Towards a framework for ecological stategic change in business networks

Journal of Cleaner Production 10 (2002) 465–478www.cleanerproduction.net

Towards a framework for ecological stategic change in businessnetworks

Per Andersson∗, Susanne Sweet1

Stockholm School of Economics, Department of Marketing, Distribution and Industry Dynamics,P.O. Box 6501, S-113 83 Stockholm, Sweden

Abstract

The objective of the paper is to identify major strategic issues for a firm aiming for change towards ecologically sustainableactivities in its network. One purpose is to develop and apply a theoretical approach that takes the strategic actions of the firmandits network context into consideration. Empirically, the aim is to identify, describe and categorize various strategic issues when anactor aims to introduce waste recycling activities in its network. The framework is applied to a case describing a food retail chain’secological re-positioning in a system for the recycling of waste. The paper identifies a set of strategic issues including managerialimplications for a firm that takes on the role of change agent in its industrial network. 2002 Elsevier Science Ltd. All rightsreserved.

Keywords: Waste recycling; Network; Strategic change; Distribution; Loose coupling

1. Introduction

Studies of environmental change in industry show thatchange towards sustainable industrial systems is prob-lematic. Industry experiences difficulty in adapting tonew norms and to change established technological andorganizational systems. Interlocking technologies, estab-lished industrial relationships and the dominating indus-trial norms can explain both the inertia and variations inchange patterns. The presence of a well-defined environ-ment with few actors having specialized roles and/orhighly integrated technologies can create inertia in thesystem and, hence, greater difficulties in the implemen-tation of environmental strategies. Stable and stronglycoupled industrial systems slowly adapt to environmen-tal demands, not by changing the industrial logic but byfinding solutions that do not challenge or disrupt existingtechnological systems in production or product [1–3].

Against this background this paper sets out to analysehow a food retail chain implements a new system forwaste recycling, a situation where multiple actorsbecome involved in change processes where inertia and

∗ Corresponding author. Tel.:+46-8-736-9000; fax+46-8-33-4322.E-mail addresses: [email protected] (P. Andersson); sus-

[email protected] (S. Sweet).1 This author is also the corresponding author.

0959-6526/02/$ - see front matter 2002 Elsevier Science Ltd. All rights reserved.PII: S0959-6526 (02)00011-2

stability are inherent system characteristics. This empiri-cal and conceptual study thus connects to a tradition ofearlier studies with a broader perspective [4–7]. Earlierstudies of the introduction of new recycling systemshave shown how new patterns of relationships in theindustrial network emerge when new, recycled inputresources are introduced to a distribution system [8].Changes in recycling often need to build on, while goingagainst, the stability of prior long-term investments inthe systems. Also, changing the systems for recyclingtakes time.

With the need for developing an understanding of theproblems and pitfalls of implementing systems for recyc-ling, this paper sets out to answer three major questions:

1. How is a new system for recycling of wasteimplemented and diffused in an interorganizationalnetwork for food distribution?

2. In a waste recycling change project, how can weunderstand and analyze the dynamic interplaybetween change agency and structure in the inter-organizational networks?

3. What are the strategic challenges and managerialimplications for the companies involved inimplementing a new system for waste recycling?

The first question relates mainly to the empirical,

466 P. Andersson, S. Sweet / Journal of Cleaner Production 10 (2002) 465–478

descriptive purpose of the study. The second questionrelates to the theoretical purpose of applying a dynamic,interorganisational network perspective on the issue ofwaste recycling. The focal changes evolve over time.Therefore, there is a need for using a temporal, historicalaccounting system. Consequently, complementing theempirical purpose of the paper, one aim is to introducea general conceptual framework that can capture thedynamic interplay between change agency and structurein interorganizational networks. According to the thirdquestion, the aim is also to discuss some of the mana-gerial implications of the analysis.

Next, the general theoretical framework is presented,building mainly on texts on loose couplings and indus-trial networks. In focus are strategic aspects ofimplementing change in industrial networks, given con-stantly changing patterns of loose and tight couplingsbetween firms. In the second section, the case of Kon-sum, a Swedish food retailer chain introducing a wasterecycling system is presented. With the theoretical dis-cussion and the Konsum case as background, the thirdsection applies some of the theoretical background todiscuss and analyse some of the central characteristicsof the change processes in the case. This includes a dis-cussion of managerial implications. Lastly, a number ofemerging research issues from the case and the analysisis presented.

2. Theoretical foundations

Some of the central assumptions and concepts onloosely coupled systems,2 put in a network view of theindustrial context, will serve here as a vehicle in thesearch for alternative ways to depict the processes ofimplementing ecologically sustainable strategies inindustrial systems. The borrowing of concepts and ideasfrom texts on loose coupling systems, founded in thedisciplines of social psychology, social interactiontheory and organization theory, is suggested as one wayto approach system dynamics. The presence of loose andtight couplings provides a background for understandingpersistence and transformation in organizational net-works, as well as the prerequisites for strategic action.Many loose couplings and great variation in change pro-cesses may increase the difficulties in achieving environ-mental change in an industrial network, but is on theother hand important for opening up the structure forinfluencing change processes and actors. With manyloose couplings there might be a need to tighten up a

2 Effects on organizational dynamics of loose and tight couplingsare discussed e.g. in: [21] Glassman, R. B., [22] Weick, K. E., [23]Orton, J.D. & Weick, K.E., and [24] Aldrich, H. E. This paper connectsalso to an application on distribution channel dynamics of loose coup-ling theory in: [14,18].

few strategically important relationships to enhance theprocess.

As one purpose of the paper is to develop and applya theoretical framework that takes both the strategicactions of the firm and its moving systemic context intoconsideration, we introduce a general framework thatencompasses all three: the systemic context, the actorstrategies, and the dynamic process perspective. First,we introduce the general markets-as-networks perspec-tive of the systems in focus, including its various dimen-sions, its basic building block, i.e. the single dyadicrelationship, and its structural patterns of loose and tightcouplings. Secondly, the dynamic and interdependentview of the context is covered in the next section, whichdescribes overlapping processes in networks. Lastly, thestrategic actions of firms in networks are discussed withthe help of the network position concept.

2.1. Industrial networks

An industrial network approach views the network ofactors as embedded in a larger context of social, econ-omic, and technological systems [9]. The system of linksof stable exchange relationships between actors is usedin a markets-as-networks perspective to describe andanalyse behavior as well as constituting the structure ofthe network. Johanson and Mattsson [10] make a distinc-tion between the governance structure, as a network ofexchange relationships, and the production system,which are seen as two levels composing the industrialsystem. To these two can also be added the institutionalsetting where the industrial system is embedded.

The technological systems, involving e.g. environ-mental issues and solutions, can often be locked intodominant technological regimes that are difficult tochange. The institutional setting can be characterized asan organized web of ideas, beliefs, values and attitudesclosely related to cultural, political, social, and legal con-ditions [10]. In the case of change towards new, moreefficient procedures for waste recycling, institutional fac-tors of importance can encompass both general regulat-ive structures, specific industrial norms concerningenvironmental issues, and specific norms and cognitivefactors on a micro level, within and between organiza-tions.

The existence of stable long-term relationshipsbetween buyers and sellers of manufactured productswas one of the important empirical observations whichfirst guided the early work of, for example, the IndustrialNetwork Approach e.g. [11,12]. Industrial networkswere observed to be stable but not static. Stability, some-times inertia, was a characteristic used to describe thecircumstances under which change processes in net-works were enacted. It could be observed that continuousinteractions between firms often resulted in long-termtrustful relationships, with the functions to provide

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bonds, security, information exchange, and pressure fordevelopment [13].

Descriptions of bonds of different types and strengthsimply that actors become tied to each other in differentways. These bonds are interpreted to have differentcharacteristics and serve different purposes [11].Five types of interdependent bonds have beenidentified: technical, temporal, knowledge, social andeconomic/administrative bonds [11]. The characteristicsof these bonds have implications for a single firm’spossibilities to act, in that it is dependent on other actorsto peruse a specific change. Transferred to our empiricalfocus, it can thus be anticipated that in order to change,i.e. implement a sustainable system for recycling, firmswill need to build on, and adapt to, already existing pat-terns of bonds and relationships. It can also mean thatnew actor bonds and relationships will be established inthe change process.

Often, implicit in different types of industrial networkanalyses is the notion that networks are defined bystrongly bonded connections and relationships [14]. Butindustrial network researchers have also pointed to theexistence of weak, potential and residual relationships innetworks [15]. In addition, descriptions of the mech-anisms by which actors in networks were able to influ-ence other actors through indirect connections havefurther strengthened the notion that industrial networksare multidimensional systems of both tightly and looselycoupled entities.

2.2. Loose and tight couplings in industrial networks

When put in a network view of the industrial context,some of the central assumptions and concepts of loosecouplings3 can serve as a vehicle in the search for alter-native ways to depict the processes of implementing eco-logically sustainable strategies in industrial systems.Many loose couplings and great variation in change pro-cesses may increase the difficulties in achieving environ-mental change in an industrial network, but can, on theother hand, be important for opening up the structure forinfluencing change processes and actors. Stability andflexibility are described in loose coupling theory as atrade-off between adaptation and adaptability. Adap-tation (in relation to tight coupling) can provide firmsand networks a means to exploit regularities and a sense

3 For a review and reconceptualization see [23]. At the same timeas Weick’s article [25] was published four other organizational per-spectives were published: transaction cost economics [26], institutionaltheory [27], population ecology theory [28] and resource dependencytheory [29], see list of references. As Orton and Weick note, each ofthese four perspectives has a more distinctive paradigm, a more com-pact theory, and more empirical support than is true of loose coupling.Without comparison, the first of the five paradigms, i.e. transactioncost economics has attracted most interest among distribution and mar-keting researchers.

of identity and continuity. Adaptability (in relation toloose couplings) can provide more economical ways ofresponding to changes, a capacity to exploit futureopportunities.

With many loose couplings there might be a need totighten up a few strategically important relationships toenhance the process. The prerequisites for introducingvariation in a loosely coupled system or a rapid trans-formation in a more tightly coupled system or part of asystem will not be static, they will change as the self-transforming industrial network and the patterns of looseand tight couplings change. In this situation of changingpatterns of loose and tight couplings in the network andconstantly emerging changes in the individual relation-ships, single actors have intentions to stabilize and tochange the present order of things in the network. Theimplementation of new environmental strategies, e.g. forrecycling, can be part of these intentions.

2.3. Processes of overlapping in networks

To implement new environmental strategies, e.g. forwaste recycling, firms often have to act in and handledifferent arenas, or networks, with different networkstructures, different technologies, and different insti-tutional rules and settings. For example, different indus-tries involved in a recycling reorganization, such as thefood-based case in this study (food retailing, transpor-tation, food production etc.) can have different normsconcerning environmental issues. An important elementof firms’ strategic actions will be connected to the hand-ling of the dynamics of being involved with or pos-itioned in different arenas. To capture these dynamics,the concept of overlapping networks [16] will beapplied. In this vein of thinking, Galaskiewicz [17] sug-gests that inter-organizational analysis should study howorganizations make use of their positions in differentarenas4. One of the conclusions of Galaskiewicz’ dis-cussion is that it is difficult to model organizational andinter-organizational behavior when arenas intersect andoverlap, but he argues for the importance of includingthis on the research agenda [17]. In a similar fashion,

4 ‘ ... inter-organizational analysis is most intriguing (and analyti-cally messy) when these arenas intersect or overlap with one another.For example, one way in which these systems do overlap is thephenomenon of residuals or traces. Residuals or traces are relationalstructures created in the context of one arena that impinge upon stra-tegic behaviour in another…... it is clear that organizations play inmore than one arena of action at a time. They often pursue resourcesand legitimacy and participate in efforts at collective action simul-taneously. It should not then be surprising that inter-organizationalstructures created in one arena will either be useful or a hindrance tostrategic action in another….... A second way in which these systemsoverlap is the phenomenon of multiplicity. This is the situation wherethe action in one arena is dependent upon the incorporation of stra-tegies more typically found in another arena.’ [17, pp. 298–299].


Mattsson [16] introduces the notion of overlapping todescribe the dynamic process when firms take strategicactions, which change the interconnections and interde-pendencies between two or more networks: ‘Overlap isa static, structural measure and implies interdependencebetween two or more networks. If actor and relationshipoverlap is high, two networks are very interdependentand might by actors and analysts more validly beregarded as one network instead of two. Through stra-tegic actions an overlap changes over time. This processis called overlapping.’

Overlapping is a dynamic process, and different forcescan drive the overlapping process. For example,reductions in barriers to overlapping can occur as a resultof formal and informal institutional rules, such asenvironmental rules, norms and regulations. An individ-ual actor’s overlapping strategy will influence the stra-tegic actions of others. Several actors belonging to dif-ferent networks might also jointly act to restructure thenetworks through an overlapping process. The notion ofoverlapping networks draws attention to the constantlyemerging and moving tensions and contradictions in net-works, evolving as a consequence of strategic actions[18]. Firms’ reactions to these actions and attempts tocope with the tensions and contradictions will sub-sequently result in new tensions somewhere else in theoverlapping networks. Firms’ environmental strategiesare thus part of more general changes where both firmsand networks are highly integrated and overlapping.

2.4. Actor strategies: position changes in networks

A single firm’s strategic position in the industrial net-work will be determined by the actions of the firm andby the actions of the other actors in the network. A pos-ition change can be defined as a change in the relation-ships with other actors in the network. These changescan include different types of bonds, the identity ofcounterparts, strengths of the relationships, the role(s) ofan actor and, the importance of the actor in relation toother actors cf. [10,19]. Each firm’s opportunities to alterits position in the network can be assumed to depend onthe emerging patterns of loose and tight couplings in theinterorganizational network [20]. With the idea of over-lapping networks as background, a firm involved in amajor reorganization for e.g. waste recycling will insome cases have different roles in the different arenas.One important role for some firms will be to be thebridging point between the different arenas. As animportant part of the change process, firms will give andtake different roles in the process as well as in the newnetwork structure that emerges.

In summary, to analyse the case of a major wasterecycling project we will follow the perspectives out-lined in the theoretical framework. Firstly, strategicactions connected to the recycling change process are

analysed in the context of several overlapping arenas,i.e. in terms of the emerging overlapping networks. Next,the network, technology and institutional dimensions ofthe context are discussed. Thereafter we focus on thesingle actor’s (in our case the food retail organization),dyadic network connections and finally we end with thekey actor’s position changes.

To sum up the theoretical framework, the analysis ofthe recycling case follows four theoretical perspectives,including (1) the dynamics of overlapping networks, (2)changes within one network, (3) dyadic relationshipchanges, and (4) changes from the perspective of thesingle actor.

With the ideas above as a foundation, the case of theSwedish food retail actor Konsum attempting to mobil-ize for a recycling change, is presented next. The caseaims to provide a provisional answer to the first researchquestion posed: How is a new system for recycling ofwaste implemented and diffused in an interorganiza-tional network for food distribution?

3. The case: Green Konsum

Green Konsum is a food retail chainstore formed asan independent business unit within KF, KooperativaForbundet, an economic cooperative association in retailand wholesale business. Green Konsum (‘GronaKonsum’ ) has been an incorporated business unit sinceFebruary 1996, but arose from four regional consumerCoop membership associations that were integrated andreorganized into one.

The first consumer cooperation retail store in Swedenstarted in the mid 1800s. The aim was to offer lessexpensive food for workers. It was run as a not-for-profitbut potential surplus was returned to the members. Manyhundreds of consumer cooperative stores followed dur-ing the late 1800s but were often not economically sus-tainable. The consumer cooperative association did notstabilize as a form until 1899 when a central associationwas formed: Kooperativa Forbundet, KF. In 1904, KFstarted wholesale activities to supply their member storesand in 1921 the first food manufacturing plant was incor-porated. By the late 1980s KF had fully owned manufac-turing plants, a real-estate company, wholesale firms,and both specialized and food retail stores. Most of thefood retail stores were owned by local or regional con-sumer cooperative associations. In 1992 KF decided toreturn to their core business, food retailing, and reor-ganized its organization and sold most of its firms out-side this core as well as its manufacturing facilities. Thereorganization was fully accomplished by 1994. Many ofthe regional and local consumer cooperative associationswere turned over to and integrated with the centralassociation, KF, while others still are owned by con-sumer cooperatives. Green Konsum is a corporation


within KF. Independently of ownership they all now runas commercial organizations. The original dividend sys-tem has changed to a bonus system where bonus checksare given to members who use them for rebates on theassortment of goods rather than receive cash-back.

3.1. The food supply chain in Sweden—structuralconsequences of efficiency

Sweden has a highly specialized and concentratedfood industry. Several decades of development towardshighly concentrated food distribution networks haverestructured the business to include a few large actorson the food manufacturing as well as wholesale andretail side. Farmers have organized into large farmers’associations to match the power positions gained by themanufacturing and distribution chain (Fig. 1).

From the 1950s, farming has gone from small diversi-fied farms to highly specialized large or medium sizedfarms that have increased productivity manifold (bothmeasured as output to labor and as output to capital).Simply put, we can divide Sweden into three regionsto describe the specialization: the northern region withforestry as the main farming activity; mid-Sweden withagriculture as its main farming activity; and lastly south-ern Sweden with meat and dairy farming. It is a special-ized structure that in itself creates difficulties in reorgani-zation into organic farming. Most of the farmers belongto farmer associations. The largest one, LantmannensRiksforbund, LRF, is an important and powerful actorin influencing both the direction and development infarming as well as acting as a lobbyist in the govern-mental sector and negotiating terms with food manufac-turers and wholesales and retail chains. The food manu-facturers are large and medium sized national firms andlarge multi-national firms.

The food wholesale and retail business in Sweden ishighly integrated and concentrated and is dominated bythree actors: KF, ICA and D-Group. KF had in 1995 amarket share of 20.4%, ICA 34.6% and D-Group 13.2%.Other actors in the Swedish food retail market are smallservice oriented stores (24,4%), for example 7-elevenand petrol-station stores, as well as two other food retailfirms with full assortment stores: Bergendahls (2%); andAxel Johnson (5,6%).

Fig. 1. The Swedish Food Supply Chain

The wholesale firms are integrated with the retail firmsthrough ownership or by strong membership associ-ations. ICA, for example, is a wholesale firm with 2300independent food retail owners as voluntary members. Inspite of voluntarism the membership also has conformistelements: they all have the ICA logotype as the nameof their stores, centralized weekly marketing campaigns,several ICA exclusive brand names which must be car-ried, ICA education, store design, etc. Most of the ICAstores are owned by an independent retailer, but a fewICA retail stores are currently owned and managed bythe wholesale organization. A couple of other retailchains that have been acquired by ICA are jointly ownedby ICA and retailers.

The D-Group is also a voluntary organization but hasstrong ties to the retailers. Membership is acquired bybuying stocks in the group. Sixty percent is owned bythe retailers and the remaining 40% by the Axel Johnsonfamily. The Johnson family fully owns a wholesale chaincalled Dagab, which is the main supplier to the retailersin the D-Group.

Lastly, KF used to be divided into a wholesale andretail part. During the last few years, reorganization intobusiness units has started a change in distribution roleswithin KF. The three business units Green Konsum,KF’s Supermarkets, and Low Price now have theresponsibility for assortment planning and developmentas well as for buying. KF’s role is to provide efficientstorage and logistical systems. KF also imports foods aswell as owns and develop its own brand names. If, forexample, Green Konsum wants to sell a certain productunder one of KF’s brand names, Green Konsum nego-tiates with KF. If it is sold under KF’s brand name thenthe product also has to be sold to the other retailers inthe KF association. Green Konsum can not in this casebe exclusive.

The development towards a highly concentrated foodindustry in Sweden has been driven by demands onefficiency and reduced costs. The wholesale and retailchains have, during the last 30 years, pressed the foodmanufacturers and farmers on price indirectly by grow-ing in size and, thus, increasing their power in the supplychain, and by starting competing activities, for examplefood manufacturing. Also consumer interests have con-tributed to the development towards a highly efficientand specialized distribution channel. Demands on lowerprices have been directly transferred from the consumersthrough demonstrations and through motions in the con-sumer cooperatives, and indirectly through pressures andsanctions from consumer organizations, for example,through the state owned consumer protection agency,KoV. Other institutional, or policy effects have also beenseen that have led to the development towards a special-ized and concentrated food supply chain. For example,farm land has been regulated by promoting enlargementof farming estates.


3.2. From supplying inexpensive foodstuffs to meetingthe needs of quality food

In 1987 the regional management for Konsum Stock-holm, undertook a market investigation to learn abouttheir customers and what they thought about the stores.The results of the research proved to be disappointing.The stores were considered dirty and impersonal, pro-ducts that were advertised could often not be found inall stores, large differences between the layout of thestores, i.e., no recognition effects when entering oneKonsum or another. Also, the customer base was old.The single largest customer group consisted of women intheir sixties, and Konsum did not attract new customers.

As a result of the research Konsum Stockholmdecided to reorient their stores to be more attractive tothe consumers. Specialists in the area of retail designand image building were brought in and put to work.One of the first activities undertaken was to redesign thelayout of the stores. Emphasis was on the food and howit was presented to the consumers. A ‘ recipe-book’ wasdistributed to all store managers with checklists andadvice on how to organize all aspects of the store, fromdisplay of the food, the clothing of the personnel, to howthe entrance should be kept clean and inviting. Tochange the image of being impersonal a new chef washired to develop food recipes that were published in theweekly advertisements. The chef, ‘Food Master Zander’was also promoted in these campaigns and a photo ofhim was printed on Konsum’s plastic bags. In hisrecipes, Food Master Zander used more sophisticatedingredients which put pressure on the stores to developtheir assortment to include, for example, fresh herbs.

Also, a new logo and new clothes were developed tosupport the change. The old store signs had KONSUMin blue on a white background. Every store that managedto accomplish this change was given a new store signwith the new logo and name, Green Konsum, in greenand white. In addition, a large centrally initiated adver-tising campaign in the Stockholm area forced the 170Konsum stores in the region to adapt to the newdemands. It did not take long before it became obviousthat there was a lack of knowledge about foods in thestores and an educational program was initiated. Person-nel programs were started where the staff at each storeprepared and learned about food together. These initialactivities were the start of a large repositioning of thechain store Konsum.

3.3. A new green orientation through parallelprocesses

At a membership meeting a few years earlier in 1984,a couple of women had motioned Konsum to start sellingorganic foods. The president of Konsum Stockholm wasnot overly impressed by the idea but decided one year

later to arrange an open workshop to discuss qualityaspects of food. The turnout at the workshop was muchlarger than expected with a large number of members,journalists, and industry people present. The completefocus on price and volume in the food retail industry hadled to neglect on the quality of the food and many voicedsupport for the idea to refocus on what was actually sold.The success of the workshop convinced the managementteam to start a new provisions program in 1986. Itincluded to offer organically grown food products,locally farmed products, date labels on every product,quality guarantees, etc.

Initially, Konsum could not find suppliers that wouldoffer products that fulfilled the criteria for organic pro-ducts and therefore advertised for suppliers in a maga-zine, Land, distributed to most farmers in Sweden. Kon-sum Stockholm got more than 900 replies from farmersthat offered their products. Only 16 of them fulfilled thecriteria and started delivering their products. Many ofthem were not linked to any existing distribution systemand deliveries were sometimes improvised. For example,one local producer of spring onions delivered his pro-ducts to Konsum Stockholm’s distribution center by taxi.Konsum developed several new relationships with far-mers that in some cases were directly linked to individ-ual stores. These links have proven to be very importanttoday when the food retail industry is facing a shortageof organically farmed products and the competition forinventory has increased.

3.4. Initializing phase: developing relationships andgaining legitimacy

In spite of the large interest for organic food products,the Konsum management was not convinced that theeco-project was a good idea. So, a test site in Stockholm,hereafter called KO, was selected as a trial store. KOwas centrally located in the wealthiest part of Stockholmcity with a large percentage of elderly and wealthypeople. The store suffered economically and had animage that was not appealing to many of the locals.When the first consumer cooperatives started in the1800s a main aim was to supply poor workers with inex-pensive food. The consumer coops became identifiedwith its initial target customers. The consumer cooperat-ive also developed parallel to the labor movement in thebeginning of this century and was often associated withsocialist ideas—an image that has been hard to changeamong the older generation. The manager of the KO,Olle Steiner, was set to turn the economic trend as wellas to change KO’s image. He worked together with sup-pliers, personnel, members, farmers and environmentalgroups and experts in the re-orientation of the store.

An early activity Mr. Steiner undertook was to bringin experts on ecology and environmental problems to thestore in order to analyse the assortment. As a result cri-


teria were developed for environmentally adapted pro-ducts that consequently were labeled in the store andsome products, regarded as particularly environmentallyharmful, were discontinued. The environmental labelingsystem was developed in cooperation with Konsum’scompetitors and with one of the environmental groupsin Sweden, SNF5. Later a national system of eco labe-ling, ‘The Swan’ was developed and exists in parallelwith the ‘Good Environmental Choice’ labeldeveloped first.

The KO also engaged in activities to promote organicfoods. Several farmers and some active COOP membersworked together in the store to sell, promote and educatethe consumers on organic foods. Some of the organicproducts looked different from the products producedwith conventional6 farming methods and informationwas needed to change consumers’ perceptions of quality.

Parallel to KO’s efforts to develop and adjust theirassortment towards more environmentally adapted pro-ducts and to quality aspects of food products, contactswere made with local consumer groups. A local churchorganization was contacted where Olle Steiner offeredthem free coffee and ginger snaps if he could visit themduring one of their meetings and tell them about therecent developments that KO had achieved. Theyaccepted and the meeting went very well. Many of themembers were not customers of KO and were pleasantlysurprised by the presentation as well as by the offeredcookies (not to be found in any other store). They werealso invited to come to the store and comment on theassortment. The hope was to start a process of change,not only in the store, but of changed buying behaviorand KO’s image. The church group was considered tobe influential in the network of people in this local areaand KO hoped these relationships would lead to changedimage and improved customer base.

The store manager was also in contact with the Jewishassociation located not far from the store. Their problemwas to find Kosher food—in Stockholm and in Sweden.KO promised to find suppliers for some key Kosher pro-ducts, mainly eaten during some important Jewish hol-idays. For meat products KO ran into problems sincethe regulations regarding methods of slaughter made itdifficult to find suppliers in Sweden. But KO succeededin developing new supplier relationships and soon a lineof Kosher food was sold at KO. The personnel was alsotrained in different food cultures and several ‘exotic’food products were included in the assortment. Todaythe assortment of Kosher food has grown considerablyand Jews from all over Sweden order from the store.

KO, the first store to integrate the new concept of

5 Svenska NaturskyddsForeningen.6 The dominating farming method was then, and still is, with the

use of pestisides, artifical fertilizers and artificial irregation.

health and environment, had by 1993 gained a reputationto be the best environmentally adapted store and themanager was rewarded by the retail industry for hisefforts.

3.5. Gaining support in the food retail network

The efforts at KO proved to be successful and theconcept of health and environment was decided to beincorporated in all stores in the Stockholm regionbelonging to the new ‘Green Konsum’ . Later larger cityregions in Sweden followed and the brand Green Kon-sum has been diffused to a large number of stores inSweden.

1991 KF launched its own brand for organicallyfarmed products, Anglamark. Initially Anglamark con-sisted of 20 different articles which in 1997 hadincreased to 130 and sales have increased ten-fold overa period of 4 years. Organic farming in Sweden is a mere3% of all farming while Konsum and other food retailerstoday are experiencing a larger demand for organic pro-ducts than they can supply.

In the early-to-mid 1990s Konsum’s president fullysupported the idea of environmentally spurred develop-ment and new efforts took place to further the processtowards environmentally sound food retailing. Ecologi-cal experts were consulted to analyse the environmentalimpact of Green Konsum. Two perspectives were chosenas the basis for the analysis: the product perspective andthe activity perspective. All 12,000 articles in the assort-ment were analysed from a life-cycle standpoint as wellas all the activities to produce, transport, process, sell,store, consume, and finally dispose of goods. The keyenvironmental impact areas were identified and pro-grams for influencing these areas were developed. Thefive key areas were: farming; energy; packaging; organicwaste; and organization/knowledge. Recently programsfor fair trade have also developed and a labeling systemwas fully implemented from 1997.

Today Green Konsum has succeeded in repositioningits business and is ranked to be the most environmentallyconscious firm in Sweden, both by the consumers andits competitors. With the introduction of a focus onhealth and environment it attracted new customers.Today the largest single group of consumers is womenin their early 40s—which was chosen as the main targetgroup for Green Konsum. Green Konsum has also beensuccessful in motivating and instilling a sense of pridein its personnel.

3.6. Green Konsum KO revisited: formation of the in-store recycling project

In the fall of 1993 the manager was contacted by arepresentative from Sellbergs, the contracted garbagecollector at the store. He wanted to increase the fee for


the services since Konsum paid for less waste than actu-ally collected. Also, complaints were made regarding thelack of tidiness in the garbage room. The relationshipwith Sellbergs and the store was at the time fairly ‘ fros-ty’ . The service contract for removal of the waste wasbased on specifications of the number of garbage bagsto be removed at each pick-up occasion and was pricedaccordingly. Regular checks on the amount were perfor-med both by representatives from Sellbergs as well asby personnel at the store. Often there were large vari-ations in the amount of waste due to seasonal variationsin the assortment or due to special campaigns on certainproducts. For example, Christmas sales on orangestended to create large amounts of discarded fruits. Thesevariations were not built into the contract so it was upto the individual waste collector to be flexible in hand-ling them.

Thus, they had a standard buyer–seller relationship interms of stating each party’s responsibilities and thefunction each party was to perform. Green Konsum con-tracted Sellbergs to transport their waste for a specifiedprice to the incinerator plant owned by the municipalityof Stockholm. What was considered to be waste and howto take care of it was defined by a waste handling law.Sellbergs and other waste handling firms were at the timemerely contracted by the municipality to transport thewaste from its source to the incinerator plants.

As a response to Sellbergs request for more money,Green Konsum’s manager suggested to start a wasterecycling project. Sellberg’s representative did not likethe idea. But later that week he was contacted by a pro-ject manager at Sellbergs that was known to be innov-ative and successful in pursuing new ideas. One of theTV stations had a special on recycling and invited themto participate in a program to discuss new ideas. Thisresulted in recycling project in cooperation betweenGreen Konsum and Sellbergs. The project developedwaste baskets to sort different types of waste into 23different fractions, organized store rooms, producedinformation material to help the personnel with the sort-ing, etc. KO had demands on organic waste to berecycled back to the organic farmers while Konsumhelped Sellbergs link-up with organic food producers.

In order to learn about the content and ensure the qual-ity of the waste, a project between Sellbergs and theAgricultural University in Uppsala was started where thewaste was analysed for containing possible metals,chemicals and the like. Once the environmental qualitycould be guaranteed, the waste was distributed to organicfarmers. Some of the organic waste was composted andwent back to Green Konsum where it sold as soil forpotted plants. Also a quality program was developedjointly by Sellbergs and Konsum to control for the distri-bution and end destination for all types of waste emanat-ing from Green Konsum.

3.7. Diffusion of the waste management project

In early 1994 Sellbergs and KO held a press confer-ence to show how they had solved the waste problem.They also had a booth at the Stockholm Water Festivalthe same year where they promoted their project. Again,the project rendered a lot of positive attention and it wasdecided to implement a recycling project in severalGreen Konsum stores. In the fall of 1994 the programhad been successfully implemented in 12 stores. Oneyear later 20 unemployed youths were employed andgiven education in how to implement the recycling pro-gram in the stores. For six months they educated, helpedbuild and organize the store rooms, provided material,signs etc., to about 10 additional stores in the Stock-holm region.

The relationship between Green Konsum andSellbergs has dramatically improved as a result of thisproject. The flexibility to deal with problems hasincreased and they are promoting each other at industrialtrade shows etc. Some marketing activities are perfor-med jointly. Sellbergs has developed several newrelationships with actors that take care of the recycledmaterials as a result of the project. Green Konsum KOreduced the number of waste bags that goes to inciner-ation from 40 bags to one bag per week.

3.8. Epilogue

The reduction of waste going to the municipality wasnot fully un-problematic since the incineration plantswere developed for large scale operations. The plantsrelied heavily on wood and paper products for gainingenough energy and heat to dissolve metals and othermaterials. With increased recycling activities less andless burnable products found their way to the plants. Thefast diffusion of the retail recycling project threatenedthe existing system and the municipality was not verycooperative in supporting these efforts. When the in-store recycling projects started on a larger scale and thepresidents from Green Konsum and Sellbergs startedactively lobbying and promoting a change of laws tosupport recycling developments, a crisis in the munici-pality relationships emerged. Indirectly through the wid-ened conflict with municipalities, both presidents lefttheir positions and the in-store recycling projects pro-gressed at a slower pace, more adapted and sensitizedto the political process. Recycling in Sweden today(2002) is, to a large degree, regulated by a number of‘producer responsibility’ acts. Manufacturers andimporters of goods are the network actors with the larg-est responsibility for administrating and financing recyc-ling systems for their products but in practice consumershave to put in a large amount of labor in sorting andtransporting waste products and in the end the consumersalso pay for the system through increased prices on pro-ducts.


The relationships that were activated during this parti-cular case of waste management change process is illus-trated in Fig. 2.

From the first overall question how a new system forrecycling of waste is implemented and diffused in aninterorganizational network for food distribution, wenow move to the second research question posed: in awaste recycling change project, how can we understandand analyse the dynamic interplay between changeagency and structure in the interorganizational net-works?

4. Analysis

The case study focuses on the overall interdepen-dencies between changes in the interorganizational net-work context of the key change agents, and in the gen-eral characteristics of the change processes. The caseindicates three major phases in the overall change pro-cess: a ‘start-up phase’ , an ‘ implementation phase’ , anda ‘diffusion phase’ . While the start up and earlyimplementation phase is characterized by a verylocalized variation in the change process, the later dif-fusion phase is characterized by more rapid systemwide changes.

The ‘start-up phase’ is characterized by a number ofefficient, ongoing adaptations. A number of small adap-tations to centralized, system wide control, and a rapiddiffusion of changes for increased efficiency withintightly coupled networks dominate this phase. In the nextphase, i.e. the ‘ implementation phase’ more localizedvariation can be observed. Through localized self-deter-mination, with more decentralized control of localchanges, environmental changes are introduced in thenetwork. During the third phase, the ‘diffusion phase’ ,a more rapid, system wide diffusion of changes can beobserved. There are more localized variations, combinedwith an increased internal adaptation efficiency.

Next, we look at the major changes depicted from four

Fig. 2. Activated relationships in the case of waste management.

perspectives, including (1) overlapping networks, (2)network changes; (3) dyadic relationship changes; and(4) from the perspective of the single actor, the changeagent. To simplify the analysis we adhere to the divisioninto three distinct change phases.

4.1. Overlapping networks

The implementation of the new environmental strat-egy for waste recycling forced our focal firm, GronaKonsum, to handle processes in several different arenas.The network structures, technological systems, and theinstitutional rules and settings were different in forexample the general food retailing/distribution network,in the transportation system network, and in the foodproduction network. Grona Konsum had to act in all ofthem. The firm had to connect and reorganize internallya number of activities that were connected to the techno-logical systems of several arenas. It also had to adaptto and influence different systems, with partly differentlogics. Thus, the role and position change between thefood retailer and the garbage collector highlighted con-flicting environmental norms and regulations, includingstate controlled laws governing the municipalities’ rolein waste management. As a result of the change processnew environmental norms and concerns emerged withinthe food retailing system. In a similar fashion, the prob-lems of being the bridging point between different arenasor networks were also apparent when Grona Konsuminitiated product development processes to develop newtypes of garbage containers. The start of this processilluminated the fact that the existing distribution systemfor waste disposal had developed a set of stable routinesand norms for the regular garbage collection activities.

Being in the middle of such overlapping processes,a firm inevitably will have to handle a set of tensions,contradictions, and maybe even conflicts that will be aninherent part of this situation. A firm can handle the builtin conflicts between different parts of the systems in sev-eral different ways, for example buffering from them oralternating the attention between the different arenasover time. What the case shows is that the dissolutionof such inherent conflicts and tensions in overlappingnetworks takes time. The tensions and focus of attentionchange over time. Successively, the tensions and con-flicts are reduced and the new ‘solution’ can be diffusedwithout any major disturbances. For the firm that is pos-itioned in the center of these overlapping processes, twoconcurrent challenges can be highlighted: firstly the needto handle several different roles in several arenas and,secondly, the need to change the firms’ own role(s) asperceived by the firm’s counterparts and by the firmitself. Grona Konsum’s new roles as product developerand service developer in the new recycling system high-lighted both these challenges. When taking on the newrole, a set of stable role expectations were challenged by


the firm’s counterparts in different systems. What thecase also indicates is that the handling of these tensionsand conflicts in the overlapping networks, will not beconcentrated to only one dominant actor, but will movebetween systems and between actors during the courseof a change process.

4.2. Network changes

In the process of implementing a new system forwaste recycling, established interdependencies betweenthe technological, the interorganizational and the insti-tutional structures will probably surface. In the casestudy, all three levels of the system undergo changes.The prologue indicates among other things that the net-work, activity and resource changes for waste recyclingwould have significant effects on the overall normativestructures in both Konsum’s food distribution and inSellberg’s waste distribution networks.

In Table 1, and following the three steps in the changeprocess, the major network changes described in the caseare summed up. The changes can be described in termsof overall patterns of loose and tight couplings betweenactors, overall role configurations and actor structure,technological (i.e. activity and resource structure)

Table 1Summary of overall changes in the recycling network

Changes in the network structurePatterns of loss & tight couplings Domination of tight couplings Increased tight couplings between Tight couplings between central

within the food distribution and food retail distribution and waste change agents of the food andwithin the waste distribution distribution networks waste distribution networks.networks, with loose couplings Emerging losse couplings to “new”between the networks distribution networks connected to

the diffusion of recyclingoperations

Actor & role structure Clearly define “ food distribution” New emerging role specialization New, emerging “entrepreneurial”and “garbage collector” roles. in new waste recycling project. roles of actors in the food and theStable actor structure. “Entry” of “Entry” of (i.e. closer cooperation waste distribution networks.(i.e. closer cooperation with) with) political org., env. research Stabilization of new, specializedspecialized supplier and customer org., waste management firms supplier roles (in food distribution)groups in the recycling project and customer roles (in waste

distribution). Stabilization of actorstructure

Changes in the technological structureActivity resource structures Stable activity links and resource Creating new activity links Increased integration of activities

ties within the food and within the between the two systems. in the whole activity chain, fromwaste distribution networks. Development of new resources and food suppliers to final wasteRelatively weak technological resource ties for waste recycling. handling firms. Increasedinterdependencies between the two Emerging technological technological interdependenciessystems interdependencies

Changes in institutionsDominating industrial norms “Low price distribution” & “Environmentally adapted “Environmentally sustainable

“distribution efficiency” distribution” recycling of waste”“Garbage collection” “ Environmentally adapted waste

management”

characteristics, and dominating normative structure andcontents.

The transitions between the phases were all connectedto different, internal, structural tensions. For example,the transition between the last two phases becamecoupled to major tensions between the new emergingactivity and interaction structures, (including new nor-mative contents), and the old, established norms. Thelatter concerned operational structures for internalefficiency, the distribution of power and control overcertain activities and the distribution of work in the net-work.

4.3. Relationship changes

It is obvious from the case study that the implemen-tation of new waste recycling operations will also haveconsiderable effect on individual exchange relationshipsbetween actors, including the patterns, intensity and con-tents of interactions between them. From the point ofview of the single firm, the contents of some specificrelationships might change and might need to changeconsiderably. A closer look at Grona Konsum and themost important relationships in the recycling networkindicates that in some cases considerable mutual adap-


tations were made in organizational structures, inexchanges of information and knowledge, in logisticsand temporal coordination, and in administrative rou-tines. In some exchange relationships there was also asignificant shift in the degree of formality. Whileexchanges and contacts earlier had been dominated bycontractual agreements, the new recycling changesrequired (at least temporarily) that more intense andinformal interactions and contacts between organizationshad to be developed. Major changes in two of GronaKonsum’s most important relationships are exemplifiedand summed up in Table 2.

As the recycling change became legitimized and stabi-lized in the interorganizational network, the prioritygiven to the new changes required interactions to beestablished also on a higher level in the organizations.It was a sign that the recycling change was seen to beof a general strategic importance to the firms. Otherimportant, direct relationships that were altered in theprocess were for example, Grona Konsum’s relationshipwith other units within the Konsum network, andrelationships to various customer groups. Furthermore,for the waste recycling project to be successful GronaKonsum needed to enact and alter a number of stable,indirect relationships. This included, for example, thewaste collector, Sellberg’s relationship with the inciner-ation plant, and Sellberg’s relationship with the Univer-sity of Agriculture.

4.4. Single actors’ position changes

In the implementation of the new waste recyclingoperations, some actors emerged as more central in thenetwork. We have chosen one of these, Grona Konsum,as focal actor and change agent in the study, but it canbe observed in the case how the role of dominatingchange agent shifts during the three phases described.In addition, some actors only marginally changed theirnetwork positions, adapting within existing relationships.Other actors changed their network positions more rad-ically, e.g., by creating new relationships and/or byestablishing a new role in the network. Focusing on threeof the central actors and change agents in the case

Table 2Major changes in two central, dyadic relationships in the recycling network

Dyad Interactions Interactions Interactions

Konsum AB–Green Konsum Reg, Adm, Leg, Know Strong, Adm, Leg, Know Strong, Adm, Leg, KnowSellbergs–Green Konsum Occ, Know Reg, Know, Adm, Soc, Leg Strong, Know, Adm, Soc, Leg

Degree of interaction: Strong=strong, frequent direct relationship, Reg=some direct contacts on a more regular basis, Occ=occasional contacts. Typeof bonds: Tech=technological bonds, Adm=administrative, Soc=social bonds, Temp=temporal bonds, Leg=legal bonds, Know=knowledge bonds.

description—Green Konsum, KO (the local retailer) andSellbergs—Table 3 sums up some of the major changes.What the table indicates is that rather than singularchange agents dominating different phases, the intensityof the change processes in the waste recycling projectwas shifted between some specific relationships in thenetwork.

One of the major position changes, including rolechanges, in the transformation process concernedSellbergs, the central actor in the waste distribution net-work. As a consequence of the recycling project,Sellbergs took on a new entrepreneurial role, adaptingand spreading the concept to other industries and busi-ness areas. As the recycling concept was accepted, thefirm began to establish a new, central role as systemdeveloper in other networks for waste recycling.

A set of general questions and issues emerge whenthe three levels, i.e., the single actor, the dyadic relation-ships and the overlapping networks are connected. Theactions of the central change agents Green Konsum andSellbergs were embedded in a moving, overlapping net-work context. By tightening the dyadic relationshipbetween the two, the organizations managed to establishthe dyad as a central bridging point between the foodretail network and the waste distribution network. Therelationships became the bridge for spreading the recyc-ling ideas further into the food retail system and to otherbusiness networks connected to the waste collection net-work. In this process, central change agents developednew roles, starting within the framework of the projectand later expanding into the network.

5. Strategic and managerial issues

So what does the case study, in combination with thetheoretical framework and analysis above imply for thesingle firm? What are the strategic challenges and mana-gerial implications for the companies involved inimplementing a new system for waste recycling? To con-clude, we will take the single firm as starting-point. Wesum up some of the major strategic issues in relation tothe fact that change takes place in a structure of looseand tight couplings and is a process stretching over time.


Table 3Major position changes of change agents in the recycling network

Actor related changes Actors & Roles Actors & Roles Actors & Roles

Dominating change agents Green Konsum–Konsum O Green Konsum–Sellbergs-Konsum Green Konsum–SellbergsO

Dominating mobilization patterns

Major role changes Green Konsum: from “Env. Entrepreneur” to “System Organizer” ; Sellbergs: from “Garbage Collector” to“System Developer”

5.1. Handling tensions in overlapping networks

As stated above, being in the middle of overlappingprocesses, a centrally positioned firm will have to handletensions, contradictions, and also conflicts. Networkgovernance structures, technological systems, and insti-tutional settings are often different and it can be a chal-lenge for the firm to balance, or in other ways handlethe situation. A firm can handle the built in conflictsbetween different systems in several ways. For example,the firm can, through intraorganizational adaptations,buffer the demands and requirements coming fromactors connected to different networks. Furthermore, thefirm can alternate its attention to the problems in thedifferent arenas. In addition, through an incrementalstrategy, the firm can successively prioritize certain spe-cific actors and networks, for example those that minim-ize the tensions between different systems. A more rad-ical change, if this would prove to be difficult, would beto break the relationships with certain actors, in ordernot to risk that the whole environmental change projectwould have to be dissolved. Another managerial ques-tion concerns the longitudinal character of the processes.An important issue concerns the start, implementationand stabilization of environmental change projects, andhow the different steps need to be timed in the move-ments of the overlapping network contexts.

5.2. Building on and using both loose and tightcouplings between firms

Each firm’s opportunities to alter its position in thenetwork can be assumed to depend on the emerging pat-terns of loose and tight couplings in the interorganiza-tional network [21]. Single actors need to adapt and reor-ganize to be able to assess and utilize the strengths of

both loose and tight coupling. Actors must be able toorganize for simultaneous loose and tight coupling inorder to foster both innovation and persistence. Oneimplication of the argument would be for change agentsto select and implement organizational structures whichare modular and flexible, to allow for short- and long-term structural changes in the network.

There are also questions concerning the balancebetween local adaptation and overall standardization ofthe environmental activities. This can be conceptualizedas a trade-off between localized adaptation and cen-tralized standardization. Constantly balancing this trade-off is an important managerial issue. Similarly, animportant aspect of industry dynamics is the mechanismsby which single actors and networks of actors make useof tight and loose couplings to handle the importanttrade-off between adaptation and adaptability.

5.3. Handling the connections between networks

Another important managerial problem for actors inindustrial networks is to organize so that local parts ofthe networks are connected in the most effective andefficient way. Synergies can be reached by connectingactivities of local sub-systems. However, these sameconnections can have disadvantageous effects and canalso hinder the development of more advantageous con-nections between other configurations of actors in thenetworks. Thus, an important managerial issue is to workthrough direct and indirect relationships, through tightand loose couplings, to design inter-organizational net-work structures which can best retain innovations andnovel solutions to environmental problems. Animportant question is how partial autonomy and self-determination through loose couplings can be createdwithin a context where the actors are embedded in


dynamic networks of both strongly and weakly connec-ted relationships. Mutual interests connect industrialactors. This mutuality gives a certain self-determinationin relation to each other and towards other, non-relatedactors, but also restricts each actor’s degree of auto-nomy.

5.4. Handling internal role conflicts and positionchanges

Changes in roles, in the use of power to achieve coor-dination and mechanisms for dealing with conflicts mustchange over time as the characteristics of relationshipsand relationship configurations change. What is con-sidered to be economically efficient and effective coordi-nation during one period may not be efficient or effectivein the next. Less exercise of power and less effort tocope with conflicts might, under certain circumstances,cause less short-term and long-term costs.

6. Further research

The ideas presented should be regarded as an initialattempt to find new roads to enhance knowledge ofindustrial networks and firms’ ecological adaptations andadaptability. The article has been restricted to a casestudy and to general conceptual discussions, and is con-cerned with opening up ways to think about structuresand processes in dynamic terms. The network conceptspoint to one path to follow when trying to increase ourunderstanding of the forces of stability and changeinvolved in the processes of implementing an environ-mental change. There is a need to understand more aboutthe interplay between the structure of the moving net-work context, the actions of change agents mobilizingother actors for change, and the characteristics of theactual change processes. This can give us clues to someof the puzzles that often surround environmentalchanges: the simultaneous occurrence of inertia andrapid changes, slow changes in the process followed bymomentum and rapid advances, the difficulties creatingcontinuity in the actual change processes. There is a needfor frameworks that help us explain or understandthese puzzles.

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Towards a framework for ecological stategic change in business networks