Beyond the Decisions-Making: The Psychic Determinants of Conduct and Economic Behavior

INTERNATIONAL JOURNAL OF RESEARCH & METHODOLOGY IN SOCIAL SCIENCE
VOL. 3, NO. 1 JAN - MAR, 2017 QUARTERLY JOURNAL ISSN 2415-0371
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TABLE OF CONTENT
Beyond the Decisions-Making: The Psychic Determinants
of Conduct and Economic Behavior ……………….……………………… 6-24
Dante Roberto Salatino
Green Supply Chain Practices on Corporate Sustainability Performance:
An Empirical Study ………………………………………. 25-35
Nitin Simha Vihari & Himani Binjola
Economic Valuation of Rural Wetlands in Bangladesh:
A Case Study of the Padma Beel of Pabna ……………………………………… 36-52
Ayub Ali and Syed Naimul Wadood
Gap between Expectation and Convenience of Open Access
Public Toilets in Dhaka: A Cross Sectional Investigation ……………………… 53-61
Syed Billal Hossain, Russell Kabir, Md. Shahjahan,
Alauddin Chowdhury & S. M. Yasir Arafat
Neurogame: An Alternative and Complementary Method
in the Teaching and Learning Process of Neuroanatomy ……………………… 62-71
Ribeiro, F.S., Soares, B.O., Santos, I.F.,
& Da Silva Júnior, E.X.

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Beyond the Decisions-Making: The Psychic Determinants of Conduct
and Economic Behavior
Dante Roberto Salatino
About the Author(s)
 Researcher of the Institute of Philosophy and of the Institute of Linguistics - Lecturer in the
General Psychology Department - Faculty of Philosophy and Letters - Teacher and Researcher in
Artificial Intelligence in the Mechatronics Career - Faculty of Engineering - National University of
Cuyo - Email for correspondence: dantesalatino@gmail.com
ABSTRACT
The objective of this paper is to provide a useful tool to evaluate the impact of conduct and
economic behavior in decision making. It is a research based on a theory of the psychic structure
and operation with a marked neurobiological support. The use of a new method is introduced: the
Transcurssive Logic, to investigate the subjective reality of which, the economy, forms part. Are
corroborated the hypotheses suggested by Hayek in his treatise on Theoretical Psychology: The
Sensible Order (1952), and they are given foundation to the psychic processes that give rise to both
the behavior as the conduct. It constitutes a basic contribution to Economic Psychology.
Keyword: Economics, Psychology, Methods, Social Sciences.
JEL Code: A12, B41
CITATION:
Salatino, D. R. (2017). “Beyond the Decisions-Making: The Psychic Determinants of Conduct and
Economic Behavior.” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 1: pp. 6–26. (Jan. – Mar.
2017); ISSN: 2415-0371.

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1. INTRODUCTION
The recent contributions of Economic Psychology and Neuroeconomics focus almost exclusively
on the supposed psychic and neurological mechanisms involved in decision making, which appears
as the only motive of economic conduct, forgetting that this conduct is given in function of a
particular behavior.
Every person or social individual has a double need, one primary: that of survival,
manifested as a desire; and a secondary one: that of knowing, expressed as a belief. The social in
the person arises from a desire that 'represents' at the deep level (in his being) motivating a
behavior, and a belief that characterizes superficially (in his seem) the object of that desire and thus
conditioning his conduct. (Salatino, 2012, p.132)
The foregoing derives, in the sensible (as subject), in opposing manifestations that arise
from the instinctive as externalizations that lead to self-preservation, which affects his life and
originates fear or apprehensiveness for the present. From the emotional (as an individual) or those
circumstances that support the adaptation that by affecting their relationship with the environment,
sustain the affections but also the suffering and mistrust for what has already lived. Or from the
emotional (as a person) where the fundamental objective is the recognition or social 'survival',
provoking an emotion in the other, even if it bring rigged together to the hope put in a future, the
anguish by its uncertain character.
All this expressive baggage enables the emergence of a belief that is the sustenance of all
knowledge, both own and surrounding.
From this belief it can be said that there are at least five ways of reaching it (Stebbing, 1965,
p. 526): a) That we have always believed in something that we do not question and before which we
are helpless against error; b) Based on the authority that recognizes two variants: i) acceptance of a
truth out of respect and ii) acceptance of a truth for being told by an expert; c) In front of direct
(apparent) evidence; d) By persuasion that is almost always subject to deception; and e) For
conviction or reasoning, mechanism that is patrimony of the logic and therefore of the science. That
is, a belief can be given by revelation, faith or superstition, by opinion, by presumption, by
persuasion or by conviction or certainty.
As Tarde says (1895, p. 108), the elementary social act, in its form at least, has only as basic
members a desire and a belief. Social relations, although potentially infinite, can be grouped
according to the same author (op. cit., p. 12) into two groups: (i) those which are based on the
transmission of a belief and are based on the apparent (Or how it should be according to a norm)
and ii) those in which what is transmitted is a desire, expression of what is (the own being).
By basing ourselves on the individual element we could say that the social, in the last
instance, arises from something 'profound' that is represented by the desire of a subject, and that is
related to something 'superficial', as it is a belief that acts as an object. Excluding the mode of belief
that is given by conviction or certainty that responds to a convention (or how science operates),
beliefs either have an external foundation and can respond either to a voluntary act or that does not
depend on the desire of the other, and where are excluded the modalities by opinion and
presumption, or respond to an imposition of the desire of others as is the case of persuasion. All this
allows us to establish logical relationships between the fundamental social elements as shown in
Figure 1.

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Fig. 1: Logic relations between the social elements
Legends: S = subject – O = object – V = apparent transformation -  = hidden transformation
The previous figure confirms, on the one hand, the interrelations that are established
between desire and belief in a social individual, that is, the imposed or voluntary character of each
one of them and the emergence from there of the different beliefs. The codes assigned in the graph
are due to having considered the desire as the subject's heritage, and belief as an object of that
desire. On the other hand, this scheme corroborates, without a doubt, that the logical nucleus of any
social act as we see it here, is an PAU (universal autonomous pattern), according to what is defined
by the Transcurssive Logic (TL of here in forward) (See Appendix)
The needs that give rise to the social act are satisfied through the 'social patterns' that are
evidenced, individually, in behavior as we have seen and socially, in conduct through a series of
'social figures'. (Salatino, 2012, p. 134)
These ‘social figures’ fulfill the non-trivial function of establishing the 'social role' which
becomes evident through a determined conduct; That is, by that behavior that is limited by a norm;
and they are:
(i) Indifference: coexistence without mutual influence of two poles of interests that generate
two parallel instances that are only contacted superficially (in appearance) without interfering.
(ii) Agreement: coexistence with mutual influence of two poles of interests that have
elements in common that bring them together and distinctive elements that are adapted by both
parties to allow the 'fit' of the two instances making possible links at the superficial level through
the appearance - the lie of a conduct - and the acceptance, by mutual agreement, of the profound
level or the behavior of each one.
(iii) Conflict/Evasion: confrontation of two poles of interests to settle a shortage through the
same object. The conflict disrupts the steady state or stable disequilibrium that is maintained in the
social system by negative feedback (Salatino, 2009, p. 84), the one in which its dynamics are
developed through 'controlled oscillations' between the superficial and the profound (the conduct
and the behavior). This disturbance manifests itself as 'out of control oscillations'. Its behavior is
comparable to that shown by physical oscillations increased in amplitude in exponential form by
positive feedback. These 'oscillations' are caused by the influence between the superficial and
profound levels in cross form and leading to a 'catastrophe'. It reaches the limit of what is tolerated
by dynamic stability. Both systems are forced to choose, that is to say, they bifurcate out or it is
passed to a level of greater complexity, taking away preponderance to the occasional 'opponent'
becoming 'dominator' of the situation; Or on the contrary, becoming "dominated" or even more,
disappearing directly from the conflictive situation.
(iv) Submission: coexistence of the poles of interests where one of them predominates
because of the intact adaptability to the different avatars, made possible by the full use of the
superficial / profound assembly (conduct / behavior) and thus to influence the other, that only
handles the superficial level (the conduct) to the detriment of the profound level. This figure can
have two variants: an absolute, where submission is total both in the seem (conduct) and in the
being (behavior), and the other, relative, where such submission is only apparent (in the conduct).
Submission may be a consequence of figure (III). In addition, its evolution can follow different
paths that lead to any of the above figures by rehabilitation of the profound (behavior) level.

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The specified figures highlight what is relevant at the sociocultural level, or what is
equivalent, what we can research on the practical plane; in addition to confirming the relevance of
the application of the Theory of Games to unravel some of the mechanisms involved in economic
decision-making, something that will be discussed later.
Nevertheless, it is possible to probe through these figures, other planes of behavior and
elements that arise from it, such as: sensations (pleasure, neutrality, displeasure); that of reactions
(attraction, displeasure, rejection); the one of the emotions (love, harmony, hatred); that of
perceptions (subject, action, object); that of the psychic (idea, language, thought); etc.
From the social roles raised as a result of the operability of the social figures, finally emerge
what we will call 'personal roles' and that are: dominator, dominated and indifferent.
Assembling the logical relationships that link the elemental social elements with the
personal roles, we have all the necessary ingredients to define, from the conducts that generate the
beliefs (myths, religions, dogmas, ideology, etc.), to the fulfillment of a desire through behavior,
both in its adequate form (to a norm) and excessive, from which emerge roles as those of the leader,
autocrat, etc. Figure 2 summarizes the logic of social relations proposed.
Fig. 2: Logic of social relations
The objective of this work is to provide a method and a theoretical tool capable of analyzing
behavior and human conduct, these 'complex manifestations' are heritage of subjective reality
(Salatino, 2009), which are not usually addressed by objective science, but which can complete the
explanation of why a decision making is made. With this contribution is intended to bring
Psychology closer to the Economy, although from a different perspective than the one current
proposed by the Cognitive Sciences.
In order to better understand our purpose, in this introduction, I have proposed as a real
framework the logic that supports both a social act and also the relationships that a person maintains
with others, as is conceived by the TL.

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2. LITERATURE REVIEW
The search for antecedents of our position we must do it from different perspectives: (1) From the
justification of a psychology based on central nervous system (CNS) physiology, (2) Through the
approach of the economic conduct from the subject, (3) Showing the existence of common patterns
underlying to phenomena Which in appearance are totally different., and (4) demonstrating the
presence of the phenomenon of symmetry.
2.1 Psychology based on physiology
John Stuart Mill (1806-1873), English philosopher, politician and economist representing the
classical economic school who theorized about utilitarianism and in his book A system of logic
(1843-1889-1950) in the chapter on the logic of the moral sciences, Says: “There are a great number
of social phenomena whose determining causes are the desire for wealth and the psychological law
which refers to the preference of a gain greater than a lesser ... In reasoning about this law of human
nature we can be qualified to explain and predict this type of phenomena, insofar as they depend
solely on such circumstances, bypassing the influence of any other social situation.” (Nagel, 1950,
p.337)
Adolf Horwicz (1831-1894), a German philosopher who, in addition to writing about the
nature and function of philosophy, did also about the history of the development of the will (1876),
and his book on psychological analysis where he used Physiology as a guide for psychological
research, that served as an inspiration to some of those who attempted to approach economics from
a psychological perspective.
Gabriel Tarde (1843-1904), Sociologist, Criminologist and French Social Psychologist, has
been the pioneer in the field of Social Psychology in talking about the causes of economic behavior,
based on the interrelation between desires and beliefs (what we have already mentioned)
(Quintanilla et al., 2005, p. 46) and in a Psychology interpreted from the physiology, although also
based on the introspection, since according to the author, when it comes to observing inter-
psychological phenomena (as he called to social phenomena) this form of meditation, he claimed, is
the only method of subjective and objective observation at the same time. (Tarde, 1902, p.83) From
2009 the TL was added (see Appendix), which, with this same purpose, is based not on
introspection but on Neurobiological Psychology.
Gustav von Schmoller (1838-1917), representative of the German historicist school, is
perhaps one of the greatest enthusiasts in the task of approximating the Economy to Psychology. In
the introduction of Grundriß der Allgemeinen Volkswirtschaftslehre (Principles of General
Economic Theory (1901-1904)) gave to the Psychology a place of privilege. It says there:
“Psychology is the key of all human sciences and therefore also of economics ... Nothing less than a
psychological history of humanity, especially a history of the evolution of feelings as shown by
Horwicz in his book of 1878: Psychologische Analysen auf physiologischer Grundlage.” (Nau &
Schefold, 2012, p 34)
Hans Vaihinger (1852-1933), German philosopher who in his Philosophie des Als Ob (The
philosophy of the 'as if') also mentions the book of Adolf Horwicz Psychologische Analysen auf
physiologischer Grundlage (The psychological analysis with physiological basis) that served him of
inspiration and where it shows that “All psychology is based on the so-called 'reflex scheme': the
sensory impressions following stimulation, ideas lead to thought, expressive movement and to the
volitional action.” Vaihinger, 1924, p.xxii)
Friedrich August von Hayek (1899-1992): The Sensorial order is a work on theoretical
psychology written by this philosopher, jurist and economist, Nobel prize of Economics in 1974 for
his contributions, among others, on the interdependence of the economy, the society and the
institutions. In this remarkable work, which will be discussed in some detail, it leaves a series of
possibilities with regard to the functioning of the psyche, such as, for example, the formation of
models with patterns of stimuli arising from the perception of the surrounding reality . (Hayek,
1952, p. 114) These writings on psychology laid solid foundations to support his ideas about
economic knowledge and the problems that economic science had to solve.

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2.2 Economic conduct from the subject
John Stuart Mill: also in the book A system of logic (loc. cit.) says, referring to the social
phenomena derived from a psychological law: “Taking into account that they have no origin in
other social facts and that no other circumstance can interfere , gave rise to have created a
department of science called: Political Economy,” making clear allusion to its subjective roots. In
contrast, in the chapter devoted to the definition of economic policy, it says: “Economic Policy can
be defined as the science of laws which regulate the production, distribution and consumption of
wealth. Wealth is defined, as all material objects useful or agreeable to mankind, except such as can
be obtained in indefinite without labor.” (ibid., p. 412)
Austrian school of economics: this line of economic thinking emphasizes that individuals
do not act automatically and in response to a rational elaboration that requires a total knowledge of
the ends and means. An individual acts as a consequence of cognitive processes that allow him to
perceive, recognize patterns, learn and understand the social reality that will determine the means
and ends appropriate to his subjectivity to face an economic decision. That is, your decisions will
always be individual and subjective. They are some of the outstanding figures of this school: Carl
Menger (1840-1921) (Subjective value theory, Menger, 2007, p 114); Ludwig von Mises (1881-
1973) (Praxeology: logical structure of human action, Mises, 1998, p. 30) Methodological
individualism: all social phenomena, including economics, can be explained from individuals, their
goals, their beliefs and their actions, Mises, op. cit., p. 41); Friedrich August von Hayek (1899-
1992): the methodological norms he adopted are a direct reflection of his perception of the subject.
This is what he notes when says: “It is probably not an exaggeration if we say that any important
advance in economic theory during the last hundred years was a further step in the constant
application of subjectivism.” (Hayek, 1955, p. 31).
2.3 Common patterns
Carl Gustav Hempel (1905-1997), a logical empiricist philosopher and epistemologist, who in his
Philosophy of Natural Science states: “What scientific explanation, especially the theoretical ... is
achieved by a systematic unification, by exhibiting the phenomena as manifestations of structures
and common underlying structures and processes that conform to specific, testable, basic principles.
If such an account can be given in terms that show certain analogies with familiar phenomena, then
vey well.” (Hempel 1966: 83) (Metaphorical by analogy method (Salatino, 2009) (see Appendix))
Milton Friedman (1912-2006) in one of the most influential works in economic
methodology says: “A fundamental hypothesis of science is that appearances are deceptive and that
there is a way to looking at or interpreting or organizing evidence that will reveals superficially
disconnected and diverse phenomena to be manifestations of a more fundamental and relatively
simple structure.” (Friedman, 1966, p. 33).
2.4 Symmetry
Bastiaan Cornelis van Fraassen (1941-). American philosopher of Dutch origin specialized in
philosophy of the science and logic. He defines symmetry as he does in mathematics and physics,
but proposes it as a guide for the characterization of a scientific theory, since he considers it as the
main key to understanding the theoretically constructed world through a model. (Van Fraassen,
1989)
3. METHODOLOGY
According to the previous characterization and in conventional form we can distinguish four ways
of approaching this research: from the ontology, the epistemology, the methodology or from the
ethics. (Sum & Jessop, 2013) Ontological, in this case, refers to the structure and properties of what
exists in that reality that we have raised. An important ontological derivative would be a set or
group of elements whose existence may be known by an observer from their individual reality.

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The epistemological approach encompasses that which is concerned with the nature of
knowledge or the beliefs that arise in the exchange with such reality.
Finally, the ethical would have to do with a set of psychic and affective qualities that form
the character as an expression of a knowledge or experience and condition the behavior of each
individual in his real world. (Figure 3).
Figure 3: S = subject – O = object – V = apparent transformation -  = hidden transformation
The above diagram shows the suggested interrelations between the modes of approach of the
facts that occur in the reality that we are going to investigate. We mean by 'fact', the relations
existing between a generic subject and an object, through a double transformation, where the
subject is the source of those changes, while the object is the destination of them.
Of the transformations that determine the facts, one of them, which we identify as' apparent
'(V) tells us how the things of reality relate to the customs of a subject, so we can also call it:'
organization '.
The transformation designated as ‘hidden’ () refers to the necessary coherence, which on
an individual level, must exist between the facts that occur in reality and its representation. Since an
individual, in his becoming, is linked to others and which together determine the progress of the
social system, it is essential that in each of them a reorganization of the relations that seem to
determine the facts, in order to cope with the demands of the system and thus allowing a sustained
degree of evolution. For this reason we could call this transformation: 'disorganization'.
The proposed provision allows us to consider the coexistence of the true determinants of the
events that occur in this reality that we are trying to characterize, as well as its consequences that
condition its observation and experience. Characters and beliefs on the one hand, and things and
rules on the other, define, as we are suggesting, the participation of subjects and objects (observers
and observed) in those facts that we intend to analyze.
The factual sciences, whose object of study are real facts, require both observation as
experimentation. In natural sciences such as biology, physics or chemistry this is basically ensured
because it is easy to separate the observer from the observed; but in the social sciences, such as
economics, for example, this is very difficult if not impossible.
One way of achieving some approximation to the scientific method as it is applied to the
natural sciences, when trying to investigate economics, is to vary the point of view, or better, to
adapt the real frame of reference that is adopted.
It will be said that the same methods that are used in physics have been successfully applied
for a long time, as is the case when one wants to record the behavior of some economic variables, as
with the relation that links total utility and marginal utility, which in mathematical terms is its first
derivative. (García, 2000) But this alone is not enough to justify that the economy, as a social
science that is, is being approached 'scientifically', because here the participation of the subject is
relegated to a mere equivalent, that to save the appearances, is establishes as real reference.
In this work we will use as a method the TL (see Appendix) which is based on two of the
central ideas in science: 1) the unification or the possibility of demonstrating that there are

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phenomena, which, however disparate they may seem, respond to a single relational pattern ; and 2)
symmetry or one of the guiding principles of nature.
The theme of unification is one of the key points of the philosophical framework on science
defended by Philip Kitcher whose conception of the logic of science has been in favor of a view of
scientific explanation as unification, at least as a regulative ideal, and that agrees with his
presumption about the existence of a causal structure of the world. (Gonzalez, 2012, p. 55)
According to Kitcher, understanding phenomena is not simply a matter of reducing our
fundamental incomprehensibility, but of seeing connections, patterns common in what initially
seemed to be different situations. Thus, science increases our understanding of nature, showing us
how to derive descriptions of many phenomena using the same derivation patterns, over and over
again. By demonstrating this we are taught how to reduce the number of types of facts that we have
to accept as ‘ultimate’ or ‘fundamental.’ (Kitcher, 1989, p. 432) For our methodological purposes,
these words of Kitcher are vital, since it leaves established two of the most important aspects of our
method . On the one hand, the use of structured patterns from the primordial aspects that define a
fact; On the other, and the most relevant, helps to select a fact, among all those who respond in
some way to the pattern, and that in TL is used as the 'object of study' of the research being done.
The latter, perhaps, constitutes the most relevant methodological contribution of TL.
Explanatory unification is considered to be one of the greatest achievements of science.
Examples of this are the works of Newton, Darwin, Bohr, or Maxwell, to name but a few. In
economics, they show the same rank of unification, the supply and demand mechanism, or
Samuelson's economic analysis. (Mäki, 2001, p. 489)
Samuelson in his analysis of the economy privileges the unification, which focuses on the
maximization of economic behavior, which coincides in general lines with the proposal made in this
work, as explicit in the following general principle:
“Most economic treaties deal with the description of some part of the world, of reality
or of the elaboration of particular elements abstracted from reality. Implicit in such
analyzes are certain recognized formal uniformities, which are in fact characteristic of
every scientific method. I propose here investigate these common characteristics in the
hope of demonstrating how it is possible to deduce general principles that can serve to
unify large sectors of current economic theory.” (Samuelson, 1965, p. 7).
In addition to the previous explanatory unification we must require our method to leave
evidence of the possibility of leading to an ontological unification, in order to make it operative.
Ontological unification brings to a theory, referential and representational capacities and consists in
re-describing seemingly independent and diverse phenomena as manifestations of the same and
small number of entities and processes. (Mäki, 2001, p. 498) This supports the existence of an
underlying relational pattern.
Finally, the other element on which the method presented here is based, the symmetry, has
suffered, as it were, a kind of evolution since in the second decade of the last century, when the
German mathematics Emmy Noether demonstrated in a theorem (Noether, 1918) why of the
existence of conservation laws and magnitudes that do not change during the temporary unfolding
of a physical system. Or put another way, it showed that natural laws do not change over time.
(Salatino, 2016b, p.3)
Van Fraassen projects the concept of symmetry beyond physics or mathematics, attempting
its application to any scientific theory, suggesting that 'similar problems have similar solutions’. On
the other hand, it establishes as a method to individualize the relevant features or aspects of the
solution. Although this proposal is similar to those already presented, it differs in that once the
relevant parameters have been isolated, a group is formed with them. (op. cit., p. 259) This
algebraic structure ensures that the solution to the proposed problem consists of a rule (a function)
that depends only on those parameters; which is to say that, from the methodological point of view,
the object of study has been isolated. (Salatino, 2015, p. 45)

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In 2009 we focused our interest in the symmetry group and proposed some modifications
that allowed us to adapt it as a tool for the analysis of some social phenomena, such as language.
Among the modifications we can mention that the group is formed with only two elements and two
transformations, arranged in two levels that represent the essential aspects of a problem, observed
from two different frames of reference. The temporal evolution of the levels occurs in the opposite
direction. There must be absolute simultaneity (t = 0) of the frames of reference, being verified the
conservation (without changes in a frame of reference) and invariance (without changes between
frames of reference).
In summary, the method presented is based on: a) economic facts, because they belong to
the social sciences, depend on the subjective reality and not on the objective reality that frames
traditional science; Or otherwise put, decision making (one of the basic economic behaviors) can
not be simulated with an algorithm, unless we take into account that it is determined by a specific
behavior; b) the selected basic elements must form a relational pattern; c) the minimum pattern
must form a group to demonstrate the presence of symmetry; That is, it should make it possible to
evidence the conservation and invariance of the fundamental laws governing the fact or
phenomenon being studied; and d) the developed scheme must have ontological projection, that is,
it must have strict relation with the facts that can be evidenced empirically.
4. FINDINGS & DISCUSSION
Why the method we have just presented can be useful to assess a decision making seen from the
subject?
In order to answer the above question, we will base ourselves, in addition to our research, on
two works written by the same Nobel Prize winner for economics: Friedrich August von Hayek. In
The Counter-Revolution of Science, the author tells us:
“The main reasons for keeping the terms 'subjective' and 'objective' for the contrast we
are referring to [differences between the natural sciences and the social sciences],
despite the misleading connotations that these terms may have, are on the one hand, that
at least in economics [and also in psychological methods] the term 'subjective' has been
used for a long time in the sense given here. On the other hand, and perhaps more
importantly, the term 'subjective' emphasizes that the knowledge and beliefs of different
people, although possessing that common structure that makes communication possible,
make them different, and sometimes even contradictory in many ways. If we assume
that all the knowledge and beliefs of different people are identical or if we conceive of a
single mind, then it would not matter if we described them as an 'objective' or
‘subjective’ fact.” (Hayek, 1955, p. 29)
This confirms that in economics the approach from the subject is an important current of
thought that has contributed a different and useful knowledge about the economic phenomena that,
without doubt, have origin in the psyche of a person. To support this latter hypothesis, we will take
as a relevant reference a very particular work by Hayek: The Sensory Order - An Inquiry into the
Foundations of Theoretical Psychology. (TSO) It is in this theoretical work in which Hayek built
the solid foundations on which to support his ideas about economic knowledge and what economic
science should solve.
TSO represents the greatest approximation never shown between the subjective and the
economic knowledge which, in addition, contributed to delimit the true object of study of the social
sciences. He did not assign to the psyche (to the mind, as he calls it) any special 'substance', because
otherwise it would ascribe to mental events attributes of whose existence there is no evidence
(Hayek, 1952, p. 177), but defined it as the interaction of physical phenomena, such as the joint
functioning of neurons in the cerebral cortex. Despite having succeeded in most of his
appreciations, not having all the current neurobiological advances at that time, he had the
disadvantage of confronting a ‘mind’ that stricto sensu is both observer and observed. This last

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problem, which we have already mentioned in Methodology, we will approach it from the TL, we
will do the same with the 'correspondence' between the 'physical order' that shows us our
environment and the 'mental order' that Hayek defines as consisting of 'classes related' and thus
explain why our senses interpret reality in a disparate way as the physical sciences do; our position
is quite similar, of course with other fundamentals.
The answer to the above question is supplemented by our theory of how the psychic
apparatus is structured and how it works, presented in 2013.
We will analyze, of the human being, the dynamics of their relationships, with himself
which allows him to preserve his life, with the environment that gives him knowledge or
experience, and with his peers that enables him to communicate his decisions. These relations have
as unique objective to maintain the biological life, the psychic life and the social life, and in that
sense, they are intentional.
The dynamics of these relationships are as follows: a) the environment is presented with its
avatars, b) the subject acknowledges having received this impact (he perceives it), and c) elaborates
an adaptive (and re-adaptive, as would say Piaget, (1947) 1975, p.14), thus indicating that he has
found 'sense' to the surrounding reality and that he ‘learned’ what to do about it in order to remain
alive in the three instances he has to face. This 'learning' has as a previous step going ‘testing’
alternatives to get as close as possible to an appropriate response. If this step is not fulfilled, that is,
no response is given or given but it is not adequate, the human being dies socially, psychically and
even, biologically, for not being able to adapt to the demands of the environment. (Salatino, 2016a,
p.19) The latter case, in game theory, would be tantamount to losing the game.
As we shall see, the situation in which a subject finds himself interacting with the three
instances of his reality, fits well with a variant presented in this paper of John F. Nash's approach to
non-collaborative games (Nash, 1950). This way of approaching the decision making in economy is
reflected in Figure 4, which we analyze below.
Nash made a vital contribution to the economy when he demonstrated that decision making
is an interactive question where selfishness (‘the intention to survive’) prevails, and that the best
results for a group in the short and medium term, despite that decisions are taken individually, are
achieved when a very particular type of equilibrium is reached between pairs of opposing and
simultaneous strategies.
Fig. 4: CH = character – TH = things – RU = rules – BE = beliefs
The above figure is intended to reflect a real framework for decision making something
different from what was previously stated. The variant is the fact of focusing the problem from the

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subject and not only of what results from their interaction with others. In other words, making a
decision here is much more selfish than in the case of non-cooperative games, because here what
really is at stake is life itself.
Without making of this approach somewhat dramatic, we mean that decision-making, for
example, the dictating of norms that is forged in the theoretical building of political economy, arises
from a subject that interacts in a group, not a group which contains a subject, because they are
sustained in their behavior. Therefore, the application of these standards in the practice of economic
policy, which regulate their conduct, should reflect part of that normative origin; However, it does
not, far from it, proposes a supposed “scientific equity” (according to the Nietzschean expression -
Nietzsche, 2004, p. 80) that conceals the true affections that underlie them, such as the ambition of
dominion or the craving for possession.
The graph of Figure 4 may very well represent a situation similar to that evidenced in a non-
cooperative game between two players: a subject with his character and therefore with his ethics,
and the environment with his things and his other subjects . There are two well-defined levels: the
superficial or apparent level or that where the future of the players is settled according to a strategy
chosen consciously and unconsciously by the subject according to certain imposed rules; and the
profound level, where the rules of the game (structure) are proposed that depend on the individual
beliefs, and to which he has no access, nor can modify any of the players (the structural is neither
conscious nor unconscious, it's biological). This double state of our psyche, to call it somehow, is
already pointed out by Hayek in TSO:
“What, then, are the special attributes of conscious behavior by which we distinguish it
from behavior which also seems to be coordinated and intentional but of which the
person acting is not 'conscious'? Such unconscious behavior can occur either because
the person's attention is in the particular moment otherwise compromised, or because
it’s completely unconscious as is the case in some states of sleepwalking and hypnotic
trances.” (Hayek, 1952, p. 134)
We must clarify that Hayek confuses, in some way, the unconscious with a lack of
consciousness (unconsciousness). The unconscious is that functional state of a psyche that governs
the automatic outputs (habits) of our psychic apparatus and therefore our behavior. Consciousness
takes care of the inputs (especially those that require attention, although there are inputs that are
unconscious, much of the perceptive process is unconscious) as well as the cognitive aspect and our
intentional behavior. (Salatino, 2014, p.15)
A system (a couple of players: the subject and its environment) represents a repose dynamic
state that accuses a certain organization (determines a specific behavior), a certain stable
disequilibrium that promotes an exchange that is projected as an evident action (a conduct that fits
to norms or rules).
The irruption of a proposal or challenge from the environment (the equivalent of point a) of
the dynamics already specified) causes a deviation in the subject that perceives it (point b) (S) that
leads to submit that 'organization' previous to the rules of the game, those general rules that define
the generating structure of their behavior in relation to the situation, as something disorganized that
the profound structure reorganizes.
This reorganization is carried out elaborating either a defense that arrived at as an adaptive
response to the environment ( O), or as a change of level of complexity that allows it, by means of a
strategy, to respond with an attack, which causes that the environment behave as a subject who
receives a challenge and the alternatives of the game are repeated until that one of the two does not
adapt and 'die', that is lose the game, or they reach an agreement and declare that the game is over.
The situation raised, necessarily, will lead to some of the social figures that we raised in the
introduction. Or in other words, depending on the outcome of this 'game', will face a reality where
there will be raised a conflict / evasion or an agreement. From the resolution of this proposal will

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arise the social and then personal roles of Dominator and Dominated if the proposed circumstance
is of a general nature, the role of indifference will never arise.
To clarify the concepts a little more, we will analyze a more concrete example. Let us
suppose that the central government of a Latin American country decides to implement an
economic policy in line with globalizing currents in order to try to insert itself at the worldwide
level, eliminating tariff barriers and allowing the free circulation of capital: financial capital (loans
and international credits), productive capital (Raw materials, capital goods) and commercial capital
(what is bought and sold). (García Echevarría, 1996)
The government of the country represents the 'environment' of the previous example.
Start the game. Government agents make the proposal, they pose a challenge, not to a local
company, but to the common subject who gives life to these companies, saying: there will be lower
production costs with the consequent reduction of prices, will increase employment there where
multinational enterprises arrive, increased competition will lead to higher quality products,
technological improvements that will increase production and facilitate economic transactions; as a
direct consequence of all of the above, there will be greater accessibility to goods that are now not
accessible. A disequilibrium has arisen.
The opposition on behalf of all the 'common subjects', instead of using the attack as a
strategy showing all the disadvantages that can have, opt for a lukewarm defense against the
onslaught of government and decides to take the opportunity to be linked to the government
because they know that between one of the downsides of globalization is economic inequality that
will occur in the country which would benefit directly the most powerful companies, which are
almost always in collusion with power. The game is defined, the common subject loses.
They are defined, in the first instance, the roles of dominator (the governing) and dominated
(the common subject).
We see in this example a situation, not strange in our countries, where the behavior of the
subject, which ultimately constitutes the one that makes a country progress, is not taken into
account. This subject has found, after hard experiences, a way of 'surviving', biologically,
psychically and socially which has shaped the way he behaves. He has had to submit to norms
indispensable for coexistence, but in no case this forced conduct, so far, canceled his behavior or
crushed his beliefs.
The decision of third parties is supported in great academic developments defended by
technocrats who decide what behavior that the common subject must observe to be in agreement
with the conduct dictated by the norm imposed.
According to the final result of this hypothetical case, globalization tends to eliminate the
stable disequilibrium that must exist between the Political Economy, whose ultimate basis should
be the behavior of the common subject, and the Economic Policy that dictates the rules, in favor of
the latter and in detriment of the first that collapses to reach a deadly stable equilibrium. In this way,
what began as a 'non-cooperative game' was transformed into a ‘zero sum’ game. This split is what
leads to ‘mortal equilibrium.’ That is to say, the appearance of economic conducts not sustained in a
genuine economic behavior, which puts directly into force the social figure of submission.
Final consequences of a bad economic decision (not based on behavior): predation of the
raw material, property of the common subject, to be more abundant and cheaper than in any global
village. Not being able to pay even the interest of the loans taken for the technological update
necessary to enter the world market (something non-existent), which forces him to give away the
precious raw material, which in turn is bought by multinational companies disguised as regional
enterprises, which pushes the common subject into a state of total submission. (Stay, 1993)
In order to finish answering the question posed at the beginning of this discussion we will
make an analysis of the subjective reality. We have already defined the frame of reference where
the subject develops. This is one of the real systems that define the TL: the socio-cultural, which as
we saw is a composition of what is present, that is, of the facts as they are shaped by representing
interrelations between subject and object, the two only components of subjective reality It is

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considered as the 'motor' that drives the gestation and regulation of the dynamics of other real
systems. Its structural unit is the REM or real fact.
Another of the real systems is the bio-external: characterization from the logical point of
view of the three major biological levels that record the physical aspects of life. These levels of life
that can be qualified by TL are: a) unicellular or multicellular without central nervous system
(CNS), which comprises simple animals and plants; b) multicellular with CNS, which include the
animals themselves; and c) the animal that, through understanding, can use the sense it gives to its
environment to adapt and evolve, the man. Its structural unit is the GEN.
Finally, the psycho-internal system: all living beings are autonomous and this autonomy
becomes evident when they are observed as different from their surroundings. Little life can have a
structure that ignores that it is different from what surrounds it. Setting a boundary between the
'inner' and the 'external' is a privilege of the living being. To the real system capable of sustaining
this 'knowledge' and relating it to the environment, we will call it psycho-internal and it is the one
that takes care of the concrete subjective aspects, both volitional and cognitive. Its structural unit is
the FREN.
All units reviewed, show the same structure, that is, they are arranged on two levels, one
superficial or evident and one profound or hidden, which arise from the interrelationship of the
subject and the object (or their equivalents) through two transformations or changes. These two
levels form a group and maintain a complex relationship with each other; that is, a triple relation of
opposition, complementarity and concurrence or simultaneity, and with a common logical
denominator: the PAU or universal autonomous pattern. (See Appendix)
The two levels that the units display are: in the REM, the superficial: the seem and the
profound: the being; In the GEN, the superficial: the phenotype and the profound: the genotype;
While in FREN, the superficial: the idea and the profound: thought. (Figure 5).
Fig. 5: Structural unit of the subjective reality
The psycho-internal system, our psychic apparatus, as we have seen, has a structural
(relational) distribution identical to the socio-cultural system. We say that both are homeomorphic
and not isomorphic as Hayek suggests (Hayek, 1952, p. 38). This condition allows facts that occur
outside the psychic apparatus to be 'recorded', as it were, in the psychic structure as phenomena that
give rise to the 'construction' of experience. A kind of ‘structural memory’. A similar mechanism is
pointed out as the origin of the experience in TSO (op. cit, p. 41). Hayek establishes as the central
thesis of his psychological theory, saying: “... a large part of the content of the sensory qualities
[mental contents] is the result of an interpretation based on experience.” We could add that not
only part but everything is understood in terms of experience, and when it does not exist, then we
will have to learn or 'die'.
It is important to clarify why I use understand rather than interpret in the previous
paragraph. The analysis that the subject does of its surroundings (to discriminate what he perceives)

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and the relation he makes of the obtained to experience (memory), if it exists, is in charge of a
series of psychic processes (Salatino, 2014, p.159) These processes can be divided into Superficial
psychic processes and Profound psychic processes:
Superficial psychic processes: (i) Learn: is related to the changes and is the one that occurs
at the moment of perception; (ii) Understand: it is the analysis or division of what is perceived in
the different real systems, to leave a real 'fact' in an idea (psychic structure = structural memory =
experience); and (iii) Explain: it has to do with: I) inference or application of the inviolable
principles of traditional logic, and II) with the association or implication based on previous
experiences and knowledge, to give individual reading of a particular fact. It is related to the use of
concepts through meaning.
Profound psychic processes: (i) Know: has to do with the differences between objects. It is
which brings together all objects given their differences (is a disjunction) and for example, that the
psyche can determine that the OS
(superficial object), or external object perceived is different from
the SS
(superficial subject), or the subject itself considered as an object. Is directly linked to
volitional thinking through which originates an embodied experience, that is, a 'incarnation' of
learning to fulfill a particular desire. (ii) Interpret: Has to do with separating related similarities by a
change or transformation not evident or profound (it is a conjunction). It is related to the 'sense' that
acquires a fact when it becomes a phenomenon. Is the germ of the behavior of a subject, and (iii)
Comprehend: Is the process that starts from an idea (psychic structure) and ends with its projection
into a function: cognitive thinking. It is the one that allows, after an internal reorganization (re-
adaptation) of the subjective slopes of the components of every real fact, to project towards the
surface the sense of that fact, that is to say, a resurgence of the truth, our truth, that which allows us
to respond from the subjective, not only with the will (behavior) but also to a strategy (conduct), to
the proposals made by the environment. Finally, comprehension is what, in our feeling, establishes
a belief. Belief is a functional affirmation of truth; and truth appears when a desire is satisfied and
this is consistent with some belief.
5. CONCLUSION
Hayek, when he tries to demarcate the true individualism of false, points out that the true one
represents a social theory because it tries, from the knowledge of the forces that determine social
life, to elaborate political maxims. "There is no other way toward an understanding to social
phenomena but through our understanding of individual actions directed towards other people and
guided by their expected behavior." (Hayek, 1958, p. 6)
What is indicated by the previous quotation is what we have tried to show in this work,
although with some nuances. It is clear from our analysis that the origin of the rules or the practical
projection of the scope of a economic conduct must be, as Hayek says, based in the obliged
knowledge that must have those who exercise power, of individual actions.
Such individual actions are manifested by a certain behavior which has as undoubted origin
the structure and functioning of our psychic apparatus, as we have seen. The expected conduct that
standards must safeguard is a direct consequence of our behavior. We have offered here a useful
tool to assess the impact that individual desires and beliefs (which translate into actions or behavior)
should have on the issuance of norms that regulate economic conduct; the only way for political
economy to become the basis of our understanding, not only of economics but of social facts.
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APPENDIX
Transcurssive Logic
The method and the scientific tool that allows to analyze the primordial interrelation (or interaction
of organizational nature) that exists between subject (S) and object (O), and that defines the
dynamic evolution (the elapse) of the subjective reality, something which is beyond the reach of
traditional science, to endorse the point of view of the observer.
Its main contribution consists in a modification of the traditional concept of what we
understand by reality as we perceive it and how it influences our behavior and our conduct,
according to the circumstances.
This approach, despite being based on the perspective that a subject has of the real facts that
affect it, respects two of the central ideas in science: 1) unification: or the possibility of
demonstrating that there are apparently independent phenomena that respond to a single relational
pattern; and 2) the symmetry: which is one of the guiding principles of nature.
Given the two characteristics above allows scientific approach to social and humanistic
aspects of reality, which is for what was created; although this form of approach can also be
extended to any scientific discipline in order to discover the relationships existing between the
fundamental aspects that define any real fact, and this with a double aim; on the one hand, as a
method to facilitate the search of the object of study of an investigation and to put it in value. On
the other hand, as a didactic tool to support the arguments that give rise to objective and verifiable
knowledge, supported by observation and experimentation.
2.0 Methodological aspects
2.1 Based on unification: although science argues as a unifying element the same cause for
apparently independent phenomena, here we will limit ourselves to propose the existence of
multiple independent phenomena that respond to a common relational pattern. This is at the heart of
a variant of Peirce's abductive reasoning, which we call metaphorical by analogy. (Salatino, 2009)
(Figure 6)
Fig. 6: Method of Metaphoric by analogy
The analogy allows us to discover the hidden model that underlies every metaphor. The
analogy is a going from the concrete (the observable) through a model or pattern, to the abstract
(theory) or from the superficial to the profound. It applies to a known domain (source or observable
results) to try to better understand or understand an unknown domain (destination). In other words,
analogy makes more familiar a domain in which extreme or surprising phenomena occur (as Peirce
called them). In this way, through the abduction it is possible to approach them doubly, on the one
hand, generating explanatory hypotheses, and on the other hand, allowing their investigation.
Through the metaphor is made the reverse way to that of analogy. It goes from the profound
to the superficial, from the abstract to the concrete; (like the Greek term Aletheia: uncover), which
becomes evident in the change produced on the surface and which is nothing other than the impact

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of the transfer from the source domain to the destination domain, Which allows abduction to
generate a hypothesis. In this way it is concluded that it is possible that the questioned (observed)
domain shows a similar logical structure and therefore, a homologous functioning to the known
domain, taken as reference.
In summary, then, we use the analogy in order to find some similarity between two domains
that, superficially, appear as very different, opposite or even excluding. When the analogy is found,
the metaphor (abduction) is responsible for giving an answer to that occult and mysterious
phenomenon that we are trying to observe or study.
2.2 Based on symmetry: Symmetry is the language of group theory. Therefore, it is through a
generic group that we can apply the principles of Transcurssive Logic to demonstrate the presence
of symmetry, the only way to validate a scientific approach. The structure of this type of group
consists of two opposing static elements (A and B) and two opposing dynamic elements. Each,
alternately, occupies one to one of the four vertices of a rectangular parallelogram. All elements
have a binary code that identifies them and that arises from a table of assignments with at least two
basic attributes ( and ). If this is the case, both attributes must be opposites. (Figure 7).
Fig. 7: Generic group
The static elements, besides opposites are complementary and concurrent. Of the dynamic
elements, one of them has the function of connecting by 'transforming' both of the static elements
(V). From the logical point of view it behaves as a disjunction and its code corresponds to the co-
presence of both attributes, which is equivalent to the union of the elements by their differences, so
we will also know it as 'organization'. The other dynamic element represents a 'hidden
transformation' whose function is to break the previous ligature, which will enable the future
evolution of the system (). Logically behaves as a conjunction and its code arises from a co-
absence of attributes, which is equivalent to a separation of elements by their similarities; We will
also know it as 'disorganization'.
This arrangement which structurally represents a group of Galois, functionally represents a
Galois connection; That is, the opposition of two aspects or concepts through another opposition,

-24-
which here we will know as PAU (Universal Autonomous Pattern). The triangle of the figure is
only to highlight the two levels that form this structure and its temporal evolution in the opposite
direction. The rotation in both directions is obtained, to the right at the superficial level, applying
XOR () [XOR : 0  0 = 0; 0  1 = 1; 1  0 = 1; 1  1 = 0.] to its codes; While to the
left at the profound level, is achieved by applying the equivalence () [ : 0  0 = 1; 0  1
= 0; 1  0 = 0; 1  1 = 1] (the opposite operation to XOR, since the profound level, from
the logical point of view, is the negation of the superficial level)
In all cases, it is necessary to justify both the choice of the attributes that support the codes
and to demonstrate that the result of the application of the operations to these codes produces a
logical sequence of phenomena that are characteristic of the real fact being studied. In the case of
social or humanistic applications, the static elements of the group must necessarily be subject and
object.

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Green Supply Chain Practices on Corporate Sustainability
Performance: An Empirical Study
Nitin Simha Vihari
, Himani Binjola
About the Author(s)
Corresponding author, Nitin Simha Vihari is a Senior Research Fellow, Department of
Management Studies, IIT Roorkee. Email: nitinvihari@gmail.com
 Himani Binjola is an Assistant Professor, Graphic Era Hill University, Dehradun.
ABSTRACT
The purpose of this paper is to validate the direct and intervening effects of internal and external
Green Supply Chain Practices on Corporate Sustainability Performance. Further, the study tests for
the moderating effect of Institutional pressures. The study uses multivariate casual modeling
approach named Structural Equation Modeling, in order to validate the linkages among the latent
constructs. Top and Middle level managerial workforce of the select Indian pharmaceutical
companies are considered as the respondents for this empirical investigation, using simple random
sampling method. The study uses adapted scales from the past researchers and with a response rate
of 72.61 %, the author’s tested the formulated hypotheses and validate the proposed research
framework. The study reveals that both the internal and external Green Supply Chain Practices
significantly influences the Corporate Sustainability Performance with respect to the
Pharmaceutical companies in India. Furthermore, Institutional Pressures such as coercive,
normative and mimetic positively moderates the direct relationship between the two central latent
constructs. The study offers implications for both practitioners and academicians. Given the
complex regulatory and competitive norms, which are enveloping the firm’s business environment,
Green Supply Chain Practices evolved as a significant predictor of Corporate Sustainability. Cross
sectional research design, simple random sampling and select Indian Pharmaceutical companies are
few of the limitations of the current study. Very few studies have focused on the importance of
Green Supply Chain Practices with respect to the Indian Pharmaceutical companies and its
managerial workforce and also the moderating variable considered as part of the study has
significantly contributed to the academic literature of Environmental Management and Supply
Chain Management.
Keywords: Green Supply Chain Practices, Structural Equation Modeling, Indian Pharmaceutical
Companies, Corporate Sustainability Performance, Institutional Pressures
CITATION:
Vihari, N.S. and Binjola, H. (2017). “Green Supply Chain Practices on Corporate Sustainability
Performance: An Empirical Study.” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 1: pp. 25-35.
(Jan. – Mar. 2017); ISSN: 2415-0371.

-26-
1.0 INTRODUCTION
Modern day manufacturers are adopting various environmental practices as there are strict
environmental regulations and for attaining competitive gains, manufacturers are focusing towards
these environmental practices. Manufacturers in collaboration with their supply chain partners,
suppliers and customers can be into a superior competitive place and can be into a better position if
they execute environmental management in a cost effective manner (Vachon and Klassen, 2006).
If organizations collaboratively work and function so it will help in reducing environmental
pressures and it will lead in reducing wastes and will help in improving supply chain functions
(Seuring and Muller, 2008). Green supply chain management (GSCM) can be seen as a popular
prospect for manufacturers in supply chain management as an approach towards reducing their
environmental damages and for environmental management, and can also be seen for achieving
operational (Zhu et al.,2008,2012a,2012b; Svensson,2007).Enterprises these days are required to
promote green supply chain management (GSCM) practices ,as stakeholders and institutional
pressures are compelling enterprises to pursue green supply chain management(Tata et al.,
2010).Government and regulatory institutional factors are key factors for motivating the execution
of external GSCM practices (Gonzalez-Benito and Gonzalez-Benito, 2006).Commercial
competitive pressures are important for organizations to pursue in-house eco-design (Chung and
Wee, 2008).Other studies have examined relationships of institutional pressure, mainly regulatory
pressure along with environmental management practices such as internal GSCM practice on
ISO14001 certification (Quazi et al., 2001) and external GSCM practice on investment recovery
(Mitra, 2009).This kind of institution investigation is a systematic analysis and approach towards
promoting proactive environmental management practices such as green supply chain management
(Beskovnik and Jakomin, 2010).
2.0 LITERATURE REVIEW
2.1 Internal and External Green Supply Chain Practices
GSCM can be broadly classified as internal and external practices and institutional pressures
including the normative, coercive and mimetic practices can drive practice of both. In this paper,
internal GSCM practices are the ones that can be implemented and managed independently by
individual manufacturers. For external GSCM, such as supplier’s co-ordination is required with
external stakeholders or partners i.e. suppliers and customers. Environmental, operational and
economic performance improvements can be seen in both internal and external GSCM practice.
(Seuring and Muller, 2008).Waste reduction and resources conservation can result in environmental
performance which will result in improvement in economic performance. Decreased inventory
levels and improved product quality in environmentally based supply chain can also contribute in
economic performance improvement (Zhu et al., 2005).This paper introduces to the different
myriad relationship and elements for internal and external GSCM and the performance outcomes by
manufacturing enterprises.
2.2 Institutional Pressures
In recent years institutional theory’s role can be prominently seen the fields of OM and SCM
(kauppi, 2013). According to Scott (2008), institutional theories suggest that external forces are
important for encouraging enterprises for practicing similar strategic practices. According to
institutional theory organizations are not only making profits but they also realize the importance of
social authority (Suchman, 1995). Economic variant and social variant are the two main forms of
institutional theory (Ketokivi and Schroeder, 2004). Mechanisms, which lead towards institutional
isomorphism, are coercive, mimetic and normative (DiMaggio and Powell, 1983). The coercive
mechanism includes of formal and informal pressures, which are created on the firm by other firms,
and also the pressure, which is created by societal expectations (Kauppi, 2013; DiMaggio and
Powell, 1983).
Here, coercive pressure, normative pressure and mimetic pressure are the three dimensions
shaping institutional theory (DiMaggio and Powell, 1983). Normative isomorphism is a result of

-27-
professionalization. “Members of particular profession define the pressures, challenges and struggle
of that specific occupation and give a guideline to the future professionals through legality” (Liang
et al., 2007). Mimetic isomorphism takes place when one organization tries to mimic the other
organization and tries following the other organization, this could only happen when one
organization is not sure about its goals, vision, environmental uncertainty or technology is not well
understood (Di Maggio and Powell,1983; Liang et al., 2007).
Coercive Isomorphism takes place when there is external pressure by stakeholders (e.g.
buyers, government agencies, regulatory norms etc.) and it also takes place when there are varied
expectations from society (DiMaggio and Powell, 1983).
2.3 Corporate Sustainability Performance
The concept of corporate sustainability performance can be understood rationally as it is difficult to
express it in operational terms (Labuschagne et al., 2005). Understanding the goals of CSP,
companies need to understand the sustainability of their present practices that how their current
practices and their direction will help them in achieving their goals. There have been various
analysis regarding CSP i.e. Porter (1985) analyzed the importance of financial aspects in terms of
profitability and economic growth, Peteraf (1993) analyzed economic performance, growth and
long-term profitability in terms of CSP and other works i.e. Chan (2005) and Christmann (2000)
analyzed CSP through impact of environmental management on corporate and Brown and Dacin
(1997) studied in depth the effect of social responsibility on enterprises focused more on the ethical
aspects of CSP.
3. THEORETICAL BACKGROUND AND HYPOTHESIS DEVELOPMENT
3.1 Internal and External Green Supply Chain Practices and Corporate Sustainability
Performance
New environmental practices help in exploring new opportunities for enterprises as that helps
competition for adding new values and core values to business programs (Hansmann and Krogger,
2001; Wagner and Schaltegger, 2006; Lai et al., 2010).Internal and external GSCM has a positive
relationship with an organization’s economic performance and this relationship is beneficial for
both. (Gil et al., 2001; Montabon et al., 2007 ; Rao and Holt, 2005; Wong et al., 2012b).
Sustainable management practices will bring significant growth in sales, return on assets, profit
before taxation and cash flows from operations (Ameer and Othman, 2012). Environmental
performance can be improved with internal and external GSCM (Frosch, 1994). Close bonds such
as suppliers and customers and close relationships between suppliers and customers contribute in
management strategies and all these factors help in contributing in improving environmental
performance(Florida,1996;Gunasekaran et al., 2008). UK researchers, Haji-Gazali and Simula
(1994), portrayed that on average consumers paid approximately 13% more for green products
(Varangis et al., 1995). Economic performance can be improved with customer satisfaction and
corporate reputation by practicing environmental management (Tang et al., 2012). We posit that
“Internal Supply Chain practices have a positive influence on Corporate Sustainability
Performance.”
3.2 Internal and External Green Supply Chain Practices and Institutional Pressures
There are many external and internal pressures on manufacturers for adopting environmental
management practices and literature has also identified many groups which exert pressure for
adoption of Internal and external GSCM and other environmental management practices. Chinese
consumers especially youngsters have developed awareness about green products (Liu et al., 2009;
Lo and Leung, 2000). According to Institutional theory, a firm will always observe the actions of
other firm. For environmental protection and in view of regulating, corporate social responsibility is
necessary for legitimacy (Boiral, 2007). There can be situations when there could be positive,
negative or no relationship may exist between various pressures and in adoption of specific GSCM

-28-
practices. We posit that “External Supply Chain practices have a positive influence on Corporate
Sustainability Performance.”
3.3 Internal and External Green Supply Chain Practices, Institutional Pressures and
Corporate Sustainability Performance
In Normative Isomorphic pressures, for example, it is perceived that manufactures should take
organizational routines which result to organizational legitimacy. Coercive institutional drivers may
force manufacturers to adopt GSCM practices. Multi institutional isomorphic pressures may
encourage competitors to adopt GSCM practices for improving competitiveness.
Environmental pressures help in adopting GSCM practices. Market regulations,
environment pressures help an organization to adopt environmental practices. These practices help
in growth of the firm. However, according to institutional theory perspective institutional pressures
help in the growth of the firm and help in adopting environmental practices. We posit that
“Institutional Pressures act as a moderator between Green Supply Chain practices and Corporate
Sustainability Performance.”
Fig. 1: Conceptual Framwork
Survey approach was used for the data collection and is also the most favored tool among
the quantitative researchers (Fowler, 2009; Amayah, 2013). Survey research is most relevant to the
unit of analysis if the study, which is the managerial workforce among the select pharmaceutical
companies in India (Dwivedi, 2005). Random sampling technique from the class of probabilistic
sampling techniques is used to identity the respondents. After data screening procedure, a total of
342 responses with the response rate of 64.75% were considered for subsequent analysis. At the
outset of analysis, the sample’s demographic profile was calculated. It comprised of gender, age and
education, job profile in the organization and tenure in the current organization. The demographic
profile of samples helps to understand that respondents are appropriate for the study as per their job
profile, experience and education. It also reveals that data is normally distributed as per
respondents’ age, gender, job profile, experience and education. Further, it highlights that samples
do not take account of high level of polarization. The tools used in exploring the sample’s
demographic profile are tables for tabulated description of profile, charts and graphs for graphical
description and discussions for the basis for a clearer picture.

-29-
Descriptive statistics were computed to examine demographic and professional
characteristics of the 342 respondents. Their managers’ characteristics were examined as well. The
statistical software SPSS 20.0 was used for the descriptive statistics. Demographic characteristics of
the respondents are presented in Table 1.
Table 1: Summary of Demographic Characteristics
Demographics Employees’ details
342n 
Frequencies Percentages (%)
Gender Male 197 57.60%
Female 145 42.39%
Age Less than 25 years 59 17.25%
25-30 years 102 29.82%
31-35 years 82 23.97%
36-40 years 56 16.37%
41-45 years 29 8.4%
Above 45 years 14 4.09%
Experience 1-5 years 91 26.60%
6-10 84 24.56%
11-15 88 25.73%
16-20 69 20.17%
More than 20 years 10 2.92%
Education Graduate 182 53.21%
Post graduate 129 37.71%
Any other 31 9.06%
Table 1 shows the gender wise distribution of respondents. Overall, the final sample
comprised slightly more male 254 (63.98%), than females 143 (36.02%). With this information, it is
presumed that, lower percentage of female employees than male employees is representative of
Indian managerial representation (Baral & Bhargava, 2010).
The present study uses the widely acknowledged multivariate causal modeling technique
named as two stage approach, suggested by Anderson and Gerbing (1998). The two stages are
Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM) respectively. CFA
confirms the extracted relationships by comparing the variance co variance matrix from both the
sample and model. It just validates the model’s measurement. Both the structure model and
measurement model are used to build the second stage SEM, which is a combination of CFA,
multiple regression and Path Analysis (Hussey & Eagan, 2007). Hierarchical Multiple Regression
Analysis was used to test the moderating effects of the latent construct Institutional Pressures.
Common Method Bias (CMB) is the degree to which the systematic error variance
influences the study variables (Richardson et al., 2009). CMB is also termed as Common Method
Variance, which is measured by Harman’s single factor approach (Podsakoff and Organ, 1986).
Principal Component Analysis was used on all the items from the four latent constructs and resulted
a unrotated factor structure with 4 distinct factors that cumulative variance accounted for 66.42% of
the total variance. The first factor enveloped mere 21% of the total variance, which lead to the
confirmation regarding the absence of CMB in the response set.

-30-
Table 2: Descriptive Statistics
S.no Constructs Mean S.D. 1 2 3 4
1
Internal Green Supply Chain
Practices
5.27 0.742 0.75
2
External Green Supply Chain
Practices
5.84 0.864 .422** 0.79
3
Corporate Sustainability Performance 5.61 0.911 .367** .513** 0.83
4 Institutional Pressures 5.92 0.528 .521* .615* .351* 0.88
Note: * p<0.05 and ** p<0.01
4.0 FINDINGS
A well-established multiple-item seven-point Likert scale spanning from 1 (“strongly disagree”) to
7 (“strongly agree”) was used to measure the variables of the study. The descriptive statistics for all
measurements are shown in Table 1. Four items of Internal Supply Chain practices and three items
of External Supply Chain practices were adapted based on existing literature on GSCM (Zhu and
Cote, 2002; Zhu and Sarkis, 2004; Zsidisin and Hendrick, 1998). Six items of Institutional pressures
were adopted from DiMaggio and Powell (1983), Zhu and Sarkis (2007) and Kauppi (2013). Six
items of Corporate Sustainability Performance was adapted from the study conducted by Zhu et al.,
(2005).
4.1 Measurement Model Results
Measurement model is the initial step to perform multivariate causal modeling of the two-stage
approach. Reliability, discriminant validity and convergent validity are the key parameters, which
complete a measurement model (Hair et al., 2006). Reliability is a measure of consistency in the
responses given by the respondents with the acceptable limit ranging from 0.7 to 1 (Hair et al.,
2006). Reliability values of all the four latent constructs were measured by Cronbach’s alpha by
benchmarking the loading (greater than or equal to 0.7) of each item with the respective construct. It
was found that all the four latent constructs exhibited a reliability of more than or equal to 0.7 by
meeting the acceptance limit (Hair et al. 2006) and the corresponding values are represented in
Table 2. Discriminant validity is the degree of the distinctiveness between the constructs, which is
measured by the parameters (Hulland, 1999, Fornell and Larcker 1981) of cross loadings, and
Average Variance Extracted (AVE). Each item of a respective construct is needed to have a greater
loading compared to the other constructs and the square root of the AVE values ought to be larger
than the inter construct correlations (Fornell and Larcker, 1981). Convergent validity is the second
type of testing for the construct validity, which is measured solely by the Average Variance
Extracted (AVE) values. An AVE value above or equal to 0.5 indicates that the items of a construct
are converged, i.e. on an average all the constructs in the proposed research model at least explain
more than or equal to 50% of its items (Hair et al., 2006). By comparing table 2 and 3, it can be
observed that that the values of Average Variance Extracted (AVE) are more than or equal to 0.5
for all the four corresponding latent constructs. Thus, the measurement has adequate convergent
validity. Furthermore, the square root of the AVE values of all constructs is found to be more than
0.8, which indicates that the measurement has good discriminant validity. Table 3 represents the
summary of the results obtained from the Confirmatory Factor Analysis (CFA). Thus the response
set of the present study shows good reliability and validity characteristics.

-31-
Table 3: Results of CFA
Latent Constructs Indicators Loadings Reliability AVE
AVE Square
Root
Internal Green Supply
Chain Practices IGSCP1 0.76 0.84 0.57 0.75
IGSCP2 0.82
IGSCP3 0.84
IGSCP4 0.71
External Green Supply
Chain Practices EGSCP1 0.77 0.78 0.63 0.79
EGSCP2 0.84
EGSCP3 0.75
Institutional Pressures
MP1 0.78
0.88 0.54 0.73
MP2 0.85
RP1 0.94
RP2 0.91
CP1 0.82
CP2 0.72
Corporate Social
Performance FP1 0.74 0.81 0.59 0.76
FP2 0.87
FP3 0.91
FP4 0.89
SP1 0.82
SP2 0.83
SP3 0.71
SP4 0.76
EP1 0.85
EP2 0.89
EP3 0.92
EP4 0.95
EP5 0.86
4.2 Structural Model Results
The structural mediated model and the respective fit indices are represented as part of table 4 and
Fig 2. The GFI, NFI, NNFI, AGFI and RMR are 0.91, 0.85, 0.82, 0.73 and 0.072 respectively. All
the fit indices and the χ2/df values are in the acceptable range as given by Hair et al., (2006).
Table 4: Fit Indices of Structural
Structure Model χ2 df p χ2/ df NFI CFI GFI AGFI RMR
Hypothesized Model 716.74 238 <0.01 3.01 0.85 0.91 0.91 0.73 0.072
The moderating effect of institutional pressures on the relation between Green Supply Chain
practices and Corporate Sustainability Performance is conducted using Hierarchical Regression
Analysis (Hair et al., 2006). The analyses were performed individually to both internal and external

-32-
green supply chain practices and are mentioned as part of Table 5 and 6. The results of the analysis
indicate that institutional pressures act as a sign cant moderator.
Table 5: Moderating effect of IP on IGSCP and CSP
Variables
CSP
B SE Change in R2 R2 df1,df2 F
Step1: Controls 0.06 6, 192 1.853**
Age 0.07 0.12
Gender 0.28 0.15
Step2: Main Effects 0.48** 0.53 11, 194 42.29**
IGSCP 0.42 0.13**
IP 0.27 0.09**
Step3: Interaction 0.05 0.56 13, 196 38. 15**
EGSCP * IP 0.13 0.07*
Note: * p<0.05 and ** p<0.01
Table 6: Moderating effect of IP on EGSCP and CSP
Note: * p<0.05 and ** p<0.01
The summary results of the hypotheses are mentioned as part of Table 7 along with the p-
value, standard error, standardized estimate and the regression coefficient.
Table 7: Results of Hypotheses
S.no Hypothesis
Independent
Variable
Dependent
Variable
Standardized
Estimate S.E. t-value p-value Result
1 H1 IGSCP CSP 0.32 0.248 4.392 0.002 Supported
2 H2 EGSCP CSP 0.28 0.174 3.165 0.000 Supported
3 H3a IGSCP*IP CSP 0.11 0.07 2.114 0.000 Supported
4 H3b EGSCP*IP CSP 0.07 0.05 2.326 0.000 Supported
4.3 Discussion
The key concern for most of the pharmaceutical companies in the developing economy context like
India is to minimize the economic risk due to environmentally oriented penalties. In order to
achieve this, proactive strategies are to be formulated through Green Supply Chain Management
Practices. Above all, the empirical results shown by the study validates the linkage between Internal
and External Green Supply Chain practices, Corporate Sustainability Performance and Institutional
Variables
CSP
B SE Change in R2 R2 df1,df2 F
Step1: Controls 0.06 6, 192 1.853**
Age 0.07 0.12
Gender 0.28 0.15
Step2: Main Effects 0.42** 0.48 8, 190 36.57**
EGSCP 0.28 0.08**
IP 0.26 0.06**
Step3: Interaction 0.02 0.51 9, 189 33. 41**
EGSCP * IP 0.07 0.05*

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