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Sustainability Drivers: an investigation in the Brazilian retail sector

Autoria: Danny Pimentel Claro, Silvio Abrahão Laban Neto, Priscila Borin de Oliveira Claro Abstract: This study investigates the impact of three drivers on retail sustainability investments. By combining internal and external drivers with supplier relationships, we developed three central hypotheses based on the retail and sustainability literature. The more retailers develop their process, human resources and customer driven capabilities, the more investments in sustainability will occur. In addition, retailers may develop close relationships with suppliers to invest in sustainability. Competition and economic instability may also lead to long run investments in social and environmental activities. Sustainability strategy is an emerging area of research dominated by exploratory single company case studies with little quantitative empirical evidence; our study is an attempt to fill that void. By combining an integrated framework of three drivers, this study will be of value to researchers who are developing causal models of sustainability and to retail managers who are responsible for developing and implementing capabilities and training retail employees in how to effectively interact with specific investments in sustainability. We tested our hypotheses by surveying 101 retailers that operate in Brazilian supermarkets, hypermarkets and neighborhood stores with a focus on food and a limited offering of general merchandise and apparel. Our survey data collection processes mostly followed Dillman’s (2000) procedures. In a study of retailers, Griffith, Noble and Chen (2006) demonstrated that the capability of market responsiveness fosters retailer performance. The importance of capability to a retailer is often viewed in terms of its operational or financial outcomes, without careful consideration of the impact that customer orientation has on investments in sustainability. Our results show the importance of customer driven capabilities for investments in sustainability. Communication with the supplier also has an impact on investments, while the process and policies of the supplier relationship do not. Retailers coordinate the relationship with suppliers to invest further in sustainability. Our study sheds light on the drivers for sustainability and offers an understanding of how a retailer may foster investments in sustainability. Sustainable business cannot be well implemented without commitment from the retailers’ top management. The sentiment is that concern for social and environmental responsibility must become an integral part of the retailer's corporate culture. It is common sense that people have somewhat either egoistic or altruistic motivations or both when it comes to having such broad and not directly accountable social and environmental responsibilities. Therefore, it is critical that leadership be shown in embracing and involving all a company’s activities, people and partners in the challenges of investing in sustainability.

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Introduction Recently, sustainability has become a major business issue for retailers (Ganesan et al., 2009). Previous research has recognized the importance of sustainability by creating the concept of enviropreneurial marketing strategy (Menon and Menon, 1997) and more recent research has recognized the importance of corporate strategy in this area by further integrating environmental and social concerns (Nidumolu and Prahalad, 2009). Due to their economic impact and proximity to end consumers, retailers may play a key role in sustainability initiatives and thus become more productive and improve their image with consumers and society in general. Sustainability in broad terms consists of a combination of economic, social and environmental dimensions to: “meet the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations, 1987). Consumers’ perceptions of a retailer’s investment in sustainability may affect the retailer’s brand image and may alter consumers’ propensity to buy specific brands and patronize certain retailers (Handelman and Arnold, 1999). Furthermore, increasingly competitive markets point to the importance of preserving loyalty and developing long term relationships with consumers. Prominent retail research has discussed internal, relationship and external drivers that may lead to investments in sustainability. The people that work for a retailer are central to any sustainable activity. People allow corporate social responsibility to be aligned with business objectives (Smith, 2003). Customers everywhere are more aware of the social and environmental aspects of retailers, and companies that invest in such activities tend to perform better (Garcia-Gallego and Georgantzis, 2009). A survey of retailers showed the importance of specific capabilities to respond to customer needs (Griffith, Noble and Chen, 2006). In addition, a retailer’s internal process is acknowledged as being critical to gaining efficiency (Day, 1994) and may, for instance, support the implementation of green operations or further transparency in a supply chain (Ganesan et al., 2009). Retailers may develop relationships with suppliers through communication and well established process and policy. The challenges of sustainable business require an alignment with suppliers to work together and address problems as they emerge (Brown, Cobb, and Lusch, 2006). Uncertainty may also affect investments in sustainability. Retailers may face high competition and be forced to incorporate social and environmental practices that influence the consumer’s perception of them (Ganesan, 1994). Therefore, retailers can consider these three main drivers in the fostering of investments in sustainability. Although some of these arguments are well known and established in the literature, very little has been done to formally integrate them into a framework of sustainability. Such a formal assessment can provide marketing managers and scholars with specific insights that can effectively explain the drivers that lead to more investments in sustainability. The purpose of this study is to explore the drivers that lead to increased retailer investment in sustainability. More specifically, this study will assess the effects of internal (process, human resources, and customer driven), supplier relationship and external drivers that may increase sustainable investments. Sustainability strategy is an emerging area of research dominated by exploratory single company case studies with little quantitative empirical evidence; our study is an attempt to fill that void. We conducted a survey of 101 Brazilian supermarkets in order to test our hypotheses. By combining an integrated framework of three drivers, this study will be of value to researchers who are developing causal models of sustainability and to retail managers who are responsible for developing and implementing capabilities and training retail employees in how to effectively interact with specific investments in sustainability.

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Understanding the impact of each driver on investments will allow retailers to focus more precisely on the critical aspects of capabilities and interorganizational relationships. Sustainability in the retail sector: some examples from Brazil Retail industry globalization and consolidation have created gigantic global and even local corporations that have attracted the attention of consumers, regulators, NGOs and society at large. Alongside the business scale and objectives, one must consider that retailers represent the last stage of the distribution channel and more specifically the fact that the retail industry may drive the whole supply chain process and its economic, environmental and social consequences. In response to this growing attention, retailers have created corporate programs to collect valuable data and formulate a strategy for sustainability (Banerjee, lyer and Kashyap 2003; Iles 2007). In summary, sustainability issues are becoming more and more relevant for any retail business. The concept of sustainability may be expressed through the triple bottom line concept, entailing the dimensions of care for the natural environment, social responsibility and economic results (Elkington, 1994; Savitz, 2006). As with any other strategic objective, sustainability is an integrated organizational objective that focuses on long term business competitive advantage. There may be several specific investments in sustainability. Retailers invest in corporate social responsibility through social projects in the surrounding communities. Corporate social responsibility encompasses a company’s status and activities with respect to its perceived societal obligations such as corporate philanthropy, cause-related marketing, minority support programs, and socially responsible employment and manufacturing practices (Bhattacharya and Sen, 2004). An interesting example is Walmart’s community stores where the company, alongside its traditional product and services, offers a community center where customers have access to health services, document expedition services, job agency and basic training courses (Ferraz, 2009). Some investments may have a direct impact on the social dimension and an indirect impact on the environmental and economic dimensions. The issues of global warming, deforestation and non-renewable resources have caught the attention of society and public opinion. In this area, many players are investing in improving their packaging and supply chains in order to reduce their carbon footprint and waste (Tesco, 2009; Carrefour, 2009). A recent document developed by Greenpeace about the deforestation in the Amazon Forest showed that cattle are responsible for about 80% of all deforestation in the Amazon region (Greenpeace, 2009). Greenpeace has tracked the trade in cattle products back from the exports – pinpointing the facilities of Bertin, JBS and Marfrig, the three large Brazilian meat processors. These companies keep cattle in ranches within the Amazon Forest. Carrefour and Walmart were listed as silent partners to the crime since they were the major buyers of the Brazilian meat processors. As a reaction to this, Walmart, Carrefour and Pão de Acucar (Brazil’s largest retailer) banned meat from these processors from their shelves. The ban lasted until June 2009, when these suppliers together with these retailers signed a document to produce and commercialize sustainable meat, which includes eliminating cattle within the Amazon Forest. Retailers have also focused on investments in environmentally friendly infrastructure and bags as well as in training and campaigns to educate employees and customers on the importance of sustainability (Nidumolu, Prahalad and Rangaswami, 2009). An interesting example is given by Pão de Açúcar: through recycling stations (in partnership with Unilever) and a pre-consumption recycling initiative called Green POS, consumers are invited to recycle and even discard product packaging right after checking out (Pão de Açúcar, 2009). Additionally, investments are being made in developing local suppliers which have an impact on the welfare of the local economy as well as production standards. Several retailers and

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event trade associations create and adopt codes of conduct that outline acceptable practices for suppliers. In an effort to develop local suppliers, retailers enforce these codes in order to develop standards as is the case of the meat supply chain in Brazil (Freitas, 2009). From a global perspective, Whole Foods is a strong example of a retailer that emphasizes its responsibilities and roles beyond its own activities, looking after farm workers and the environment (Whole Foods 2009). Research has shown the impact of several of these dimensions on brand image, reputation, sales and profits, and product and process innovation (Womack, Jones 2005; Truch 2006). As sustainable businesses lead to long term performance, research needs to address the relevant drivers that retailers should be taken into account when investing in sustainability. Specifically, we investigate three drivers in which retailers are leveraging sustainability investments. Given the fact that retailers represent the end of a larger chain, we must take into consideration aspects that go beyond retailers. Sustainability investments may be influenced by internal and external drivers as well as the nature of the supplier relationship. Hypotheses Figure 1 presents the research model and the suggested hypothesis. The first driver involves a move toward internal capabilities, which refers to the sum of expertise and resources with a specific purpose. We investigate the process, human resources and customer driven capabilities (Helfat, 2000). The second driver pertains to the challenge of maintaining a relationship with suppliers. For instance, retailers maintain these business relationships to facilitate access to an appropriate assortment of products. Interorganizational process and policy (Ganesan, et al. 2009) as well as supplier communication (Mohr and Speckman, 1994) are considered in this analysis of sustainability investments. Finally, we looked into the external driver of uncertainty which may influence the tendency of retailers to invest. Uncertainty includes risk taken under economic instability or the increasing presence of competitors (Ganesan, 1994; Klein et al., 1990). Figure 1: Drivers of Sustainability Investments

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Capability has been extensively discussed in the marketing and management literature. The capabilities concept refers to the complex set of skills and resources that ensures superior functional activities (Penrose, 1959). At the time of its introduction, the concept mainly focused on the matter of developing such distinct capabilities. In a retail business context, capabilities can be usefully sorted into three categories, depending on the nature and orientation. A first category is process capabilities that are related to the day-to-day organizational operations and routines. Zeithaml (2000) shows the importance of process capabilities by reviewing the literature of overall quality in services and the implications of cost reduction for customer relationship management. A second category is human resource capabilities. Human capability addresses the propensity of the management literature to over- emphasize routines and processes without explicitly considering the human aspect of processes (Analoui, 1997). Human capability appears to be a realistic indicator of improved organizational effectiveness (Boxall and Steeneveld, 1999) because it contributes accumulated knowledge about complex processes. A third category is customer driven capability. Every discussion of market orientation emphasizes the ability of a firm to learn about its customers and execute market driven activities. Day (1994) explored the idea of market sensing and customer linking to develop and sustain customer driven capabilities. In addition, the new dominant logic of marketing suggests a clear and direct focus on customers because they are the active participant in change and co-producers in the market (Vargo and Lush, 2004). Retailers that are able to assemble these categories of capabilities may be well prepared to deal with sustainability issues. Thus, we formulate the following hypothesis:

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Hypothesis 1: Process (a), human resource (b) and customer driven (c) capabilities lead to investments in sustainability. Along with capabilities, a number of retailers are involved in developing relationships with suppliers to better cope with the increasing demands of consumers (Ganesan, et al., 2009). Interorganizational relationships have long been recognized as being critical for businesses (Anderson and Narus, 1990). In nature, relationships require two notable dimensions to be operational. First, process and policy must be well defined and implemented in a way that reassures relationship partners and tells them how to work together and address problems (Brown, Cobb, and Lusch, 2006). Ill-defined procedures hamper partners in providing constructive decision making input. Retailers may invest more in sustainability when supplier procedure and policy are clear. Communication is another dimension of the supplier relationship. The concept of communication refers to the transfer of information between two parties which includes providing and receiving it. Mohr and Nevin (1990) developed an extensive model to explore the facets of communication by looking at frequency, content and direction. Mohr and Speckman (1994) found evidence that communication influences financial performance and the satisfaction of the relationship parties. In the high tech industry, manufacturers are assumed to have more power than the retailer and use the power to hide valuable information (Mukhopadhyay, Yao, and Yue, 2008). This lack of communication brings conflict and decay to the relationship. As per Sindhav and Lusch (2008), collaborative communication from suppliers is found to be positively related to coordination, and thus improves trust and commitment and reduces the chances for unresolved conflicts and power imbalances. Thus, we formulate the following hypothesis: Hypothesis 2: Process and policy (a), and communication (b) in the supplier relationship lead to investment in sustainability. Uncertainty may arise from sources like economic instability or increasing competition (Klein et al., 1990). While economic instability represents the unexpected changes in economic policy that can catch firms by surprise, increasing competition represents the consolidation of the retail sector all over the world (Ganesan, 1994). Uncertainty may lead to high investments in sustainability. Sustainability is a long term investment that affects the brand image and reputation of retailers among customers. Retailers may face high competition and be forced to incorporate social and environmental practices that influence consumer perception. According to Nidomolu and Prahalad (2009) the quest for sustainability is already starting to transform the competitive landscape, which will force companies to change the way they think about products, technologies, processes, and business models. The key to progress, particularly in times of economic crisis, is innovation. Just as some internet companies survived the bust in 2000 to challenge incumbents, so, too, will sustainable corporations emerge from today’s recession to upset the status quo. By treating sustainability as a goal today, early movers will develop competencies that rivals will be hard-pressed to match. That competitive advantage will stand them in good stead, because sustainability will always be an integral part of development. Together with perceived differentiation, retailers may also gain with efficiency. From a risk taking perspective, disinvestments in sustainability can lead to more risks and fewer business opportunities, which can also influence competitiveness. Retailers may then be long term

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oriented and be willing to invest more in sustainability. Sustainability may also absorb economic instability through a long term perspective. Consumers can react positively during periods of instability by rationalizing their choices of retail brands. Thus, we formulate the following hypothesis: Hypothesis 3: Uncertainty leads to highs investment in sustainability because it can be a source of competitive advantage. Methodology We tested our hypotheses by surveying retailers that operate in Brazilian supermarkets, hypermarkets and neighborhood stores with a focus on food and a limited offering of general merchandise and apparel. This industry has undergone a consolidation process over the past two decades and as a result the top 5 chains represented 40% of the total formal market in 2008 as measured by the Brazilian Supermarket Association (ABRAS 2008). The other 60% is accounted for by small and medium chains with important local expertise and differential strategies (McKinsey Global Institute, 2006). These retailers are organized in associations that supported the data collection. The national association has more than 1,000 members throughout the state of São Paulo, the richest and most influential state in Brazil. Our survey data collection processes mostly followed Dillman’s (2000) procedures. We initially developed a questionnaire by identifying construct items used in previous studies. We also obtained the help of other academics and managers to develop items where the literature was silent, to refine survey wording, and to check the overall validity of questions vis-à-vis the industry environment. The questionnaire was given by telephone to randomly selected retailers in the national association. A marketing research firm was hired to interview 101 retailers over a period of two weeks during May 2009. We identified the key respondents by inviting the retail owner (approximately 70% of the sample) or the highest general executive (approximately 30%). These individuals are the most knowledgeable about their business, as well as company specific information. In questions about their relationship with suppliers, we asked respondents to focus on “a supplier that the respondent was most knowledgeable about.” Our sample’s retailer sizes are representative of the country’s national population of businesses. The variables used in the questionnaire are described in Table 1. Sustainability investments consider aspects related to environmental, economic and social issues. The variable of sustainability was assessed by a formative 4-point Likert scale. The variable included eight items and was calculated by the unweighted average of the eight items. The capability construct is formed by three dimensions: process, human and customer. The process dimension refers to the extent to which activities and routines employed in the day-to-day business are relevant for the firm. This dimension was measured by three items. The human resources dimension refers to investments made in training staff, the work climate, the workload and opportunities for career advancement. This dimension was assessed by ten items. The customer driven dimension refers to the activities and resources employed specifically in tangible (e.g. competitive price) and intangible (e.g. customer service) customer perceived value. The customer driven dimension was measured by three items. All dimensions were assessed by a formative 5-point Likert scale ranging from “not at all important” to “very important”. The variables were calculated by the unweighted average of the items of each dimension. Table 1: Sample of construct items

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Sustainability Investments (4-point scale, “no investments/under study/under implementation/implemented”) Social activities for local communities Development and use of environmentally friendly bags Environmentally friendly building Sourcing to local suppliers

Capabilities (5-point Likert scale, “not at all important”–“very important”) - Process,

What is important for your process management? Reduction of costs Improved logistics and operations Reduction of product waste

- Human Resources, What is important for your HR management? Transparent and fluid internal communication Adequate workload Opportunities to participate in social activities Training programs

- Customer Driven What is important for managing your relationship with customers? Increased assortment Competitive prices Customer service

Supplier Relationships (5-point Likert scale, “totally disagree”–“totally agree”) - Process and policies (α=0.72),

Suppliers manage policies fairly. Suppliers apply policies consistently to retailers. Suppliers treat retailers the same when implementing any policy.

- Communication (α=0.83), Suppliers are transparent in their communications with you. Procedures are explained thoroughly by the supplier. Suppliers communicate details in a timely manner.

Uncertainty (5-point Likert scale, “not at all concerned”–“very concerned”) Changes in government tax policy for businesses Economic policies to reduce consumption Consolidation of the retail sector More multinational competitors

The construct of supplier relationship drivers is formed by two dimensions. The process and policies dimension refers to the effect of the perception of the supermarket on the supplier’s development and the uniform enforcement of policies and procedures. A four-item measurement instrument was applied containing a reflective scale with a Crombach alpha of 0.72. The communication dimension refers to the explanations provided by suppliers that convey information about why actions were employed in certain ways. The instrument included four items containing a reflective scale with a Crombach alpha of 0.83. All two dimensions were assessed by a 5-point Likert scale ranging from “totally disagree” to “totally agree”. The variables were calculated by the unweighted average of the items of each dimension. The variable of uncertainty refers to the respondent’s perception of the impossibility of exactly describing the future outcomes of issues related to his or her business. A measurement instrument with six items with a formative 5-point Likert scale ranging from “not at all concerned” to “very concerned” was employed. The variable was calculated by the unweighted average of the six items. Table 2 presents the descriptive statistics and the correlation matrix of our variables. The correlations between the measures do not suggest problems of pairwise collinearity that would preclude the use of all constructs in the estimation.

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Table 2: Descriptive Statistics and Correlation Matrix Mean SD 1 2 3 4 5 6 7 8

1.Sustainability Investment

1,33 0,65 1

2.Process Capabilities 4,28 0,53 0,31 1

3.Human Resources Capabilities

4,88 0,38 0,20 0,34 1

4.Customer Driven Capabilities

4,05 0,58 0,29 0,52 0,22 1

5.Interorganizational Power

2,52 0,96 -0,04 0,05 0,16 0,08 1

6.Supplier Communication

3,06 0,96 0,15 0,04 0,09 0,10 0,52 1

7.Uncertainty 3,68 0,60 0,13 0,11 0,19 0,16 0,05 -0,06 1

8.Number of Checkouts (mil)

0.12 0.97 0,26 0,11 -0,05 -0,01 0,06 0,01 -0,06 1

9.Small and Medium 0,04 0,20 0,03 0,09 0,07 0,09 -0,06 -0,18 0,24 -0,03

Results Table 2 summarizes the results of ordinary least square regression analysis. The table presents the standardized coefficients of the estimated regression model and the t-test in parentheses. The standardized coefficient allows for a comparison of “coefficient size” because all measures are in the same metric, namely, standardized normal deviates. The equation was statistically significant below the 0.01 level in the F-test. The R2 for the equation is 0.23, which indicates that the results of the estimated model present an acceptable explanatory power (Hair et al., 1998). The explanatory power of the equation and the relative pattern of the significant coefficients support the examination of individual coefficients testing the effects of each individual variable. Table 2: Drivers of Sustainable Investments

Variables Hypotheses Sustainability Investments

Capabilities

Process H1a 0.09 (0.76)

Human Resources H1b 0.14 (1.33)

Customer Driven H1c 0.24 (1.97)* Supplier Relationship

Process and policies H2a - 0.22 (1.96)*

Supplier Communication H2b 0.23 (1.96)* Uncertainty

Competitive and Economic H3 0.11 (1.11)

Control Variables

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Number of Checkouts 0.31 (3.19)**

Small and Medium 0.01 (.09)

R2 0.23

Adjusted R2 0.17

F-statistics 3.24** Notes: Standardized coefficients are reported with t-value in parentheses. *p < .05; **p < .01.

Estimated drivers have significant effects on the measurement of sustainability investments. The results show that retailers with customer driven capabilities tend to invest more in sustainability (β=.24, p<.05), which is in line with our hypothesis (H1c). No significant effect was found on the impact of other capabilities. This suggests that retailers managing assortment, prices and services with a strong focus on customer behavior tend to invest in sustainable activities. We found a negative significant effect of the processes and policies of supplier relationships on sustainability investments (β=-.22, p<.05). This is the opposite of our hypothesis H2a. We speculate that the investment in sustainability is working to counterbalance the lack of transparent processes and policies in the relationship with suppliers. Retailers may be focusing on improving their operation and image for consumers in order to safeguard the misty relationship with suppliers. On the other hand, we found support for H2b which refers to communication with suppliers. There is a positive significant effect of communication with suppliers on sustainable investments (β=.23, p<.05). Communication appears to create an atmosphere conducive to retailers investing more in sustainability. Considering the external driver of uncertainty, there was no significant effect of competitive and economic uncertainty on the sustainability investment of retailers. We included two control variables. We found a significant effect for size, by the number of checkouts, on sustainable investments (β=.31 p<.01). Larger retailers tend to invest more in sustainability. No significant effect was found for the small and medium dummies.

Discussion and conclusion This paper aims to examine the drivers that influence retailer investments in sustainability. The retailers’ brand image and the propensity of consumer repurchase may be reinforced by sustainable investments and retailers may improve their financial performance through such investments (Luo and Bhattacharya 2006). Our study sheds light on the drivers that lead to sustainability investment and offers an understanding of how retailers may invest further in sustainability. As such, this study extends the literature on retail sustainability and its drivers by exploring the internal, external and relationship based elements. In a study of retailers, Griffith, Noble and Chen (2006) demonstrated that the capability of market responsiveness fosters retailer performance. The importance of capability to a retailer is often viewed in terms of its operational or financial outcomes, without careful consideration of the impact that customer orientation has on investments in sustainability. As such, the findings of this study underscore, and provide empirical support for, the theoretical precepts put forth in the capabilities literature that argue that resources are necessary yet insufficient for the establishment of enhanced performance. Here the findings demonstrate that it is through investments in sustainability that retailers can develop a strong image and position in the competitive market.

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Grewal, Levy and Kumar (2009) acknowledged that retail supply chain issues were somehow less important than other activities such as promotion, pricing, and customer service. Ganesan et al. (2009) examined several important supply chain issues, including communication and the processes that foster innovation and efficient coordination. In our study, the supplier relationship from both the greater communication angle and the greater partnership angle has proven to be an important factor in leveraging investments in sustainability. Managerial Implications and Future Research Sustainable business cannot be well implemented without commitment from the retailers’ top management. The sentiment is that concern for social and environmental responsibility must become an integral part of the retailer's corporate culture. It is common sense that people have somewhat either egoistic or altruistic motivations or both when it comes to having such broad and not directly accountable social and environmental responsibilities. Therefore, it is critical that leadership be shown in embracing and involving all a company’s activities, people and partners in the challenges of investing in sustainability. By treating sustainability as a business goal, retailers may develop competencies that rivals will be hard pressed to match. Some of the sustainability issues are imposed by regulation and national policies that retailers have to comply with. Apart from compliance, voluntary actions appear to be recognized by organized and informed consumers and create a virtuous cycle for retailers. Our research shows that consumer oriented retailers tend to be invest more on sustainability. Considering that those retailers take the consumer perspective and behavior as a central aspect of their strategy, this result may suggest that sustainability themes are getting more importance and relevant due to consumer awareness and demand but are not fully integrated into their since we found no evidence that human resources and process capabilities influence sustainability investments. An integrated supply chain seems to be associated with more investments in sustainability. Retailers are closer to consumers and may play an important role in stimulating environmental and socially conscious actions and appear to respond more effectively to consumer needs when fluid relationships with suppliers are established. Our research has shown that specific and better communications among suppliers and retailers tend influence positively sustainability investments. On the other policies and procedures tend to be detrimental of sustainability investments. We may speculate that, at this moment, sustainability investment are not fully formalized and incorporated by retailers. Our research provides interesting insights on retailing sustainability, however we acknowledge some limitations to this study. First, even though our sample was drawn from a large population of supermarkets, a broader perspective must be drawn from in order to better grasp the national movement of retailers toward sustainability. Future research may approach a national sample of retailers of other products. Second, on the basis of previous study, we assume the impact of sustainability on long and short term financial performance. It remains to be investigated how and why various sustainability investments impact the performance of retailers of all sizes. Future research may consider studying this causality. A longitudinal approach may be employed to better understand the sustainability issue and its drivers for the retail sector. Third, we considered the variable “sustainable investments” a homogeneous factor of the model, although we agree that investments in bags are simpler and more reversible than green building, for instance. Our assumption is that companies could be considered more or less sustainable based on the stage of development of sustainable practices and integration to business strategy. Based on that, all items that form the variable could be considered important because we looked at sustainability as a process and not only as a result. However, some may argue that this is a limitation of the research and so we

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strongly advise further research to distinguish between reversible and simpler investment from non reversible and more complex sustainability investment. Finally, issues related to advertising and sustainability should also be addressed. Customer perception is altered by emotional and social appeals in marketing campaigns and consequently ethical problems may emerge (Drumwright 1996; Handelman and Arnold 1999). This would include an examination of the role marketing plays in helping the organization decouple its sustainability investments from its communication strategy. Reference List ABRAS (2009) – Ranking ABRAS – edição 2009 Aurora Garcia-Gallego and Nikolaos Georgantzis (2009), Market Effects of Changes in

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