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Dissertation: Only little attention has been paid to the facilitators of sustainability on the operational level

Institutional pressures affect environmental and social sustainability.

According to Rilana Riikkinen’s dissertation, which will be examined at Aalto University School of Business on 26 May, sustainability, including environmental, social, and economic aspects, have become increasingly important to globally operating multinational corporations (MNCs).

"Environmental and social sustainability are essential to international operations, given that the depletion of natural resources along with human and employee rights are seen as critical global issues for the future. However, despite its importance for the functioning of MNCs, only little attention has been paid to the facilitators of sustainability on the operational level. Therefore I focus on sustainability in MNCs’ purchasing", says Rilana Riikkinen.

‘There are differences between sustainability on the operational level in MNCs, as opposed to other companies. Sustainability within MNCs is externally driven and its performance is impacted by institutional pressures. The ability to learn, examined here through absorptive capacities, does not affect all aspects of MNCs’ operational sustainability. This is in contrast to the pivotal role that individual actors within MNCs’ purchasing’, she continues.

Currently, operational sustainability is depicted as a trichotomy comprising of sustainability focus, industry, and location. Riikkinen's thesis builds on this finding in viewing MNCs in comparison to other companies, so called non-MNCs. In applying an institutional theory lens and studying the relationship between institutional pressures and triple bottom line sustainability performance, it finds that institutional pressures affect environmental and social sustainability performance, but not economic performance.

Riikkinen furthermore examines the impact of absorptive capacities on environmental and social sustainability practices and economic performance and finds that only realized absorptive capacities affect social sustainability practices in MNCs.

‘She consequently finds that there are clear differences between MNCs and non-MNCs with regards to the external factors influencing sustainability (through institutional pressures) and internal factors (through absorptive capacities). Finally, the study examined the mechanisms of and reasons for the adoption of corporate level sustainability policies and the practices by actors in the purchasing function. It thus finds the process to be headquarter driven; further, distance, in terms of both geography and role, is the main factor influencing differences in the adoption of sustainability policies and practices in MNCs’, Rilana Riikkinen explains.

Riikkinen utilizes in her thesis both quantitative (structural equation modeling on 305 European companies) and qualitative (in-depth case study of two Finnish MNCs) research methods.

Rilana Riikkinen's defence of dissertation on 26 May at 2 pm.

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