Exploring the Role of Competitiveness in Sustainability Standards: Insights From an Animal Welfare Scheme Adopted by Supermarkets

ABSTRACT Research on supermarket‐related voluntary sustainability standards (VSSs) is divided on whether competition helps or hinders efforts to reduce negative social and environmental impacts. This paper examines how the standardization process shapes these outcomes. Using insights from management literature, we argue that how competitive concerns are addressed in the standardization process significantly affects VSS ambition and effectiveness. Through a study of a Dutch animal welfare VSS co‐constructed by supermarkets and an animal welfare non‐governmental organization (NGO), we show that perceived constraints on gaining competitive advantage, stemming from the NGO's demands for rule compliance, largely explain the VSS's stagnating ambition level. Our findings demonstrate that providing space for competitive differentiation in co‐construction processes is crucial for supermarkets' willingness to advance sustainability standards.