Sustainability in the Chilean Wine Export Industry

Hanna Bremander

Student thesis: Master thesis

Abstract

“New World” wine producer countries like Chile, New Zealand and South Africa increasingly focus on developing their sustainable winemaking practices, and have adopted national sustainability initiatives to guide this development. Scholars have argued that firm- and industry-external factors are important for the adoption of voluntary sustainability initiatives in the wine industry (Gabzdylova, Raffensperger & Castka 2009; Sinha & Akoorie, 2010; Szolnoki, 2013; Ioannu & Serafeim, 2012). However, little is known about the effect of institutional pressures in the industry’s external environment on the adoption of such initiatives. Through a critical realist case study approach, I use an institutional theory-based analytical framework to understand and explain how and why demands for sustainability exerted by the Chilean wine export industry’s external environment have affected the industry’s implementation of sustainable winemaking initiatives. The Chilean wine export industry is important for the country’s economic and social development, as it is an emblematic sector that promotes the Chilean “brand” on international markets and contribute to employment and professional development. Furthermore, the industry has an objective to become the number one New World exporter of sustainable wine by 2020 and has developed a Sustainability Program and Sustainability Code to promote this development in the industry (Wines of Chile, 2010). Interviews with sustainability managers in four of Chile’s largest wine export companies and with the Head of Sustainability Program at Wines of Chile, as well as secondary sources about industry actors and academic scholars’ perceptions of the sustainability situation in the industry, make up the empirical foundation of the study. An industry analysis, both on a global and national level, describes the preconditions for the Chilean industry to be an international competitor on an increasingly competitive global market. Demands for environmental friendly, socially and economically responsible wine is exerted on Chilean wine exporters by the Swedish Alcohol Monopoly, Systembolaget, and by its Nordic “sister” monopolies. As a member of the international Business Social Compliance Initiative (BSCI), Systembolaget has implemented the BSCI principles for labor rights and protection of the environment into its Code of Conduct. Thereby, Chilean wine companies that wish to export to the Swedish market, have to comply with these principles. Systembolaget’s demand for BSCI compliance is one example of an institutional pressure for sustainability put on the Chilean wine export industry. By the application of DiMaggio and Powell’s (1983) institutional theory framework I aim to explain the underlying powers that drive the implementation of sustainability initiatives in the Chilean wine export industry, and under what conditions these powers have caused the increased focus on sustainability in the industry. Through causal analysis, I conclude that the isomorphic process of increased sustainability focus among actors in the Chilean wine export industry partly is explained by the interaction between coercive, normative and mimetic pressures for change exerted by actors in the industry’s institutional environment. These institutional pressures stem from norms and rules about acceptable and legitimate business behavior and have the power to drive or constrain the homogenization process toward sustainable winemaking practices in the industry. However, the interviewed companies and WoC’s responses to such pressures were mediated by the following contextual factors: the level of competition on the global wine market; firm-level factors such as previous investments in sustainable practices, international presence, and the financial state of the company; and cultural-cognitive norms that influence and guide legitimate business behavior in Chile. I suggest that further research with the aim to explain why wine industry actors engage in sustainability initiatives take into consideration the effect of 1) company-internal values and norms which can constitute industry-internal sources of institutional pressure for sustainability; and 2) economic conditions in the industry’s environment.

EducationsMSc in Business, Language and Culture, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2014
Number of pages70