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Abstract Sustainability has become an imperative value in business management, promoted as a necessary element in the context of global competitiveness and a strategy in new businesses development. In small and medium-sized enterprises, starting up a sustainable business is aligned to personal and cultural experiences of the entrepreneur, which permeate overall decision-making process. This article shows a case study of a bottled juice company started up in Colombia by young German entrepreneurs, seen from a theoretical perspective supported by the Upper echelon’s theory, as a way to analyses the influence of personal values in the implementation of sustainability as a business core. The case study is of a qualitative and exploratory nature and was carried out through a semi-structured interview with company Prost SAS founder. As a result, it was evidenced that the founders to the company transmit indeed the conceptions or personal values. However, there are external factors that can question the value of sustainability as something positive in the development of the business, or even can jeopardize the long-term viability of small businesses. In conclusion, sustainability is a value that corresponds to the vision or intention of the company leader, however, the company implementation processes can be affected by external factors. Palabras clave: Sustainability; organizational value; entrepreneurship; top management theory; sustainable business Resumen La sostenibilidad es un valor que se ha constituido como imperativo en la gestión empresarial, promovido como un elemento necesario en el contexto de competitividad global y una estrategia en el desarrollo de nuevos negocios. En empresas medianas y pequeñas, se encuentra relacionado con los valores y experiencias personales y culturales del líder o emprendedor, que permean la actividad empresarial y en particular la toma de decisiones. El articulo analiza el caso de Prost S.A.S., -una empresa de jugos que inicia en Colombia por jóvenes emprendedores alemanes-, desde la teoría de los mandos superiores, considerando la influencia de los valores personales en la implementación de la sostenibilidad en el negocio. El estudio de caso es de carácter cualitativo y exploratorio, y se realizó a través de una entrevista semiestructurada al fundador de la empresa Prost SAS. Como resultado se evidenció que efectivamente las concepciones o valores personales son transmitidos por los fundadores a la empresa. Sin embargo, existen factores externos que pueden cuestionar el valor de la sostenibilidad como algo positivo en el desarrollo del negocio, o incluso pueden poner en peligro la viabilidad a largo plazo de las pequeñas empresas. Como conclusión la sostenibilidad es un valor que se corresponde con la visión o intención del líder de la empresa, sin embargo, la implementación en procesos en la empresa puede verse afectado por factores externos. Keywords: Sostenibilidad; valor organizacional; emprendimiento; teoría de los mandos superiores; negocio sostenible |
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Article: Case Study. Fecha de recepción: 01/02/2023 Fecha de devolución: 26/05/2023 Fecha de aceptación: 05/06/2023 Fecha de publicación: 12/06/2023 |
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Universidad El Bosque Bogotá, D.C. (Colombia) ymontegro@unbosque.edu.co |
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Oscar Hernán Vargas Villamizar Universidad El Bosque Bogotá, D.C. (Colombia) ovargasvi@unbosque.edu.co |
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Para citar este artículo: Montenegro, Y. A. & Vargas Villamizar, O. H. (2023). Sustainability as a value: experience from a German entrepreneur starting up a company in Colombia. Económicas CUC, 44(2), 253–272. DOI: https://doi.org/10.17981/econcuc.44.2.2023.Org.5 |
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JEL: D23, L2, M14 |
Introduction
Recent business development recognizes the fundamental role of managers and their substantive effect on the performance of companies and on the transfer of individual characteristics and beliefs to the business sphere, particularly with organizational values. These understood as those ideals that are organized hierarchically (Bardi & Schwartz, 2003), in the manner of beliefs that are socially shared and that guide and determine behavior (Schwartz & Bilsky 1987).
Individual values are motivational and are manifested as objectives and victories to be achieved (Karp, 1996), in such a way that these serve as guidelines for decision-making in the professional field (Schwartz, 1992; Halaby, 2003). Each individual prioritizes their actions according to their values, that is, coherence is sought within the value, which can be identified with a belief or thought with behavior (Bardi & Schwartz, 2003); thus, an action that expresses a value will be perceived as meritorious.
Within the organization, values direct behavior over time or actions at a specific moment and determine decision-making. According to Al-Shammari, Rasheed and Al-Shammari (2019), in current research trends, there is a gap in the exploration of the role of the organization’s values, seen as a whole and in the way; these values influence the members of the organization.
To incorporate values related to sustainability and social responsibility as a strategic concept, it is necessary, according to Joshi, Verma, Dutt and Bindish (2013), to integrate social values, individual principles, as well as government legislation and corporate goals.
The purpose of this research is to analyze the influence of the manager in the establishment of sustainable values within the business activity and, for this purpose; we will study the case of the Prost S.A.S Company in Colombia and its German founders. This company was chosen for the study as a vehicle to contrast the idealized interpretation of its founders and current managers’ (of German origin) concept of sustainability (seen as an organizational value) with the conditions faced during the implementation of their business idea in the Colombian cultural sphere.
State of the Art
Sustainability and sustainable business
The first attempt to define the concept of “sustainability” emerged when sustainable development was conceived in the report of the World Commission on Environment and Development in 1987, which points out the need for a balanced relationship between economic growth, the environment and development; since, initially, the environment prevailed over the social and economic aspects (Lorenc & Sorokina, 2015). Subsequently, these concepts have evolved through international legal instruments such as the 1992 Rio Declaration and the 2005 Kyoto Protocol, in which State commitment and business activity have been linked.
Thereafter, and based on these conceptions of sustainability and sustainable development, the notion of sustainable companies or businesses has been proposed, considered as those that fulfill their economic objective by integrating social and environmental issues (Schaltegger & Wagner, 2006), promoting the improvement of competitiveness through remarkable social and ecological performance.
The business model “identifies, generates, and captures value” (Osterwalder & Pigneur, 2010): in this sense, we speak of a sustainable business model when, according to Lüdeke-Freund (2010), a competitive advantage is created through the creation of value for the customer and this contributes to sustainable development, encompassing the social and environmental dimension.
Additionally, the sustainable model, due to its broad and comprehensive perspective of economic, social, and environmental factors, generates a value proposition that involves various parties that participate or may be affected by it, such as customers, suppliers, investors and workers (Donaldson & Preston, 1995); in what, according to Paris and Viltard (2017) is understood as shared value.
Corporate sustainability refers to a competitive advantage, through the implementation of a strategy that incorporates ecological, social, product, and service production processes (Yilmaz & Flouris, 2010). The business model has sustainability as a determining element in its activity and in the decision-making processes (Stubbs & Cocklin, 2008).
Considering the above, the involvement of all stakeholders is necessary, especially those that constitute the company; since the implementation of the sustainable business model, and the strategy through which it is carried out, will depend on their cooperation (Bocken, Short, Rana, & Evans, 2013).
One of the most relevant elements in the implementation process will be the support and leadership of the manager or entrepreneur and of all those who occupy management positions, since they are the ones who lead the execution of the strategy through dialogue and implementation of processes efficiently, making the strategy part of the organisational culture (Šnircová, Fidlerová & Božiková, 2016).
Sustainability as a value in the organizational culture
Values guide the members of an organization in their decisions and behavior, seeking coherence with the collective objectives and well-being (Bourne & Jenkins, 2013). Among the organizational values, they identified collaboration, trust, support, growth, autonomy, competence, communication, and sustainability (Krajcsák, 2018).
People usually identify with the culture of the company when they share or coincide in beliefs or values with the leader, which is why the character of the founder or manager, the environment, and the development policy and talent management are relevant (Castello, 2003; Krajcsák, 2018). The responsibility then falls on the entrepreneurs or managers to set the values that will guide the organisation’s activity; their attitude and behavior must be coherent and consistent with the established values. Through the example of the leader, the workers adopt these values as their own, incorporating them collectively (Ketprapakorn & Kantabutra, 2019).
This is how the leader’s personal value system affects the conception and way of conducting business. That is, personal thinking and belief transcends the way of solving and managing business activity (Halis, Ozsabuncuoglu & Ozsagir, 2007). Consequently, it is concluded that the leader’s values are transferred to the company, and become pillars in organizational management, from which decisions are made, so that sustainability, understood as an organizational value, manifests itself through its management from the founder or who directs the company (Castello, 2003; Esqueda, Csoban & Prat, 2019).
Associated with this, Chen, Liu, Song and Zhou (2020) suggest that the heterogeneity in the personal characteristics of the CEO, and his or her understanding of concepts such as altruism or materialism, influences the definition of corporate policies associated with social responsibility. Additionally, they highlight that the often-intangible nature of the socially responsible activity hinders the attribution of market value. In this direction, it is necessary to consider the Upper Echelons Theory since it ponders on the influence the values of the managers or leaders of the organizations have on their management.
Upper Echelons Theory
Leaders in organizations are a determining factor in the development of the activity and the values that condition it: the UET (Upper Echelons Theory) indicates that the decisions of managers are influenced to a great extent by their values and previous experiences, so they tend to choose organizational strategies that adjust to their personal preferences and psychological characteristics (Al-Shammari et al, 2019).
According to Neely, Jr., Lovelace, Cowen and Hiller (2020), the upper echelons theory, proposed by Hambrick and Mason (1984), is one of the most influential perspectives in the strategic management literature. This theory allows us to examine the way in which the personal characteristics and experiences lived by senior managers shape their decisions and actions, affecting the results of the organization. For Hillestad, Xie and Haugland (2013), cultural values and beliefs are inserted over time into the formal and informal fabric of the organization, so they use the term “cultural architect” to highlight the impact of the founder on building the organizational culture in the early years of the organization.
The characteristics that are evaluated in this theory are psychological insofar as they refer to the cognitive aspect and personal values, and observable with respect to demographic variables such as age, education, sex (Hambrick, 2007). Both are decisive in decision-making by managers and influence companies in terms of their growth and profitability (Hambrick & Mason, 1984).
The main premise of the UET indicates that the results of the companies arise from the decisions made by the dominant coalition and, therefore, are highly influenced by the cognition and values of the group (Connelly, Ketchen Jr. & Slater 2011). Along these lines, Finkelstein (1992) indicated the need for the UET to expand and consider the way in which management power affects the association between senior managers and organizational results.
In this regard, it is possible to affirm that the education of managers and the experience they have in environmental issues are associated with the performance of the organization (Kassinis, Panayiotou, Panayilotou, Dimou & Katsifaraki, 2016). Empirical work at UET looks to the physical characteristics of top management such as age, ethnic group, education and previous experience, as observable means to identify psychological constructs that influence the way executives interpret and act on the signals of their environment (Connelly et al, 2011). However, for Waldman, Javidan and Varella (2004), for a more complete result of the UET, the analysis of personal or leadership characteristics is necessary.
Likewise, the UET can also be related to charismatic leadership, understanding charisma as the relationship of the leader and the followers or, in the case of the organization, the workers and stakeholders in the company; based on the behaviours of the leader tending to an inspiring vision, based on values and beliefs that show determination to achieve the objectives (Waldman et al., 2004).
This capacity or ability in the leader is key in the so-called strategic leadership (Pawar & Eastman, 1997). This can affect the performance and functioning of the organization through the interpretation of information and decision-making and can promote cohesion among the members of the company (Finkelstein & Hambrick, 1996).
A key aspect in UET, according to Connelly et al. (2011), is limited rationality, since senior management must constantly deal with aspects such as excess information, ambiguous signals, contradictory objectives and changing restrictions; so, they must trust their cognitive ability and their values in decision-making action. Therefore, Connelly et al. (2011) consider that the UET is useful to explain the action of organizations regarding sustainability, as it is a fast-growing subject, which a few years ago organizations did not regard.
Given this, and following Connelly et al. (2011), the UET argues that the organization’s response to sustainable actions will depend on the way in which the value system of senior management suggests the way to respond, so the possibility of adopting sustainable action will depend on of the background and experience of the management team on the subject. Consequently, a diverse senior management team can offer more creative solutions, based on different interpretations of social and environmental situations; while a more homogeneous team will offer a lower probability of proposing creative solutions to solve sustainability problems through innovative processes and technologies (Connelly et al., 2011).
Methodology
This paper is a case study based on a qualitative and exploratory study (Gioia & Chittipedi, 1991; Gioia, Corley & Hamilton, 2012), that aims to delve into the existing concepts related to sustainability as value and quality or characteristics of the CEO. Thus, the theoretical information is contrasted with the testimony of the founder of the Prost SAS juice company, Henrik Jessen, who participated in a semi-structured and open interview. This company was chosen because of its sustainable and integrative profile in the management and production of its products. The information was analyzed from an interpretive approach, considered appropriate to carry out this study, to obtain an understanding of the influence of the CEO on the company’s strategy.
The case method is considered appropriate for exploratory investigations; however, it has been applied to descriptive and explanatory studies (Chetty, 1996) and has been used as a means of contrast to theory with the aim of improving knowledge. In addition, this method allows to reach new knowledge by identifying aspects and factors that condition a reality in a specific and detailed context.
Through the case method, it is possible to contribute to a greater understanding of a theoretical concept and to the presentation of another perspective in the face of a problematic question, evidenced from the context of the case itself (Leppäaho, Plakoyiannaki, Dimitratos, 2016).
For the construction of the case presented below, theoretical elements about sustainability, seen as organizational value, are contrasted with information obtained from the juice company Prost SAS, in two historical moments:
- Conception of the business idea, through information extracted from the Business Plan of Prost S.A.S. (Jessen, Jessen and Durlej, 2014); in which the vision of the founders of the organization and their ideal interpretation of the concept of sustainability are embodied.
- Current situation of the company, through the testimony of Henrik Jessen, the founder and general manager of the company, through a semi-structured and open interview. This method was chosen because it allows the interviewer to interact and propose questions that deepen the topic of interest (Díaz-Bravo, Torruco-García, Martínez-Hernández, Varela-Ruiz, 2013).
The interview was conducted online, since Henrik Jessen is in the city of Medellín, and the interviewers are in Bogotá. The interview was transcribed, and the relevant extracts related to the subject under study were taken. The information was analyzed from an interpretive approach, understanding that, in the case of study method, the development of knowledge through interpretation allows the understanding of the circumstances generated in the situation under analysis, recognizing its particularity and its interrelation with context (Stake, 1999).
Therefore, exploration becomes the means to understand the meanings of the case (Leppäaho et al., 2016). Thus, the mode of interpretation is appropriate for the analysis of this study, in order to understand the influence of the manager’s personal vision and values on business dynamics.
Results
Case Study- Prost SAS and its business idea
The company Prost SAS is a Colombian company that is dedicated to the production of organic juices in the city of Medellín, founded in 2014 by two German brothers Henrik and Konstantin Jessen, its purpose since birth is to develop the activity in sustainable conditions. The fruit is grown by local farmers and the juice is packed in glass bottles in order to be returnable and reusable, reducing the environmental impact. They enact an objective of responsibility, where inclusion, sustainability and respect for the environment are essential.
Henrik and Konstantin grew up in Hamburg, the second largest city in Germany, whose urban and innovative environment influenced their interest in generating new business ideas:
Since my adolescence, I had the idea of creating my own company: I did not know in which sector and I did not know in which region of the world, but I always had the idea of, at some point, having my own business (H. Jessen, personal communication, July 8th, 2020).
Henrik came to Colombia as a student, without the initial intention of starting his project. However, his previous ten-year experience in a friend-owned beverage company, and the identification of sustainable consumption as a possible trend in the country, led him to propose the creation of Prost SAS.
This, combined with the variety of fruits and vegetables found in Colombia, totally new to a German, gave me the business idea: making beverages using local products and tools” (H. Jessen, personal communication, July 8th, 2020).
Based on this initial idea, Prost SAS created its business plan in 2014 that showed, since its inception, its purpose to integrate sustainability as a central concept of its business action; aspiring to become a means for the diffusion of the values of its founders.
We want to be a beacon, a precursor, an example for a greater number of imitators (Jessen et al., 2014, p. 21).
Accordingly, Prost SAS set out to become a benchmark in the production of the first certified organic drink, by not identifying offers of other organic refreshments in the Colombian market (Jessen et al., 2014). As a commercial brand, the name D’Cada was chosen to name the drink produced in Colombia, a pioneer in the use of organic materials and a sustainable approach in its processes.
Aligned with the values shared with the founders, the Prost SAS business plan raises two key pillars that are interpreted by the organization as its competitive advantages:
The first pillar is working with small Colombian farmers, offering them guidance in the transition to organic production to contribute to the well-being of farmers and their families. Hence, they created a solidarity fund, which receives a percentage of their profits, with the aim of generating support projects involving the farmers who provide them with fruit.
The second pillar is the sole use of glass bottle containers, establishing a procedure for return and recycling, to reduce environmental impact and promote the sustainable use of resources.
The creation of a solidarity fund was supported in these two fundamental pillars, through which a percentage of each bottle sold is reserved to support the development of local smallholder cooperatives. Through this solidarity fund, for example, it was possible to implement an irrigation system for fruit producers in the municipality of Marinilla, in the department of Antioquia.
These pillars are based on the values shared by Henrik and Konstantin, due to their education background in a German environment, where the concern for sustainability, inclusion and recycling is spread to young people from an early age.
We do what we do because we think this is the way a drink should be made. For us, all drinks should be organic, all bottles should be returnable (H. Jessen, personal communication, July 8th, 2020).
In this case, it can be considered that they both act in accordance with their convictions in a natural way, becoming a motivational and stable characteristic (Feather, 1973; Rokeach, 1973; Schwartz, 1992); through values related to the appreciation, protection, and well-being of others, as well as supported by social justice and environmental protection (Bardi & Schwarz, 2003).
Sustainability as a bet of Prost SAS.
The pillars frame the company’s action to offer a “healthy, sustainable and social alternative in certified organic quality” (Jessen et al., 2014, p. 21). The commitment set forth is reflected in its institutional mission.
To sell the healthiest refreshment in Colombia, setting an example of an economic model that is ecologically, socially, and persistently successful (Jessen et al., 2014, p. 21).
The commitment and values are reflected in the Business Plan through a declaration of principles:
We want to live in a world where ...
[...] people give up chemicals and pesticides in their diet, protecting themselves and the environment.
[...] consumers around the world harness their market power to demand and promote regional products.
[...] all countries have a bottle reconditioning system and PET bottles are banned.
[…] All people who live directly or indirectly from agriculture receive a fair return for their work.
[...] the economy serves the man, not the other way around (Jessen et al., 2014, p. 21).
Following this corporate mission, the company deploys actions that make its daily operation more complex, in order to be faithful to its commitment to sustainability. Regarding the promise of exclusive use of reusable bottles, it assumes a greater financial, administrative, and logistical effort since in Colombia, unlike Germany, the bottle deposit system is not implemented. Therefore, they must design their own system for its operation. Given this, the Jessen brothers are convinced of the importance of sustainability as a shared value
Part of sustainability as a basis for our business is implementing the returnable bottle system, which we consider beneficial for the planet (Jessen, personal communication, July 8th, 2020).
According to the above and understanding sustainability from a broad perspective, we conceive the social impact and the need to generate benefits as a way to improve the quality of life of fruit producers and farmers who supply their raw materials.
Likewise, they must carry out a more complex task in identifying the segment in the market, interest groups such as customers (supermarkets, shops and restaurants), as well as suppliers (bottlers and smallholders). For example, when approaching possible distributors interested in complementing their offer and marketing the product:
[…] If they are companies that already offer an organic product, it is an example of a shared vision. These organic products have a higher price than the conventional ones, but that is justified by the positive impact it has on the environment. In other words, these types of restaurants are aimed at a group of consumers who understand the organic and sustainable concepts and therefore pay the value they imply. The foregoing constitutes a benefit for us that can be represented in sales (H. Jessen, personal communication, July 8th, 2020).
In the business plan, Prost SAS considers that both its principles and the brand promise will be understood and embraced by the segment of customers of interest called LOHAS (Lifestyle of Health and Sustainability) (Jessen et al., 2014). This term is used to identify a group of consumers with a tendency to value sustainability, through the purchase of locally produced products, organic food and healthy consumption, who tend to influence their close circle to adopt this lifestyle (Sung & Woo, 2019).
In the Prost SAS business plan, LOHAS are described as “critical consumers with high purchasing power” (Jessen et al., 2014, p 19), being a priority that the company is known by this segment, to promote the sales and, additionally, this recognition contributes to the dissemination of sustainable awareness in the country.
Given this, Henrik and Konstantin Jessen have a good level of education, they developed their business when they were young and were raised in a social environment that encourages sustainable actions. This is the profile they also look for in their customers (LOHAS) and they also hope to find in their investors, as they outlined in their business plan:
Our demands on you as a potential investor are the following:
You have a basic understanding of Prost’s values - you give great importance to ecology, sustainability, and social impact. In other words, you understand why we put these aspects before profit maximization. You are aware that the consistent fulfillment of these values requires decisions that do not correspond (yet!) to the usual management in a free market economy. In addition, we will all need patience to achieve the objectives set (Jessen et al., 2014, p. 38).
The principles of sustainability are also present in those who work for the company, who share the same values, know and are convinced of the premises on which the company stands.
Challenges of Prost SAS for the implementation of its business plan
Six years have passed since the preparation of the Prost SAS business plan in 2014, in which the company has faced the challenge of positioning a product with a high commitment to sustainability, which has shown a contrast between what was foreseen in the initial plan and its adjustment to the reality of the Colombian market.
What was outlined in the business plan was the initial vision of the company and it has been the principles that have guided the development of the activity. However, it has had to be modified according to the market (H. Jessen, personal communication, July 8th, 2020).
The company has identified some difficulties related to consumption in the Colombian market.
Probably, we had the business conception thinking of the German consumer without considering the particularities of the Colombian consumer (H. Jessen, personal communication, July 8th, 2020).
In this sense, it is necessary to consider that awareness in the individual and society regarding the concept of sustainability and its applicability is greater in Germany, which has inserted this concept in its state policy since 2002 and effectively implemented its development in different areas, considering it an element related to generational equity, social cohesion, and quality of life, with a national and international perspective (Press and Information Office of the Federal Government of Germany, 2022).
Compared with the German situation, one of the differences identified in Colombia is the availability of reconditioning plants for bottles, which is less developed in this South American country, which made it necessary to create the company’s own model.
On the other hand, the return system had to be modified due to the experience with restaurants. It was evident that it was complex. It works well as long as you have direct control (H. Jessen, personal communication, July 8th, 2020).
The limitations to have a standardized system for reconditioning glass bottles, due to the restrictions of both the country and the company, reduce the possibility of having the same results in their operation in Medellín —their main headquarters and where they have more control in the operation— and in Bogotá, the capital of the country.
In Bogotá, the return percentage is much lower, it is approximately 35%. In total, if the return is averaged in both Medellín and Bogotá, we are at a 50% return, which is good. But to be honest, at the start of the business, we did not consider these operational and regional differences (H. Jessen, personal communication, July 8th, 2020).
Likewise, although the purpose of the company is to have our supply coming entirely from small farmers, it is also necessary to have a supply from large companies, to guarantee the continuity of the materials:
[…] We need certainty in the supply of the main material that is fruit, which is why we work with a couple of larger organic fruit pulp companies. In these cases, we do an investigation and control regarding their activity and their management, so we make visits to see how they are working, we talk with the workers, and we verify that they comply with minimum standards that correspond to our principles and our way of managing the company. This is, for now, something that we have to “accept”, but in the medium term, we are planning not to depend on large companies as suppliers (H. Jessen, personal communication, July 8th, 2020).
On the other hand, another problem faced by the company is that the consumption of sustainable or organic products in Colombia is not yet widespread, as expected when the business plan was created. Compared to Germany, education in sustainability and consumer responsibility is a need that has entered the Colombian public agenda in a more recent time: the concept of sustainability was initially presented in the 1991 Colombian Political Constitution and, although the creation of The first Ministry of the Environment dates from 1993, in 2002 it was merged into the Ministry of Housing, and only until 2011 the Ministry of the Environment and Sustainable Development was created (Decree <Law> 3570, 2011).
The relative novelty of sustainability in the Colombian sphere has involved a greater effort than expected and, using a German term employed by the founders, has involved consumer education —from Adam and Eve—, that is, from the basic concepts:
[...] the first years, we went to many events to explain to people what Prost SAS is and what the premises of the business are, as well as the characteristics of the product. And in these two or three years that we have been in events, I cannot tell you how many times people has asked us “Organic: what is that?” (H. Jessen, personal communication, July 8th, 2020).
This lack of knowledge and appropriation of the concept of sustainability and the organic product is one of the possible causes that consumption is not as expected.
[…] I cannot be with these dear customers every day: I have a chance to speak with them, for five minutes, the reflection and purchase decision is theirs (H. Jessen, personal communication, July 8th, 2020).
This last situation has triggered one of the current concerns of Prost SAS: the difficulty of accessing the LOHAS segment.
[...] I still believe that if the LOHAS see us and understand a little what we do, they not only become loyal consumers, but also potential multipliers of the idea ... the percentage or number of LOHAS in Colombia may be smaller than we thought. For now, we are going to go to other markets where we think or know that there are more LOHAS (H. Jessen, personal communication, July 8th, 2020).
Given the market reality posed by a possible smaller size of the LOHAS in Colombia, the company has chosen, as a strategic action, to expand the operation towards attracting customers outside the Colombian geographical environment:
What we analyzed and the diagnosis we made, is that our product is somewhat expensive in the market if the organic concept and the value it brings is not understood, because our product not only wants to include a new idea related to organic products in the Colombian beverage market, but several ideas related to the broad concept of sustainability (H. Jessen, personal communication, July 8th, 2020).
Faced with this scenario, Konstantin Jessen has relocated to Europe in order to identify new clients, expanding the geographic market, but without disengaging from the idea of continuing with the operation in Colombia, as stated in the proposed label for the future foray into the Spanish market.
We produce all our beverages in Colombia to generate a positive social impact where it is most needed (Jessen, personal communication, July 8th, 2020).
Vision of the future and preservation of the values of the founders
At present, Prost SAS and its product D’Cada has reoriented its vocation of concentration on the Colombian consumer, opening up the possibilities for commercialization in other countries; without abandoning the possibility of continuing to penetrate the Colombian market:
[…] It is a short time for consumers who make their decisions in a supermarket: it is a lapse of 3 to 5 seconds for their choice. Probably, that was a disadvantage at first. We are sure that in the medium term all this will make our business stronger because we have all the conditions and we, Konstantin and I, are very persistent (H. Jessen, personal communication, July 8th, 2020).
Likewise, the company has considered that, despite expanding its focus to other countries and not maintaining its concentration on the education of the Colombian consumer, this decision offers opportunities to strengthen the brand in the future:
[…] Everyone should focus on small farmers and then the world would be a better place. Our idea was to stay in Colombia and that we will continue to do. We understand that exporting has implications for the environment; however, it allows us to grow, strengthen the company and help many more farmers. So, it has positive aspects that balance the negative ones (H. Jessen, personal communication, July 8th, 2020).
Faced with the hypothetical question of the possibility of changing the business model to one where sustainability is not the premise, with the aim of facilitating the operation, the founders have a clear position in this regard:
There are many people who do not have the same values as we do, who would say that everything we do is luxury problems, that we can do sustainability when we earn a lot of money, because they think this represents success. We (prefer) the other way around: the basis of our business model is sustainability. If it becomes successful or not, we will see (H. Jessen, personal communication, July 8th, 2020).
This reinforces the belief of the founders, embodied since the origin of the business idea, regarding sustainability as a condition that cannot be incorporated along the way:
At least from the beginning, the core of our business is well planned because we know that many large companies, which currently want to do more sustainable things, have great challenges because they would have to modify the core of their business and change things that are not possible now. Once you have a thousand employees, things are much firmer, much less easy to change (H. Jessen, personal communication, July 8th, 2020).
Finally, when faced with a second hypothetical question about the conditions for selling the company to a third party, Henrik is clear that one aspect that would be essential in a negotiation process for the sale of the company would be the solidarity fund:
One thing that is essential for me is the issue of the solidarity fund, this is something that I would include in any contract with any company ... And if a “Coca Cola” buys from us and sells, I don’t know, how many million bottles a year, that then would be (for) a foundation that would have good resources and good possibilities ... they might do with the D’Cada brand whatever they want, but we would have, at least, this income for the Colombian people, to do lovely projects (H. Jessen, personal communication, July 8th, 2020).
This final position summarizes the business model and its link to the values of its founders.
We may not be making a lot of money with our company, (but) in “karma points” we are very favored. In another life, it will favor us (H. Jessen, personal communication, July 8th, 2020).
Discussion of the Results
Prost SAS is a sustainable business model, which generates value by creating an apparent competitive advantage for the customer and contributing to sustainable development (Lüdeke-Freund, 2010). The way in which the creation of the company was raised and the organizational values on which it is founded, as well as the way in which the activity is developed, account for this. Sustainability is not a factor that has been adopted after its creation, on the contrary, it is what defines the company and is part of its nature, giving added value to its product.
Entrepreneurial ventures offer a unique context for applying UET to understand how founders’ behaviors influence their companies’ strategic capabilities and performances (Hensellek, Kleine-Stegemann & Kollman, 2023), as it can be seen in Prost SAS, confirming how the thinking and individual conditions of the managers and founders of a company direct and determine factors such as sustainability in business performance.
Prost SAS is a company in which the application of the Upper Echelons Theory is evident, confirming how the thinking and individual conditions of the managers and founders of a company direct and determine factors such as sustainability in business performance.
In the case of Prost SAS, it is possible to identify what Junquera and Ordiz (2002) stated regarding the influence of the demographic aspects of the managers in the strategic decisions of the organization: initially, it is understood that people with a high education level tend to have values more related to nature and sustainability (Vaske, Donnelly, Williams & Jonker, 2001). Likewise, it has been identified that younger people take more into consideration that the activity of the company is consistent with the care for nature (Egri & Herman, 2000); and that the social environment and national context influence individual values. Related to the above, the founders of Prost SAS were influenced by education and values regarding sustainability in Germany which encouraged them to establish a business in Colombia based on these premises.
Despite that, in this case, the individual influence of the managers in the direction of the company is reaffirmed and values transcend from the personal to the organizational, this is not enough for the efficient development of the business and is not a factor that can be considered in isolation. As the context and the environment in which the business operates may limit or affect the exercise of these values. From this perspective, in Prost SAS converges three interlinked forms of work identified by Bozkurt, Xheneti & Vicky (2022) as contributors to small sustainable businesses: entrepreneurial work, identity work, and institutional work.
Entrepreneurial work is particularly demanding in this kind of companies, according to Bozkurt et al. (2022), because their business models are more experimental and fragile, as it is shown through the different intended actions made by Prost SAS to adapt its original business plan and working system in order to preserve founders’ identity and values.
In this case, the sustainable measures in the business are affected by cultural aspects that limit their impact, such as the fact that in Colombia consumers still do not recognize the benefit of an organic product and the cost that this implies in the product, be it for personal considerations or for financial reasons that they cannot solve. Thus, the identification of a product as —sustainable—, which is initially considered a —positive— attribute by the founders, can become a —negative— characteristic for the development of a business idea in each environment.
In the case of Prost SAS, the product and its sustainable elements have not been enough to be more popular in the Colombian market, so it has even been necessary to modify its original strategy by redirecting the commercialization of the product towards Europe, where there is a recognized market interested in investing in high quality organic products. Faced with this, the new approach to the European market poses a paradoxical situation in which the company, in order to guarantee its survival, must reformulate its original purpose of promoting sustainability in Colombia, which has been an intrinsic condition to the existence of Prost SAS.
In their study about opportunity recognition among small businesses, Sarma, Attaran & Attaran (2022) identified entrepreneur’s knowledge, motivation, and resilience as drivers of sustainable entrepreneurship. In the case of Prost SAS, the values and cultural beliefs of the Jessen brothers are part of the nature of the company, so the business activity responds to the enduring ideal of its founders. Henrik Jessen is convinced that business activities can be responsible and fair with the environment in which they are developed. He also considers the value of sustainability as an element of the business, recognizing the social and environmental dimensions (Lüdeke-Freund, 2010; Farag & Mallin, 2016), which is evidenced in organizational management.
As an organizational value, sustainability in the Prost SAS model persists and is validated through the Upper Echelons Theory. However, external aspects that in certain environments can influence the direction or continuity of those values in the organization condition this.
The case of Prost SAS raises concerns to investigate in the future about the limitations, not only external but also specific to the organization, to the exercise of values transmitted from the individual sphere of the entrepreneur to the organization.
Conclusions
Prost SAS is a company convinced that production and marketing must be framed within the concept of sustainability and positive impact on a social level. The company is, in itself, a sustainable business that seeks to stay in the market even though the environment does not always correspond to those organizational values.
Over time, the company has carried out its activity in coherence with the principle of sustainability, making it one of its fundamental pillars. However, it has had to adapt to the Colombian environment, which is still incipient in terms of organic and sustainable products awareness, since there is a market for the product, but it is not broad enough yet. This circumstance makes the founders consider the need to make changes that may not be entirely framed in their sustainable business idea.
Despite the interest of the company’s leaders that organizational management is founded on the principles of sustainability, of which they are convinced, a market that corresponds to or aligns with the organizational values is a determining factor in the success that can reach a company like Prost SAS. The values that the manager or the entrepreneur naturally transmits to the company and that seek to permeate it in all its areas, must find a corresponding receiving environment that allows the development of the business; otherwise, the value may be reduced or limited and, consequently, change to its detriment.
Regarding sustainability, it is necessary that it is not a task only foreseen from the legal and political order as a direction towards the company, or a decision of the organizations themselves: it must be conceived in a comprehensive way including the market and other context factors that participate or may affect the development of the company. In the case of Colombia, the creation of instruments that promote the consumption of sustainable and environmentally friendly national products is required.
This paper has implications for actual entrepreneurs, educators and university students interested in getting a better understanding about managing sustainability as a core business value, by offering an accessible approach to challenges faced by a small and medium enterprise whose founders are embedded in a different country and culture.
As a case study of a single company in a specific time period, this paper’s external validity is limited, and its results cannot be generalized to other companies, but its ultimate purpose is to stimulate open discussions among both actual and would-be entrepreneurs. Finally, a direction for future research inspired by this paper is to explore the unique nature of entrepreneurial ventures by turning to case study methodology to reflect upon realities from different contexts and sectors seen through founders’ eyes.
Statement of Authorship
Montenegro: Research, conceptualization, preparation of original draft, writing, revising and editing.
Vargas Villamizar: Research, conceptualization, methodology, writing, revising and editing.
Funding
This article, a case study, is derived from the research project entitled "Sustainability as a value, experience from entrepreneurship".
Conflict of Interest Statement
This research does not represent any conflict of interest between the authors, the journal, the publisher and the funding entities.
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Biodata
Yamile Andrea Montenegro is an Associate Professor of the International Business Program at Universidad El Bosque (Colombia). Doctor of Law - University of Vienna (Austria). Master in Globalization, International Trade and Emerging Markets - Universidad de Barcelona (Spain). Lawyer Universidad de la Sabana (Colombia). Her research interests focus on international business law, international business, business internationalization, international economic law. ORCID: https://orcid.org/0000-0003-2509-9863
Oscar Hernán Vargas Villamizar is an Associate Professor of the International Business Program at Universidad El Bosque (Colombia). Master of Science in Business and Economics- Lund University (Sweden). Master’s in Industrial Engineering - Universidad de los Andes (Colombia). Industrial Engineer - Universidad Industrial de Santander (Colombia). His research interests focus on Organizational management, international business, higher education. ORCID: https://orcid.org/0000-0002-2704-5722