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Building Sustainable Organizations in China

Published online by Cambridge University Press:  16 September 2015

Chris Marquis
Affiliation:
Cornell University, USA
Susan E. Jackson
Affiliation:
Rutgers University, USA
Yuan Li
Affiliation:
Shanghai Jiao Tong University, China
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Abstract

As China shifts its development model from focusing on economic growth at all costs to a model in which economic growth is balanced with solving pressing societal and environmental problems, there is an increasing need for management research on building sustainable organizations in China. This collection of papers focuses attention on the role of business in promoting sustainable economic development, highlighting a number of key processes including: the factors that foster transparency and CSR reporting, how stakeholders can influence corporations to abandon their CSR commitments, the benefits of environmental branding and labeling, and the antecedents and performance consequences of proactive environmental strategies. In this introductory essay we reflect on recent trends in sustainability research in China, and to encourage this important movement, provide recommendations for future research directions.

Type
Introduction
Copyright
Copyright © The International Association for Chinese Management Research 2015 

INTRODUCTION

China's unprecedented economic expansion over the past thirty years has brought significant wealth and prosperity to millions of people. But this economic miracle has been accompanied by many social, political, and environmental challenges. Income disparity is creating a divide that separates the rich from the poor; uneven development of coastal regions is occurring at the same time that people living in some interior regions have seen little improvement in their lives; and significant environmental issues are affecting not only the entire country, but also the entire global community. As of 2012, China's 10.2 billion tons of carbon dioxide (CO2) emissions accounted for 30% of that year's global CO2 emissions. This environmental degradation plus numerous business ethics scandals (e.g., tainted infant milk powder, an increase in employee suicides) have combined to reveal the need for an improved understanding of how to build sustainable organizations in China.

Recognizing that China's rapid development has brought some unanticipated negative consequences, the government has begun to direct attention to these concerns. Likewise, management scholars are now turning their attention to these issues. This issue of Management and Organization Review presents a collection of papers that address the challenge of Building Sustainable Organizations in China, focusing attention on the role of business in promoting sustainable economic development in China while also recognizing that multiple parties bear responsibility for ensuring China's sustainable development, including the government, as well as state-owned and private firms.

To encourage businesses and other institutional players to combat environmental pollution issues, the Chinese government has been setting aggressive goals. In its 11th Five-Year Plan (2006–2010), the government put forth the idea that China should pursue a more ‘harmonious society’, balancing economic development and environmental and social sustainability. The plan set major environmental goals (which were eventually exceeded) for energy use, water use, and sulfur dioxide (Marquis, Zhang, & Zhou, Reference Marquis, Zhang and Zhou2011). In the 12th Five-Year Plan (2011 to 2015), 8 out of 24 targets addressed sustainable development and included new aggressive goals for reducing major air, water, and soil pollutants. In an effort to drive investment into industries focused on ameliorating environmental issues, the plan also identified several strategic emerging industries for development, including ‘energy efficient and environmental technologies’, ‘new energy’, and ‘new-energy vehicles’.

The government's new policy direction partly reflects the public's increasing sense of urgency. As Yang Chaofei, vice-chairman of the Chinese Society for Environmental Sciences, has noted, protests over environmental conditions rose by 120% from 2010 to 2011. Surveys of consumers reveal shifts in public attitudes, also. A recent global consumer survey conducted by The Nielson Company found that within the Asia-Pacific region 64% of respondents said they would pay more to support responsible companies, with such attitudes being especially prevalent among younger respondents (Nielson, 2014). Within China, a recent survey reported that 80% of consumers said they had made a purchase from a brand because of its social reputation (Edelman, 2010). Visible air pollution in most Chinese cities and frequent food quality scandals appear to have brought sustainability issues into focus for consumers.

Concerns about environmental degradation, working conditions, and social responsibility have been gaining considerable attention recently within China, but such problems are not unique to China. These problems are present to some degree in nearly every country. Indeed, during the past three decades, management scholars (as well as scholars in many other disciplines) have been documenting the various unintended negative consequences of economic development while also seeking to understand the antecedents of firms’ sustainability strategies. Perhaps the most common question addressed in this literature is the extent to which it ‘pays’ to be socially and environmentally responsible; in other words, can companies ‘do well by doing good’ (e.g., Ambec & Lanoie, Reference Ambec and Lanoie2008, Reference Ambec, Lanoie, Jackson, Ones and Dilchert2012; King & Lenox, Reference King and Lenox2001; Salzman, Ionescu-Somers, & Steger, Reference Salzman, Ionescu-Somers and Steger2005). Recognizing that the pursuit of economic rewards is not the only motivation that drives executives to act responsibly, management scholars have also shown the importance of unique organizational conditions, regulatory requirements, nonbinding international agreements, voluntary industry protocols, labor contracts, social activism, and pressure from investors as well as local communities as reasons for pursuing a business strategy that includes sustainability goals and objectives (Bansal & Roth, Reference Bansal and Roth2000; Flammer, Reference Flammer2012; Hoffman, Reference Hoffman2001; Jackson, Reference Jackson, Jackson, Ones and Dilchert2012).

As editors of this collection of papers, we have had the privilege of seeing the early results of ongoing research efforts on the topic of building sustainable organizations in China. Although most of the submitted papers were not yet ready for publication, we could see that a robust area of study is emerging. With the goal of providing guidance to scholars who wish to improve our understanding of sustainable organizations in China, in this essay, we comment on some general patterns in current research and also highlight some areas of weakness that suggest several additional questions that authors might consider as they design and carry out new research on the topic.

APPROACHES USED TO STUDY SUSTAINABILITY

As stated in the original Call for Papers, we sought manuscripts that addressed a wide range of questions, including (a) the importance of environmental sustainability in today's business world, (b) approaches to green management and green strategies in Chinese companies, and (c) the development and impact of corporate social responsibility (CSR) in China. In all, a total of 38 manuscripts were submitted for review, representing the efforts of 118 individual authors. In conjunction with the process of developing papers on these topics for eventual publication, we also held a special issue conference that was hosted by Shanghai Jiaotong University and the Harvard University Shanghai Center and funded in part by the Natural Sciences Foundation of China. Authors whose papers had passed the first stage of review were invited to attend the conference to develop and present their work in a compelling way.

Our analysis of manuscripts submitted in response to the Call for Papers reveals two rather distinct approaches to researching sustainable organizations in China. Obviously, sustainable practice or CSR is at the center of articles submitted. But there appears to be a cleavage between scholars focused on understanding the performance consequences associated with sustainability and those focused on understanding the antecedents of sustainability. Tables 1, 2, and 3 describe respectively the outcomes, dominant theories, and antecedents that we observed in the submitted papers.

Table 1. Outcomes examined in manuscripts submitteda

a N = 38 submitted manuscripts. Total number of manuscripts is greater than 38 because some manuscripts discussed multiple outcomes.

Table 2. Dominant theoretical perspectives in manuscripts submitteda

a N = 38 submitted manuscripts. Total number of manuscripts is greater than 38 due to manuscripts that relied equally on two or more theoretical perspectives.

Table 3. Antecedents examined in manuscript submitteda

a N = 38 submitted manuscripts. Total number of manuscripts is greater than 38 because some manuscripts discussed multiple antecedents.

As is common in the broader management literature and articles published in Chinese management journals in particular (Tsui, Reference Tsui2013), efforts to understand the outcomes associated with sustainability and CSR often focus on so-called ‘bottom-line’ metrics. Table 1 shows that business performance was examined in 24% of the submissions. Among the various performance indicators used were ROA, sales revenue, net profit, and successful entry into a new market. That general pattern notwithstanding, we were pleased to see that most papers sought to balance concerns about economic performance with consideration of non-economic outcomes, and many articles (58%) considered direct organizational actions as the outcomes of interest, including both environmental protection practices such as pollution reduction and energy conservation and CSR practices such as charitable giving and CSR reporting.

The identification of antecedent conditions that predict or support sustainability practices and CSR was a second clear theme we observed, with particular emphasis on the role of social influence and governance processes. As Tables 2 and 3 show, institutional forces, stakeholders’ concerns, company leadership, and corporate governance were the most frequently examined explanations for why firms engage in sustainability practices and CSR.

As research on building sustainable organizations in China matures, we anticipate there will be more effort devoted to developing and testing conceptual models that incorporate both antecedents of the sustainability activities engaged in by organizations and the array of potential outcomes such activities can have for multiple stakeholders. We also encourage management scholars to be adventurous and incorporate theoretical perspectives from closely related disciplines (e.g., psychology, sociology, and economics), other business fields (e.g., marketing, operations management, international business), as well as more distant cousins (e.g., political science, environmental science, public policy). The complex nature of organizations and the magnitude of sustainability as a topic for study means that multiple perspectives will likely be needed to develop new insights.

FUTURE RESEARCH DIRECTIONS

We next reflect on a number of questions that we used in assessing the submitted manuscripts and offer some guidance for future research. Our overall reaction to the manuscripts submitted for this special issue is that many studies were too narrowly focused on testing a proposition that seemed intuitively obvious, used methodologies that were not sufficiently rigorous, and partly as a result of these weaknesses, yielded papers that were neither sufficiently interesting nor sufficiently useful to warrant publication. With the sincere hope of improving future research on building sustainable organizations in China, we encourage authors to invest significant effort to maximize the extent to which their work is interesting, rigorous, and useful.

Is Your Research Interesting?

The question of what makes research interesting is one that many scholars have contemplated; of these, a few have even offered suggestions about how to develop interesting research questions and what to avoid. For example, Davis (Reference Davis1971) argued that interesting theories are those that suggest that our well-accepted assumptions are actually incorrect, and he offered several specific suggestions for how to generate research propositions that are not simply logical extensions of generally accepted truths. More recently, Sandberg and Alvesson (Reference Sandberg and Alvesson2011) extended this idea and proposed ‘problematization’ as a method that takes account of existing work and then attempts to advance that work by questioning basic assumptions embedded in it. Thus, as researchers consider how to craft publishable papers, particular attention should be given to findings and associated mechanisms that are surprising and novel and they should avoid presenting only findings that are obvious or that confirm known assumptions.

As we initially assessed the research submitted, we seriously considered the extent to which each article was ‘interesting’. For example, a frequent research topic for sustainability scholars is to consider the effects of firms’ governmental ties on either sustainability/CSR outcomes, and/or to consider whether such ties moderate the relationship between sustainable/CSR practices and firm performance. These topics were new to sustainability research several years ago, but many questions about the phenomena of firms gaining preferential access from governmental ties and of ties leading to governmental cooptation have been thoroughly addressed (Marquis & Qian, Reference Marquis and Qian2014; Wang & Qian, Reference Wang and Qian2011; for review see Marquis & Raynard, Reference Marquis and Raynard2015). While firm-government relations are obviously consequential in China, it is increasingly difficult to make new theoretical contributions by following the same tried-and-true approaches. Instead, we encourage research that results from out-of-the box thinking.

For example, the Chinese government often uses real-world experiments that involve several model cities as a means to gaining insights into what works and why (Marquis, Zhang, & Zhou, Reference Marquis, Zhang and Zhou2013). For sustainability scholars, experiments such as these are rich and extremely rare opportunities to observe and learn from organizations as they respond to various new policies and incentives. The government's use of large-scale experiments is just one example of how the Chinese context is unique. That uniqueness requires that research take the Chinese context specifically into account and at the same time it offers exciting opportunities to study new and interesting phenomena.

Of course, addressing an interesting question is not all that's needed for a successful piece of research. Also necessary is convincing your audience that your work is interesting. That is, the fact that something is interesting to you does not mean that it will be interesting to other readers. Attention must be paid to appropriately framing your research question to convince readers that your research is interesting. For suggestions on how to achieve this goal, readers are encouraged to consult Barley (Reference Barley2006).

Is Your Research Rigorous?

Conducting rigorous research is difficult, and the standards for excellence are likely to be raised continually as the topic of sustainability gains traction and the extant body of knowledge about sustainability expands. Increasingly, authors will be expected to elevate the theoretical and methodological rigor of their work.

Methodological rigor

In general, the methodological weaknesses we observed were similar to those often observed in empirical research on management topics, including poor research designs (e.g., small samples, poor construct measurement, reliance on cross-sectional surveys, failing to take the broader context into account) and inadequate or inappropriate statistical analyses (e.g., data aggregation problems, over-reliance on multiple regression to test complex models, failure to include appropriate control variables). For summaries of the most common methodological and statistical issues faced by management scholars, readers are encouraged to see Bansal and Corley (Reference Bansal and Corley2012), Becker (Reference Becker2005), Podsakoff, MacKenzie, and Podsakoff (Reference Podsakoff, MacKenzie and Podsakoff2003), and Rouse and Daellenbach (Reference Rouse and Daellenbach1999) and to regularly consult articles published in this journal. Looking ahead, we anticipate that sustainability scholars will strive to conduct more rigorous research, which will ensure their work in published and disseminated.

Theoretical rigor

In addition to research characterized by greater methodological rigor, we look forward to seeing new research that is theoretically more sophisticated. Essential to achieving this goal, we believe, is adopting the systems perspective. A systems perspective encourages scholars to view organizations as entities influenced by the cultural, economic, governmental, social, and ecological contexts in which they are embedded. No single theory or study can take into account the full complexity of all these systems, but most of papers submitted paid scant attention to the complexity of organizations’ contextual embeddedness.

Consistent with the heavy reliance we saw on institutional theory as a guiding perspective, several papers addressed the cultural and normative contexts of organizations, but most ignored differences in the economic and ecological contexts faced by firms in different geographic settings, with different technologies, and within different industries. Given the current environmental situation in contemporary China, focusing attention on these questions is of both theoretical and practical importance. For instance, do localized environmental accidents or other large punctuated changes (Tilcsik & Marquis, Reference Tilcsik and Marquis2013) affect government environmental policy or firm behavior? Given the increasingly contentious nature of environmental protests in China (Sima, 2014), what is the role of the growing NGO sector in monitoring polluters and pressuring the government and firms for change? And more generally, how has civil society and social activism affected firms’ environmental activities (Marquis, Toffel, & Zhou, Reference Marquis, Toffel and Zhou2015)? As research on sustainable organizations in China continues to mature, we anticipate scholars will more fully engage the underlying political dynamics that are often kept under the surface in China.

One consequence of research that fails to recognize the multi-layered systemic context of sustainability phenomena is that managers quickly dismiss findings as not relevant to their particular situation. Increasingly, management scholars also dismiss research that ignores the complexity of organizational phenomena, making the argument that organizational scholars should strive to build more bridges across so-called ‘micro’ and ‘macro’ perspectives by combining theories and methods from each to yield scholarship that is both interdisciplinary and multi-level (e.g., see Hitt, Beamish, Jackson, & Mathieu, Reference Hitt, Beamish, Jackson and Mathieu2007). As pointed out in a recent Academy of Management Journal editorial on ‘Climate Change and Management’ (Howard-Grenville, Buckle, Hoskins, & George, Reference Howard-Grenville, Buckle, Hoskins and George2014), studying environmental issues is a truly multi-level phenomenon that involves individual level processes such as advocacy (Sonenshein, DeCelles, & Dutton, Reference Sonenshein, DeCelles and Dutton2014) as well as more macro processes such as how states, regions, and even global processes affect organizational phenomenon such as corporate CSR reporting (Marquis & Qian, Reference Marquis and Qian2014).

Even when studying organizations within a single country, scholars should not ignore global political, social, and economic conditions that have influenced the development of corporate sustainability practices (Etzion & Ferraro, Reference Etzion and Ferraro2010). For example, as countries join global institutions such as the United Nations, environmental norms diffuse and countries are more likely to enact laws to protect the natural environment (Frank, Hironaka, & Schofer, Reference Frank, Hironaka and Schofer2000). While critics have noted that China has often not adhered to international agreements such as the WTO and Global Climate treaties (Etzioni, Reference Etzioni2011), the consequences of the Chinese government's lack of engagement in global governance processes is not yet fully understood. As Chinese corporations engage with an array of global stakeholders, they become a conduit through which global sustainability norms and practices enter China and the surrounding region (e.g., see Guthrie, Reference Guthrie2012).

In the manuscripts we received, stakeholders were most often viewed as external actors who were of interest primarily because they can pressure a firm into taking actions that the firm might not take otherwise. But these stakeholders can also be collaborators who assist the firm in achieving sustainability. For example, various stakeholders can collaborate to influence government and industry regulations that set higher standards for all firms to follow; they can create and participate in consortia to develop industry guidelines and metrics for assessing sustainability performance; and they can agree to share responsibility for developing a skilled workforce, for promoting transportation options in the community, and so on. Consistent with adopting a systems perspective, we encourage research that reflects a broader, multifaceted view of how firms engage with stakeholders. Rather than viewing organizations merely as entities that react to contextual influences, future research should also consider how collaboration amongst multiple stakeholders (even including one's competitors) may be one effective approach to achieving long term sustainability.

Are Your Research Findings Useful?

We have found that many scholars engaged in sustainability research, ourselves included, are drawn to the topic because of a personal belief in the real-world importance of the topic. We had hoped that this special issue would yield some helpful recommendations for practicing managers who wish to steer their organizations toward sustainability, so we counted how many submitted manuscripts mentioned the practical implications of their findings. We were pleased that the majority of submitted manuscripts (67%) included at least a brief statement about the practical implications of their work. However, in many cases these statements were extremely brief and many seemed to be perfunctory attempts to address this issue.

For most organizations, addressing the challenge of sustainability will require significant learning and the development of excellent change management capabilities. The journey will unfold over time as new goals are set, problems identified, and actions taken; there will be both successes and failures along the way. New scholarship that offers guidance for practitioners responsible for managing sustainability would be especially useful. What form might useful research take? Logically, that is a question that should be posed directly to the managers involved in sustainability efforts, and we encourage scholars to have such conversations. A complete list of the questions managers would likely generate would certainly be very long and include many questions that scholars also would find interesting. Here we simply offer a few ideas with the hope of inspiring scholars to think about how to conduct research that addresses the practical concerns of managers. Such scholarship might seek to answer questions such as:

How can business leaders and managers contribute to building sustainable organizations in China? What leadership characteristics and management capabilities do they need to successfully navigate the journey toward sustainability, and how can organizations assess and develop these capabilities? Are the change processes involved in achieving sustainability unique to this particular challenge, or can organizations effectively use the same processes developed to address other strategic issues such as total quality management, innovation, or cost control? How do the mental maps of top executives in more sustainable organizations compare to executives in organizations that have made less progress toward achieving sustainability? Do executives in more sustainable organizations tend to view sustainability as a separate, terminal outcome against which they measure the organization's performance? Is the so-called ‘triple bottom line’ evident in the mental maps of executives in more sustainable organizations? Or, is sustainability more likely to be viewed as a means to achieving other objectives? Do managers in organizations that have made the most progress toward sustainability believe that it contributes to the firm's near- or long-term financial success, and/or customer and business partner satisfaction, and/or branding efforts? Or, are the most effective organizations more likely to be populated with executives who simply believe sustainable organizations are essential to the viability of the planet and social order?

What tools, guidelines, and procedures are most effective as aids used by managers to assess the degree to which the organization is aligned with sustainability objectives? To what extent do organizations find it useful to monitor the reactions of specific stakeholder groups (customers, employees, investors) and/or follow the sustainability guidelines promulgated by relevant industry groups and regulators and/or follow the practices of organizations perceived to at the leading edge of sustainability achievements?

What are the most common obstacles managers encounter as they try to achieve alignment between organizational systems and sustainability goals, and what are some effective ways to manage around such obstacles? For example, which types of common obstacles can be effectively managed by engaging employees is the search for solutions? Are some types of obstacles or challenges best addressed by reorganizing the accountability structure and processes of the organization? Under what circumstances is it likely to be particularly effective to gain access to the expertise of outsiders?

How do various stakeholders view the issue of sustainability and the role of business in addressing the issue? The potential influence of customers, investors, alliance partners, and the media is widely recognized among scholars conducting research on sustainability, yet we understand very little about the specific concerns of these different stakeholders. What information do various stakeholders attend to most closely? How do different stakeholders weigh information such as ‘objective’ current sustainability performance metrics versus management practices that indicate a commitment to future advancement toward sustainability? How do the most effective organizations manage the potential risks associated with transparency about sustainability activities and performance? What are some effective ways that organizations can engage external stakeholders to work collaboratively toward improving sustainability?

As this long list of questions suggests, we have much more to learn in order to provide useful guidance to business leaders and managers with a desire to build sustainable organizations in China. The four articles in this special issue illustrate some of the best research currently available, and serve as a foundation for developing additional knowledge.

SPECIAL ISSUE CONTRIBUTIONS

This collection of papers on Building Sustainable Organizations in China includes a diverse set of studies on environmental sustainability and corporate social responsibility in China and illustrate the characteristics of being interesting, rigorous and useful.

The article titled, ‘Community institutions and initial adoption of corporate social responsibility practices in China's banking industry’, by Yin, Sun, Wang, and Wang examines the factors that lead to the adoption of CSR reporting by 142 banks across 128 prefectural cities in China between 2006 and 2011 and illustrates how firms’ local institutional environments influence early adoption of new practices. The results indicate that banks are more likely to be first movers in CSR reporting if they operate in communities where more companies publish CSR reports or where there are guidelines encouraging CSR reporting. Furthermore, the effects of these two institutional factors were moderated by the length of time that banks had been operating in the communities. This study offers important theoretical contributions concerning the processes that stimulate organizations to become first movers, and also offers practical lessons by about how new environmental practices can be started.

In their article titled, ‘Stakeholder influences and organization responses: A case study of CSR suspension’, Feng, Liu, and Li consider the factors that lead companies to abandon existing CSR practices, focusing on two important but under-studied questions: Under what conditions do stakeholders exert their influence on firms’ decision-making? And how do firms respond to stakeholders influences? Based on observations of a Chinese insurance company from 2009 to 2013, the authors argue that precipitating events create windows of opportunity that allow different sets of stakeholders to be more effective in pressuring the company.

In the article titled, ‘Financial benefits of environmental labeling among Chinese firms, 2000–2005’, Wang, Cui, and Liang consider the conditions in which it pays for firms to be green. Studying a large sample of Chinese manufacturing firms from 2000 to 2005, the authors draw on economic, sociological, and strategic perspectives to study how environmental labeling may affect a firm's financial performance. Their key arguments are that environmental labeling will reduce information asymmetry, increase legitimacy, and provide strategic differentiation for a firm and so enhance performance. Among the interesting conclusions they reach is that firms in marginal, or less legitimate positions (e.g., being small or unlisted) are more likely to reap financial benefits from sustainability practices such as environmental labeling.

In the final paper, titled ‘The antecedents and performance consequences of proactive environmental strategy: A meta-analytic review of national contingency’, Liu, Guo, and Chi present a framework that connects proactive environmental strategies to firm performance and describe how this connection varies between China and Western countries. Based on the results of a meta-analysis of 68 studies, Liu et al. argue that Chinese managers tend to respond to both regulations and stakeholder norms when making efforts to use proactive environmental strategies to improve both environmental and economic performance. The authors argue that, compared to Western cultures, China's traditional culture allows Chinese managers to better integrate economic and environmental performance.

CONCLUSION

We believe the time is ripe for scholars studying Chinese organizations to turn their attention more fully to issues of corporate sustainability and social responsibility. The government, Chinese citizenry, growing NGO presence and in many cases corporations themselves are advocating a shift in the China development model to one where economic development is tempered with consideration of the broader environment. This special issue aimed to encourage this movement and show scholars that there is a home for high quality research on this important topic. The dedication shown by authors who submitted their work for review and the 33 reviewers who provided valuable feedback, to whom we extend our heartfelt thanks, reveal a strong interest in this topic. The challenge now is for scholars to pursue research that yields new insights and promotes positive change.

SUPPLEMENTARY MATERIAL

To view supplementary material for this article, please visit http://dx.doi.org/10.1017/mor.2015.37

Footnotes

We thank former and current MOR Editors Anne Tsui and Arie Lewin for their support and inspiration throughout the process of working on this collection of papers. We also greatly appreciate the contributions of MOR Managing Editor Tina Minchella, and thank Shiyu Yang for research assistance in preparing this manuscript.

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Figure 0

Table 1. Outcomes examined in manuscripts submitteda

Figure 1

Table 2. Dominant theoretical perspectives in manuscripts submitteda

Figure 2

Table 3. Antecedents examined in manuscript submitteda

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Building Sustainable Organizations in China
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Building Sustainable Organizations in China
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