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Proactive sustainable supply chain management strategies

abstract Compliance of the different parties involved in a value chain with a firm's voluntary sustainability standards (e.g., codes of conduct) is of central importance to maintain credibility to stakeholders. As firms frequently rely on complex value chains for the production of their goods or services, they face the challenge to institutionalize their voluntary sustainability standards not only within their own organization and their suppliers but also within the many further sub-suppliers that are commonly independently contracted by their suppliers all the way up to the exploitation of raw materials. Having established new voluntary sustainability standards to change their institutional field, firms acting as institutional entrepreneurs need to eventually institutionalize these standards. It is in particular in this final institutionalization phase, when the diffusion of new standards in the institutional field, i.e. the value chain, happens.
External stakeholders have build up high consciousness and expectations on sustainability. They usually do not differentiate between a firm's and its suppliers' behaviors and hold the firm itself responsible for all practices involved in the making of the product (Koplin, Seuring, & Mesterharm 2007; Rao, 2002). Thus, any party in the value chain not complying with the firm's voluntary sustainability standards can potentially damage corporate reputation or harm customer confidence (Barnett & King, 2008; Wagner, Lutz, & Weitz, 2009). An increasing number of firms pursue voluntary sustainability strategies that take the entire value chain into consideration. Firms specify their sustainability commitment in voluntary sustainability standards (VSS), which commonly comprise statements to comply with legal requirements and add aspects that voluntarily go beyond the law (Bansal & Hunter, 2003; Barnett & King, 2008). Having introduced such a VSS, the firm still faces the uncertainty whether its value chain partners and in particular its sub-suppliers comply with it (Matten & Moon, 2008; Roth et al., 2008).
The general research question of this research proposal is: "What key capabilities does an institutional entrepreneur (the firm) require to successfully institutionalize previously defined 'voluntary sustainability standards' (VSS) in the value chain and to ensure value chain partners' compliance with the VSS?"
The research project integrates theories of institutional entrepreneurship (IE) and the resource-based view (RBV) in the context of value chain management and procurement. It builds upon institutional entrepreneurship, which examines how actors initiate, establish and finally institutionalize "new realities" that are frequently represented by diffused practices or rules (Lawrence, Hardy, & Philips, 2002) beyond dyadic relationships with direct suppliers. It applies RBV by focussing on the identification of key capabilities, which enable the firm to institutionalize VSS in value chains and to ensure value chain partners' compliance with those.
As the institutionalization of VSS in value chains is a relatively new research field (Delmas & Montiel, 2009; Lee, 2008; Millington, 2008), we are going to combine qualitative, exploratory research and quantitative, confirmatory research. Further, in order to decrease complexity of the unit of analysis, we focus on triads as part of firms' value chains, consisting of the firm itself (e.g. OEM), a supplier (tier 1) and a sub-supplier (tier 2).
   
keywords Sustainability Compliance, Value Chains, Supply Chains, Supplier Triads
   
partner
type fundamental research project
status completed
start of project 2009
end of project 2010
additional informations
topics Sustainability Compliance in Value Chains
methods Case Studies, Interviews, Literature Review
contact Jörg H. Grimm