Role of Formal and Informal Institutions in Advancing Sustainable Environmental Practices in SMEs of Pakistan's Textile Sector

Aslam, Raees (2023). Role of Formal and Informal Institutions in Advancing Sustainable Environmental Practices in SMEs of Pakistan's Textile Sector. PhD thesis The Open University.



Economies around the globe have established formal institutions to protect their natural environments (Klewitz et al., 2012, Wahga et al., 2018b), but parallel to them are 'proto-institutions' that also make an important contribution towards sustainable development. A proto-institution, an institution in the making, comprises rules, practices, and technologies that are partially diffused and weakly entrenched but poised to become widely institutionalised (Lawrence et al., 2002, p. 283). This qualitative study examines how proto-institutions in Pakistan's textile sector emerged and played a role in promoting sustainable environmental practices. Stakeholder Theory and Institutional Theory were combined to guide data collection and analysis. Primary data were collected through in-depth interviews, field observations and a field journal, whereas secondary data came from archival records and industry-specific publications. NVIVO 12 was used to sort and prepare data for analysis. Grounded analysis (Gioia et al., 2013, Easterby-Smith et al., 2015) revealed that institutional voids (Mair and Marti, 2009) and institutional gaps (Kolk, 2014) impeded the ability of formal institutions to assist the textile sector and ensure compliance with the established Punjab Environmental Quality Standards (PEQS). Due to these voids and gaps, textile manufacturers and stakeholders collaborated in various ways, resulting in the emergence of proto-institutions. These proto-institutions address the 'knowledge gap' by conducting informative seminars, capacity building workshops, and the production of best practice manuals. They bridge the 'cleaner production gap' by devolving internationally tested cleaner production solutions and assisting with their implementation. In addition, they take steps to close the 'compliance gap' by building the capacity of firms and public institutions. They fill the 'R&D gap' through commercial research into inputs, processes, and product development. They also provide firms with financial assistance through matching grants that help firms overcome their 'financial assistance gap' and acquire international certifications for market entry into global markets and undertake business development services. In doing so, these proto-institutions imposed iii normative and mimetic pressure on firms to adopt green practices while coexisting with formal institutions as compensatory institutions to create environmentally compliant isomorphs (firms). These findings add to the insights about institutional work processes and roles of proto-institutions, by presenting evidence from a previously under-research context: promoting sustainability in a SMEs dominated manufacturing sector of a developing country. In terms of practice, these findings are helpful information for textile manufacturers who are yet unknown to the benefits they could reap by adopting sustainable practices and processes in their manufacturing concerns. The information about collaboration is helpful for stakeholders looking to form new partnerships for responsible production. This study also suggests policymakers to both encourage and collaborate with proto-institutions to accomplish national and international commitments such as SDG 12 - Sustainable Consumption and Production, and race to net zero in textiles. Furthermore, the context specific factors that are affecting the emergence and development of proto-institutions in Pakistan’s textile sector could also help policymakers in Pakistan and alike developing countries to overcome institutional gaps and voids in their formal institutional arrangements and better promote sustainable production in their key manufacturing sectors.

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