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Terri,
What do you get when you try the following:
C/EXEC SQL DECLARE A CURSOR FOR
0043.00 C+    SELECT  PRKEY,IDESC,
0044.00 C+        SUBSTR(PRKEY,1,15) as ITEM,
0045.00 C+        SUBSTR(PRKEY,16,6) as cust,PMETH
0046.00 C+      FROM ESP, IIM
0047.00 C+      WHERE PMETH = 'A'
0048.00 C+        AND substr(prkey,16,6) in ('      ', '770440')
         *:CUST IN ('      ', '770440')
0049.00 C+        AND substr(prkey,1,15) = iprod
         * :ITEM = IPROD
0050.00 C+      ORDER BY prkey
0051.00 C/END-EXEC
Assuming that iprod is also character column in table IIM.
HTH.
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