Long Range Planning xxx (xxxx) xxxx

Contents lists available at ScienceDirect

Long Range Planning

journal homepage: www.elsevier.com/locate/lrp

Divide and rule: The effects of diversity and network structure on a

firm's sustainability performance
Naeem Ashrafa, Jonatan Pinkseb,∗, Alireza Ahmadsimabc, Shoaib Ul-Haqd,
Kamal Badare
a
Montpellier Business School, 2300 Avenue des Moulins, 34080, Montpellier, France
b
Manchester Institute of Innovation Research, Alliance Manchester Business School, The University of Manchester, Booth Street West, Manchester,
M13 9NG, UK
c
HEC Montréal, Université de Montréal, 3000 Chemin de La Côte-Sainte-Catherine, Montréal, QC, H3T 2A7, Canada
d
Karachi School of Business and Leadership, Opp. Liaquat National Hospital, National Stadium Road, Karachi, 74800, Pakistan
e
College of Business Administration, Prince Sultan University, P.O. Box No. 66833, Riyadh 11586, Saudi Arabia

ARTICLE INFO ABSTRACT

Keywords: To tackle sustainability, firms often use partnerships with organizations from different industries
Sustainability or societal sectors such as government and civil society. While partnerships show potential for
Alliances firms to improve their sustainability performance, they not only lead to a potential to learn from
Cognitive perspectives diversity but also to tensions due to a lack of unity between partners. In partnerships for sus-
Institutional theory
tainability, this unity-diversity tension particularly manifests itself in different views of sus-
Non-profit strategy
tainability. This paper examines how this tension affects the sustainability performance of firms
taking part in partnerships for sustainability in developing countries. To address this question,
this tension is conceptualized as being the result of differences in organizational frames and
institutional logics between a focal firm and other organizations in the partnership. It is also
taken into consideration that firms are embedded in an overarching, relational network structure
that allows them to manage the diversity in frames and logics. To test the hypotheses, the study
analyses 1353 greenhouse gas emission reduction projects of 322 firms from developing countries
active in the carbon-offset market from 2007 to 2009. The findings show that if partners hold
different frames and belong to different sectors, a firm's sustainability performance improves first
due to learning from diversity but after a turning point decreases from a lack of unity. This
inverse U-shape relationship is flipped if a firm occupies a brokerage position in its network.

Introduction

Sustainability is one of the most pressing ‘grand challenges’ to emerge from decades of over-exploitation of natural resources,
chemical pollution and the emission of greenhouse gases (GHGs) that have resulted in the earth's climate to change (George et al.,
2016; Whiteman et al., 2013). In the natural sciences, calls have been made to maintain a safe living environment by staying within
the planetary boundaries (Rockström et al., 2009). Due to human influence, the Earth's subsystems such as the global climate and
local ecosystems are getting close to reaching their boundaries, where abrupt changes will threaten long-term stability and biological
diversity. Since firms, through their industrial activities, are large contributors to putting pressure on planetary boundaries, they have

Corresponding author.
∗

E-mail addresses: n.ashraf@montpellier-bs.com (N. Ashraf), jonatan.pinkse@manchester.ac.uk (J. Pinkse),

alireza.ahmadsimab@hec.ca (A. Ahmadsimab), shoaib_ulhaq@yahoo.com (S. Ul-Haq), kbadar@psu.edu.sa (K. Badar).

https://doi.org/10.1016/j.lrp.2019.04.002
Received 13 July 2018; Received in revised form 4 March 2019; Accepted 4 April 2019
0024-6301/ © 2019 Elsevier Ltd. All rights reserved.

Please cite this article as: Naeem Ashraf, et al., Long Range Planning, https://doi.org/10.1016/j.lrp.2019.04.002
N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

a key role in addressing sustainability (Hahn et al., 2015; Whiteman et al., 2013). Regarding the sustainability issue of climate
change, firms have become engaged in mitigation activities (Pinkse and Kolk, 2009), yet with mixed success when it comes to
reducing global emissions (Slawinski et al., 2017).
While large multinational firms have considerable power to ensure that emissions are reduced throughout their supply chains
(Pinkse and Kolk, 2009), given the scale of the challenge, which is transcending organizational and geographical boundaries, firms
tend to collaborate with organizations from different industries and/or societal sectors, e.g., non-governmental and governmental
organizations (Ashraf et al., 2017; Kolk, 2014; Selsky and Parker, 2005). Firms' efforts to tackle climate change through cross-sector
collaboration is especially prevalent in developing and emerging economies due to the ‘regulatory gap’ in these countries as gov-
ernments tend to have prioritized economic development over climate change concerns (Ashraf et al., 2019; Pinkse and Kolk, 2012a,
b). Cross-sector collaboration for sustainability has given rise to the organizational form of cross-sector partnerships (Kolk, 2014),
since resources in one sector (i.e., private or non-profit sector) are not sufficient to address grand sustainability challenges (Selsky and
Parker, 2005). Partnering with a diverse set of organizations translates in a hybridity of goals and governance mechanisms (Quélin
et al., 2017). Cross-sector partnerships pursue myriad goals—often spanning economic, social and environmental goals—and are
governed as an alliance or network bringing together different organization types (Hartman and Dhanda, 2018; Laasch, 2018; Rivera-
Santos et al., 2017; Rufin and Rivera-Santos, 2012).
This paper investigates how firms can improve their sustainability performance through partnerships. Partnerships have potential
for firms to improve their sustainability performance and contribute to the sustainability objectives of wider society, because they
allow access to different resources, knowledge and viewpoints that each organization brings to the partnership (Selsky and Parker,
2005). However, partnerships not only lead to a potential to learn from the diversity between partners but also to a high likelihood of
tensions between them (Hahn and Pinkse, 2014; Ashraf et al., 2017). Tensions, in this context, refer to the ‘stress, anxiety, discomfort,
or tightness in making choices and moving forward in organizational situations’ (Putnam et al., 2016: 68). As documented in the
literature on alliances (Goerzen and Beamish, 2005) and top management teams (Hambrick et al., 1996), diversity is a double-edged
sword; it stimulates learning but also leads to communication problems and distrust.
Partnerships encounter what has been referred to as a unity-diversity tension (Saz-Carranza and Ospina, 2010); that is, they need
sufficient unity between partners to reach agreement on the main goals and activities and they need sufficient diversity between
partners to stimulate learning. Yet, achieving both unity and diversity simultaneously is problematic and a failure to effectively
manage this tension is likely to have performance consequences. In partnerships for sustainability, the unity-diversity tension
manifests itself, in particular, in the different understandings of sustainability (Hahn et al., 2015). As sustainability is an umbrella
concept, i.e., a ‘broad concept or idea used loosely to encompass and account for a set of diverse phenomena’ (Hirsch and Levin, 1999:
200), it has different meanings for different organizations. Sustainability refers to various objectives related to economic, environ-
mental, and social impact and is both an organizational-level and societal-level concept (Hahn et al., 2015; DesJardins, 2016; Laasch,
2018). Tensions related to sustainability are likely to be further exacerbated when partnerships involve organizations from developed
and developing countries because sustainability tends to be interpreted differently in terms of the type of issues that are considered
most important and how they should be addressed (Banerjee, 2003).
Taking into consideration the unity-diversity tension, in this paper we examine how firms' engagement in partnerships for sus-
tainability in developing countries affects their sustainability performance. We argue that the potential for learning from diversity
and the tensions between firms and other organizations in a partnership find their source at two different levels. Firstly, the unity-
diversity tension plays out at the organizational level due to differences in organizational frames. Frames are interpretations used to
make sense of the world (Ansari et al., 2013; Cornelissen and Werner, 2014). The extant literature shows that frames that govern and
constitute the practices for sustainability carry or mask the tensions inherent in goals and practices (Gao and Bansal, 2013; Hahn
et al., 2014, 2015). We study the performance implications of frame diversity in terms of whether sustainability represents a single
objective or multiple objectives for organizations in a partnership. Secondly, the unity-diversity tension plays out at the field level
due to differences in institutional logics (Nicolini et al., 2016) which comprise taken-for-granted assumptions and practices that shape
the behaviour of organizations in specific societal sectors (Friedland and Alford, 1991). We study the performance implications of a
diversity in logics which stems from organizations from different sectors being embedded in different logics. We investigate the
simultaneous and countervailing effects on firms' sustainability performance of diversity and tensions related to firms and their
partners' frames and logics. In addition, we take into consideration that in order to make up for the weak institutions in developing
countries – e.g., protection of property rights, low enforcement of environmental regulations, etc. (Ashraf et al., 2019; Pinkse and
Kolk, 2012b) –, firms operating in developing countries tend to rely relatively more on their own network of partners (Khanna and
Palepu, 1997). Since their position in this overarching network of partnerships could help them manage tensions in individual
partnerships (Raynard, 2016), we examine the role of firms’ network position on the relation between diversity in frames and logics
and sustainability performance. To empirically test these relations, we focused on the specific challenge of climate change and
analyzed 1353 greenhouse gas emission reduction projects of 322 firms from developing countries which were operating in the
carbon offset market from 2007 to 2009.

Theory and hypotheses

Diversity in organizational frames

As argued in the introduction, the unity-diversity tension in partnerships for sustainability plays out at the organizational as well
as at the field level. At the organizational level, this tension in partnerships is the result of the different frames that organizations use

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to make sense of sustainability (Hahn et al., 2014). An organization's frame has been defined as a ‘knowledge structure that directs
and guides information processing’ (Cornelissen and Werner, 2014: 185). Organizations tend to rely on such knowledge structures to
make sense of their environment when it presents them with ambiguous signals (Walsh, 1995). Since ambiguous signals require high
information processing capacity, organizations develop frames made up of a limited number of elements that act as a mental template
to allow for easy sensemaking (Weick, 1995; Maitlis and Christianson, 2014). Organizations develop their frames based on previous
experience with similar situations (Walsh, 1995) which means that the nature of the frame they use to make sense of a new situation
depends on previous experience. An organization's frame guides its understanding of an ambiguous concept such as sustainability by
filtering data and prompting it to take note of or ignore specific information (Hahn et al., 2014; Grewatsch, and Kleindienst, 2018).
Applying the idea of frames to sustainability, what sustainability means for an organization depends on the frame it uses to make
sense of it. Hahn et al. (2014) argued that organizations tend to either develop a simple or a complex frame to make sense of
sustainability depending on the number of elements of which the frame constitutes. When organizations hold a simple frame of
sustainability, they ‘deal with ambiguities by trying to eliminate tensions—that is, they seek situations with a fit between various
factors and look for contingencies that reconcile any inconsistencies’ (Hahn et al., 2014: 466). If organizations hold a simple frame
with a few elements only, they have a rather narrow view of sustainability and pursue only a few sustainability-related objectives in
an efficient manner which often leads to a focus on the business case for sustainability. This singular focus on a few objectives reduces
the ambiguity organizations face regarding sustainability (Hahn et al., 2014). When organizations hold a complex (or paradoxical)
frame of sustainability with many elements, they ‘accept tensions and accommodate conflicting yet interrelated economic, en-
vironmental, and social concerns, rather than eliminate them’ (Hahn et al., 2014: 466). Organizations with a complex frame focus on
multiple objectives related to sustainability all at once which means they will not only have a more holistic picture of sustainability
but also accept more ambiguity. Whether organizations hold a simple or a complex frame will depend on their previous experience
with sustainability issues.
In the context of partnerships for sustainability, we expect the frames that the involved organizations hold differ, with con-
sequences for the success of the collaboration. While a difference in how organizations frame sustainability is likely to be related to
whether they are from developed or developing countries (Banerjee, 2003), this is not necessarily the only reason for such a dif-
ference. For example, for organizations from developed countries partnerships might be a conduit to achieve their environmental
objectives which would mean that they hold a simple frame focused on the environment. Then again, previous experience might also
have led them to develop a more holistic meaning of sustainability, leading to a complex frame. In contrast, organizations from
developing countries face stronger tensions between the environmental and socio-economic dimensions of sustainability, because the
need for economic development is more pressing (Pinkse and Kolk, 2012a). This economic focus might translate in them holding a
simple frame focused on economic objectives, but it could also lead to a complex frame that combines economic, social and en-
vironmental objectives. It would thus be plausible for both types of organization to either hold a simple or a complex frame de-
pending on their previous experience with sustainability.
While country-of-origin might affect an organization's frame, regardless of the reason for holding different frames to make sense
of sustainability (i.e. a simple or a complex frame), we expect that such a situation will affect the partners' potential to profit from
collaboration. When a firm's partners in a partnership hold different frames—a situation we term as frame diversity—there may be
advantages and disadvantages for the focal firm. We argue that frame diversity will expose a focal firm to different ways of looking at
and employing practices for sustainability. This exposure to different frames can become a competitive advantage, as it increases a
firm's capacity to scan environmental cues, act upon opportunities, access new knowledge, and learn about different methods and
procedures to improve sustainability performance. For example, firms with complex frames might learn from those with simple
frames to be more pragmatic and efficient in pursuing well-defined sustainability objectives (Hahn et al., 2014). We thus expect frame
diversity to increase a firm's sustainability performance.
However, we anticipate this positive impact to show a decreasing rate with higher frame diversity due to the countervailing force
of increasing tensions in the partnership. When the level of frame diversity increases, i.e. when partners hold vastly different frames,
unity in the partnership will diminish. There will be a turning point after which the costs of frame contests between partners start
overshadowing the benefits of learning from diversity (Cornelissen and Werner, 2014). While frame diversity offers benefits to the
partnership, such as learning new skills or pursuing multiple objectives, it also intensifies the contradictions between divergent
frames of partners, reflected in ambiguous and incongruent goals (Hahn et al., 2014). Frame diversity drives up the cost of co-
ordinating the partnership. When frame diversity increases, it may frustrate a focal firm's efforts to achieve a few focused sustain-
ability objectives when its partners have a broad conception of sustainability and prefer to address many objectives simultaneously.
For example, a focal firm holding a complex frame might get frustrated when working with partners from developing countries that
hold simple frames focused on economic objectives due to the lax environmental expectations from stakeholders in their countries
(Ashraf et al., 2014). Beyond a certain point, the ensuing tension between a focal firm and its partners will become unmanageable and
adversely affect a firm's sustainability performance because it can no longer learn from diversity due to a loss of unity which creates
misunderstanding between partners. Hence, we expect the relationship between frame diversity and a firm's sustainability perfor-
mance to have an inverted U-shape:
Hypothesis 1. The relationship between frame diversity and a firm's sustainability performance shows an inverted U-shape.

Diversity in institutional logics

The unity-diversity tension in partnerships is not only the result of frame diversity but also of diversity in institutional logics that a

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focal firm and its partners are embedded in. Firms operate in pluralistic environments, characterized by multiple, competing, and
potentially contradictory institutional logics (Greenwood et al., 2011; Nicolini et al., 2016). When firms face ‘incompatible pre-
scriptions from multiple institutional logics’, they encounter a situation of institutional complexity. In partnerships for sustainability,
partners not only tend to come from other industries, as in strategic alliances, but also from other societal sectors such as government
and civil society (Selsky and Parker, 2005). Especially firms that engage in such cross-sector partnerships experience institutional
complexity (Ashraf et al., 2017), because partners operate within different institutional spheres, and are subject to 'multiple reg-
ulatory regimes, embedded within multiple normative orders and/or constituted by more than one logic' (Kraatz and Block, 2008:
243).
Cross-sector partnerships demonstrate the interaction between two separate spheres of activities each with a distinctive cluster of
norms supported by symbols and practices (Saz-Carranza and Longo, 2012; Thornton et al., 2012). Organizations within one sector
(e.g., business, government or civil society) tend to have a common meaning system and certain generally accepted standards which
set the parameters for defining the salience of issues, problems and their solutions (Ocasio, 1997). Institutional logics capture that
meaning system and standards by providing ‘a set of material practices and symbolic constructions that constitute the organizing
principles and are available to organizations to elaborate’ (Friedland and Alford, 1991: 248). These guidelines are ‘taken-for-granted
and thus largely invisible to the actors themselves’ (Gray and Purdy, 2014: 213). For organizations within one sector, institutional
logics not only shape their interests and organizing principles, but also their patterns of interaction (Thornton et al., 2012; Saz-
Carranza and Longo, 2012; Gray and Purdy, 2014). Organizations in the private sector, such as for-profit firms, mainly, although not
exclusively, follow a market logic, which is reflected in their objective to maximize economic gains through economic transactions
(Ashraf et al., 2017; Ocasio and Radoynovska, 2016). By contrast, organizations in the public sector, such as (non)governmental
organizations, tend to follow a community logic (Thornton et al., 2012) or environmental logic (Ansari et al., 2013) instead, which is
reflected in the objective to produce public goods and address societal concerns. By partnering with public sector organiza-
tions—representative of a community logic—firms become exposed to different logics, rituals and values, and consequently their
framing of sustainability, and interpretations of differences with their partners are affected. Moreover, collaborating with partners
from other sectors will allow firms to have exposure to more diverse values, skills, knowledge, and to gain symbolic resources such as
legitimacy (Kivleniece and Quélin, 2012) by conforming their practices to the social expectations (Scherer et al., 2013; Saz-Carranza
and Longo, 2012).
While frames are fairly flexible, logics are far more stable (Ansari et al., 2013; Cornelissen and Werner, 2014) because they are
related to the collective structuration of an entire field (Suchman, 1995). The practices and symbols related to institutional logics
provide a set of tools (Swidler, 1986) that allow organizations to construct the ‘actual meaning content of frames’ (Jonsson and
Lounsbury, 2017: 73). That is, how organizations frame their objectives depends partly on their exposure to, and embeddedness in,
their respective institutional logics. In a study of two microfinance organizations, Battilana and Dorado (2010) found, for example,
how the confrontation of competing logics (market and community) increases the ability of creative actors to resolve institutional
complexity. The organizations learnt to reinterpret some of the central principles of their logics to generate complex frames and solve
complex problems. Considering the aforementioned, we argue that firms can benefit from being exposed to the multiple and diverse
institutional logics of their cross-sector partners. If a firm has more partners from the public sector, for instance, the exposure to these
partners' logics will affect the firm's ‘translation’ (Thornton et al., 2012; Wright and Nyberg, 2017) of the values and expectations of
the public sector concerning sustainability.
The cultural diversity of a firm's exposure to multiple logics will further strengthen the effect of being confronted with a diversity
in frames regarding sustainability. It will open up new avenues for the firm to work on, new possibilities to pursue, and new ways to
present their practices to stakeholders. As a consequence, it will not only learn from diversity in frames but also from diversity in
logics and thus be able to more effectively improve its sustainability performance. However, the dividends of frame diversity and
having relatively more public-sector partners will translate into higher sustainability performance only so long as the costs of
handling the tension of a lack of unity with these partners remains relatively low (see Table 1). Beyond a certain point, as with frame
diversity, the tension will become unmanageable, and firms' sustainability performance will start to decrease. In such cases, firms face
a multitude of problems characterized by complex and occasionally contradictory demands (Bjerregaard and Jonasson, 2014).
Therefore, we expect more exposure to institutional logics by engaging in partnerships with organizations from other sectors to
moderate the inverted U-shaped relationship between frame diversity and sustainability performance by steepening the inverted U-
curve. When frame diversity is combined with a higher number of partners belonging to sectors with different logics, sustainability
performance will at first improve more rapidly. However, after a turning point, a firm's sustainability performance will decrease more
rapidly as well due to the now unmanageable tensions caused by the presence of exceedingly different frames and logics in the
partnership.
Hypothesis 2. Greater exposure to different institutional logics from higher participation in cross-sector partnerships will steepen the
inverted U-shape relationship between frame diversity and a firm's sustainability performance.

Network structure

A firm's network of partners, acting as influencing stakeholders, can either facilitate or constrain a firm's actions (Kolk, 2014). So
far, we have argued that a firm's exposure in partnerships to different organizational frames (Rowley and Moldoveanu, 2003; Gray
and Purdy, 2014) and institutional logics (Gray and Purdy, 2014) create opportunities as well as challenges affecting a firm's sus-
tainability performance. In addition, we expect a firm's position in the overarching network of partnerships to influence how it

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Table 1
Frame diversity, cross-sector partnerships and network structure.
Frame diversity Diversity in logics in cross-sector Network structure: structural holes
partnerships

Definition A situation when a firm's partners hold a
different frame – a cognitive template to
construct meaning around organizational
activities.
Mechanism and When a focal firm's partners hold
consequences for a different frames, the advantage of access
focal firm as a partner to diverse cognitive resources to a focal
firm does not last long as a firm's cost to
handle contests, contradictions, and
coordination with partners holding a
different frame trump the benefits of
diversity.
Sustainability performance Sustainability is an “umbrella concept”
(Hirsch and Levin, 1999:2000) and has
different meanings for different
organizations. When a firm's framing of
sustainability differs from that of its
partners, it faces unity/diversity
tensions, and its performance will be
nonlinear.
A situation when a firm's partners
belong to different sectors who work
under different logics – rules and
conventions which set the parameters
for defining the salience of issues,
problems and their solutions and are
“taken-for-granted and thus largely
invisible to the actors themselves”
(Gray and Purdy, 2014: 213)
A firm's framing or translation of issues
is influenced by sectoral logics. The
unity/diversity consequences are
exacerbated for a firm with more cross-
sector partners.
The partnerships with cross-sector
partnerships augment the nonlinear
consequences of diversity for the focal
firm.
A firm holds a brokerage position in its
network, or its network contains structure
holes, when its partners are not
connected with each other (Burt, 2005).
A firm's network is said to be a closed
network when all of its partners are
connected with each other.
A firm's brokerage position, or existence
of structural holes in its network,
provides it with an opportunity to manage
the diverse partners, but at the cost of
understanding them. The brokerage
position is beneficial if a firm wants to
reduce the negative consequences of
diversity and extract relational rents from
its diverse partners, by pitching one
partner against the other. However, a
firm's brokerage position or lack of
cohesive relationships with its diverse
partners hinders the development of trust
and access to tacit knowledge.
Firms' brokerage position at the
interstitial spaces influence their
translation, interpretations, and actions.
The relational position of firms influences
the socially constructed symbolic and
material practices. How sustainability is
viewed, and what measures are taken to
improve the performance depends on a
firm's network position.

effectively capitalizes on the benefits of diversity or manages the tensions that arise from a loss of unity. Extant studies show that a
firm's position in the network structure (Rowley, 1997; Rowley and Moldoveanu, 2003; Frooman, and Murrell, 2005) enables it to
effectively engage with partners and balance competing claims (Oliver, 1991; Provan et al., 2004). The inter-organizational network
structure influences how firms establish ‘dialogues’ and achieve ‘negotiated settlements’ (Gray and Purdy, 2014: 207) with partners
by exchanging information and resources (Glasbergen, 2007; Saz-Carranza and Longo, 2012) and thus address tensions with their
partners. Especially in a developing-country context, we expect a firm's network to be important in negotiating tensions due to the
institutional voids that exist here. Without well-developed formal institutions to govern interorganizational relations, firms tend to
rely on fostering their own networks to manage such relations (Khanna and Palepu, 1997; Khanna et al., 2006).
The social network literature suggests a dual impact of a firm's network through two mechanisms: closure and brokerage
(Coleman, 1988; Burt, 2005). Closure refers to a situation where a firm's partners are connected with each other. In a network
structure with high closure, communication becomes more efficient as the structure facilitates not only the exchange of information
among members but also the understanding of norms and values. The social network thus makes up (Ashraf et al., 2019) for the lack
of formal institutions that facilitate economic exchange (Khanna and Palepu, 1997; Khanna et al., 2006). The facilitating role of a
closed network structure is in building trust among members in the presence of institutional voids and in lowering the risk of
collaboration (Ashraf et al., 2019). Brokerage refers to the existence of structural holes in a partnership, where a firm's partners are
not connected to one another. The advantage for a firm of having a network with structural holes is its unique access to a diverse
supply of information and a higher level of control over network relations (Stadtler and Probst, 2012; Scherer et al., 2013).
We argue that the presence of structural holes in the network of a firm's partnerships for sustainability will flip the curvilinear
relationship between frame diversity and a firm's sustainability performance when more of a firm's partners belong to sectors em-
bedded in different institutional logics (three-way interaction). The flip in the shape of the curve—from inverted U-shape to U-
shape—can be explained (Haans et al., 2016) by drawing upon the two countervailing mechanisms: closure and brokerage. If a firm's
network is closed, that is, when all the partners are connected with each other, trust between partners is expected to be high as frames
and logics are effectively translated and understood (Ashraf et al., 2019). However, firms will also have less leeway to balance and
meet partners' competing demands (Rowley, 1997; Rowley and Moldoveanu, 2003) and to optimize the collective value (Donaldson
and Walsh, 2015). When the tension of a lack of unity due to high diversity in frames and logics increases, the existence of structural
holes can help firms to reap benefits from the diverse partnership by being able to play a brokerage role and control the information
flow between partners (Stadtler and Probst, 2012; Scherer et al., 2013).
Paradoxically, when tensions are manageable and do not reach the tolerance threshold (or turning point), having a network with

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structural holes will decrease a firm's sustainability performance due to a lack of unity and trust between partners. However, when
tensions are no longer manageable, firms with structural holes in their network can negotiate more effectively with their dis-
connected cross-sector partners by pitching partners against each other or controlling the information flow (Raynard, 2016). Also,
those firms who are positioned at the 'interstices of multiple fields' (Raynard, 2016: 328) become more aware of the creative al-
ternatives and start realizing the ‘true’ benefits of having diverse partners. Therefore, we posit that a firm with a network structure
containing structural holes will be better able to manage the different expectations of cross-sector partners. As a result, the firm is
more likely to improve its sustainability performance from engaging in partnerships, but only after the turning point where the
diversity in frames and logics become unmanageable.
Hypothesis 3. The presence of structural holes in a firm's network structure flips the curvilinear relationship between frame diversity
and a firm's sustainability performance such that when a firm has more cross-sector partners, its sustainability performance will be
higher at the lowest or the highest level of frame diversity.

Research methodology

Research context: climate partnerships as part of the Clean Development Mechanism

Climate change is one of the ‘grand’ challenges that emerged from decades of over-exploitation of natural resources and emission
of greenhouse gases (George et al., 2016; Whiteman et al., 2013; Slawinski et al., 2017). An important policy response to address
climate change, which was developed as part of the Kyoto Protocol in 1997, is the Clean Development Mechanism (CDM). CDM is a
market mechanism that gives incentives to organizations, particularly to firms in developing countries, to improve their sustainability
performance by reducing GHG emissions and earning credits tradable in the carbon market (Kolk and Mulder, 2011). Under CDM,
organizations from developing countries enter into partnerships with organizations from developed countries to work on GHG
emission reduction projects and buy or sell credits generated by investing in such projects. The literature highlights the benefits of
CDM projects to firms in developing countries (Ashraf et al., 2014) and to developing economies more broadly (Petersen et al., 2006).
For instance, partnerships with developed-country organizations enable firms in developing countries to access more advanced green
technologies (Petersen et al., 2006; Schneider et al., 2008; Seres et al., 2009). CDM thus helps firms hosting projects in developing
countries to reduce emissions and earn tradable carbon emission reduction credits (CERs). The higher the number of CERs, the higher
their sustainability performance in terms of reducing GHG emissions (Ashraf et al., 2014). However, earning CERs is partly con-
tingent on the characteristics and skills of firms' partners who could help them in all the phases of CDM projects starting from the
project's idea generation to earning the CERs (Kolk and Mulder, 2011; Ashraf et al., 2017). The tensions that arise from working with
various organizations involved in this market from different societal sectors could have implications for a firm's sustainability per-
formance (Kolk and Mulder, 2011; Ashraf et al., 2017).

Methodology, data and sample

In this study we try to capture the sustainability performance impact of firms engaging in partnerships for sustainability under the
influence of a diversity in frames, logics and structural holes in firms’ network. While a quantitative research methodology lends itself
particularly well for testing relationships, we instead applied a mixed methods approach which is common in the field of sustain-
ability (Crane et al., 2018). Due to the difficulty to capture frames organizations use to make sense of sustainability (Hahn et al.,
2014), we complemented quantitative econometric methods to test our hypotheses with qualitative content analysis to measure
frame diversity based on CDM projects documents. As our phenomenon of partnerships for sustainability finds itself in a transition
stage where some aspects are well understood while others are less well understood, 'a mix of qualitative and quantitative data
leverages both approaches to develop new constructs and powerfully demonstrate the plausibility of new relationships' (Edmonson
and McManus, 2007: 1177).
The empirical data we used to test our hypotheses were collected as part of a larger, multi-year, project to study CDM market
dynamics. For this paper, due to non-availability of financial information, we only included 322 firms from developing countries
(focal firms henceforth), which reduced emissions and entered into partnerships with 460–960 organizations during the years
2007–2009. These focal firms were based in 26 countries; the majority of firms were from China, India, and Brazil, and belonged to
113 industries mostly from electrical services and cement industries (see Table 2 for details). From an empirical standpoint, the
context of developing countries and CDM market provided an ideal research setting to investigate the impact of the diversity of
frames at the organizational level, logics at the field level, and management of diversity at the network level on firms’ sustainability
performance. Since CDM has been designed to bring together partners from developed and developing countries, it leads to colla-
borations between organizations from different public and private sectors that might not have joined forces otherwise (Kolk and
Mulder, 2011; Ashraf et al., 2017). As a result, there is a relatively high likelihood for a high diversity in frames and logics in CDM
partnerships. Moreover, because CDM projects take place in developing countries, we expect firms to rely on their social network to
manage interorganizational relations and make up for the institutional voids present in this context (Khanna and Palepu, 1997;
Khanna et al., 2006).
We obtained the data from the Institute for Global Environmental Strategies’ CDM project database (IGES, 2011). We then
corroborated all project-level information with the available 1353 CDM project documents and available written communication
between project partners and the CDM secretariat. For this purpose, secondary data for crosschecking and verification was

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Table 2
Sample statistics.
2007 2008 2009

Total number of focal firms from developing countries 322 322 322
Total number emission reduction projects of focal firms 41 59 69
Total number emission reduction projects of partners of focal firms 644 1116 1430
Sample firms' total partnerships ties: 465 698 962
Cross-sector ties 163 223 272
Intra-sector ties 302 475 690
Industry (major) to which sample firms belong: 113 113 113
Electric services 21.43% 21.43% 21.43%
Cement 13.04% 13.04% 13.04%
Chemicals 3.73% 3.73% 3.73%
Major countries to which sample firms belong: 26 26 26
India 38.9% 38.9% 38.9%
China 38.32% 38.32% 38.32%
Brazil 3.74% 3.74% 3.74%
CER market prices (per metric ton; in Euros) 0.66 0.02 13.02

downloaded from the CDM Pipeline (2015) and the United Nations Framework Convention on Climate Change (2015). Organization-
level financial data was obtained from the MINTGLOBAL database.

Variables

Sustainability performance
To compute our dependent variable, we took the CERs focal firms earned in the CDM market as a proxy of their sustainability
performance in terms of GHG emission reductions. To take into account differences in the number of CDM projects from which firms
earn CERs, we normalized this measure by dividing CERs with the number of projects from which firms earned their CERs.

Diversity in frames
Firms can use their engagement in CDM partnerships to achieve various different sustainability objectives which can benefit both
the local economy (public benefits) and their own organizations (private benefits). Benefits include providing access to energy and
water, improving health and welfare of local communities, and reducing air, land and water pollution (Olsen and Fenhann, 2008).
While some benefits accrue to the focal firm, as they allow complying with local regulation or charging a price premium, other
benefits are particularly of value for the local economy or environment (Ashraf et al., 2017). How organizations utilise CDM projects
to improve their sustainability performance will in part depend on the organizational frames they use to make sense of sustainability.
For example, an organization with a simple frame will focus on a few elements of sustainability only such as reducing CO2 emissions
and disregard other potential benefits of CDM projects like improving health and welfare of the local community. By contrast, an
organization with a complex frame will focus on multiple sustainability objectives—e.g., reducing various different GHGs, not just
CO2, as well as social benefits—and the complex relation between these objectives (Hahn et al., 2014).
To compute frame diversity, we conducted a content analysis of 1353 documents of CDM projects on which organizations (focal
firms and their partners) in our sample were working. Based on the literature, the identified projects' goals for sustainability were
considered as elements of organizations' frames. We then classified organizations as holding similar or dissimilar frames. Finally, we
computed frame diversity as the ratio of focal firms’ partners with different frames. The higher the ratio, the more the focal firms
would have partners with dissimilar frames. Below we describe the process in more detail.
We computed frame diversity in three steps. In the first step, based on the work of Olsen and Fenhann (2008), we identified the
objectives of the CDM projects of organizations in our sample. The sensemaking literature (Bogner and Barr, 2000; Cornelissen and
Werner, 2014) suggests that objectives act as frame elements that guide information processing and construct a meaning system
around organizational activities for internal and external stakeholders (Ansari et al., 2013). The knowledge structure of a frame
translates into objectives which signal an organization's perception of the external environment. By referring to specific objectives
organizations give stakeholders cues how they perceive their environment, not only about what they are doing but also why they are
doing it. To identify the objectives that act as proxies of organizational frame elements, we analyzed 1353 carbon offset projects'
documents using NVivo 10 (Neuendorf, 2002). Two research assistants coded and classified the emergent themes into twelve di-
chotomous categories (see Table 3 for sample codes, and categories) which overlapped with those of Olsen and Fenhann (2008). For
example, if the objectives of a carbon-offset project included spurring the growth of the local economy and improving the health of
locals while reducing land pollution, the organizations working on that project were considered as aiming for these sustainability
objectives. Such organizations were assigned a score of 3 for having 3 elements in their frame i.e. ‘growth’, ‘health’, and ‘land’. The
Cohen's Kappa of 0.82 indicates adequate inter-coder reliability (Neuendorf, 2002).
In the second step, to take into account that many organizations in our sample were working on multiple projects, we computed
organizations' sustainability index by summing their scores from all of their projects. This summing-up resembles the approach of
Barnett and Salomon (2012) and Gao and Bansal (2013). We normalized this index by dividing it by the number of projects

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Table 3
Themes and categories with sample codings.a.
Representative text First-order category Second-order Theoretical Construct
category

The project activity also contributes in economic well-being of the nation's economy by Balance of payment Economic Sustainability
reducing import of coal and other fossil fuel for electricity generation in hard
currency.
The power generated from the project activity will stabilise the local grid and helps in Energy
providing uninterrupted power for these industries and help them to grow further.
Promoting implementation of similar activities in the region. Growth
The installed capacity is 30 MW and the straw-fired boiler is imported from Denmark Technology transfer
BWE Company, which is a world leading company in biomass boilers production
and biomass cogeneration. The project will assist in transferring advanced biomass
technology to China.
Apart from its benefits on the global environment, further environmental benefits will Air Environment
be achieved though the reduction of air-based pollutants, such as oxides of
nitrogen, oxides of sulphur, carbon monoxide and fine particles, being emitted into
the atmosphere due to the reduced combustion of fossil fuels.
In normal practice fly ash is dumped to the landfills, which creates land pollution in Land
long run. Project activity reduces the burden of the ever-increasing volume of waste
in landfills as well as utilise it properly.
… improvement of the water supply; and a watershed protection program Water
… Conservation of natural resources including land, forest, water and the ecosystem. Conservation
Preference was given to employment of local people during construction and operation Employment Social
at project site thereby creating opportunities in the area for skilled and unskilled
labour.
… The objective of LFG flaring is to dispose of the perilous constituents, particularly Health
methane, safely and to control and reduce odour nuisance and health risks. This is
particularly important, as the closed old site is surrounded by human settlements.
The project activity has assisted in higher interaction amongst the local villagers Learning
thereby increasing the flow of information in the villages thereby levels of
awareness and knowledge in the community
Enhances the local investment environment and therefore improves the local economy. Welfare

a
Sample codes of content analysis of 1353 CDM project design documents.

organizations were working on. The index was computed year-wise. The higher an organization's value on this index, the more
elements the organization's frame contains. To establish the threshold beyond which an organization's frame would be classified as
complex (containing many elements) or simple (with few elements), we followed Polidoro et al. (2011) and compared organizations'
sustainability index value with the global mean. Organizations whose sustainability index values lie above the mean were categorized
as holding complex frames, while the rest of the organizations were categorized as holders of simple frames.
Finally, using UCINET 6 (Borgatti et al., 2002), we computed frame diversity—the ratio of a focal firm's ties to partners with
different frames—by computing a firm's ties to partners with different frames, minus ties with partners with similar frames, divided
by the total number of ties. The resulting variable's values range from −1 to 1. A positive value indicates high frame diversity, that is,
a focal firm has relatively more partners with dissimilar frames. A negative value indicates frame unity, that is, a focal firm has
relatively more partners with similar frames.

Diversity in logics
Organizations in different societal sectors tend to bear the imprint of other institutional logics (Gray and Purdy, 2014). Hence, we
computed a focal firm's engagement in partnerships with organizations from other sectors—i.e. cross-sector partnerships—as a proxy
for a firm's exposure to a diversity in institutional logics (or institutional complexity). To compute this variable, we first classified
organizations into for-profit firms and public-sector organizations, i.e., governmental organizations as well as government-owned
enterprises.1 Using UCINET 6 (Borgatti et al., 2002), we computed the ratio of focal firms' cross-sector partnerships by taking their
ties to public-sector organizations, minus ties with for-profit firms, divided by the total number of ties. The resulting variable's values
range from −1 to 1. A positive value indicates high diversity in logics, that is, a focal firm has relatively more partners embedded in
logics different from their own. A negative value indicates low diversity in logics, that is, a focal firm has relatively more partners
embedded in logics similar to their own.

Structural holes in a firm's network

Following Burt (2005), we computed the structural holes in a focal firm's network by computing the firm's network constraint.
Network constraint captures the degree to which focal firms are constrained if their ‘partners are connected to each other’ (Greve

1
There were no NGOs in our sample.

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et al., 2010: 312). Higher values of network constraint indicate a lower number of structural holes. To compute this variable, we
followed Ferriani et al. (2009) and constructed two-mode network matrices (organizations by projects), transformed them into one-
mode matrices (organizations by organizations) from which we computed network constraint using UCINET 6 (Borgatti et al., 2002).

Control variables
To take into account that the degree of resource dependence (Oliver, 1991; Frooman, and Murrell, 2005; Wry et al., 2013) of focal
firms on their partners might affect their relationship, and consequently focal firms' performance despite different frames and logics,
we computed interdependence to capture the complementarities between focal firms and their partners based on differing resource
endowments of each industry niche to which they belong (Hannan and Freeman, 1977). Organizations in one niche are more likely to
depend on organizations from other niches as 'members of different niches are likely to possess a complementary set of skills which in
turn enhances' interdependencies (Gulati, 1995: 632). Based on four-digit US SIC codes, we computed our measure for inter-
dependence and resource complementarity by calculating the ties focal firms had with partners from different industries, minus their
ties with others operating in the same industry, divided by the total number of ties. Interdependence values range from −1 to 1. A
positive value indicates a focal firm's relatively high dependence on its partners, while a negative value stands for a relatively low
dependence.
We also controlled for network position heterophily to account for the incompatibility between focal firms and their partners due to
differences in their social status and power accrued by their network positions (Rowley and Moldoveanu, 2003; Polidoro et al., 2011)
because this might affect a focal firm's sustainability performance. To compute this variable, we first calculated a score for each
organization's network centrality (Gulati and Gargiulo, 1999; Polidoro et al., 2011), based on Bonacich's (1987) centrality measure
using UCINET 6. Bonacich's (1987) centrality measure gives higher weight to those whose partners have relationships with highly
connected others. Based on organizations' centrality score, we computed a network position heterophily index by calculating the ties
focal firms had with others who had different centrality scores, minus ties with others who had similar centrality scores, divided by
the total number of ties. Network position heterophily values range from −1 to 1. A positive value indicates a firm having a higher
number of partners with different status or power, while a negative value stands for a firm having a lower number of partners with
different status or power.
Following Ashraf et al. (2014), we also controlled for differences in focal firms' performance due to the nature of their projects i.e.
projects type (number of renewable projects divided by total number of projects) and scale of projects (number of large projects
divided by total number of projects). In addition, we took into account the effects of firms' differential resource endowments and
financial performance (return on assets), size of firms' networks (total number of ties), firm age (observation year minus firm
founding year), and the effect of carbon market dynamics (carbon prices). We also controlled for whether focal firms were affiliates of
business groups by creating a dummy (BG) and whether they belonged to countries with the highest share of the CDM market
(dummies for Brazil, Russia, India, and China). Moreover, we computed the ratio of firms’ relationships with CDM market inter-
mediaries—designated operating entities (DOEs)—who provide consultancy and auditing services (Kolk and Mulder, 2011), and the
ratio of success to register projects. The last two variables were used to control for selection bias (see Table 4 for a list of variables and
data sources).

Model estimation and specification

To control for selection bias due to a non-random sample selection, we estimated a Probit model using a Heckman two-step
procedure. We regressed a dummy cross-sector (1 for a cross-sector tie, 0 otherwise) against firms’ sustainability index, project type,
project scale, return on assets, firm age, carbon price, DOEs, ratio of project registration success, BRIC, and BG, while clustering the 4-
digit USSIC codes. The Probit model (χ2 = 90.02, p = 0.000) predicted the propensity to form cross-sector ties with a success rate of
88.92% (see Table 5). The computed inverse Mill ratio was then used as a predictor in model estimations to control for the selection
bias.
The independent variables of the study were mean-centred before the creation of all the interaction terms. To control for si-
multaneity and reverse causality (Greene, 2012), we lagged all the predictors and control variables. We estimated models stepwise,
using linear regression with panel-corrected standard errors (using the xtpcse command in STATA 14) to address the issue of auto-
correlation (F = 7.51, p = 0.007). The models, which were estimated using the xtpcse command of STATA 14, are robust to
autocorrelation (Greene, 2012).

Results

The results show that the correlations between some variables are statistically significant (see Table 6). However, there was no
issue of multicollinearity, as the variance inflation factor (VIF) scores were found to be below the threshold of 10 (Greene, 2012). The
estimated model 5 (see Table 7) is the most optimal model (R2 = 0.41, p = 0.000) compared to baseline model 1 (R2 = 0.221,
p = 0.000). The full model 5 includes all the variables: the main variables, two moderator variables, two-way and three-way
interaction terms along with the control variables.
The effect of frame diversity (β = 0.0020, p = 0.854) is found to be insignificant (see model 2). However, its quadratic term
(β = −0.127, p = 0.000) is significant (see Model 3 in Table 7), which lends support to Hypothesis 1. With an increase in frame

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Table 4
Variables and data sources.
S.No. Variables Proxy or Measurement Data source Use in the analysis

1 Sustainability
performance
2 Diversity in frames
3 Diversity in logics
4 Structural hole
5 Interdependence
6 Network position
heterophily
7 Project types
Greenhouse gas reductions or certified emission reductions (CER) of a Institute for Global Environmental Strategies' CDM project database Dependent variable
focal firm in the observation year. and CDM Pipeline
Ratio of focal firms' ties with partners who hold different frames. The CDM project design documents obtained from United Nations Predictor
elements of frames were derived from the content analysis of CDM Framework Convention on Climate Change
project design documents of focal firms and their partners.
Ratio of focal firms' ties with cross-sector partners. National Bureau of Statistics of China, Mintglobal, and websites of Moderator
sample organizations to determine whether they belonged to private
or public sectors.
Network constraint which captures the degree to which focal firms are Information obtained from Institute for Global Environmental Moderator
constrained if their ‘partners are connected to each other’. Higher values Strategies' CDM project database was used to construct network
of network constraint indicate a lower number of structural holes in a matrices
focal firm's ego network.
Ratio of a focal firm's ties with partners from different industrial sectors National Bureau of Statistics of China, Mintglobal, project design Control variable
(four-digit USSIC). documents and internet sources to determine USSIC codes.
Ratio of a focal firm's ties with partners with different social status and Information obtained from Institute for Global Environmental Control variable
power (Bonacich's centrality). Strategies' CDM project database was used to construct network
matrices
Ratio of renewable energy projects over total number of focal firm's CDM Institute for Global Environmental Strategies' CDM project database Control variable

10
projects.
8 Project scale Ratio of large projects over total number of a focal firm's CDM projects. Institute for Global Environmental Strategies' CDM project database Control variable
and CDM Pipeline
9 Return on assets Net income divided by total assets Mintglobal Control variable
10 Network size Total number of a focal firm's ties Institute for Global Environmental Strategies' CDM project database Control variable
11 Firm age Observation year minus focal firm founding year Mintglobal Control variable
12 Carbon prices Spot European Union Allowance (EUA) prices Bluenext Control variable
13 Business group Dummy variable, takes the value of 1 if focal firm belonged to a business Mintglobal Control variable
group
14 BRIC Dummy variable, takes the value of 1 if focal firms belonged to Brazil, Mintglobal, Institute for Global Environmental Strategies' CDM Control variable
Russia, India, China project database and CDM Pipeline
15 DOE Ratio of a focal firm's partnership ties with CDM market intermediaries Institute for Global Environmental Strategies' CDM project database Instrument variable in the probit
(designated operational entities) over total number of ties model to control for selection bias
16 Registered projects Ratio of a focal firm's registered projects over total number of started Institute for Global Environmental Strategies' CDM project database Instrument variable in the probit
projects and CDM Pipeline model to control for selection bias
17 Cross-sector partnership Dummy variable, takes the value of 1 if a focal firm had a cross-sector Institute for Global Environmental Strategies' CDM project database. Dependent variable in the probit
partnership tie in the observation year model to control for selection bias
18 Sustainability index Index to measure elements of a focal firm's sustainability frame. The CDM project design documents obtained from United Nations Predictor in the probit model to
elements of a frame were derived from the content analysis of CDM Framework Convention on Climate Change control for selection bias
project design documents of focal firms.
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Table 5
Results of the probit model predicting Organization's. Probability of forming the cross-sector partnershipa.
Variables Model (1) % change

Sustainability scores −0.049** (0.024) −0.005

Project type 0.099 (0.196) 0.010
Project scale 1.285*** (0.352) 0.133
Return on assets 0.039*** (0.008) −0.004
Firm age −0.0003 (0.004) −0.0004
Carbon prices −0.0006 (0.005) −0.0007
DOEs 0.110 (0.318) 0.114
Project registration 0.596** (0.273) 0.621
BRIC −0.074 (0.327) −0.008
BG 0.468* (0.262) 0.4880
Constant −1.791*** (0.335)

Pseudo R2 0.236
Percent correctly specified 88.92%
χ2 90.02
Log pseudo-likelihood −257.05

***p < 0.01, **p < 0.05.

a
Number of observations = 966; Observation period: 2007 to 2009. Cluster robust standard errors are in
parentheses. Observations are independent across industries – 4-digit USSIC codes.

diversity, the sustainability performance of focal firms increases, but it decreases again after a certain threshold or turning point. The
results show that such a turning point takes place when frame diversity is moderate.2
Model 4 shows that diversity in institutional logics, captured by a firm's use of cross-sector partnerships, moderates
(β = −0.0625, p = 0.000) the curvilinear effect of frame diversity lending support to Hypothesis 2. The change in R2 of model 4
compared to model 2 is also found to be statistically significant (χ2 = 1833.71, p = 0.001). For ease of interpretation, we plotted the
interaction effect of cross-sector partnerships (see Fig. 1). The interaction plot shows that the effect of frame diversity on sustain-
ability performance is higher when firms have more cross-sector partnerships.3 Yet, the inverse U-shape relationship between frame
diversity and sustainability performance still holds. Moreover, in the absence of frame diversity and network constraint, the use of
cross-sector partnerships is also found to directly affect (β = 0.079, p = 0.000) the sustainability performance. However, the fitness
of the model with these specifications (R2 = 0.244, p = 0.003) is low compared to model 3 (R2 = 0.235, p = 0.000) with the direct
effect of frame diversity on sustainability performance in the absence of other main predictors.
Finally, three-way interactions between frame diversity, cross-sector partnerships, and network constraint (β = −2.783,
p = 0.000) show the moderation effect of structural holes in a firm's network. The change in R2 (model 5 compared to model 4) is also
found to be statistically significant (χ2 = 31.35, p = 0.001). These results are supported by the three-way interaction plot shown in
Fig. 2 which shows the U-shape relationship between frame diversity and sustainability performance for firms with a less constrained
network (more structural holes) and more cross-sector partnerships. These results lend support to Hypothesis 3. Structural holes are
beneficial only when tensions from a loss of unity between partners, due to differences in frames and logics, are relatively high. This
effect can be observed by looking at Fig. 2 which shows that when firms interact with cross-sector partners with different frames, a
low network constraint (more structural holes) decreases the sustainability performance. Yet, beyond moderate tensions (mid-point
on the horizontal plane), firms' sustainability performance increases when their network is less constrained and thus has more
structural holes. Moreover, in the absence of frame diversity and cross-sector partnerships, structural holes are also found to directly
affect (β = −0.448, p < 0.01) the sustainability performance. However, the fitness of the model with these specifications
(R2 = 0.219, p = 0.001) is lower than that of model 3 (R2 = 0.244, p = 0.000) with the direct effect of frame diversity in the absence
of other main predictors.
The results show that having a network of cross-sector partners with structure holes is beneficial when tensions caused by
diversity are highest. The structural holes in a firm's network give a firm the opportunity to control and balance the competing

2
It is important to note that organizations with similar frames may differ in their relative focus on the second-order sustainability dimensions. For
example, two partners may hold a simple frame, but one partner's frame contains more elements related to economic objectives (second-order
categories, see Table 3), whereas another partner's frame contains more elements related to social objectives. Therefore, to avoid conflict, it is more
likely that organizations prefer to partner with others with different frames. To verify this, for example, whether focal firms holding complex frames
prefer to partner with others holding simple frames, we checked the pairwise correlation between firms' sustainability ratio (higher ratio indicates
complex frame), and frame diversity (focal firms' ratio of partners with different frames). The results show a positive correlation (β = 0.07,
p < 0.05). Focal firms with complex frames partner with organizations with simple frames. However, as the results in Table 7 suggest, such a
difference in frames is beneficial for focal firms so long as tensions between partners do not cross the tolerance threshold, which is found to be mid-
way between frame unity and diversity.
3
We also probed if focal firms holding complex frames have more cross-sector partners. The negative correlation (β = −0.15, p < 0.01) between
focal firms' sustainability ratio and cross-sector partnership ratio suggests that, if focal firms hold complex frames, they have more intra-sector
partnerships. This implies that those firms who hold simple frames may need cross-sector partners to gain symbolic resources including legitimacy.

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Table 6
Descriptive statistics and correlations.
# Variables Min Max 1 2 3 4 5 6 7 8 9 10 11 12 13

1 Sustainability performance 0 13
2 Frame diversity −1 1 0.04
3 Network constraint 0 1.22 −0.38** −0.06†
4 Cross-sector partnerships −1 1 0.09* −0.05 −0.07†
5 Interdependence −1 1 0.12** 0.04 0.37** −0.01
6 Network position heterophily −1 1 −0.02 0.01 0.28** −0.01 −0.12**

12
7 Network size 0 40 0.39** 0.02 −0.09** 0.14** 0.24** 0.02
8 Return on assets −78.61 74.14 0.1** −0.06* 0.08** −0.09* 0.11** −0.01 0.14**
9 Firm age 0 155 −0.06 −0.02 0.08* −0.02 0.08** 0.01 −0.04 0.06†
10 Project size 0 1 0.15** −0.04 0.52** 0.26** 0.25** 0.21* 0.13** 0.12** 0.02
11 Project types 0 1 −0.1** −0.07* 0.25** 0.001 0.001 −0.06† −0.003 −0.01 −0.06* 0.04
12 Carbon prices 0.02 22.51 −0.01 −0.01 0.37** −0.01 −0.00 0.76** 0.08* 0.06† 0.03 0.24** −0.02
13 BRIC 0 1 −0.07† 0.05 0.02 0.08* −0.15** 0.02 −0.06† −0.03 −0.14** 0.08* 0.02 0.00
14 Business group 0 1 0.02 0 −0.01 0.16** 0.03 −0.02 0.05 0.02 0.08* 0.06* −0.05† −0.004 0.2**

†
p < 0.1 * p < 0.05 **p < 0.01.
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Table 7
Results of linear regressions predicting a Firm's sustainability performance.
VARIABLES Model 1 Model 2 Model 3 Model 4 Model 5

Frame diversity (FD) 0.0020 0.003 0.005 −0.0004

(0.010) (0.006) (0.008) (0.034)
FD quadratic (FDq) −0.127*** −0.114*** 0.126†
(0.027) (0.029) (0.074)
Cross-sector partnerships (xSPs) 0.112*** −0.210***
(0.0073) (0.029)
Network constraint (NC) −0.684***
(0.075)
FD x xSPs −0.0140 −0.225
(0.018) (0.158)
FDq x xSPs −0.0625*** 0.828***
(0.016) (0.205)
FDx NC −0.005
(0.112)
FDq x NC −0.531**
(0.220)
NC x xSPs 0.774***
(0.082)
FD x NC x xSPs 0.615
(0.454)
FDq x NC x xSPs −2.783***
(0.604)
Interdependence −0.0485 −0.0487 −0.0670*** −0.0248 0.124***
(0.030) (0.030) (0.020) (0.018) (0.036)
Network size 0.0559*** 0.0559*** 0.0545*** 0.0597*** −0.0054
(0.002) (0.003) (0.006) (0.004) (0.015)
Project types −0.153*** −0.152*** −0.114*** −0.123*** −0.0806***
(0.043) (0.042) (0.041) (0.036) (0.012)
Project size −0.0256*** −0.0261*** −0.0646† −0.0413† −0.194***
(0.009) (0.009) (0.038) (0.022) (0.032)
Return on assets 0.0075*** 0.0076*** 0.0093*** 0.0099*** 0.0149***
(0.001) (0.0012) (0.002) (0.001) (0.002)
Network position heterophily −0.0519† −0.0517† −0.0512† −0.0425† 0.0242***
(0.029) (0.029) (0.029) (0.021) (0.008)
Firm age −0.0012*** −0.0013*** −0.0015*** −0.0015*** −0.0012***
(0.0013) (0.0001) (0.0014) (0.0017) (0.0012)
Carbon prices 0.0018 0.0017 0.0008 0.0001 −0.002
(0.0013) (0.0013) (0.0009) (0.0005) (0.001)
BRIC −0.0665*** −0.0662*** −0.0815*** −0.0800*** −0.049
(0.0253) (0.0256) (0.0285) (0.0289) (0.031)
Business group −0.0205 −0.0216 −0.0305 −0.0523** −0.174***
(0.016) (0.016) (0.026) (0.021) (0.028)
Inverse Mill's Ratio 0.183*** 0.184*** 0.240*** 0.232*** 0.449***
(0.036) (0.037) (0.070) (0.055) (0.067)
Constant 0.469*** 0.470*** 0.523*** 0.563*** 0.325***
(0.027) (0.026) (0.056) (0.032) (0.037)

R2 0.221 0.220 0.244 0.264 0.409

χ2 for change in R2 0.03 20.93*** 1833.71*** 31.35***

***p < 0.01, **p < 0.05, †p < 0.1. Panel corrected standard errors are in parentheses.
Sample firms = 322; Observation = 565. Observation years = 2007 to 2009.

demands of its partners. When a firm predominantly has intra-sector partnerships, though, the reverse is true (see Fig. 2). The more a
firm has structural holes in its intra-sector network (partnerships with other for-profit firms), the better it will perform because of
advantages of control, new information, and brokerage. Nonetheless, in the case of intra-sector partnerships, beyond a certain level of
diversity due to differences in frames, structural holes start to adversely affect the sustainability performance. This implies that an
increase in tensions in the intra-sector network necessitates a certain level of trust, social embeddedness, and social policing.
The results also show that interdependence increases the sustainability performance of firms (model 5), but only when a firm's
network is more constraining and has less structural holes. This result suggests that embeddedness in a dense network influences how
differences in resource endowments with partners are interpreted as complementarities or power asymmetries (Gulati, 1995). The
effects of network position heterophily show the same trend, i.e. a firm's network position as a proxy of status and power positively
affects its sustainability performance, but only when the network has fewer structural holes. The effect of network size shows that the
larger the number of ties, the larger the sources of information, which leads to a positive effect on sustainability performance. The
results also reveal that large project size, different variety and types of projects in a firm's portfolio, a firm's age, membership in BRIC
countries and affiliation with business groups all negatively affect sustainability performance, whereas higher financial resources

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N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

Fig. 1. Effects of frame diversity on sustainability performance in the presence of cross-sector partnerships.

Fig. 2. Effects of structural holes on the relationship between frame diversity, cross-sector partnerships and sustainability performance.

(return on assets) positively affect sustainability performance.

To check the robustness of results, we followed Haans et al. (2016) and estimated models with a cubic transformation of frame
diversity. With these specifications, model fitness did not improve, thus providing support for a quadratic relationship between frame
diversity and sustainability performance. In addition, we estimated the final model with network density as an alternate specification
of structural holes (Phelps, 2010). Network density captures the percentage of ties among a firm's partners. The higher the network
density of focal firms, the lower the opportunity of brokerage available to these firms. The results of the model with network density
as moderator (3-way interaction) remained consistent, showing the same trend: a flip in the shape (from inverted U-shape to U-shape)
of the curvilinear relationship between frame diversity and sustainability performance in the presence of cross-sector partnerships
and low density or structural holes. However, with this specification, the positive effects of fewer structural holes on sustainability
performance of firms embedded in intra-sector partnerships become prominent, suggesting that results are somewhat sensitive to
alternate specifications.

Conclusion

In this paper, we have analyzed how the tension between unity and diversity in a partnership for sustainability affects the
sustainability performance of firms taking part in such a partnership. The main argument we developed is that this tension is the
result of the difference in organizational frames and institutional logics between a focal firm and other organizations in the part-
nership.

Discussion of results

Our empirical findings show that the differences in frames and logics between firms and their partners in partnerships for sus-
tainability improve focal firms’ sustainability performance, but only up to a turning point after which these differences lead to a
decrease in sustainability performance instead. Our first result that the effect of frame diversity is insignificant while its quadratic
term is significant fits recent insights from the sustainability and partnership literature. It corroborates the theoretical argument that
the way in which actors frame sustainability affects their response with concomitant consequences for sustainability performance

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N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

(Hahn et al., 2014). It also supports recent qualitative findings that some diversity in frames can lead to productive tensions in
partnerships (Klitsie et al., 2018). Our quantitative results show more explicitly, though, that there are limits to the productivity of
such tensions between partners. The significance of the quadratic term indicates that diversity in organizational frames can also
hinder collaboration (Gray, 2004).
Our second result that diversity in institutional logics, captured by a firm's use of cross-sector partnerships, moderates the cur-
vilinear effect of frame diversity on sustainability performance is in line with theoretical insights that institutional logics influence
actors' frames (Battilana and Dorado, 2010; Jonsson and Lounsbury, 2017; Thornton et al., 2012). However, the finding that working
with partners from other sectors could have a dampening effect on a firm's sustainability performance contradicts the general ar-
gument in the cross-sector partnership literature that access to different resources, knowledge and viewpoints has positive perfor-
mance implications (Kolk, 2014; London et al., 2005; Rondinelli and London, 2003; Selsky and Parker, 2005; Sharma and Bansal,
2017). Our findings instead reinforce studies that argue that a difference in institutional logics between partners can be an important
barrier to successful collaboration (Ashraf et al., 2017; Hahn and Pinkse, 2014; Vurro et al., 2010).
Our last result that structural holes in a firm's network can lead to an increase in sustainability performance when tensions caused
by diversity are high supports insights from social network literature (Rowley, 1997; Rowley and Moldoveanu, 2003; Frooman, and
Murrell, 2005). Drawing on social network theory (Coleman, 1988; Burt, 2005), this result shows that when a focal firm occupies a
‘brokerage’ position in the overarching network structure, it can counter the harmful performance effects of too much diversity in a
partnership. A firm's relational network structure allows it to manage diversity in frames and logics (Raynard, 2016) and effectively
negotiate with its partners (Gray and Purdy, 2014; Raynard, 2016).

Theoretical implications

With our study we make several contributions to the literature. Firstly, we contribute to the partnership literature which ad-
vocates the usefulness and necessity of using partnerships to address sustainability (Selsky and Parker, 2005). While previous studies
highlight the function of partnerships as arenas for learning (London et al., 2005; Rondinelli and London, 2003; Selsky and Parker,
2005), our findings bring some nuance to this argument. They confirm the potential of firms to improve their sustainability per-
formance by engaging with organizations with different views on sustainability but also show that organizations need to have
sufficiently similar views on what they would like to achieve by engaging in partnerships for sustainability and only limited di-
vergence in their institutional logics to prevent tensions from derailing collaboration. Working with organizations with different
views on sustainability might lead to a tension between unity and diversity in the partnership (Saz-Carranza and Ospina, 2010). We
find evidence for an inverted U-shape relation between diversity of frames and logics and sustainability performance. We argue that
the improvement in firm performance happens because diversity of partners is beneficial for firms as it exposes them to diverse
perspectives on sustainability from which they can learn, and it allows them to access new resources (Kolk, 2014; Sharma and Bansal,
2017). But, when diversity among organizations in a partnership becomes very high, it leads to a loss of unity, lack of effective
communication of tacit knowledge, and mistrust. High diversity in a partnership harms a focal firm's sustainability performance as it
can no longer effectively use the partnership to reduce GHG emissions.
Secondly, we contribute to the literature on conflict in partnerships by showing that the double-edged sword of diversity, common in
alliances (Goerzen and Beamish, 2005) and top management teams (Hambrick et al., 1996), is also prevalent in partnerships for sus-
tainability. While previous studies have referred to incompatible logics as the main source of conflict in partnerships (Ashraf et al., 2017;
Gray and Purdy, 2014; Vurro et al., 2010), we draw on recent insights from the sustainability literature that organizations tend to frame
sustainability differently with concomitant consequences for the practices that they develop to address sustainability (Hahn et al., 2014,
2015, 2018; DesJardins, 2016). Whereas these studies develop sustainability frames conceptually, we have empirically measured how
organizations frame sustainability, i.e., as a single-objective or multi-objective issue, and captured if frame diversity between a focal firm
and its partners affects sustainability performance. We provide evidence that partnerships formed around an umbrella concept (Hirsch
and Levin, 1999) such as sustainability can be hindered by a lack of agreement about what it actually means to the various partners. We
show that it is useful to combine frames and logics to explain tensions related to conflict in partnerships for sustainability. As Smith and
Tracey (2016: 457) note, '[c]ompeting logics can be managed by implementing effective structures at the organizational and field level.'
Our findings suggest that the distinction between frames and logics is particularly important in developing countries, because here
organizations are more likely to frame sustainability differently (Banerjee, 2003). While studies focusing on a diversity in logics tend to
emphasize the difference between for-profit firms and NGOs (Gray and Purdy, 2014; Vurro et al., 2010), the limited role of NGOs in
developing countries means that a diversity in logics due to sectoral background does not sufficiently capture sources of tension between
partners. By also considering frame diversity as a source of tension, we more accurately capture common differences between organi-
zations in developing countries such as between private and state-owned enterprises.
Finally, we make a contribution to the social network literature. Our findings reinforce the argument that 'outright similarity in
actors' attributes may not characterize social connections and that in some instances actors may seek a balance between similarity on
some dimensions and differentiation, or heterophily, on others' (Rivera et al., 2010: 94). By making a distinction between frames and
logics, we disentangle what determines similarities and differences between partnering organizations. Moreover, our findings suggest
that a firm's relational network structure allows it to manage diversity in frames and logics (Raynard, 2016). Drawing on social
network theory (Coleman, 1988; Burt, 2005), we show that when a focal firm occupies a ‘brokerage’ position in the overarching
network structure, it can counter the harmful performance effects of too much diversity in a partnership. While existing partnership
studies (Kolk, 2014; Sharma and Bansal, 2017) highlight the complexities of working with partners from different backgrounds, we
show how a firm's network configuration can actually help manage the consequent tensions (Hahn et al., 2015; DesJardins, 2016).

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N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

Nonetheless, our findings suggest that a firm's brokerage position in the network plays an ambivalent role. In the case of cross-sector
partnerships, having structural holes in the network is beneficial for firms' sustainability performance, but only when tensions are no
longer manageable. Before reaching this threshold, network cohesion seems more beneficial instead. We argue that using the rela-
tional network to manage tensions between partners is especially important in the context of developing countries because here firms
cannot rely on formal institutions (Khanna and Palepu, 1997; Khanna et al., 2006). Our findings thus support recent findings that a
firm's network helps bridging institutional voids in developing countries (Ashraf et al., 2019).

Practical implications

Based on our findings, we suggest several ways for firms to better manage their partnerships and improve sustainability per-
formance. Mounting concerns about climate change has increased the challenge for managers to be more effective role in making
their organizations more sustainable (George et al., 2016; Whiteman et al., 2013). Cross-sector partnerships have been suggested as
way forward as it allows for learning from organizations that have relevant skills (Kolk, 2014). Our study supports the general idea
that collaboration across sector boundaries can be beneficial for a firm's sustainability performance. Yet, our findings also draw
attention to the consequences of working with ‘strange bedfellows’ (London et al., 2005), as managers have to work with others who
may not share their frames and logics. Building successful partnerships thus requires a deep understanding of how other organiza-
tions in the partnership see and manage sustainability. Much attention has gone to the difficulty for firms to work with organizations
such as governments and NGOs that do not have a profit objective, but our findings show that tensions can also occur when seemingly
similar organizations frame sustainability differently (Hahn et al., 2014).
Our study offers guidance to better manage the conflicts and tensions when working with diverse partners. Considering partners'
identifiable sustainability objectives, managers are advised to first carefully assess their potential (mis)fit on what issues are seen as
part of sustainability before embarking on a partnership. To increase sustainability performance, managers will have to strike a
balance between unity and diversity among their partners in how they see sustainability and what their sectoral background is, which
is likely to be a long process of trial-and-error. Moreover, managers should not see partnerships as a panacea (Kolk, 2014). There are
limits to what partnerships can achieve in addressing sustainability (Ashraf et al., 2017; Hahn and Pinkse, 2014). Being engaged in
partnerships should not crowd out firm-specific measures to reduce emissions and improve sustainability performance but just be
seen as one way to address the challenge. This study also suggests that restructuring inter-organizational relationships in a way that
key partners are not connected to each other could help firms manage conflicts that arise when partners are diverse. However, such a
network strategy has its pitfalls. It will only be helpful when the loss of unity in a partnership is so severe that it cannot be handled by
settling differences within the partnership. It is therefore more important for managers to consider prospective partners’ frames and
logics at the stage of partnership formation.

Limitations and future research avenues

This paper has several limitations that can hopefully be addressed in future studies. Although a period of three years (2007–2009)
provides sufficient data to observe firm behaviour, future research can overcome the limitation of a micro-panel and use a longer
period to test whether results hold in a different empirical context. Following Ansari et al. (2013), we assume that frames are socially
constructed inter-subjectively. However, some factors beyond a bounded empirical context may influence organizations' frames.
While our data did not allow us to include other factors that might influence how organizations frame sustainability, we tried to
capture potential contingencies by including logics as moderating variable as well as the many control variables. Analysing how
frames are not only a product of a focal firm's engagement in partnerships but also of other factors influencing firm behaviour will be
an interesting avenue for future research. Furthermore, we demonstrate that especially in developing countries a firm's relational
network is helpful in negotiating with partners with different frames and/or logics. It will be interesting to further investigate how
other firms' attributes and relational network affect and shape their partners' frames and logics.
In this study, we built upon the literature that asserts the confrontation and incompatibility of logics in the situation of in-
stitutional complexity. Specific configurations of institutional complexity including potential complementarities of competing de-
mands (Smith and Tracey, 2016), segregated complexity, restrained complexity, aligned complexity, or volatile complexity (Raynard,
2016) will likely affect the relationships between frames and logics. Moreover, while we took the role of power, positions, and
resource asymmetries of partners into account as control variables, research should examine more deeply how organizations respond
to such asymmetries. Pursuing this line of research would provide empirical support to theoretical studies that highlight framing
contests and organizations’ strategies (Rao and Kenney, 2008; Fligstein and McAdam, 2012; Cornelissen and Werner, 2014).
Finally, our analysis focused on for-profit organizations as focal firms. Future studies can explore how other types of organizations
might benefit from engaging in partnerships for sustainability. The partnerships in our sample only include profit-profit and profit-
public (state-owned) organizations. Widening the scope to other partnership formations can delve deeper into other potential sources
of learning and tension in partnerships. For example, future research could focus on the role of state-owned enterprises in developing
countries and explore how differences between countries in how they frame sustainability translate to the organizational level and
play a role in achieving sustainability objectives through partnerships.

Conflicts of interest

The study was supported by a research grant awarded to the first author by Lahore University of Management Sciences. The rest of
the authors receive no funding for this project, and have no conflict of interest.

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N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

Appendix A. Supplementary data

Supplementary data to this article can be found online at https://doi.org/10.1016/j.lrp.2019.04.002.

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N. Ashraf, et al. Long Range Planning xxx (xxxx) xxxx

Naeem Ashraf is an Assistant Professor at Montpellier Business School, France. His research interests focus on studying organizational
behaviour, corporate strategy for sustainability, and social networks. His research has been published in Organization and Environment,
Scientometrics, and Journal of Management Studies.

Jonatan Pinkse is a Professor of strategy, innovation, and entrepreneurship at and the executive director of the Manchester Institute of
Innovation Research, Alliance Manchester Business School, The University of Manchester. His research interests focus on business
responses to climate change, corporate sustainability, social and sustainable entrepreneurship, and innovation in the field of renewable
energy. His work has appeared in various different journals such as the Academy of Management Review, Journal of Management
Studies, Journal of International Business Studies, Organization Studies, Journal of Business Venturing and Entrepreneurship Theory and
Practice. He is associate editor at Organization & Environment and Business & Society.

Alireza Ahmadsimab is an Assistant professor in the management department at HEC Montreal. His research interests lie at the in-
tersection of strategy and organizational theory. By drawing upon sociological concepts such as institutional logics in studying cross-
sector partnerships, he studies how organizations are attempting to balance social and economic objectives and organize for growth. His
research has been published in Journal of Management Studies.

Shoaib Ul-Haq is an Assistant Professor at Karachi School of Business & Leadership, Pakistan. His research interests center on exploring
the impacts of organizations on society, role of religion in business and postcolonial imaginings of the absolute continuity between
imperial expansionism and capitalism. His research has been published in Organization.

Kamal Badar is a Postdoctoral fellow at the College of Business Administration, Prince Sultan University, Riyadh, Saudi Arabia. Kamal
studies the antecedents and consequences of strategic networks (inter- and intraorganizational networks). Adopting a social capital
perspective, Kamal empirically tests causal models comprising network and non-network variables. Most of his reserach has been carried
out in a developing country or transition economy context. Previously he has published in Scientometrics, Aslib Journal of Information
Management and Journal of Manufacturing Technology Management.

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