenewegen, 2017; Risi, 2018). Third, the impact of one or several logics on social or environmental practices has been studied (Herremans, Herschovis, & Bertels, 2009; Hyatt
& Berente, 2017; Misangyi, 2016). All in all, this literature seems to suggest that the salience of a given logic explains why some firms are “laggards” or “leaders” (Herremans et al., 2009) in terms of sustainability.
However, the majority of authors focus on differences in the extent of social or environmental activities, and less on differences in kind. Research indicates, however, that depending on whether the market or the community logic is dominant, the organisational structure for sustainability varies (Glynn & Raffaelli, 2013). If sustainable practices are orchestrated in different departments of an organisation, it is very likely that it will also implement different kinds of sustainable practices. This argument is echoed by a recent study which has found that different patterns of environmental practices are also related to different VoM, which in turn represent different logics (Misangyi, 2016). Drawing on that, I posit that differences in kind might also be likely. In addition, despite the high relevance of the VoM, none of these studies has focused on identifying of the specific VoM which firms use to justify their sustainable practices within the various core logics.
In sum, reviewing the literature thus reveals that we neither know which VoM play a role in sustainable practices within the different logics, nor how exactly the mechanism by which VoM shape sustainable practices actually functions. In order to address this research gap, an embedded case study has been conducted, the method of which is outlined in the following section.
3. Research Context and Methods
3.1 Research Context: The German Banking Industry
My research objective was to understand how VoM within institutional logics shape organisational practices. Consequently, I needed a research context which displayed a variety of certain organisational practices and where this variety was related to different logics. Such a context would allow comparing VoM implied by the ideal types of different logics and their effects on the specific practices. To put it differently, I sought for
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institutional pluralism within one institutional field. As will be shown below, studying sustainable practices in the German banking industry provides just such a research context, due to the various bank types it encompasses.
The German banking system is characterised by a threefold structure of private banks, public banks and cooperatives (Deutsche Bundesbank, 2018). The 263 private banks include major banks, such as Deutsche Bank, but also smaller banks, direct banks as well as subsidiaries of foreign banks. Given their private nature, I assume that these banks are most strongly exposed to a market logic. The market logic is defined as a shared belief system that guides bank behaviour regarding striving for profits and market status (Almandoz, 2012). Public banks comprise 386 savings banks (“Sparkassen”), seven state banks and a further twelve public banks with special functions. These banks are owned by local authorities such as municipalities, towns, or districts and are thus exposed to the state logic. This logic refers to a shared belief system within which banks strive to support the government in achieving welfare goals and providing a financial infrastructure (Arena et al., 2018; Greenwood, Díaz, Li, & Lorente, 2010).
Finally, there are 915 cooperative banks whose peculiarity entail in the fact that they are owned by their members, i.e., the shares purchased by the members form the equity capital of a cooperative. It follows that the overall purpose of those locally operating banks is the economic development of the members forming a community. Consequently, I argue that such cooperatives are strongly exposed to the community logic (Hellenkamp, 2015). This logic comprises a set of values and norms centred around proximity, social cohesion and reciprocity (Arena et al., 2018; Venkataraman, Vermeulen, Raaijmakers, &
Mair, 2016). Parallel to this tripartite structure, there are two additional banking types with their own particularities. First, there are banks which operate exclusively for churches and Christian organisations. Such banks were founded as cooperatives at the beginning of the 20th century, in order to provide a financial basis and infrastructure for churches and church-related institutions, or their employees. Consequently, they are also owned by Christian organisations (Wulsdorf, 2014), which is why they are strongly exposed to the religion logic. This logic refers to Christian beliefs and values, which are derived from religious texts such as the Bible (Goodman, Louche, van Cranenburgh, & Arenas, 2014;
Louche, Arenas, & van Cranenburgh, 2012; van Cranenburgh, Arenas, Goodman, &
Louche, 2014). Second, there is a small number of ethical banks in Germany. Such banks
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centre their business model around sustainable finance and are similar to Triodos from the Netherlands or Merkur Bank from Denmark. They exclusively lend to and invest in socially or environmentally healthy projects (Cowton & Thompson, 2001) and consequently adhere to a sustainable logic. This logic can be defined as a shared belief system that attaches high value to the natural environment (Corbett et al., 2018). The primary goal of such a bank is therefore to provide products and/or services which address environmental needs.
As a result, the German banking sector provides a highly data-rich research setting for my research purpose. By including the different banking types, a variance in VoM can be achieved which allows comparing their effects on the specific sustainable practices from an ideal-type perspective.
3.2 Research Design & Data Collection
Given the explorative nature of my research objective, I conducted an embedded, multiple case study which is particularly suitable for answering how and why questions, as well as for exploring complex causal relationships (Yin, 2018). Embedded case studies consist of more than one unit of analysis and support the study of phenomena whose boundary and context are not evident (Scholz & Tietje, 2002) which is the case with logics and VoM.
In addition, studying more than one case has the advantage of increasing the validity and robustness of results, to enable more in-depth observations and to reduce bias (Kumar, Stern, & Anderson, 1993). Moreover, analysing multiple cases implies replication, i.e., cases are understood “as a series of experiments with each case serving to confirm or disconfirm the hypotheses” (Eisenhardt, 1989: 542).
Applying typical case sampling (Palinkas, Horwitz, Green, Wisdom, Duan, & Hoagwood, 2015; Patton, 2002), I selected five cases, each representing one of the banking types outlined in the previous section. By doing so, five different institutional logics (market, state, community, religion, and sustainable logic) were included. I chose this sampling strategy because I aimed to detect how different VoM within the logics trigger a variance in the sustainable practices. Within each case, I then selected at least four banks as the embedded subunit of analysis (Yin, 2018). However, it was not only the bank type that served as an indicator of the various logics. I ended up adding subunits, when for each case, i.e., for each logic, no additional and relevant data were found and thus, theoretical
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saturation was reached (Eisenhardt, 1989). As a result, the sample consists of five cases with 26 subunits in total (see Table 1 for an overview).
I very thoroughly analysed the statements on the mission, corporate philosophy and founding history in order to assign a bank to a certain logic. Irrespective of the bank type, the individual bank is exposed to more than one logic and thus faces institutional pluralism (Kraatz & Block, 2010).
Case ID N° of employees
Data sources
(Interviews and archival data)
Private banks
PrB 1 < 5 000 a) Interview with sustainability manager b) Website c) Sustainability report
PrB 2 < 5 000 a) Interview with sustainability manager b) Website, c) Annual Report
PrB 3 < 500 a) Interview with PR manager b) Website
c) Code of conduct d) Company brochure e) Annual report PrB 4 < 5 000 a) Interview with PR manager b) Website
c) Sustainability report d) Business flyer
PrB 5 < 500 a) Interview with head of private banking b) Website PrB 6 < 500
a) Interview with head of strategic corporate development b) Website c) Annual report
d) Customer magazine
Public banks
PuB 1 < 10 000 a) Interview with PR manager b) Website c) Statute
PuB 2 < 1 000 a) Interview with project leader for sustainability reporting b) Website c) Savings bank law d) Statute
PuB 3 < 5 000
Interview with sustainability manager b) Statute c) Savings bank law d) Sustainability report e) Code of conduct f) Website
PuB 4 < 10 000 a) Interview with sustainability manager b) Sustainability report c) Website d) Savings bank law e) Environmental report
Cooperatives
CoB 1 < 5 000 a) Interview with project leader for sustainability reporting b) Statute c) Website d) Code of conduct
CoB 2 < 100 a) Interview with head of private banking, b) Website c) Statute
CoB 3 < 500 a) Interview with head of private customer business b) Website c) Statute
CoB 4 < 500 a) Interview with PR manager b) Code of conduct c) Website
CoB 5 < 500 a) Interview with Head of Private Customer Business b) Website c) Statute
CoB 6 < 100 a) Interview with sustainability manager b) Website c) Code of conduct
CoB 7 < 500 a) Interview with head of private customer business b) Website c) Statute
CoB 8 < 5 000 a) Interview with PR manager b) Sustainability report c) Website d) Annual report d) Statute
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Church bank
ChB1 < 500
a) Interview with sustainability manager b) Sustainability report c) Website d) Statute e) Mission statement
ChB2 < 500 a) Interview with PR Manager b) Sustainability principles c) Website d) Annual report
ChB3 < 500 a) Interview with sustainability manager b) Website c) Environmental report d) Statute e) Code of Conduct ChB4 < 500 a) Interview with sustainability manager b) Website
c) Sustainability report d) Code of conduct e) Statute
Ethical banks
EB1 < 1 000 a) Interview with overall banking manager b) Sustainability report c) Statute d) Website
EB 2 < 500 a) Interview with PR manager, b) Environmental report c) Social report d) Website
EB 3 < 5 000 a) Interview with marketing manager b) Sustainability report c) Website d) Investment policy
EB 4 < 100 a) Interview with CEO b) Website c) Investment policy d) Code of Conduct
Table 1: Cases, Subunits of Analysis and Data Sources
Data were triangulated in order to improve the validity of the analysis (Golafshani, 2003).
I included publically available sources such as sustainability and annual reports, environmental policies, bank websites, press releases, mission statements, codes of conduct and customer magazines. Such documents represent communicative events and as such, constitute institutional logics (Ocasio et al., 2015), which is why they are particularly useful for the study of VoM in different logics. In addition, 26 in-depth interviews with bank employees were also a central source for the study. If available, I used sustainability managers as key informants (Kumar et al., 1993). However, as a specific position for sustainability did not exist at each bank, I spoke in those cases to the person who was mostly responsible for sustainability-related activities, such as product, marketing or public relations managers. Interviews were semi-structured to ensure that I gained similar data for each case, while opening the interviews for further topics to emerge.
I was aware of the potential response bias, particularly of employees from the public relations department. I therefore made efforts to create an open atmosphere during the interviews, by guaranteeing anonymity to interviewees. Additionally, I included various, hidden questions to detect motives behind the reported sustainable practices, that reduced the bias. For instance, I asked for the most successful management argument for a new sustainable practice, or for consequences in the event of cessation of a sustainable
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practice, etc. By doing so, I triggered the interviewee’s perception of the “category conventions and vocabulary dimensions” (Ocasio et al., 2015: 29) within their organisation. Finally, I also discussed the emerging patterns with three interview partners in order to validate findings.
3.3 Data Analysis
Data analysis of the ideal types of the logics comprised several analytical steps (Figure 1).
Using MaxQDA, I first went through all the data and coded paragraphs containing a sustainable practice and a given justification for that practice. Drawing on the concept of reasoning schemas (Thornton et al., 2012), the analysis focussed particularly on causal relationships between a specific practice and a reason for that practice given by the interviewees – a process also referred to as causation coding (Saldaña, 2013: 163). Words and phrases indicating causality, such as due to, because, as, so, since, thus, consequently, that is why, therefore, if-then, etc. served as indicators of such assumptions (Nadkarni &
Narayanan, 2005). Second, I grouped the reasoning schemas in order to extract the VoM for the sustainable practices. Category names were derived from the terms used by the informants. I attached particularly high importance to those VoM which were contained in several interviews and texts, i.e., I searched for “within-group similarity and across group differences” (Eisenhardt, 1989: 540).
Third, drawing upon the premise that “meaning of actions can be inferred from their connection to these vocabularies” (Misangyi, 2016: 425), each VoM was assigned to one institutional logic. That is, when there was a clear reference to the values, norms or strategies associated with a given logic, I classified the VoM as belonging to that logic drawing on the literature dealing with the ideal types of institutional logics. For instance, I coded any reference to profit maximisation as belonging to the market logic (Almandoz, 2012, 2014), any reference to Christian values as belonging to the religion logic (Louche et al., 2012), any reference to environmental values to the sustainable logic (Corbett et al., 2018), and so on.
Fourth, I clustered similar practices. For example, membership in a sustainability-related network or association, cooperation with research institutions, communication on sustainability-related issues was grouped as a non-financial contribution to sustainable development (see Figure 2 and Figure 3).
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Figure 1: Analytical Steps during Data Analysis
Fifth, I then repeated the causal coding undertaken in the first step of analysis. This time, however, it took place at the aggregated level, that is I elaborated on the linked VoM and grouped practices.
This step ultimately enabled comparing which logics and their inherent VoM are related to which kind of sustainable practices (see Table 2 and Table 3). Drawing on the core- periphery thesis (Siggelkow, 2002), I made a distinction between practices that affect the core business and practices in the business periphery (Yuan, Bao, & Verbeke, 2011). It is evident that while some logics imply VoM, which enable rather sustainable practices in the core business of banks, the VoM of other logics constrain the institutional toolkit to sustainable practice in the business periphery. Thus, the comparison revealed that each logic provides – via VoM – a different institutional toolkit, which only contains those sustainable practices which are perceived as appropriate for the support of the VoM. The following section details the specific VoM and sustainable practices within each logic, before the differences among the VoM and practices across the various institutional logics are outlined.
Causation coding
Identification of sustainable practices and their justifications
Categorization of justifications Identification of Vocabularies of Motive
Assignment of VoM to the logics
Based on thorough consideration of previous literature Creation of categories for practices
Clustering of similar sustainable practices
Causation coding at the aggregated level Analysis of link between VoM and grouped practices
Cross-logic comparison
Identification of role of VoM in shaping the institutional toolkit
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Figure 2: Clustering of Sustainable Practices in Banks' Core Business
Exclusion criteria for companies: Alcohol, nuclear energy, embryo research, green genetic engineering, pornography, military equipment, violations of labor and huma rights, child labor, tobacco, animal experiments or any controversial environmental behavior.
Exclusion criteria for countries: Possession of nuclear weapons, authoritarian regimes, discrimination, money laundering, child labour, inadequate climate protection, corruption, violation of labour and human rights, restriction of freedom of association, press and media freedom, excessive arms expenditure and death penalty
Best-in-class principle: Investment in companies that behave in an exemplary manner within an industry.
Use of positive criteria: investment in companies that have sustainability management, environmental management, and the promotion of women
Engaging actively with customers &
invested companies Integrating social and environmental
criteria in lending decisions Integrating social and environmental criteria in investment
decisions
Core Business
Financing of environmentally friendly projects (e.g. photovoltaic plants, wind power plants and repowering measures, plants for the generation and use of biogas, etc)
Financing of socially sustainable projects such as old people's homes, hospitals, schools and kindergartens, fair trade companies and social enterprises, non-profit enterprises with social objectives
Granting of micro-credits: small loans to poor population segments which are traditionally unable to provide securities
Interest subsidies on private loans for ecological or social projects (e.g. electric cars or age- appropriate conversions)
Assessment of social and ecological aspects in credit assessment
Exercise of voting rights and explanation of why and with what purpose the exercise of voting rights is carried out
Constructive dialogue if sustainability requirements are not met by a borrower or a company invested in, or in the event of a critical incident
Involvement in working groups of similar minded institutional investors
Inclusion of sustainable offers (e.g. fonds or bonds) in the product range developed by the investment company
Design of investment products that take into account social and environmental criteria
Active promotion in the sales consultation process
Offering sustainable financial products
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Figure 3: Clustering of Sustainable Practices in Banks' Business Periphery
Business Periphery Operational
environmental management
Philanthropic activities
Non-financial contribution to
sustainable development
Environmental management: Light management, energy efficient building, use of solar energy, lowering of heating, renaturation measures, waste and water management, etc.
CO2 offsetting
Promotion of environmentally friendly mobility: Electric car pooling, bicycle leasing, bicycle parking, guidelines for business trips, public transport tickets, etc.
Paper management: Climate-neutral post dispatch, use of mineral oil- free ecological printing inks and recycled paper, digitalization of communication processes
Environmental purchasing guidelines
Granting of endowed prizes for social or ecological projects
Financial support for ecological projects, e.g. reforestation projects
Financial support for social projects, e.g. children and youth projects, cultural institutions, refugees, sports, etc.
Establishing a foundation with social or environmental purpose
Corporate volunteering: Releasing of employees for voluntary work in social or ecological projects
Lobbying for sustainable finance: Communication and research on sustainable finance: presentations, newsletters, publishing of studies, customer magazines, organization of events
Promotion of financial literacy: Provision of materials for schools, presentations, counselling services
(Active) membership in sustainability-related associations and alliances (e.g. Global Compact, INAISE, Equator Principles) and campaigns (e.g.
"Tax against Poverty“
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4. Vocabularies of Motives for Sustainable Practices
4.1 Market Logic
Within the market logic, I identified three main VoM for sustainable practices: reducing risks, differentiation from competitors and pushing sales, and saving costs. First, reducing risk refers to both financial and reputational risks. Consequently, banks apply sustainable criteria for investment and lending decisions if they anticipate reputational threats. For instance, they exclude certain forms of coal production and check the compliance with human rights of their customers. Beyond that, banks actively engage with their customers if there are any socially or environmentally critical issues because “if something happened, it would be huge reputational risks […]” (PuB4a). On the other hand, sustainable investments and lending policies are understood as a means of reducing financial risks.
Non-financial criteria imply an improvement in the risk-return profile of portfolios when making investment decisions. Likewise, in terms of credit decisions, the environmental and social criteria are integrated “because in the end we also protect ourselves from credit defaults” (CoB4a).
Second, the market logic implies the pursuit of sales growth and differentiation from competitors. On the one hand, philanthropic activities are understood as a form of advertising through which they gain public attention. Banks therefore select the funded projects accordingly. “If we want to implement something new, then we will certainly also see how it can be presented to the public, so that it attracts a certain amount of attention.” (ChB2a). Furthermore, customers may benefit from interest rebates if they meet positive criteria, e.g., when they buy an electric car instead of a conventional one, because it is a way to attract new customers as well as to bind existing ones, i.e., “it’s a sales argument” (PuB2a). Finally, meeting customer expectations is important.
Consequently, banks offer sustainable financial products. This mechanism also applies the other way round. If there is no customer demand, banks also do not make the offering.
Finally, the reduction of costs is intended. “If you can save money, bank people like it”
(CoB1a). Banks implement environmental measures for this purpose, such as saving measures for power, paper, water, and waste or directives for business trips.
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4.2 State Logic
There are two main VoM for sustainability in the state logic. First, banks strive for increased liveability, and second, they aim to ensure financial inclusion. Increasing the liveability is clearly linked to the region within which the bank operates. In order to pursue that motive, banks strategically allocate considerable funds to charitable projects or organisations such as sports clubs, cultural projects or social welfare work in the same region. Donations are administrated by one or several foundations, which ensure criteria- led decisions.
Second, public banks state that part of their task is “the promotion of financial self- sufficiency and financial education, primarily of the youth as well as of every other age group” (PuB2c). Practices related to this motive are more content-wise than money-wise.
On the one hand, public banks offer a free basic bank account on a credit basis which can be opened by anyone, including homeless people or refugees. In addition, banks offer a free consultancy service which includes a budget analysis, budget software and information events on financial education both for schools and adults.
4.3 Community Logic
Sustainable practices in the community logic are guided by two main VoM – enabling civic engagement and supporting the region. In order to enable civic engagement, they facilitate and motivate their employees to get actively involved – for example with the fire brigade or in non-profit institutions – by giving them leave of absence for such purposes, awarding their commitment and pay association membership fees for employees who are volunteering. “We create opportunities and enable personal initiatives which benefit society” (CoB5b). In addition, charity organisations are prioritised in awarding contracts, for example for catering at events. Moreover, banks provide platforms through which non-profit organisations can collect funds or recruit volunteers. “The [crowd-funding]
platform is actually something that really seems to us something essentially cooperative.
So, what one person can't do on his own, many can together” (CoB3a).
The second VoM in the community logic is to “simply give something back” (CoB2a).
Thus, banks financially support charity organisations, e.g., youth projects or sports clubs, by donations or sponsoring. The allocation of financial resources follows a “scattergun
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approach” (CoB3a) within the community, i.e., every club and school should benefit from the support.
4.4 Religion Logic
Given their Christian background, church banks mainly refer to two VoM. First, they intend to protect God's creation. Second, they aim to foster social equality, peace and human rights. Both VoM strongly affect the core business. Banking products and investments therefore, consider manifold social and environmental exclusion criteria because banks “don’t want to generate profits in certain industries” (ChB1a). Typically, businesses are excluded from investments that are related to nuclear power, fossil fuels, environmental pollution, those that endanger biodiversity or relate to genetic engineering;
as well as to arms manufacturing, child labour, human rights abuses, corruption, alcohol, tobacco, pornography, or abortion. Additionally, banks exclude investments in countries, which restrict religious freedom, carry out the death penalty or produce nuclear weapons.
Banks also work with positive criteria for investments. “[…] we prefer to invest in companies that have, for example, a sustainability management, environmental management and the promotion of women.” (ChB1a). Microcredits also form part of that strategy. Negative and positive criteria are complemented by an active shareholder approach. For this purpose, these banks then usually join forces with other church investors.
Beyond the core business, church banks also engage in sustainability-related associations and forms of lobbying, for instance campaigning for a financial transaction tax. Finally, the VoM to preserve God’s creation also leads to a well-established environmental management, which includes, the use of renewable energy, energy- efficiency endeavours, water management, use of eco-certified paper, ecological purchasing guidelines and climate-friendly company cars.
4.5 Sustainable Logic
There are two VoM in the sustainable logic. First, banks strive to preserve the livelihood of the earth and second, the sustainable logic implies the VoM raising environmental awareness by spreading the notion of sustainable finance.
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The first VoM is mainly achieved by reducing the global climate footprint via the exclusive financing of environmentally healthy projects such as renewable energy projects, organic farming and forestry, or closed-loop-economy businesses. A broad range of strict positive and negative criteria (for instance, biodiversity in forestry and agriculture, resource efficiency, renewable energy, circular economy and pollutant, no fossil fuels, nuclear energy, etc.) is applied to each investment decision, be it a proprietary investment, security business or credit granting. Additionally, microcredits are given to conventional farms in developing countries, which are transformed into sustainable agriculture business.
Equally, projects with a positive impact may benefit from special interest rates, whereas deals can be rejected if they do not comply fully with these criteria. “If there is a conventional farm which asks us to finance a photovoltaic system, we will not do so until it switches to organic farming” (EB3a). The positive criteria are therefore ultimately a prerequisite for any form of financing. Finally, environmental management practices extend beyond efforts resulting from the motive of saving costs. These banks use renewable energy; buy highly resource-efficient hardware, up-cycle technical devices instead of buying new ones and adhere to a strict regional purchasing policy. Remaining carbon dioxide emissions are compensated for.
Second, the sustainable logic implies the motive to raise environmental awareness by spreading the idea of sustainable finance. This motive is pursued by a content-wise involvement. For instance, banks provide professional input for sustainable projects, help to build networks, give presentations, write articles, engage in scientific projects and participate actively in sustainability-related networks and associations.
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Illustrative quotes for reasoning schemas Kind of sustainable
practices
Vocabularies
of motives Logic In the investment process for our equity and corporate bond funds, we pay attention to
how companies consider environmental, social and governance aspects, alongside financial criteria. This is primarily a matter of improving the risk-return profile of our portfolios (PrB4c); We are convinced that states or companies that are leaders in these areas are less susceptible to reputational risks, consumer boycotts or even criminal consequences (ChB4b);
also from an economic perspective [we want nothing to do with defence companies], because we believe that these companies will not be successful in the long run (ChB1a)
Integrating social and environmental criteria into investment decisions
Reducing financial and reputational
risks Market
It just reduces the risks, because in the end we also protect ourselves from credit defaults (CoB4), we always have it on board as a relevant factor for reputation risk-management.
And if we finance things that society regards as critical, it may damage our reputation (PuB4a); this also has an impact on our business models, because if we only have coal power in our credit portfolio, then we will have a problem in the long term. So from a risk- assessment point of view, this is a strong focus (PrB2a)
Integrating social and environmental criteria into lending decisions
If I read “Amazon employees on strike” or something about the employment conditions of temporary workers, if I now have any case where I think it has something to do with human rights, I always send it again to the colleague from the Sustainability Risk Rating who can then pass it on to the colleagues if necessary […] It's definitely a risk and quite clearly reputational damage that's there. I would not say that it is intended altruistically, but that it comes from a risk aspect (PrB2a), Human rights violations, for example, are an exclusion criterion [...], because if something like this were to happen, it would of course also be a huge reputational risk (PrB1a)
Engaging actively with customers & invested companies
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Illustrative quotes for reasoning schemas Kind of sustainable
practices
Vocabularies
of motives Logic
We did a survey last year and asked investors, and the results showed that 80% of investors are interested in climate-friendly investments. […] And that is a reason to say, ok – let’s make a sustainable bond (PrB2a); when customers ask about topics like that, of course we react to them (PrB4a), So we also offer a sustainability fund, because many institutional investors also attach importance to it (PrB3a); So in the metropolitan region, of course, you have to stand out somehow from your competitor (CoB6a); This enables us to differentiate ourselves from the competition (ChB1a); Our customers are showing increasing interest in products and services that combine economic, ecological and social criteria[…]. Our approach therefore includes of sustainability criteria in investment portfolios (PrB4c)
Offering sustainable financial products
Pushing sales &
differentiation against competitors
Market
So we also support this in order to differentiate ourselves from the competition, also in order to get traffic to our homepage [...] and thus generate attention for the bank (CoB3a);
it should also fit in with the bank's image (CoB3a); [...] to be widely known. Of course, a bit of advertising is always part of it. That is quite clear (CoB2a); Events are usually sponsored.
Yes, it's all about image and attention (CoB5a); and of course it is also clear that when it comes to funding, one thinks about promoting things that are perceived positively by the public because one expects a positive image from them (PuB1a)
Donating & Sponsoring
But it's also easy to save money (CoB4a); When costs can be saved, it always sells well (CoB1a); that is clear, from a business point of view, that you are acting in a resource-saving manner (PuB1a)
Operational environmental management
Saving costs
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Illustrative quotes for reasoning schemas Kind of sustainable
practices
Vocabularies
of motives Logic In this way, the institutes strengthen social cohesion and the quality of life in their business
area as well (PuB2b); Because a wide range of sports activities contributes to liveability (PuB2b); Improving liveability is of the utmost importance to us (PuB3f)
Donating & sponsoring Increasing liveability of the region
State
Our advisory service supports consumers with free household and financial services. In this way, the financial education and economic freedom of people in our region are sustainably improved (PuB2b); our goal is not to maximise our profits, but to give all citizens from all classes access to financial products (PuB2a); The aim of school-based financial education is to promote competence in dealing with money and financial services for the individual shaping of everyday life and economic issues (PuB2b)
Content-wise support Ensuring financial inclusion
The [crowd-funding] platform is actually something that really seems to us something essentially cooperative. So, what one person can't do on his own, many can together (CoB3a); We create opportunities and enable personal initiatives which benefit society (CoB5b)
Content-wise support Enabling civic engagement
Community
Simply give something back (CoB2a); support the region – that’s our main ambition (CoB7a); of course, we found this good as a supporter in the region (CoB3a); the bank supports schools and educational institutions annually through donations in order to assume responsibility for the region and for the people who live here” (CoB3c)
Donating & sponsoring Supporting the community
Table 2: Vocabularies of Motive in the Market, State and Community Logic and Related Sustainable Practices
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Illustrative quotes for reasoning schemas Kind of sustainable
practices
Vocabularies
of motives Logic Ultimately, it is a question of creating equal opportunities, perhaps making a fairer world
possible (ChB2a); to enable people to participate in society (ChB1a); the subject of human rights is then relatively high up on the agenda (ChB3a); for human rights reasons (ChB1a)
Integrating social criteria into investment and lending decisions
Fostering social justice and peace
Religion
We regard the granting of loans to microfinance institutions as sustainable in the narrower sense, since these funds are used to implement the church’s social objective of poverty reduction (ChB1c); we are really lending to South America, Eastern Europe. And there are these things like
meeting basic human needs, enabling social participation, making social changes those are all high on the agenda (ChB1a)
Micro credits
…] in order to achieve the necessary improvements in ethically sustainable corporate management (ChB4c); we are also a member of the circle of church investors, who are also heavily involved in the topic of engagement [...] in order to further sharpen the topic of sustainability filters (ChB4a); the bank reviews all of its own investments to ensure that they meet the requirements of our sustainability definition. If this is not the case, the bank approaches the companies in order to achieve improvements (ChB1a)
Engaging actively with invested companies
For the environment, for God’s creation (ChB2a); the preservation of God's creation is for us not only a phrase which is appropriate for a church bank, but also a guideline for our actions (ChB4c); and we have set ourselves the goal of making a contribution to the preservation of creation within the scope of our possibilities (ChB4c)
Integrating
environmental criteria into investment and lending decisions
Preserving God’s creation
However, the commitment of church investors is also essentially oriented towards the criteria of social compatibility, ecology and intergenerational justice. Compliance with these criteria often serves to improve and maintain the company's added value in the long term and helps it to live up to its social responsibility (ChB4c); the addition of engagement activities to the classic sustainability approach fulfils our understanding of a holistic sustainability approach (ChB1c)
Engaging actively with invested companies
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Illustrative quotes for reasoning schemas Kind of sustainable
practices
Vocabularies
of motives Logic In all our projects, we seek ways that are less harmful to the environment and promote
sustainable management (ChB3c), and then we have the handling of resources in banking operations. [...]. There are various places where we work, where we optimise. Water, paper and energy. For us, too, the topic of mobility, how do we get to our customers? […] The motivation behind this is ultimately our ambition to anchor sustainability as a dimension in the bank (ChB3a); we didn't do this to save paper costs, but to actually save paper, to reduce consumption, to leave a smaller ecological footprint (ChB4a)
Operational environmental management
Preserving God’s creation
Religion
So that we will still have a viable world in the future […]. We focus on the environment, because otherwise it will be difficult for humans to survive (EB2a); that we understand everything that makes a sustainable life possible for future generations too, in harmony with nature (EB2a); All actions should preserve the life chances of present and future generations and promote their further development (EB1b)
Exclusively lending for and investing in environ-mentally healthy products
Preserving livelihood
Sustainability
In the printing processes, too, the bank attaches high importance to keeping air and water pollution and other environmental influences as low as possible (EB2b); We are completely CO2 neutral. That goes so far that we offer service bicycles to people and tickets for local public ^transport, that all routes that colleagues travel to work and back home are recorded and by which means of transport, so that this can then be compensated for centrally (EB3a)
Operational environmental management In addition, the bank intends to use its more than 30 years of experience to raise societal
awareness of the issue of sustainability even further (EB3b); We want to raise a voice […]
and show an alternative point of view (EB1a), to advance this topic again and again and to bring it into the minds of politicians (ChB1a); Simply bring this green thought to the broad masses (EB2a)
Content-wise involvement (e.g., presentations, roundtables, etc.)
Spread the idea of sustainable finance
Table 3: Vocabularies of Motive in the Religion and Sustainable Logic and Related Sustainable Practices
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4.6 Cross-Logic Comparison: Differences in Kind and Degree
Comparing the sustainable practices that emerge within the different logics, differences in kind and in degree become evident. Differences in degree, for instance, can be seen in the exclusion criteria. The market logic, on the one hand, excludes the financing of oil extraction from tar sands, and puts a limit to the profits a company can generate in the oil industry before being excluded from the investment universe. On the other hand, the sustainable logic excludes any form of financial support for the whole fossil fuel industry, be it through investments or loans. The strictness of the criteria thus varies considerably.
Similarly, such a difference in degree can be observed when it comes to investment products that are offered to customers. While some banks, for instance, completely exclude investments in defence companies, others do not recommend them, but leave it up to the customer.
Likewise, I find differences in degree in the internal environmental management. The market logic supports ecological practices as long as costs can be reduced. Practices by the sustainable logic, in contrast, also include practices that are no longer financially advantageous, but that make sense in terms of the VoM of the sustainability logic, for example purchasing local, organic food for events, which certainly causes higher costs than conventional catering.
In each of these examples, there are parallels in the justification of these practices. These justifications are clearly based on the VoM, which originate from the market or sustainable logic. Both logics provide VoM which spotlight similar practices. However, the degree to which they are implemented, differs. It is due to the different VoM that the practices derived from the sustainable logic go substantially beyond the practices derived from the market logic. To put it differently, both logics enable the same practices but the VoM of the market logic (i.e., to reduce risks, to push sales and differentiation, and to save costs) cap the sustainable practices where they cease supporting the VoM.
Beyond different degrees, the logics also imply different kinds of practices. This is most evident when looking at the community and state logic. In contrast to the other logics, these two direct the focus most strongly to philanthropic activities, i.e., sponsorship or donations. Although in principle, it would be conceivable that the VoM “to support the region” would be pursued through special investment products for example, the community logic provides no schema of reasoning which connects a bank’s core business
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to sustainable practices. In addition, the state and community logic focus exclusively on social practices. Environmental practices, whether in internal environmental management or donations to environmental organisations, are not connected to these two logics.
Furthermore, more subtle differences in kind can be observed. Both state and community logic enable philanthropic practices, however the community logic additionally implies practices that strengthen the community from within, for instance by establishing crowdfunding platforms. Another example of a difference in kind is that the religious and sustainable logic imply a divestment approach; that is, they categorically do no longer invest in certain industries. Engagement plays a minor role. In contrast, banks dominated by the market logic tend to continue their customer relationships. Instead, they train their employees how to constructively dialogue with customers.
Here, too, the explanation lies in the VoM. In the case of different kinds of practices, however, the VoM not only cap or constrain certain practices, but they enable different sustainability tools. In other words, they spotlight different practices within an institutional toolkit. That is, the VoM within a logic serves as a valid agreement on justification and directs the organisational focus towards specific sustainable practices. That is, while some VoM direct the organisational attention to sustainable practices within the core business (e.g., exclusion criteria for lending and investment in banks), other logics rather imply a focus practices within the business periphery, such as philanthropic activities or resource- efficiency measures. Thus, each institutional logic provides a different institutional toolkit, mediated by specific VoM.
5. Discussion
The findings of this study provide empirical evidence for supporting the propositions of the vocabulary perspective (Loewenstein et al., 2012) according to which institutional logics imply a certain vocabulary structure through which cultural categories emerge, i.e., social conventions about meaningful categories (Ocasio et al., 2015). Such categories serve as an inference basis (Mills, 1940) and materialise in practices. Logics thus provide organisations with reasoning schemas that are “labelled cultural categories for thought and action” (Loewenstein et al., 2012: 63). In terms of sustainability this means that an
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institutional logic provides knowledge on what is both an appropriate social and/ or ecological end and means to that end. The means thereby differ considerably, as the VoM act as a filter for the institutional toolkit. Any logic affects the kind of sustainable practices deemed valid and thus implemented by a company through providing sustainability- specific VoM which then become manifest in different kinds of sustainable practices. In addition, the VoM also set the boundaries for the degree to which a sustainable practice is implemented.
A practice is not only enabled by VoM, but also recursively instantiates the VoM (Loewenstein et al., 2012). At the moment of implementation, that is, the moment in which the VoM is acted upon, this VoM also becomes enacted. To put it differently, the organisation behaves in congruence with the VoM and approaches it. Through the enactment, the VoM increases its power as a legitimate argument and unfolds a reciprocal effect on the logic as such. If, for example, a bank’s reputation is protected by integrating environmental information into its lending decisions, the link between the VoM (reducing risks) and practice (integrating of environmental criteria into the lending decision) is intensified. The manner in which sustainable practices are reasoned thus becomes routine (Wright, 2016).
Due to this recursive mechanism, a minimum level of that practice becomes necessary, so that this instantiation can also be deemed valid. While, for instance, a lower-level implementation is sufficient to instantiate the VoM “protecting reputation” (market logic), a more far-reaching approach is necessary to instantiate the VoM “preserving livelihood” (sustainable logic). Likewise, a maximum degree results from the VoM, since each practice is only implemented to the extent that it contributes to an outcome perceived as relevant by the VoM. As those VoM “stand at the nexus of meaning-making in institutional logics” (Misangyi, 2016: 412), they are equally instantiated by the practices. The function of VoM thus extends beyond being “carriers of institutional logics”
(Lammers, 2011: 159) as they equally envelop the institutional toolkit of a logic. In sum, the relationship between logics, VoM and sustainable practices is interdependent, meaning that the processes connecting them are best understood as recursive rather than linear (see Figure 4).
