Sustainability progress in monopolistic landscapes – a German water case study

Justification Water-supply and distribution companies (WSC) are dealing with one of the most crucial natural resources. In Germany, WSC show characteristics of natural monopoly. The clear separation between public... [ view full abstract ]

Justification
Water-supply and distribution companies (WSC) are dealing with one of the most crucial natural resources. In Germany, WSC show characteristics of natural monopoly. The clear separation between public institutions obtaining general, overall responsibility for water protection and management, and the private sector as well as municipal operators being responsible for practicing special functions is characteristic for the German water economy. It is of interest how German WSC implement sustainability strategically.

Purpose
Monopolistic landscapes change slowly. Strategic concepts and tools facing management and sustainability (e.g. ISO 14001, Reporting, Balanced Scorecard etc.) were analysed and evaluated in the context of the German water industry. Using literature studies and web analysis the relevant data of 110 German WSC was collected. A cross-sectional design was used in order to find patterns for fostering sustainability.

Theory
Evolutionary theory is appropriate to understand market behaviour in monopolistic landscapes. “From the evolutionary theory perspective, established markets can be conceptualized as search landscapes that are well understood, relatively stable, and, therefore, often organized” (Katila et al., 2012: 118). The Authors argue further that these landscapes are relatively stable and often well-structured as well as organised. According to Benner and Tushman (2003) companies use exploitation strategies they know. Facing sustainability concepts in the water industry the 12 sustainability principles, systemised by Kahlenborn and Kraemer (1999), and Grambow (2013), are analysed and enriched by current strategic tools and concepts in order to find strategic impulses.

Results
Although based on rather good governmental regulations the water industry needs a change towards sustainability and forward-looking strategic thinking. There is the need of strengthening sustainability management tools and the initiation of possible transformation paths of the existing water systems in order to guarantee high water quality permanently.

Implications
WSC seem to be irritated by competitors, strategic leaders and stressing factors, like fracking, etc., and enhance their sustainability activities accordingly.

Key words: sustainability, CSR, ISO 26000, water industry, cross-sectional design