Balancing sustainability performance dimensions: A system dynamics perspective

During the last decades, the topic of sustainability has increasingly attracted the attention of management scholars and practitioners, such that pursuing a sustainability strategy and generating sustainability value has become a key concern for firms. As broadly argued by prior literature (e.g., Morioka et al., 2017), sustainability is based on three main pillars (the so-called “triple bottom line dimensions”) as it concerns the simultaneous pursuit of economic, social, and environmental goals, for the benefit of current and future customers and society at large (Elkington, 1994, 1997). In this sense, sustainability draws its theoretical foundations in the stakeholders’ theory (Freeman, 1984; Parmar et al., 2010), according to which the satisfaction of diverse stakeholders’ expectations should represent the primary objective for firms (Upward & Jones, 2016). Being sustainability a multidimensional concept (Stubbs and Cocklin, 2008), it entails the alignment of interests of multiple stakeholders, and its achievement remains problematic for firms. Specifically, two main challenges impact the real possibility of adopting a sustainable behavior. On the one side, not necessarily the expectations and satisfaction of one stakeholder overlap with those of the others (Adams et al., 2016; Breuer et al., 2018; Schaltegger and Wagner, 2011). For instance, pursuing waste reduction may imply the adoption of green and automated processes that negatively affect the recruitment of the labor force. Similarly, the fight against economic and social inequality may imply the adoption of wage management practices that negatively affect the economic sustainability dimension for firms. In turn, the sustainability value generated by firms necessarily represents a balance among contrasting drivers associated with a broad plethora of diverse stakeholders (Jay and Gerard, 2015; Lüdeke‐Freund and Dembek, 2017). On the other hand, it seems unrealistic to believe that the set of stakeholder relationships that a firm establishes in a given period of time remains stable over time and valid in the long term. In this sense, sustainability has to be interpreted as a dynamic concept, where the objective of achieving a balance between the contrasting interests of stakeholders has to be revised every time a new stakeholder manifests its interests or existing stakeholders modify their own goals. Thus, while the long-term perspective of sustainable development for the firm and society at large remains valid (Evans et al., 2017; Morioka et al., 2017; Searcy, 2016), the sustainability value generated by the firm in the short term has to be constantly assessed. In the same sense, the analysis of the firm’s business model for sustainability has to incorporate a dynamic perspective (Cosenz et al., 2020