Facilitating Sustainability Collaborations in SMEs: Strategic Challenges in the Scandinavian Outdoor Industry Master’s Thesis in the Master’s Programme Management and Economics of Innovation ISABELL KERNICH LISA ÖHLÉN Department of Technology Management and Economics Division of Entrepreneurship and Strategy CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2019 Report No. E 2019:060 MASTER’S THESIS E 2019:060 Facilitating Sustainability Collaborations in SMEs: Strategic Challenges in the Scandinavian Outdoor Industry ISABELL KERNICH LISA ÖHLÉN Examiner, Chalmers: Hans Löfsten Department of Technology Management and Economics Division of Entrepreneurship and Strategy CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden 2019 Facilitating Sustainability Collaborations in SMEs: Strategic Challenges in the Scandinavian Outdoor Industry ISABELL KERNICH & LISA ÖHLÉN © ISABELL KERNICH & LISA ÖHLÉN, 2019. Master’s Thesis E 2019: 060 Department of Technology Management and Economics Division of Entrepreneurship and Strategy Chalmers University of Technology SE-412 96 Gothenburg, Sweden Telephone: + 46 (0)31-772 1000 Chalmers digitaltryck Gothenburg, Sweden 2019 Abstract This master thesis was written with the purpose to highlight the alignment between industry preservation and preservation of the environment. Sustainability collaborations among industry actors has proven to be valuable to accomplish more effective solutions to common challenges. The industry of subject is the Scandinavian outdoor industry, motivated by the industry characteristics, such as the friendly competitive landscape and an overall willingness to collaborate. The thesis focuses on finding the barriers that limits sustainability collaborations within the industry and how these barriers are lowered and how industry dimensions are better utilized. To enable for a profound analysis the empirical data collection includes a wide range of companies and additionally, two industry organizations who provides a more holistic perspective of the industry with regards to networking and innovation. Findings are complemented with an iterative data collection of theory to provide a theoretical framework, serving as a support for the analysis. The main findings conclude that sustainability must be integrated as a part of the overall strategy to enable successful sustainability collaborations. To accomplish this integration, the suggestion is to implement a sustainability strategy and overcome the often-occurring resistance of this. The solution is to provide metrics that visualize clear effects and result, preferably that can be translated into monetary measurements such as profitability. Moreover, three dimensions has been identified to help facilitating sustainability collaborations. These dimensions have been concluded as third-party organizations, network and knowledge sharing. By increasing the utilization of those dimensions, the number of sustainability collaborations are believed to increase according to the industry actor’s willingness to collaborate and thus, approach the full industry potential. Keywords: barriers, dimensions, sustainability strategy, sustainability collaborations, Scandinavian outdoor industry Acknowledgement This is the resulting report of the master’s thesis course during the spring semester of 2019 at the department of Technology Management and Economics at Chalmers University of Technology. The thesis finalizes the Master’s Programme of Management and Economics of Innovations and corresponds to 30 ECTS. The subject of the thesis is suitability collaborations and what barriers inhibits those, but also what dimensions facilitates them. The industry of subject is the Scandinavian outdoor industry, motivated by the industry characteristics and our personal interest in the industry and nature, hence no direct company stakeholder was involved in the process. We would like to express our gratitude to a number of people who were a part of making this thesis possible. Firstly, we would like to thank our supervisor Hans Löfsten who has provided interesting insights, feedback and academic knowledge throughout the process. Secondly, we would like to express our gratitude to Johnn Andersson, who volunteered to assist with industry expertise when needed. Thirdly, we would like to thank all companies who answered our survey at ISPO Munich 2019, but especially the two organizations and seven companies who contributed largely to this study by committing to interviews. Without their participation and knowledge this report would not have been possible. It is our great desire that this report will provide interesting insights to them. Isabell Kernich & Lisa Öhlén, Gothenburg, May 2019 1 Introduction .................................................................................................................................. 1 1.1 Background ........................................................................................................................... 1 1.2 Problem Analysis .................................................................................................................. 3 1.3 Research Questions ............................................................................................................... 4 1.4 Purpose .................................................................................................................................. 4 1.5 Demarcations ......................................................................................................................... 4 2 Theoretical Framework ............................................................................................................. 5 2.1 Innovation .............................................................................................................................. 5 2.1.1 The General Concept of Innovation ............................................................................. 5 2.1.2 Sustainable Innovation .................................................................................................. 5 2.1.3 Business Model Innovation ........................................................................................... 6 2.1.4 Open Innovation ............................................................................................................ 8 2.2 Collaborations ....................................................................................................................... 8 2.2.1 Collective Action Problem ............................................................................................ 8 2.2.2 Network Management ................................................................................................. 10 2.3 Strategy ................................................................................................................................ 10 2.3.1 The Concept of Strategy .............................................................................................. 10 2.3.2 Sustainability Strategy ................................................................................................. 11 3 Method ...................................................................................................................................... 15 3.1 Research Design .................................................................................................................. 15 3.2 Data Collection.................................................................................................................... 15 3.2.1 Survey ........................................................................................................................... 16 3.2.2 Interviews ..................................................................................................................... 17 3.2.3 Data Analysis ............................................................................................................... 19 3.2.4 Ethics ............................................................................................................................ 20 4 Empirical Findings ..................................................................................................................... 21 4.1 Survey Findings .................................................................................................................. 21 4.2 Interview Findings .............................................................................................................. 22 4.2.1 Organization A ............................................................................................................. 22 4.2.2 Organization B ............................................................................................................. 26 4.2.3 Company A .................................................................................................................. 28 4.2.4 Company B .................................................................................................................. 30 4.2.5 Company C .................................................................................................................. 32 4.2.6 Company D .................................................................................................................. 34 4.2.7 Company E ................................................................................................................... 35 4.2.8 Company F ................................................................................................................... 37 4.2.9 Company G .................................................................................................................. 39 4.3 Empirical Summary ............................................................................................................ 41 5 Analysis .................................................................................................................................. 43 5.1 Industry characteristics ....................................................................................................... 44 5.2 Strategy ................................................................................................................................ 45 5.2.1 The Limitations of a Non-Existing Sustainability Strategy ...................................... 45 5.2.2 Strategy as a Key Element to Sustainability .............................................................. 46 5.2.3 Implementation of a Sustainability Strategy .............................................................. 47 5.2.4 Business Model Innovation as a part of Implementing Sustainability Strategy ...... 48 5.2.5 The Need for Metrics................................................................................................... 48 5.3 Dimensions .......................................................................................................................... 49 5.3.1 Third-party Organizations ........................................................................................... 49 5.3.2 Network ........................................................................................................................ 52 5.3.3 Knowledge Sharing ..................................................................................................... 53 5.4 Collaborative Success Stories ............................................................................................ 54 5.5 Summary of Analysis ......................................................................................................... 55 5.6 Discussion............................................................................................................................ 56 6 Conclusions ............................................................................................................................ 58 6.1 Suggestions for Further Research ...................................................................................... 58 A Appendix .................................................................................................................................... 59 A.1 Survey ................................................................................................................................. 60 A.2 Survey Findings ................................................................................................................. 61 A.2 Interview Template: Organizations................................................................................... 65 A.3 Interview Template: Companies ....................................................................................... 66 References ...................................................................................................................................... 67 1 1 Introduction This chapter will serve the purpose of introducing the conducted study and the research context will be outlined and elucidated. Initially a description of the Scandinavian outdoor industry will be presented and thereafter connected to global warming and its effect on industry interests. The industry is believed to be an environmentally conscious niche industry, hence motivated as positive towards improvements. The background will be followed by a problem analysis and the purpose that lay the foundation upon where the research questions are formulated. 1.1 Background The Scandinavian outdoor industry is a small and fragmented industry consisting mostly of small- and medium-sized enterprises (SMEs), which are companies with less than 250 employees (OECD, 2005). The Scandinavian outdoor industry has 13 % of the market share of outdoor apparel and clothing in Europe (Statista, 2019). The companies are to a large extent focused on B2C, selling sports and outdoor clothing and equipment to end-users (Scandinavian Outdoor Group, 2019). The industry also includes a number of ingredient brands, which are providing a technical solution for the other brands, and hence, are defined as B2B. In this study 33 companies have been included in the survey. Two industry organizations together with six companies and one ingredient brand has been interviewed more profound. The leading trade fair ISPO in Munich, is the main gathering where brands, sellers, suppliers and dealers meet yearly (ISPO, 2019). In February 2019 the trade fair had a total number of 1099 exhibitors within the segments of outdoor and snow sports from all over the world. 91 of those exhibitors were Scandinavian (ISPO, 2019), this provides a reasonable benchmark for the total number of companies within the Scandinavian outdoor industry. When referring to the Scandinavian outdoor industry, both the segment of outdoor and snow sports are included. Characteristics for the industry is, due to its small size, the personal connections that extend across corporate boundaries. The Scandinavian spirit has a great impact on the industry and is by Scandinavian Outdoor Group (2019) described as “friendly, informal, open and democratic”. Such adjectives are expected to be important as they affect industry dimensions, the term dimension will be used throughout the study to describe the competitive landscape where companies and organizations thrive. The study will explore industry dimensions and identify the most important ones and how they reinforce each other. The outdoor industry is closely connected to the nature and companies have a history of hiring truly enthusiasts within outdoor sports (Harrison and Corley, 2011). This result in employees and founders sharing the interest for outdoor leisure and nature, hence the environmentally conscious attitude is assumed to be larger than in other industries. Outdoor enthusiasts who spend a lot of time in nature have self-interest in preserving the environment, but it further includes the business perspective since outdoor products is what generates the monetary profitability. The outdoor industry bases its business on nature experiences and are therefore dependent on the preservation of the nature. Today, global warming is a fact and one of the causes is industrial production (United Nations, 1987), which causes for the need of action now. However, opinions 2 differ with regards to the urgency of the problem, but there is a presumption that companies will need to change their way of doing business, to adjust to future laws, requirements and demands. The challenge is to find out how to work proactive with sustainability and how to turn it into a business opportunity. The term sustainability refers to the overall objective of creating a present that does not jeopardize the quality of the future (Senge, Smith, Kruschwitz, Laur and Schley, 2008). Today, there are indications that the global warming may lead to changes in the seasons and climate where one effect is a decreased snow cover and ice extent (Folland et al., 2001). Rising temperatures results in precipitation in form of rain instead of snow (Folland et al., 2001). Due to climate changes in terms of warmer winters and less snow, this industry, and especially the segment focusing on snow sports, will inevitable be affected (Gilaberte-Búrdalo, López-Martín, Pino-Otín and López-Moreno, 2014). Senge et al. (2008) describes how coalitions and collaborations over corporate boundaries are the only way to achieve a critical mass to create an impact in the sustainability challenge. No single company is large enough to change the way an industry is operating. In alignment with this, the United Nations (2019) have defined an initiative called Sustainable Development Goals, consisting of 17 goals that addresses the sustainability challenges that humanity is facing with the purpose is to create a sustainable planet. The Sustainable Development Goals are interlinked with each other and goal number 17 “Partnership for the Goals” describes how collaborations and partnership will be required to achieve all other goals (UN, 2019). This refers to all levels, both governments, companies and the civil society and UN (2019) states that a shared vision and goals focusing on the preservation of the planet and its inhabitants are necessary. In this study, sustainability collaborations refer to any collaborations or projects including two or more companies or industry associations within the Scandinavian outdoor industry. For it to be defined as a sustainability collaboration, the purpose of the collaboration needs to be achieving better work methods, materials, products or innovations with the aim to decrease the environmental footprint. Industry collaborations are common within in larger industries, such as the automotive and ICT especially within open innovation (Vrande, de Jong, Vanhaverbeke and de Rochemont, 2009). Huizingh (2011) states that open innovation is a concept within innovation management that has drawn a lot of attention during the last two decades but is still under research. The core of the concept is further described as opening up the innovation process and can take several forms, but the chosen definition for this study was formulated by Henry Chesbrough and reads “Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively. [This paradigm] assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as they look to advance their technology.” (Chesbrough, Vanhaverbeke and West, 2006). Industries such as the previously mentioned automotive and ICT consist of many large corporations with specialized departments for design, product development and research and development (R&D). Giants of this size basically do not exist within the Scandinavian outdoor industry. As an SME, all activities are integrated in the companies’ daily operations causing for 3 a fear of engaging in larger collaborations that are associated with major risks. There are several industry associations who operate to facilitate industry collaborations and push sustainability work, both on Scandinavian and European level (Scandinavian Outdoor Group, 2019). In this study these types of organizations will be referred to as third-party organizations. Arenas, Sanchez and Murphy (2013) states how third-party organizations can enable collaborations over corporate boundaries by help eliminating conflicts and providing structure. Different types of third-party organizations are suitable for different types of collaborations. This study will focus on the type called convener which is preferred when the third-party organization are intended to firstly, coordinate and secondly, onboard new companies and stakeholders to projects and thirdly, it is important that the process is unbiased (Arenas et al., 2013). When a convener holds formal authority, they are reliant on obtaining the stakeholders trust (Wood and Gray, 1991). Trust is crucial since the stakeholders need to be ensured that the third-party organization is not operating in favor to any participators but rather adds objectivity to the collaboration. Further, Wood and Gray (1991) describes how conveners need to be powerful to allocate resources. However, informal authority is also utilized, for example conveners use credibility, knowledge and influence to create common understanding and solve problems within the collaborations (Wood and Gray, 1991). Arenas et al. (2013) further describes how third-party, by providing structure and “bridges” between companies, can help solving the collective action problem. 1.2 Problem Analysis Actions such as sustainable innovation and sustainability collaborations requires money, time and knowledge which creates barriers for the relatively small actors within the Scandinavian outdoor industry. Willard (2012) describes that associated problems are that industry actors may be unable to see the financial incentives of performing sustainable innovation and sustainability collaborations, thus this is not prioritized. A problem for many companies is the perception that meeting sustainability requirements are costly which cause for the assumption that improving sustainability work will continue to increase costs moving forward and to prove the opposite is challenging (Willard, 2012). Epstein and Buhovac (2010) further states that stakeholder pressure often forces managers to prioritize short-term goals that supports profitability, which often cause for low prioritization of long-term sustainability goals. The challenge is to prove that sustainability collaborations can be turned into a business opportunity and will not limit, but rather increase profitability. The fact that the Scandinavian outdoor industry consists of a small number of SMEs, implies that actors have limited ability and power to influence suppliers, customers and other stakeholders individually. Additionally, SMEs may find it difficult to bear the costs for sustainable innovations on their own (Chesbrough, 2007). As mentioned in 1.1 Background, Senge et al. (2008) describes how coalitions and collaborations over corporate boundaries are the only way to achieve a critical mass to create an impact in the sustainability challenge. This cause for a belief that industry collaborations will help overcome these barriers if industry dimensions are better utilized, which gave rise to the interest of this study. 4 1.3 Research Questions Based on the described purpose following research questions have been formulated: 1. How are barriers limiting sustainability collaborations within the Scandinavian outdoor industry? 2. How are dimensions utilized to lower barriers and encourage sustainability collaborations within the Scandinavian outdoor industry? 1.4 Purpose The purpose of this study is to clarify that preservation of the Scandinavian outdoor industry is aligned with the preservation of the environment. By illustrating the main barriers and dimensions in the industry, the objective is to provide a guidance of what barriers other SME industries can face, but also what dimensions that can be better utilized. 1.5 Demarcations The geographical scope has been limited from the worldwide industry to only include actors within the Scandinavian outdoor industry because of the perception of this as a homogenous group with similarities in behavior. The geographical proximity has also enabled for a feasible width of the study. Moreover, the actor’s willingness to participate in the initial survey but also the qualitative in-depth interviews conducted later on in the study is considered a demarcation for the result of the study. Customer demand will not be subject to deeper exploration and the aspects regarding supply chain and logistics will be excluded. 5 2 Theoretical Framework This chapter presents the theoretical framework that has emerged throughout the study. The literature that has been selected and anchored within the presented research questions to enable for the researches to answer them with theoretical support. The data has been collected from books, journals and websites and afterwards clustered into themes to provide a logic presentation for reader. The theoretical material has been iteratively updated as new findings has been revealed, thus demanding more or other theory to fulfill the purpose of the study and answer the research questions. The three main topics that will be covered is innovation, collaboration and strategy. The reason for this is that these topics are identified as crucial to achieve a change towards sustainability. Firstly, innovation is the foundation of new production methods, materials, products and business models. Secondly, collaboration is believed to be necessary for SMEs, that have limited resources, to access external knowledge and enable sharing costs in order to perform successful sustainability work. Lastly, strategy lays the foundation for how companies operate and allocate their resources. 2.1 Innovation Innovation is a key component which is crucial in the shift towards a more sustainable world (Senge et al., 2008). The main concept innovation can refer to different types of innovations, from product development to changing processes or even the way an organization operates. These will be further described in this chapter, under the headlines sustainable innovation, business model innovation and open innovation and how these relate to each other. 2.1.1 The General Concept of Innovation According to Baregheh, Rowley and Sambrook, (2009), innovation and its management is a key strategic issue for practitioners as well as academia and several different definitions exists. In order to find a definition of the concept of innovation Baregheh et al., (2009) has through research and content analysis of previous definitions come up with six attributes that can be used a basis to a definition of innovation. The six attributes are nature of (1) innovation, (2) type of innovation, (3) stages of innovation, (4) social context, (5) means of innovation and (6) aim of innovation. As previously mentioned, the authors further describe that different practitioners tend to look at innovation from their perspective only, but these six attributes are presented to be independent on the context and social entities and thus, rather present the essence of what innovation actually is. The definition by Baregheh et al., (2009) thus reads “Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace.”. 2.1.2 Sustainable Innovation Senge et al., (2008) describes how our society, collectively, have created the environmental problems that we today are facing. The industrial age was not planned, nor lead by a single company or political leader, it was shaped by countless of innovations derived from everywhere with the purpose was to simplify humans’ lives. Senge et al., (2008) believes this will be characteristic for the next shift in age, which by the authors is called the necessary revolution, 6 pointing out the need of involving sustainable thinking and opportunities. Characteristic for the industrial revolution was that innovators was inspired by machines, and hence, were thinking in terms of efficiency and increased comfort in people's lives. Senge et al., (2008) means that it is necessary that sustainability and nature become the widespread new inspiration and way of thinking for innovators, for a revolution and not just random events to occur. “In short, to shape a sustainable future, we all need to work together differently than we have in the past” (Senge et al., 2008). Sustainable innovation is a widely used concept, but with no established definition of its exact meaning. According to Clark and Charter (2007) this is reflecting the difficulties of defining concepts such as sustainability and sustainable development. However, the chosen definition for sustainable innovation is the one presented by Clark and Charter (2007) and reads “Sustainable innovation is a process where sustainability considerations (environmental, social, financial) are integrated into company systems from idea generation through to research and development (R&D) and commercialization. This applies to products, services and technologies, as well as new business and organization models.”. It is further described that sustainable innovation covers the entire spectrum of innovation, from incremental to radical innovations. 2.1.3 Business Model Innovation According to Teece (2010), all companies do have a business model, but the existence of it is either implicit or explicit. The author further states that business model innovation can be a pathway to competitive advantage. As climate changes keeps growing and industries changing, the average company needs to adjust in order to manage new challenges and requirements. Considering the fact that customers are assumed to become more concerned regarding climate threats and sustainability, which will likely cause for a need of business model innovation. Teece (2010) further describes that a well-developed business model is the key to ensure that innovators are able to both deliver and capture the value from the innovations. This is further supported by Johnson, Christensen and Kagermann (2008) as the authors describe the business model to consist of four linked elements; customer value proposition, profit formula, key resources and key processes. Firstly, customer value proposition is how the company manages to create value for their customers, meaning that a customer problem is solved by the solution presented by the company. Secondly, profit formula concerns how the company are profiting on their solution and includes revenue model, cost structure, margin model and resource velocity. Thirdly, the key resources are the assets the company possess within their organization and includes people, technology, products, facilities equipment, channels and brand (Johnson et al. 2008). These assets are all considered to be required in order to enable delivery of the solution i.e. the value proposition to the targeted customer. Fourthly, key processes consist of operational and managerial processes that allow for value delivery that can be both repeated and scaled. Despite the fact that this framework might seem too simplistic at first glance, according to Johnson et al. (2008), the power is to be found in the interdependencies of its elements. Together these four elements create and deliver value and thus, form the building blocks of the company. Teece (2010) builds on these elements, explaining that in order to create a successful business model it needs to be differentiated and hard to imitate for new entrants and competitors. 7 Amit and Zott (2012) describes that business model innovation can occur differently; through content, which means that novel activities can be added, through structure, meaning that existing activities can be linked in new ways or through governance, which means that one or more parties that perform the activities are changed. The authors explain that if one of these three design elements are sufficiently changed, then the business model is changed and thus innovated. According Teece (2010) the importance of connecting the business model to the strategy cannot be underestimated in terms of protecting the competitive advantage created by the business model innovation. Amit and Zott (2012) describes that the business model is generally not what managers change when they search to innovate. The simplistic, yet demanding, change of innovating an individual product or process is usually preferred since it is easier to look at the trees than the forest. However, the authors recommend focusing on the holistic and systemic perspective to get the overall design of the activity system right, before focusing on details. To do so, the suggestion is to ask six questions, stated below, before launching a new model. By addressing those questions, the identity of the company within the environment of networks and ecosystems that the company operate in will appear more clearly to management. 1. What customer needs will the new business model address? 2. What novel activities could help satisfy those needs? 3. How could the activities be linked in novel ways? 4. Who should perform the activities? What novel governance arrangements can be found? 5. How will value be created for each stakeholder? 6. What revenue models can be adopted to complement the business model? Amit and Zott (2012) presents an example, comparing Apple and HTC in order to illustrate business model innovation and its possibilities. In the beginning Apple were only selling hardware and software products such as the iPod, but when realizing that they would be able to encompass a relationship with their customers through iTunes, revenues, profit and stock price increased rapidly. The authors compare this model to “razor and blade” model by Gillette and call it a successful business model innovation. HTC on the other hand, have continued to focus on the hardware design and product innovation which limits the company to capitalize only on their smartphones and tablets, but not from their usage. Translated into the terms of Gillette, HTC sells great razors but no razor blades (Amit and Zott, 2012). 8 2.1.4 Open Innovation As described, the Scandinavian outdoor industry consists mainly of SMEs. Vrande et al. (2009) are addressing the phenomenon of open innovation in SMEs and explains both to which extent it is applied but also the motives behind. Open innovation has mostly been studied in relation to larger high-tech companies within industries such as automotive and ICT, but this study is addressing SMEs. Conclusions can be drawn that medium-sized companies are more likely to engage in and adopt open innovation collaborations compared small-sized companies. However, the trend of practicing open innovation is increasing in both size segments. Vrande et al. (2009) describes knowledge acquisition and the effectiveness of innovation processes as motives for SMEs to engage in open innovation activities. But the most appealing reason is market related i.e. to serve customer more effectively, enable new market entrance and thus ensure maintained growth and increasing revenues. By joining forces with more incumbent industry actors SMEs are more likely to overcome their largest challenge which according to Gans and Stern (2003) is commercialization rather than the invention itself. The non-profit, non-political organization Scandinavian Outdoor Group is an industry initiative founded based on the common problem of commercialization in export markets (Scandinavian Outdoor Group, 2019). There are barriers associated with open innovation and Vrande et al. (2009) has identified the main barrier in SMEs to be the challenges associated with different organizational cultures that occur when external partners start collaborating over corporate boundaries. Fredberg, Elmquist, Olila and Yström (2011) describes the confusion and tensions experienced by intermediaries as they participate in open innovation initiatives. The authors have identified four different types of tensions, which are related to career, trust, loyalty and knowledge sharing. It is not necessarily suggested to remove the tensions to achieve better results since the elimination might create stable roles among participants, which is assumed to lower the dynamics within the open innovation activity and thus impair the result. Fredberg et al. (2011) rather advocate acknowledgment of the tensions in order to lower confusion and thus enable for better results among participants. 2.2 Collaborations Collaborations and united efforts are believed to be crucial to overcome the sustainability challenges that both industries and the planet are facing (UN, 2019; Senge et al., 2008). This section describes theories relevant for industry collaborations, where both competition and networks are present. 2.2.1 Collective Action Problem Olson (2009) explains how previous theories describes how groups or organizations exist to enhance the interests of its participants. Humans have throughout the history formed groups to become more efficient, stronger, better hunters or to protect each other. Olson (2009) draws upon how individuals act on their self-interest are expected to correlate to how group members 9 act for the group’s best interest. The author further questions whether this phenomenon always is the case, which results in formulating the collective action problem. The collective action problem, described by Olson (2009), is the state where all group members would be better off by commonly working towards a goal, which is too difficult to achieve individually. Conflicting interests and the risk that some actors will not contribute, but only benefit from the commonly created value results in a situation where no player acts. Hence, value creation does not occur (Olson, 2009). When a company enters a collaboration with other competing companies there is always a risk to fail and such failures can hurt the brand or the own organization by economical means (Kramer, Brewer and Hanna, 1996). Another aspect, according to Kramer et al., (1996) is that some participating organizations might put in more effort or resources than others, and hence, there is a risk that less contributing organizations takes advantage of the created collective value, the so called free-rider problem. Kramer et. al, (1996) further states that this might make a barrier for companies to justify initiating of collaborations. There are a lot of parameters that could cause failure when collaborating, even if the willingness to collaborate is present. For over a century the Swiss watch industry accounted for a large share of the world watch market (Glasmeier, 1991). By collaborating and creating a strong network over the last century the Swiss watch manufacturers created great advantages in their mechanical watch production and was superior compared to other regions and countries. Eventually, new technologies emerged in other parts of the world. In Hong Kong, the companies started developing new production systems and the quartz crystal technology, which proved to be cheaper, possess more accurate time keeping qualities and the speed of the technological development turned out to be way more rapid than the previous production techniques (Glasmeier, 1991). By the 1970s the Swiss companies could not be agile enough and adjust its production to stay competitive to other watch companies and hence lost market shares and were perplexed by the external threats. Glasmeier (1991) describes how the companies in the region tried to deal with the problem by initiating collective research in new technologies and innovations, but due to the lack of formal specification on how the valuable results should be shared or dealt with among the participating companies, the Swiss industry’s development became stagnate. Since no individual company could be the first to use and benefit from the collectively developed technology, its commercialization failed. However, Olson (2009) describes that the most crucial factor to ensure all participants act for the better good of the group, is to make sure the members of the group or organization share the same purpose and objectives. Olson (2009) states that the larger and more complex the group is, the more difficult this gets and Kramer et al., (1996) further describes that large and complex networks who fail to get continuity in their collaborations encounter even more difficulties in building trust. The fact that companies compete with each other adds another layer of risk to the collaboration and trust problem. It is easier for smaller or homogenous organizations to rely on each other (Kramer et al., 1996). 10 2.2.2 Network Management The field of Network Management and Business and Innovation networks has been thoroughly explored over the past few decades. There are different types of networks and Möller, Rajala and Svahn (2005) defines the difference between “network of organizations” and “organization network” where the former could be any market where organizations who direct or indirect form relationships. The latter is formed with a purpose where organizations have predefined roles or responsibilities. Due to the intentional creation and their strategic aims Möller et al. (2005) names these as “strategic nets”. “Strategic nets are formed by a few actors pursuing mutual goal(s) and having jointly agreed and contractually defined roles and responsibilities. Actors relinquish part of their autonomy to the net to achieve goals beyond their individual resources.” (Möller and Halinen, 2017). The activities within strategic nets can vary depending on its nature. Möller et al. (2005) describes three types of nets, where the first one is Vertical Value Nets which are based on vertical integration, and thus, includes suppliers, retailers and other actors along the vertical value chain. The aim is to create more efficient value systems. The second type, which is relevant for this study, is Horizontal Value Nets, consists of alliances and coalitions of competitors who seek to share resources of development, marketing and other important capabilities. Government or industry associations, research institutes and universities can also be a part of this type of value net. The third type is Multidimensional Value Nets (MDVNs) which are more complex nets that consists of different organizations with the purpose to develop new technologies or businesses. When participating in strategic nets, companies need to consider their own position with regards to other actors. By planning and operating strategically, companies can ensure they have the ability to manage and influence the value activities of other actors (Möller et al., 2005). To create a value net that together share resources and develops new technology, companies must succeed in building trust in each other. It is also crucial that managers possess the ability of identifying roles, capabilities and goals of other actors to be able to strategically adjust their own companies’ activities to the changing environment in the net (Möller et al., 2005). 2.3 Strategy This section will present the importance of strategy and how the traditional views of this concept differs from sustainability strategy. Further, emerging drivers of sustainability strategy will be presented as well as the complexity of implementation. This is considered highly relevant as the lack of sustainability strategies have turned out to be inhibitory in the industry in accordance to empirical findings. 2.3.1 The Concept of Strategy According to Grant (2016), a strategy clarifies how certain objectives are achieved, but due to the broadness of the concept, several definitions exist. The strategy is used to increase the effectiveness enabling higher quality of the decisions made, help coordinating and ensure long term objectives are achieved. 11 Strategy as decision support - Strategy is used to unite the decisions made within an organization and according to Grant (2016) a strategy has several positive effects on decision making. By reducing the number of relevant alternatives, it eases the process of decision making. The strategy is further helpful as it collects and integrates knowledge from different people at the same time as it eases the use of analytic tools. Strategy as a coordinating device - Grant (2016) states that the main challenge in many companies is how to coordinate different actions within the organization. Strategy helps handling this challenge by working as a communication device between the CEO and the individuals within the organization. Elements such as identity, goals and positioning of the company are communicated through the strategy. In order to ensure the company is moving in the same direction, there is a strive to achieve consensus and along with this, the strategy of the company is developed. After the strategy has been composed it is usually translated into goals, commitments and performance targets in order to provide guidance for the individuals within the company and ensure all employees move forward in the same direction. Strategy as target - Strategy concerns both the present and the future. When working with future strategy it is, according to Grant (2016), important to motivate and inspire the employees within the organization by setting aspirations. The strategy of a company originates from the top management but are handled differently depending on the size of the company (Grant, 2016). Smaller companies usually do not find the need to explicitly state the strategy in documentation but is rather keep in the head of the managers. Larger companies on the other hand, usually have the company strategy in writing in confidential strategic planning documents. Despite all of this, Grant (2016) means that most companies value to communicate the strategy to their employees, customer, business partners and investors. Collis and Rukstad (2008) describe that the strategy can be communicated either through a mission statement, a statement of principles or values, a vision statement or a strategy statement. The authors continue stating that words do lead to action and that if a company invests time in in developing a well formulated strategy, this will have great effect on the employees within the organization and both energize and empower them to help achieve long- term goals. 2.3.2 Sustainability Strategy A successful implementation of a sustainability strategy requires both formal and informal systems (Epstein and Buhovac, 2010). The formal ones are according to the authors; processes, performance measurements and rewards and the informal ones are for example management, culture and staff. Epstein and Buhovac (2010) describe how leadership is a core component in the implementation of sustainability strategies and that the importance of devoted leadership cannot be stressed enough. If owners acknowledge that sustainability can create new revenue opportunities from a strengthened brand and increased sales, in combination with lowered costs, this will encourage the incorporation of sustainability in the strategy (Epstein and Buhovac, 2010). However, the benefits of sustainability efforts might be difficult to visualize, especially 12 if the company currently have a low level of sustainability work. This is explained by Willard (2012) in the Five-Stage Sustainability Journey to a Sustainable Enterprise. 2.3.2.1 The Five-Stage Sustainability Journey to a Sustainable Enterprise Willard (2012) presents five stages for organizations in their journey to become sustainable. The first stage, pre-compliance is the lowest level of environmental and sustainable engagement, where companies tries to trick the system and only do what they absolutely have to. The second stage, compliance, describes companies who work with sustainability to meet current and minimal requirements and regulations to ensure they can continue operating their business (Willard, 2012). The incentives are derived from external factors. Harmful media coverage and pressure from environmental organizations, e.g. Greenpeace, forces this kind of companies to act to protect their reputation. Organizations that take their sustainability work to the third stage, beyond compliance, do according to Willard (2012) experience positive effects, such as payoffs and increased cost-savings from eco-efficiencies, derived from previous investments. Efforts at this stage often include decreasing waste and pollution. At this proactive stage companies may also find their brand becoming strengthened, due to the CSR initiatives. These effects therefore often lead to further motivation to continue on the sustainable path. The fourth stage, integrated strategy, describes companies who work with sustainability proactively as an integral part of the company’s strategy, budget and R&D. Sustainability is considered a business opportunity. At the fifth stage, purpose/passion the sustainability awareness originates from the company’s management and leaders. Sustainability is highly incorporated in the mission and vision of the company and it is common that these types of companies are founded with sustainability incorporated in the mission. Willard (2012) describes that it is possible for companies at a lower stage to develop their sustainability work and move all the way up to an integrated strategy, or even to implement sustainability as a core reason for their existence, but this may require extensive work. Many companies find it overwhelming to prioritize sustainability work with diffuse and insurmountable goals as saving the world, when their everyday operations require their full attention. This is according to Willard (2012) one reason why this transition takes long time for most companies. Epstein and Buhovac (2010) describes how managers often, due to external pressure from owners or shareholders have to prioritize short-term objectives, which negatively affects the implementation of sustainability strategies. 2.3.2.2 Measurable goals In order to clarify and simplify the implementation process, the formulation of goals and performance measures are crucial (Epstein and Buhovac, 2010). Willard (2012) adds to this by stating that the return on investment on sustainability must be identified, quantified and translated into business value for sustainability initiatives to pass top management’s tough prioritizations. The authors’ statement “Money and numbers are the language of business” further underlines this. Epstein and Buhovac (2010) describes how a sustainability strategy differ from other strategies within a company. The traditional organizational goals, e.g. increased efficiency and number of innovations resulting in a higher profitability are easily measured. In contradistinction, sustainability goals, which according to Epstein and Buhovac 13 (2010) can be defined as obtaining “excellence in social, environmental and financial performance simultaneously” are focused on a long-term perspective and are usually difficult to translate into financial metrics. Because of this, projects regarding elimination in waste or energy consumptions which results in better financial performance are hence prioritized over larger projects that will not risk affecting profitability negatively or require initial monetary investments (Epstein and Buhovac, 2010). This is in line with Willard’s (2012) theory, describing the logic of a company at the level of compliance, and hence, more comprehensive initiatives will be denied. Epstein and Buhovac (2010) provides a straightforward way of breaking down organizational activities and assign them with appropriate goals and key performance metrics as presented in figure 1. In contradiction to what Willard (2012) states, the metrics are not required to relate directly to financial numbers or profitability but are rather measured to track the company’s total effort with regards to sustainability over time. The metrics or goals can vary from the nature of just articulating a vision to track how much positive versus negative media coverage the company is subject to. Epstein and Buhovac (2010) means that results of individual actions or initiatives might be difficult to see in financial numbers immediately, while tracking and acknowledging all efforts will enable the visualization of long-term financial progress. Figure 1. The Epstein Corporate Sustainability Model (Epstein and Buhovac, 2010) 2.2.3.3 Stakeholder management Implementing new sustainability strategies or actions leads to uncertainties in the organizational performance, which in turns to a various extent will affect stakeholders and may cause different reactions from these (Epstein and Buhovac, 2010). The first results that a company and its stakeholders experience after completed sustainability activities are described as outputs, while the long-term financial performance is defined as outcome. One way to reduce the Internal context Leadership Sustainability strategy Sustainability structure Sustainability systems, programs and actions Sustainability performance (may be both an output and outcome) Stakeholder reactions Long-term corporate financial performance Human and financial resources External context Business context INPUTS PROCESSES OUTPUTS OUTCOMES Feedback Loop 14 dissatisfaction among stakeholders is to have a continuous conversation with them and include them in the sustainability work process, and ensure that the company understands the stakeholders’ needs, but also to increase the level of trust from their side. This in turns, result in stakeholders who can make well-grounded decisions on what products to buy or what company to work for (Epstein and Buhovac, 2010). Further, it is recommended to implement a feedback loop, from the stages of both outputs and outcomes back to leadership, which enables the leaders of an organization to test assumptions and adjust the creation of a sustainability strategy further (Epstein and Buhovac, 2010). 15 3 Method In this chapter the methodology for the study will be outlined and elucidated. The chapter describes the chosen research methodology and design as well as data collection methods. The choice of methods and design was tailored to gather necessary data to enable answers for the research questions. 3.1 Research Design Saunder, Lewis and Thornhill (2009) describes how research philosophy is the starting point in selecting research design and methods in social science. The research philosophy investigates the researchers’ worldview in terms of positivist and social constructionist viewpoints. This can vary depending on the formulation of research questions and the researchers’ assumptions or predicted outcome of those. Easterby-Smith, Thorpe and Jackson (2015) adds to this by describing how a positivist viewpoint builds upon the paradigm that the social entities in the world exist externally, meaning, its attributes can be measured with objective methods. Thus, when the research question is a proposition and the researchers are striving to falsify a hypothesis, a quantitative method, which is enables measurable data providing for identification of patterns, is the best option. In a social constructionist viewpoint, the researchers believe the world is constructed socially, which implies it consists of nuances, feelings and motivations that cannot be translated into numbers (Easterby-Smith et al., 2015). Hence, to enable a subjective analysis including as reflection or intuition, the research method is recommended to be of a qualitative nature. A qualitative method is suitable when the research questions are more of an open question type, rather than a proposition. The data will consist mostly of words and the purpose is to explore new dimensions and underlying factors that the researchers could not predict. Due to the explorative nature of this study, where the purpose is to identify unknown barriers and drivers a qualitative approach was motivated. This is further strengthened since Easterby-Smith et al., (2015) recommends a qualitative method for research where the design is cases and surveys, and the research questions starts with “How...”, which is the case in this study. 3.2 Data Collection Due to the qualitative nature of this thesis, the methods of data collection have been chosen accordingly. Primary data from qualitative surveys and non-standardized interviews such as the chosen semi-structured interviews, are according to Saunders, Lewis and Thornhill (2009) used to gather data for a qualitative analysis. This will help researchers answer not only “what” and “how” questions, but also the “why’s”. The data collection was initialized with a survey in the early phase of the study to provide a brief understanding of the Scandinavian outdoor industry and what motivates and hinders industry actors to work with sustainable innovation. The survey was later followed by interviews conducted with selected actors within the same industry and the result of the surveys was used to guide the subsequent interviews to enable for effectiveness in question formulation. The purpose of the interviews was to gain a deeper understanding of the interviewee and the organization and how it is operating in terms of sustainable innovation 16 and sustainability collaborations to enable for answering formulated research questions. To complete the robustness of the study, secondary data will be gathered from relevant literature. 3.2.1 Survey Survey is a method to collect information in order to gain understanding of people’s opinions, feelings or behaviors. The respondents are instructed to answer a form with predesigned questions and the survey can be conducted on either paper, online or in person. Assistance from the surveyor can be given, but some surveys are also held in privacy, for example over the Internet (Fink, 2009). The survey was conducted in an early stage of the process to verify the problems this thesis is built upon and give indications of what level of importance it has for industry actors. It served the purpose of validating that the subject was worth pursuing and building this study around. Another reason why a closed survey was conducted at this early stage and at this specific fair, was to include a large number of companies within the industry. For the scope of this study it was not possible to interview a larger number of companies, which motivated a closed survey that could be distributed to a large proportion of the companies in the Scandinavian outdoor industry. The survey contained questions regarding what barriers the companies experience in working with sustainability and collaborations with other actors and to what extent they wish to improve. The fair where the survey was conducted is a large industry fair, called ISPO, in Munich, Germany. The fair took place on February 3rd till 6th 2019 and the survey was conducted during the 5th till 6th. After getting a short introduction including the purpose of the study, the respondents were asked to fill out the survey on an iPad which was handed out by the surveyors, who also assisted with answers to any potential questions. Fink (2009) describes five crucial parts of a survey; questions and responses (1), sampling and design (2), data processing and analysis (3), pilot testing (4) and response rate (5). Firstly, this survey had forced-choice questions, meaning no open-ended answers were possible. According to Fink (2009) this enables to deal with complex behaviors, allows for multiple answers and are most user-friendly. The questions were designed thoughtfully to be familiar for all actors within the industry, to avoid ambiguity and based on relevant theories, such as “Emergent Drivers to Sustainability”, described in the theoretical framework. The survey was conducted during a large industry fair and it was considered that the stressful environment might affect the time the respondents can spare. Hence, the number of questions was limited to seven and only closed answers were allowed. This was motivated by the fact that it takes less time to answer which makes it easier for the surveyors to convince respondents to participate. Secondly, the Scandinavian outdoor industry consists of a limited number of actors, where a large proportion will attend as exhibitors on the industry fair ISPO in Munich. The sampling, referring to the number and the characteristics of the participants (Fink, 2009) of this survey was chosen to focus on the participants at the fair. These are considered a good representation of the Scandinavian outdoor industry with regards to size, business area and attitude and awareness of the research questions. The role of the participants varied from marketing managers to CEOs to salesmen, but all possessed a good overall understanding of their own companies. In this study, only one survey 17 was conducted. For the third part, the alternatives were designed to be easily analyzed, for example, form a basis of how large percentage of the actors have a certain opinion or behavior. Other questions aimed to highlight how the respondents rate the importance of certain alternatives in comparison to other. Fourthly, self-administered surveys need to be designed with a clear and unambiguous language to ensure that least possible misunderstandings occur (Fink, 2009). To ensure the survey-template achieved this, it was tested on several people before rolling out. Feedback was handled by adjusting accordingly. Finally, the survey got 100 % response rate due to the personal handout and collection of the survey. 33 respondents out of 91 targeted companies at ISPO answered the survey. 3.2.2 Interviews According to Saunders et al. (2009), using interviews as a method for data collection can be advantageous when gathering relevant data with regards to the research questions. Interviews can further serve the purpose of helping to more correctly articulate the research questions to ensure for a better study. Three different interview approaches are presented by Saunders et al. (2009) as applicable for data collection, these are highly structured, semi-structured and unstructured interviews. The different approaches describe the levels of structure and formality which applies to the preparation and conduction of the interview. According to Easterby-Smith et al. (2015) the structured interviews are applicable when the researcher is conducting a quantitative study and wants to gather quantifiable data. As a result of this, the structured interviews were not considered applicable to this study due to its qualitative nature. The semi-structured and unstructured interviews on the other hand, are used for qualitative research and were thus considered more suited options for the data collection in this study. They are further considered suitable when wanting to understand an opinion or a certain matter from the interviewee’s perspective (Easterby-Smith et al., 2015). The chosen approach for this study was semi- structured interviews that were performed with two different interview templates that was used as the script for all interviews conducted. The two different templates are motivated by the differences in characteristics of the respondents since they were either employed at a company in the Scandinavian outdoor industry or a third-party organization i.e. industry associations within the same industry. As Saunders et al. (2009) describes, the semi-structured interviews are together with the unstructured interviews defined as non-standardized in contradiction to the structured interviews. By using semi-structured interviews, the interviewer has a predefined list of questions and topics that can be both excluded and added during the interview, depending on the conversation and the situations that might occur. The motivation of choosing semi- structured interviews was the upside of having a structured template at the same time as allowance of flexibility adjustments were present. The interviewees were allowed to speak more freely, and the interviewer adjusted the order of the questions dependent on how the conversations developed. By doing so, there is a chance it leads to more interesting conversations and that the interviewee will reveal information that might not have been brought up in an interview limited by structure and formality. Saunders et al. (2009) further explains 18 that by conducting semi-structured interviews the interviewer has the possibility of excluding questions that of various reasons are not applicable for the specific respondent because of organizational contexts etc. The nine interviews conducted during the time period of March 12th till April 5th. 3.2.2.1 Interview Sampling The interviews were conducted with two organizations and seven companies with the purpose to cover a broad perspective of the industry. The organizations and companies have been selected with a non-probability sampling, which means that the respondent has not been randomly selected but rather selected by using purposive sampling (Bryman and Bell, 2011). Purposive sampling means that the respondents has been strategically selected. In this study the selection was made to include variations and combinations regarding products, company size, geographical location, sustainable profile and membership or collaborations with third-party organizations to illustrate differences. Regarding products, companies selling both clothes and textile, but also hardware products and gear are represented in the study. Company size is considered self-explanatory, the selection of geographical location is Scandinavia even though most companies are of the same nationality, attempts were however made to include more companies from other Scandinavian countries but was limited of factors such as response and relevance. To include a broad sustainability perspective, companies that on beforehand was assumed to have relatively different sustainable profiles was selected and also companies that both are and are not members the selected third-party organizations. Lastly, companies who both are and are not participating in well-known collaborations has been selected. The organizations included in the study were also selected through purposive sampling because of their respective purpose and functionality within the industry. Organization A was included based on the organization’s innovative and sustainable role within the industry. Organization B was included motivated by the organization’s coordinating and network building community. This environment and the collaborations between the two were assumed interesting. 3.2.2.2 Interview Form Regardless of the chosen approach, the interaction of the interview can take several forms. It can be conducted face-to-face, over telephone or buy using the internet and video calls. The interviews can further be constructed to include only the researcher and the respondent which is a one-to-one interview, or it can include more respondents and take the form of a group interview or a focus group which is a one-to-many interview (Saunders et al., 2009). In this study all interviews have been conducted over internet using video calls via Skype or by phone to eliminate any geographical barriers that will otherwise affect the sampling of the respondents and obstruct the purposive sampling of participants. Furthermore, only one-to-one interviews was conducted, and all interviews aimed to last for approximately 45 minutes. The interviewer did vary between the two researchers conducting the study. However, both were always present to ensure that relevant follow-up questions were asked and that no questions or subjects was unintentionally excluded. To further support the previous, but also to ensure that all information is captured and eliminate information loss all interviews were recorded with permission from 19 the respondents (Bryman and Bell, 2011). After completion, all interviews were summarized instead of transcribed and the summaries were distributed to the respondents for approval of material and citations. This resulted in exclusion of minor details containing sensitive information. However, these changes did not affect the content of the interviews and thus not the data analysis. In table 1, all interviewee roles are presented together with the date and duration of the interview. Organization / Company Interviewee Role Date Duration Organization A Sustainability Project Manager 2019-03-12 69 min 32 s Organization B Coordinator 2019-04-02 40 min 4 s Company A Sustainability Manager 2019-04-02 47 min 10 s Company B Sustainability Developer 2019-04-05 46 min 18 s Company C Head of Innovation 2019-04-11 61 min 11 s Company D Product Developer 2019-03-21 39 min 52 s Company E Co-Founder & Product/Design 2019-03-20 42 min 44 s Company F Head of Product Development 2019-04-04 30 min 46 s Company G Marketing Manager 2019-03-20 48 min 8 s Table 1. List of Interviews 3.2.3 Data Analysis The section will present how data was collected, summarized and analyzed with the purpose to be presented in a structured and perspicuous way to enable for easier reading. Further, the research quality is evaluated, and ethical considerations are discussed. 3.2.3.1 Qualitative Data Analysis During this study the data analysis has been performed as an iterative process. The survey was performed during an early stage of the research and conducted within short and intense period of time. Thus, the relevance of organization A was not yet discovered and included in the survey, which would have been preferred to investigate their importance within the industry. From this point forward, data from interviews and literature were iteratively collected. After finishing the data collection, the interview recordings were summarized, closely compared to a transcription, with the purpose of eliminating information loss. From the interview summaries, significant findings were extracted and labeled into 1st order categories, with inspiration from a qualitative analysis method presented by Gioia, Corley and Hamilton (2013). This was an overwhelming part with lots of data and different topics and categories. To gain an overview and enable clustering of this data, all categories were written down on sticky notes and put on a wall. From here, similar categories were paired, and duplicates removed. Eventually, the findings were sorted into six 2nd order themes (Gioia et al., 2013). From this stage, it became clear that some of the 2nd order themes were inhibitory to sustainability collaborations, hence, identified as barriers. Other themes were considered having a facilitating effect on sustainability collaborations, hence, identified as industry dimensions. The clustering of categories also resulted in a theme that gave a clear perception 20 of industry characteristics. These themes are sub-categories to the aggregate dimensions (Gioia et al., 2013) of industry characteristics, barriers and industry dimensions. Further, Gioia et al. (2013) describes how a pre-mature literature review can cause for biased analysis of the data, leading to researchers searching for pre-decided topics and patterns. To mitigate the risk for this, the literature review has been conducted iteratively and a more thorough review of the theme’s topics was conducted in parallel to the analysis process. 3.2.3.2 Research Quality As any research conducted, this qualitative research study needs to undergo a quality assessment and thus an evaluation according to certain criteria. Usually the terms of reliability and validity are used to asses quantitative research, but those have been questioned with regards to qualitative research (Bryman and Bell, 2011). According to the authors, qualitative studies should rather be evaluated from the perspectives of trustworthiness and authenticity, thus these criterions will be used in the evaluation of the study. Trustworthiness includes credibility, transferability, dependability and confirmability and has corresponding ones within quantitative research; credibility corresponds to internal validity, transferability to external validity, dependability to reliability and confirmability to objectivity (Bryman and Bell, 2011). Credibility of the study is considered achieved as the study is carried out with good practice. The findings have been discussed with a third-party and non-member of the social world where they were found. Transferability refers to the fact that a qualitative study usually represents a small group with the same common characteristics, this describes the nature of this study, but the researchers made an effort to include a broad variation of companies in the study to open up for transferability of findings. Dependability are handled according to the requirements of Bryman and Bell (2011) stating that records should be kept of all steps of the research. Since complete objectivity is considered impossible to ensure, but this study has been conducted in good faith and thus achieves confirmability. 3.2.4 Ethics Bryman and Bell (2011) describes that ethical principles in terms of business research concerns the four areas of harm to participants, lack of informed consent, invasion of privacy and deception. The information shared by survey respondents and interviewees are according to themselves not considered harmful to any of the businesses. However, the participating companies has been promised anonymity to the extent that no organization names, company names or project names will be revealed in the empirical findings. All interviewees have been offered the opportunity to read the interview summaries with the possibility to exclude or adjust the information shared, thus the problem with lack of informed consent are considered to be overcome. As invasion of privacy is closely tied to the lack of consent, it is considered to be handled and eliminated. The absence of deception corresponds to the literature of Bryman and Bell (2011) as the researchers of this study have done their utmost to represent the research as what it is. 21 4 Empirical Findings The following chapter will present the findings from the primary data collections carried out in this study. The empirical findings consist of answers from one survey and nine interviews which were held with company and organization representatives. Firstly, the findings from the survey, which was conducted at an initial stage of the study will be presented and thereafter the interviews. 4.1 Survey Findings In this section the empirical findings from the survey will be presented. It is structured to present the result from each survey question, one at a time. The empirical findings are presented in a corresponding order to the interview survey template. A survey was conducted in February at the trade fair ISPO in Munich 2019, which is the largest trade fair for sports business including the segments of snow sports, outdoor, health and fitness, urban and team sports (ISPO, 2019). However, all targeted companies were Scandinavian. When all industry actors were gathered the opportunity of conducting a survey was seized. The purpose of the survey was to gain broad and overall understanding of the companies’ perception regarding relevant topics for upcoming interviews and to validate that the subject of the study was worth pursuing. A further expectation was to make contact and introductions for the interviews in order to hopefully enable easier access to relevant interviewees. As a response to the first question in the survey, which is visualized in diagram 1 in Appendix A2, all companies state that their attitude towards sustainability work exceeds the level described as “we do what we have to”. In fact, the majority of the companies place themselves at the highest level of engagement, where they aim to create value for society and environment. The second and third questions were asked in a way that the respondent had to weigh six drivers for sustainability actions against each other. The responses are shown in diagram 2 respectively 3 in Appendix A2. Several respondents found this difficult, since all six alternatives appeared to be important, which was the intention. The question regarding the most important drivers to work with sustainability shows a clear result, where 20 respectively 17 out of 33 respondents have stated that “preservation of the industry” and “build a strong brand” are considered the top two most important drivers. The remaining four drivers have been given a fairly even distribution and “achieve competitive advantage” has been chosen the least number of times. The third question had the same six drivers, but the respondent was instead asked to choose the two least important drivers. Correlated to the second question, 18 respondents state that “achieve competitive advantage” is the least important driver to work with sustainability, followed by 14 respondents choosing “meet regulations” as least important. It can be assumed that since all the companies, according to the first question, have an ambitious attitude towards sustainability work, meeting regulations are something they already do and thus, do not pay much attention to. Worth mentioning is that in both the second and third question in the survey respondent were asked to choose two options out of six which means that there should be 66 answers since there was 33 respondents. However, there is only 65 and 58 answers in question 22 two respectively question three. This can be interpreted in two ways, either the respondents found the question confusing or the simply thought only one answer were applicable for their company. Question number four focuses on the main barriers with regards to sustainability work. Cost and time are considered the main barriers among the respondents. A large portion of the companies also states that the lack of knowledge is a barrier. Only four respectively six companies respond that uncertainties in customer demand and supplier relationships are considered main barriers. The answers are to be found in diagram 4 in Appendix A2. The last three questions are together with respectively answers presented as diagram 5-7 in Appendix A2. These questions focus on collaborations, which is seemingly common in the Scandinavian outdoor industry. As many as 30 companies states that they at some point collaborate over corporate boundaries, and nine of 33 are doing it continuously. Only three companies do not participate in any collaborative activities. Furthermore, the respondents were asked if they are a part of the organization B or Protect Our Winters, but also about the importance of organization B with regards to sustainable innovation. 21 of the respondents are a part of organization B and three of these companies state that organization B has a very important role for their companies’ sustainable innovation work. Further, nine companies specify that the organization are of important nature, while eight companies consider organization B to be of little importance. One member of organization B states that the organization is unimportant, with regards to sustainable innovation. Additionally, three respondents collaborate with Protect Our Winters. 4.2 Interview Findings In this section the empirical findings from interviews that were held with two organizations and seven companies will be presented. It is structured to present the result from each interview one at a time to enable a more clarity and easier reading. Further, the findings are summarized in order to present relevant information for the reader. Initially, the two interviews conducted with organizations will be presented. The interview template differs from the ones conducted with companies, therefore the structure of the findings between organizations and companies will vary. The findings are, for each interview, presented in a structured way ordered after topic. However, the topics might vary to some extent due to its relevance correlated to individual companies. In the end of this chapter table 2 and table 3 presents a summary of the empirical findings from company and organization interviews respectively. 4.2.1 Organization A Organization A is a part of a company which owns an incubator and a science park. This company is further co-owned by a university, an economic association, by the local region and by three nearby counties. The organization is a national initiative in sports and outdoor and works project oriented. The financials and coordination have during the last ten years come from a government agency for innovation systems with the purpose to create an innovation hub with focus on sport and outdoor. 23 Organization A work closely with Mid Sweden University which is crucial for its survival and the interviewee states that “One part of what we do is trying to find research questions to the university but also trying to make them to create value for the industry. The other part is working within the industry with sustainability.”. One example of what the interviewee has done is the development of a strategy program to raise the level of knowledge within the companies in the industry to enable for them to manage questions within innovation. Sustainable Innovation The interviewee explains that there are two approaches to working with sustainable innovation. Either working with innovation and ensure that this leads to something sustainable or originate from the sustainability challenge in the innovation which cause for a sharper project in terms of sustainability. Most of the projects within organization A has a sustainability focus, or a focus on something that is challenging for the society. The interviewee clearly states that organization A are not consultants running customer’s errands. The basis of what the organization is doing is creating benefit for the society, which is necessary since it uses public funds. Drivers of Sustainable Innovation The interviewee expresses legal aspects and regulations to be of great importance in terms of driving sustainable innovation work. Regulations such as the European Reach Regulation drives development forward. Furthermore, there are associated groups and organizations who helps to draw attention around those questions. Another driving force the interviewee mentions is the people working in the industry and states “The connection of being an outdoor person who appreciates the nature and wants to preserve it really matters”. People are explained to be humble and understand that most of the time they do not work with necessities of life, but rather with products that are supposed to make people feel good and enjoy living in consonance with the nature. The interviewee states that “Most people have a personal wish of not doing anything bad for the nature, rather something really good! But at least nothing bad.” An increasing customer interest in sustainable innovation is mentioned. However, the interviewee states “It is not considered a driving force since most companies are still far ahead of the average consumer regarding these questions”. But what is considered a driving force is associations such as Greenpeace, Naturskyddsföreningen and WWF. According to the interviewee, they do a great job in terms of pushing these questions and create cooperation. Other types of organizations such as Protect Our Winters, are considered having an influence too, but in more of an inspirational way rather than handling big questions and create medial pressure. The interviewee explains that companies with a clear vision and an outlined strategic direction are working more with innovation and sustainability despite less effort. The interviewee states “If you have a holistic perspective and a clear vision of where you are going, then the innovative and sustainability work comes naturally”. As a proof of this, it is further explained that companies participating in the sustainability program developed by organization are returning, talking about their own ideas and asking if it is possible to start a new initiative. Earlier these 24 same companies had their hands full with the internal structure, working mostly with short time innovation projects. Collaborations Collaboration projects can be suggested either from a company or from an industry association such as organization B or ISPO which are all associations that organization A works with continuously. Ideas and initiatives can also come from RISE or Vinnova. The interviewee has noticed an increased interest in collaborations and think it is possible to unite companies around different core areas and mentions the example of a project regarding sustainable shoe innovations. This project was initialized by one company wanting to produce the most sustainable trail running shoe possible. They wanted to do it through an open innovation project in collaboration with other companies. The initial thought was for them to run the project but later concluded that this would be difficult. Now three companies are participating in the project and others are likely to join. It is thus better to have organization A coordinating the project together with ISPO since they are both neutral partners. Otherwise problems may arise since most companies are likely not willing to participate in a product development project lead by one of their main competitors. The interviewee explains that if organization A is running the project this makes it easier for the companies to find a common platform for collaboration. To make sure that all companies have the same objective with a collaboration, the interviewee states that it is important to make sure everything is clear from the beginning. All companies are usually included in the development phase of the project and talk about objectives for the industry and in what direction to move forward. Then the project is designed, and the objectives are clearly communicated to all parties. Organization A contributes to projects and collaborations by offering industry expertise, sustainability knowledge, network opportunities and are working as the link between the parties in the role of a project leader, coordinator and the legal neutral partner. Barriers of collaborations The interviewee continues by describing some of the challenges and difficulties that can occur in collaborations, for example intellectual property, which is a major one requiring contractual agreements. The more concrete and practical the innovative work is, the more difficult the rights of those intellectual properties are to manage. Two recent projects are mentioned as an example of this, which required between three and five months of the project time before organization A had completed the contracts. No valuable information from companies can be shared before contract completion. Many projects are created to involve external expertise and competencies and this project group consisting of people and companies share a common base of knowledge for everyone to benefit from. Projects concern background and foreground in terms of knowledge, information and results. Background is the input from the companies and foreground is the desired result of the project. The background material is owned by the different parties and thus, each party choose what to share. Legal contracts, stating whether the other parties are allowed to use the shared 25 information and if so, how they are allowed to use it in terms of agreements such as licenses. When it comes to the foreground there is a need to find a fair way of distribution. The interviewee has never experienced any large disagreements in any project where one company experience that they are doing the majority of the work and while others only collect information. However, organization A has not yet managed any major innovation projects with the purpose of coming up with a common solution and makes a comparison with innovation projects in the automotive industry. These types of projects are according to the interviewee much more sensitive in terms of contribution, time and money invested but also the ownership of rights and capitalization on the solution becomes crucial. The interviewee´s opinion regarding why organization A have not conducted any such projects are described as “It probably depends on the maturity of the sustainability work in the industry, which is required to be able to do this and to work together with practical questions. But it is likely also depending on the fact that it is an industry with smaller companies, compared to the automotive industry where the companies are huge and have specific organizational departments for design, product development and R&D. This basically do not exist in our industry, not in Scandinavia.”. Examples of collaborations One example of a project that organization A is currently working with is a project with ski wax. The purpose is to find a system change and move towards fluoride free ski wax. The interviewee explains that sport shops already sell fluoride free wax which provides a good glide for the average skier. However, the fluoride free wax provides an insufficient performance for professional athletes chasing seconds or hundredths of seconds, especially in warmer temperatures. This fluoride wax is currently unbeatable in this area. In this project organization A works together with two competing companies and one large competition for cross country skiing in Sweden, who is participating as a communication partner in the project. Researchers are working with performance tests in laboratories, with environment and health questions in different ski wax types and with performance in real conditions. The interviewee further explains that the competition management took a standpoint in December 2018 when they announced the removal of all fluoride wax from their wax stops during the race. They further recommended everyone to race without fluorides during the competition. This has created a snowball effect, both in terms of scrutiny, internally and in collaborations with the Swedish ski association. Since this is only a recommendation, the interviewee is speculating in what the next step will be and if it might cause for a regulation. If so, the sport is facing challenges such as figuring out how controls are supposed to be conducted. A project like the ski wax project includes many perspectives and industry collaborations. It is important to educate people and spread the knowledge to enable for the average skier to make better choices already in the sports shop when buying the wax. Organization A does not work directly with commercialization but do help to search for funding for commercialization. Another example of a collaboration is a project with the purpose of increase retailer knowledge. Organization A has identified that many companies have great solutions and many customers are searching for those but cannot seem to find them. The reason why this is happening is 26 because of the missing link, which according to the interviewee is the lack of competence among the retailers. Thus, organization A has initialized a knowledge program with the purpose of raising the level of knowledge since it will increase the market for sustainable innovations within the segment. The interviewee states “If we can make this work, it will create ripples on the water and increase the speed of innovations. This is extremely important in all steps of chain.”. The interviewee cannot recognize any collaboration failures and states “There have definitely been contributions in projects which did not reach the expected outcome. There have also been collaborations that failed because the parties involved was not mature enough for this type of collaboration.” The interviewee mentions the sustainability program developed by organization A as an example of such a program. There has been great variation of what the companies embraced and how they have transformed the knowledge into a practical benefit internally. The interviewee continues by stating “There has been extremely successful examples where the companies have embraced the knowledge and are building new strategies and base future work upon it, resulting in a strong innovative force”. This is explained as largely dependent upon the approach of the leaders within the company. This determines the amount of resources spent on sustainability and how it is prioritized within the company. The interviewee further describes that there are companies who did not make as much out of it and states “Some did not develop any sustainability strategy, rather a basic policy which the project leader said turned out to be a good thing, but management did not see the point and the value that came from it”. Management of those companies has the opinion that time was wasted instead of spent on accomplishing practical activities tangible results. When working with innovation, one should be prepared of failures, and the interviewee states that people are often afraid of failing. There is a belief that the reason behind this can be the large number of small companies with limited resources in terms of time and money. This adds the pressure of creating something valuable. Many companies rather do something small with a certainty of creating value, than take on a large project and risk a major failure. 4.2.2 Organization B Organization B is an industry association with over 60 SME members. The main focus of the organization is networking between companies in combination with marketing Scandinavia as a strong brand. The basis in the organization is to work towards retailers and press outside of Scandinavia and in this work, it is considered beneficial to be a larger number of companies grouped together. The interviewee states “We want to create an awareness of what Scandinavia is, who we are and why we do good things.”. The interviewee further describes that there is no self-interest in marketing the organization itself, or in growing the organization in terms of member companies. Sustainable Innovation Innovation work does occur within organization B even though it is not the reason for its existence. Two times a year there is a product innovation competition hosted by the organization. Member countries nominate a recently launched product they want to compete with. There is a number of prize categories and a jury consisting of retailers and press from 27 Europe, performing tough tests on the products and announce one winner within each category. Innovation is a main focus in all prize categories. Collaborations The interviewee describes that member companies generally view collaborations as something positive and continues “Competitors enjoy each other's company, which is encouraging. Before I started working for Organization B I did not expect it to be like this. Everyone wants more networking, more workshops and more time to hang out with each other. It truly is a positive attitude among the members.”. The interviewee further describes collaborations as especially important with regards to sustainability work by stating “At every company there is more or less one person responsible for the sustainability work, they are pushing it but are rather alone in this role at the own company. It is important for them to be able to discuss and exchange information with others.”. Thus, the information exchange with people in the same position at other companies are proven valuable. The interviewee continues by stating that “As a single Scandinavian SME, you are nothing in terms of affecting the industry. But if we are over 60 SMEs, then we have a way better chance to actually affect and influence the sustainability work.”. Within organization B, a sustainability group exists. All member companies are a part of the group and they meet two times a year in conjunction to the annual meetings. The interviewee mentions a Sustainability Charter as an example of the work this group is conducting. The project is currently under development, but all member companies has signed the agreement to participate. The purpose is to create educational steps within the chart to enable for companies to climb between the levels depending on the dedication in their sustainability work. Different companies are described to experience variations in value created by organization B. The size of the member companies is described as one reason and the value created is a factor that affects the decision if members actually prolong their membership or not. It is further described how smaller and larger companies work in symbiosis at the fairs. Smaller, newer companies attract visitors curious about what is up and coming in Scandinavia and are considered a proof of the fact that Scandinavia is developing and still to count on in the outdoor industry. Larger companies on the other hand, are attracting visitors simply because of who they are. They can achieve success on their own, but still see an upside with the membership and the common showcase village at the fairs. The interviewee cannot think of any failed attempts of collaborations that organization B has facilitated. Rather the opposite, that other countries around Europe are wondering why the organization and collaborations works so well in Scandinavian. They are experience much more opposition between companies. When asked specific about this, th