The Sustainability Frontier
Edited by Urs P. Jäger and Vijay Sathe
Chapter 2: The sustainability frontier
‘Sustainable businesses’ seek to increase their profitability and long-term success by following responsible environmental, social and economic strategies designed to build on synergies between corporate productivity and societal welfare. However, the pursuit of sustainable strategies depends on both the creativity and intent of the company and the circumstances that define its opportunities and constraints in the larger context. This chapter offers a framework for thinking about the nature of strategic options by borrowing the concept of the efficiency frontier from economic theory to explore the circumstances where shared value may be created to benefit both the company and society, where trade-offs must be made between societal benefit and corporate profitability, or where innovations can be developed to expand the set of possible outcomes. The chapter also explores the factors that determine the shape and coordinates of the frontier – including public policy, cultural norms, industry structure and market power – and how a company can operate within, along, or prospectively above the existing frontier through alternative strategies. The chapter also distinguishes between strategies at the margin that may or may not improve a business’s performance from its current state, and the overall social and economic performance of a company, in order to put claims of business sustainability into a fuller perspective for purposes of marketing and societal assessment. Three case studies of Central American companies are used to examine the applications of the sustainability frontier in analyzing company operations and strategies.
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