Sustainability and interactive network branding in fast-changing business environments

This editorial is part of our BEER Spotlight Editorial Series, where we aim to shed light on relevant topics in business that we believe need more academic attention in BEER and beyond. In this editorial, we address the topic of sustainability in relation to interactive network branding (INB) in the context of fast-changing business environments.

Manifold crises are currently affecting business markets, threatening the existence of companies. These include, but are not limited to, the COVID-19 pandemic, the energy crisis, global supply chain issues, and the war in Ukraine. These crises are increasing the volatility, uncertainty, complexity, and ambiguity of business environments (see Bennett & Lemoine, 2014), calling for a need to develop novel strategies and business models (Koporcic & Törnroos, 2019a; Markovic, Koporcic, et al., 2021). Moreover, in the current fast-changing and ever more competitive business environments, customers and other stakeholders are increasingly expecting organizations to positively contribute to society, reduce their negative impacts on the natural environment (e.g., Markovic, Sancha, & Lindgreen, 2021), and have distinctive and authentic brands (Markovic, Iglesias, et al., 2022). Accordingly, both sustainability and branding are increasingly considered essential components of viable business models and organizational strategies (Koporcic & Törnroos, 2021).

Sustainability can be defined as the “ability of an organization to favorably drive its actions towards concerns and welfare of people, planet and profits in a way that the company will be able to empower itself to meet its own and its customer's current and future requirements successfully” (Gupta et al., 2013, p. 288). In light of the triple bottom line (TBL) approach, sustainability has three key components: environmental, social, and economic (Elkington, 1994, 2018; Goh et al., 2020; Svensson et al., 2016). Environmental sustainability mainly relates to the footprint on the natural environment left by the organization's activities and operations, particularly the use of resources (Hubbard, 2009; Markovic, Sancha, et al., 2021). Social sustainability is primarily concerned with the organization's influence on societal welfare, contemplating internal and external stakeholders and the different types of communities (Gimenez et al., 2012; Hubbard, 2009). Finally, economic sustainability relates not only to making positive financial results through the organization's activities and operations but also to the influence the organization has on the broader economic environment (Ho & Taylor, 2007).

Embracing sustainability can not only enable organizations to positively contribute to (or reduce their negative impact on) society and the environment but also to obtain some more intangible brand-level benefits, such as higher levels of brand affect, brand trust, brand loyalty, and, ultimately, brand performance (see Markovic et al., 2018; Markovic, Gyrd-Jones, et al., 2022; Törnroos et al., 2021). Companies should not only embrace sustainability but also communicate it. Sustainability communication—especially when the company's core activities are not directly related to social and/or environmental programs—has a strong effect on how an organization's brands are perceived in the marketplace, influencing their reputation (Koporcic & Törnroos, 2021). In turn, strong and reputable brands can help a company differentiate itself from competitors, create a unique corporate identity, and attract skilled employees and business partners (Bhattacharya et al., 2008). However, in their communications, companies should be careful that their sustainability initiatives are not associated with greenwashing, as this could generate negative word-of-mouth and strong reputational damage, especially in increasingly interconnected business environments (Markovic, Iglesias, et al., 2022; Pope & Wæraas, 2016).

Traditionally, academic literature has examined branding from a single-firm perspective, as an internal management activity (e.g., Barros-Arrieta & García-Cali, 2021; Gapp & Merrilees, 2006). In practice, however, it is rarely the case that a brand can control its reputation or even identity (Koporcic & Törnroos, 2019a). In recent years, studies have started to look at brands as cocreated with diverse types of stakeholders (e.g., customers, suppliers, distributors; Iglesias, Landgraf, et al., 2020; Iglesias, Markovic, et al., 2020; Koporcic & Halinen, 2018; Markovic & Bagherzadeh, 2018). Accordingly, it has been argued that failure to consider stakeholders as a part of brand-building processes represents the new marketing myopia (Sheth & Sinha, 2015; Smith et al., 2010).

To capture the involvement of stakeholders in brand-building processes, the concept of INB has been recently introduced (Koporcic & Halinen, 2018). INB is described as a socially constructed process, through which the identity and reputation of a company—as two key pillars of a brand—are being cocreated with a company's stakeholders (Koporcic & Halinen, 2018; Koporcic & Törnroos, 2019b). The INB process, thus, takes a multi-stakeholder perspective, while focusing on interpersonal interactions between firm representatives that act as brand ambassadors and boundary spanners in business network settings (Koporcic, 2020). Therefore, for a company to be competitive in volatile, uncertain, and fast-changing business environments, it needs to have representatives that are capable of combining branding with networking activities (Koporcic & Törnroos, 2019a, 2019b). As argued by Iglesias and Ind (2020, p. 711): “leaders also need to promote an open organizational mindset that sees all stakeholders as relevant potential collaborators so that they can orchestrate a strategic collaborative innovation network, capable of fostering competitive advantage.”

Moreover, as a strategy to re-legitimize businesses, (re)gain the trust and loyalty of customers and other stakeholders, and maintain a positive reputation even during crises, Porter and Kramer (2011) compel firms to create shared value, by focusing on the TBL components. Thus, it is crucial to note that, similar to branding, sustainability should be treated as a strategic activity that is multi-stakeholder oriented, as its functionality and influence concerns different actors from the surrounding network (Koporcic & Törnroos, 2021).

Pointing to an interrelationship between the fields of sustainability and branding, research has reported the positive influence of adopting sustainability practices, such as prevention of pollution or reduction of consumed natural resources and energy, on strengthening of a firm's brand (e.g., Chen, 2010; Olsen et al., 2014; Vesal et al., 2021). However, it has mainly done this from a single-firm perspective. Following the reasoning underpinning INB, a firm's reputation regarding sustainability is not influenced only by its own actions, but also by the attitudes toward sustainability held by its stakeholders and its relationships with them (e.g., Sheth & Sinha, 2015; Törnroos et al., 2021). In other words, the actions of each stakeholder can have a positive, but also negative, influence on the reputation and overall brand of the firm in hand. To meet the growing demand for products being made in a sustainable way, manufacturers are increasingly pushed to alter their behaviors and implement sustainability-related practices in their production processes (Kumar & Christodoulopoulou, 2014; Sharma et al., 2010). When executed properly, all partners, who are committed to sustainability, are likely to benefit from the resulting improved reputation as, for instance, the 3BL Media's list of the 100 Best Corporate Citizens¹ shows.

Thus, the challenge for a company is to choose those INB partners who have the same or similar ethical standards and sustainability-related values. This may require significant efforts and investments from the focal company, followed by close monitoring to ensure that all supply chain actors adhere to the same sustainability-related practices (Törnroos et al., 2021). An example of a negative influence of partners' actions on a focal firm's reputation comes from Nestle, Cargill, and Hershey, whose suppliers were selling cocoa from the Ivory Coast at lower prices than competitors, allegedly due to the use of child and forced labor in their cocoa production. As a result, companies were sued by eight citizens of Mali. Although the lawsuit was dismissed by the US court in 2022,² such cases show the crucial relevance of INB and of carefully choosing business partners with the same or similar ethical standards and sustainability-related values. Unsustainable practices and failed initiatives may have negative legal, financial, and especially reputational consequences for all parties involved.

As Sheth and Sinha (2015) argue, companies that embrace a stakeholder orientation should also utilize sustainability and branding to tackle TBL challenges. At the same time, this sustainability-based stakeholder perspective should avoid being reactive but, instead, aim toward becoming an integral part of organizational decision-making processes (Bhattacharya et al., 2008). When combined, INB and sustainability can lead to the creation of competitive advantage through improved reputation and customer satisfaction (Luo & Bhattacharya, 2006), the association of a brand with sustainability-oriented values and with social and environmental responsibility (Sheth & Sinha, 2015), while attracting skilled personnel (Bhattacharya et al., 2008).

An example of a company that successfully integrated INB and sustainability into its business strategy is Patagonia. Patagonia is an outdoor clothing and gear company that created a strong brand for its focus on responsible business practices, such as its circular economy-based program “Worn Wear”³ which encourages repair and reuse of its products instead of new purchases. Patagonia also portrays the focus on sustainability over profit by collaborating only with organizations committed to sustainability, arguing that they are “reluctant to co-brand with oil, drilling, dam construction, etc. companies that they view to be ecologically damaging”.⁴ Another example is that of Unilever, a multinational consumer goods firm, and its “Sustainable Living Plan”⁵ initiative, which, they argue, can be used as a benchmark for corporate sustainability. By contributing to diverse sustainable development goals (SDGs), Unilever focuses on reducing its environmental impact by half, improving the health and well-being of more than 1 billion people, while enhancing livelihoods for millions of people. Unilever is an example of an organization that embraces a stakeholder-oriented approach to branding and sustainability, in part by providing training courses on sustainability for its shareholders (Iglesias et al., 2023). As these companies showcase, integrating sustainability as a part of INB can benefit a company and its partners, by enhancing their respective reputations, increasing competitiveness and customer loyalty, among others, while benefiting society at large (Koporcic & Törnroos, 2021).

Nowadays, discussions on sustainability and branding have expanded, and the two fields have become more explicitly interconnected (Czinkota et al., 2014; Gupta et al., 2013; Iglesias & Ind, 2020). Moreover, sustainability is facing a more prominent shift toward becoming a crucial part of business performance (Markovic, Sancha, et al., 2021). However, combining sustainability and branding—for instance, by including sustainability as a part of INB—remains a challenging task (Koporcic & Törnroos, 2021; Sheth & Sinha, 2015). Stakeholders increasingly demand from companies a focus on TBL issues and expect to be the beneficiaries of sustainability initiatives, rather than targets of marketing activities (Luo & Bhattacharya, 2006). However, many companies fail to see this demand as an opportunity to innovate and gain a better position in the marketplace, but rather perceive it as a costly pressure, and thus are tempted to address it in a reactive fashion. A solution may lie, we suggest, in taking a holistic view of sustainability and branding, while focusing on their impact on different stakeholders, instead of counting the costs (Sheth & Sinha, 2015).

Based on the above, we would like to call for further research at the crossroads of sustainability and branding, especially INB. We believe that BEER scholarship is well positioned to inform INB, by applying and adapting extant sustainability-related theorizing to explore and refine this phenomenon further. Accordingly, we would be interested in receiving manuscripts dealing with—for example—the following topics, themes, and contexts for consideration for publication in BEER: