CONTRIBUCIÓN AL CONOCIMIENTO NACIONAL, REGIONAL Y MUNDIAL SOBRE EL DESARROLLO Y LA EVALUACIÓN

Scholars have classified SSCM motivators into internal versus external motivators (e.g., Walker et al., 2008). Internal motivators are further classified into two sub-categories: instrumental and normative motivators. First, the instrumental perspective holds that that the adoption of sustainability strategy leads to the enhancement of corporate image and reputation among stakeholders and the reduction of operational costs and efficiency, which in turn contributes to its economic sustainability (Carroll & Shabana, 2010; Donaldson & Preston, 1995).

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Conversely, the normative view holds that a company adopts a sustainability strategy because of moral or ethical values of organizational members (Donaldson & Preston, 1995; Ramus & Oppegaard, 2006). This orientation (normative rationality) encourages a company to fulfil its ethical and moral obligations towards its stakeholders and act as a responsible corporate citizen in society (Bansal & Roth, 2000; Jenkins, 2006). Thus, driven by normative prudence, a company and its members intends ‘to do the right

thing’ (Lieb & Lieb, 2010) by practising sustainability. Top management, especially,

perceives itself to be a proactive contributor to societal good, including the environmental stewardship and social wellbeing of society (Giunipero, Hooker, & Denslow, 2012; Jenkins, 2006).

On the other hand, external forces may also drive companies to adopt SSCM strategy. These factors include market drivers (e.g., competition, customers and consumer demands), government (e.g., regulations and legislations) and social factors (e.g., civil society organizations and media), which may force companies to adopt sustainability (Chkanikova & Mont, 2015). The following sub-sections further explore the relevant literature on internal and external motivators.

Internal Instrumental Motivators Economic Optimization

Economic optimization is an instrumental reason driving companies to implement SSCM practices. Dauvergne and Lister (2013, p. 1) argued that “leading-brand companies are racing to adopt sustainability in order to enhance their growth and

control within the global economy. These ‘big-brands’ are defining sustainability and

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advantage and increase sales and profits”. Some potential advantages for implementing

SSCM strategy include reduction in energy and operational costs (Hoffman, 2005; Lee, 2012), occupational health and safety costs (Cantor, 2008), packaging costs (García- Arca & Prado-Prado, 2006; Mollenkopf, Closs, Twede, Lee, & Burgess, 2005), costs related to attract new suppliers (Keating et al., 2008), transport and logistics costs through the use of clean transport modes (Carter & Rogers, 2008; De Brito et al., 2008), environmental liabilities and potential future costs (Berry & Rondinelli, 1998; DeSimone & Popoff, 2000), and cost savings by developing long-term relationships with suppliers (Andersen & Skjoett-Larsen, 2009).

Other reported benefits of SSCM implementation include increased revenues for the company (Nidumolu, Prahalad, & Rangaswami, 2009), improved competitiveness through reverse logistics practices (Barker & Zabinsky, 2010; Chan, 2007; Efendigil, Önüt, & Kongar, 2008; Jack, Powers, & Skinner, 2010; Schultmann, Zumkeller, & Rentz, 2006), better fleet management (Wilson, 2010), and improved product quality (Porter & van der Linde, 1995) through lean supply chain practices (Corbett & Klassen, 2006).

Several studies reported the business case for SSCM implementation. Rao and Holt (2005) conducted an empirical study of South-east Asian firms, which found that GSCM practices lead to competitiveness and economic performance. In their study, Pullman, Maloni and Carter (2009) reported that indirect performance gains associated with SSCM practices. They posit that environmental performance improvements lead to quality enhancement, which in turn develops the cost performance of a company. Zhu and Sarkis (2004) studied the relationship between GSCM practices of Chinese

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companies and its impact on economic and environmental performance. The findings of the study revealed a strong relationship between GSCM practices and economic performance. Likewise, Green Jr, Zelbst, Meacham, and Bhadauria (2012) found a positive relationship between GSCM practices and organizational performance. Zailani, Jeyaraman, Vengadasan, and Premkumar (2012) also reported a positive relationship between SSCM practices and firm value.

Risk Management

The perception of potential risk or business loss vis-à-vis poor SSCM practices is a critical factor that influences management to adopt a SSCM strategy. However, previous studies revealed that companies can reduce, mitigate or eliminate social and environmental risks by exploiting proactive SSCM strategies (Cheung, Welford, & Hills, 2009; Keating et al., 2008; Roehrich et al., 2014; Tate, Ellram, & Kirchoff, 2010), developing risk management systems (Kytle & Ruggie, 2005; Teuscher, Grüninger, & Ferdinand, 2006), partnerships (Cheung et al., 2009) and capabilities (Reuter, Foerstl, Hartmann, & Blome, 2010). Maloni and Brown (2006) argued that supply chain sustainability issues increase the threat of media or consumer campaigns and public backlash, which may pose a substantial reputational risk to well-known brands.

Accordingly, the image and reputation of a company “can be tainted by the actions of

another member who engages in activities that result in public sentiment or outcry or, even worse, is accused of criminal behavior where liability is extends up and down the

supply chain” (Spekman & Davis, 2004, p. 418).

Kytle and Ruggie (2005) suggested that ‘social risk’ is a growing area of concern for global corporations. The stakeholders can identify hidden supply chain vulnerabilities

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and put pressures on companies for behavioural change. Some of these risks directly impact on the performance and reputation of a company. For example, Nike faced significant stakeholder backlash and loss of reputation because of child labour practices in outsourced factories operating in the developing world (Kytle & Ruggie, 2005; Locke, 2002, 2013). More recently, consumers launched a strong campaign against Apple as a result of alleged labour issues such as long working hours and poor wages in the Foxconn city where most of the Apple products are manufactured (Foley, 2012). On the other hand, some scholars have also drawn attention to the indirect impacts of environmental issues on the supply chain of a company. Lee (2012, p. 44) noted that

“climate change issues have rapidly emerged as a new source of business risks and opportunities that could completely transform existing competitive environments”.

Climate change issues may lead to natural calamities such as fires, hurricanes, floods, droughts and storms, which disrupt or totally damage supply chain operations.

Internal Normative Motivators

Sustainability Values and Top Management Commitment

The support of senior management is a key factor in the successful introduction and

implementation of social or environmental programmes within a company’s SCM

operations (Ageron et al., 2011; Dey, LaGuardia, & Srinivasan, 2011; Green Jr et al., 2012; Haake & Seuring, 2009; Mont & Leire, 2009; Pagell & Wu, 2009; Routroy, 2009; Walker & Brammer, 2013; Wolf, 2011; Zhu, Sarkis, Cordeiro, & Lai, 2008). Thus, one of the prime reasons for managers to embrace SSCM strategy can be their social or environmental values (i.e. normative rationality).

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Value-based orientations – self-worth, integrity, pride and wellbeing of community (Jenkins, 2006; Ramus & Oppegaard, 2006) – guide managers to embrace corporate citizenship behaviour. Therefore, managers or owners initiate pro-environmental or social programmes within their companies (González-Benito & González-Benito, 2006). Scholars call this managerial orientation ‘ethical motives’ (Bansal & Roth, 2000)

or ‘a desire to do the right thing’ (Jenkins, 2006; Lieb & Lieb, 2010; Sharfman, Shaft, &

Anex Jr, 2009). Van Marrewijk (2003, p. 102) argued that caring and ethical behaviour

inspires companies to “go beyond legal compliance and beyond profit considerations.

The motivation for CS [corporate sustainability] is that human potential, social

responsibility and care for the plant are as such important”.

External Motivators

Corporate Reputation and Brand Value

Corporate brand value encompasses intangible assets such as reputation and customer loyalty (Dey et al., 2011). A review of the literature suggests that both sustainable and SSCM issues influence corporate reputation and brand value. In a recent survey of corporate leaders, students and NGOs, Ditlev-Simonsen and Midttun (2011) suggested branding and reputation-building as primary drivers for corporate responsibility. Poor environmental or social performance of a company can potentially harm business reputation, negatively impact employee morale, and damage sales and its corporate legitimacy and license to operate in the marketplace (DeSimone & Popoff, 2000). Conversely, a proactive response to sustainability issues helps a company maintain social legitimacy and develop healthy relationships with society, which in turn provides tangible and intangible benefits to a company (DeSimone & Popoff, 2000), including an increase in sales (Dey et al., 2011), reputational enhancement (Heikkurinen, 2010),

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strong brand image (Shekari & Rajabzadeh Ghatari, 2013) and product differentiation (Mahler, 2007).

Brady (2003, p.280) argued that “if companies align corporate values with those of their stakeholders and brand appropriately, they can extract considerable competitive

advantage (primarily enshrined in increased brand equity)”. In a similar vein, Roberts

(2003) suggested there is a strong relationship between reputation and the expectation of the supply chain stakeholders. For example, companies that implement reverse logistics strategy are able to enhance consumer satisfaction and loyalty, which leads to

customers’ willingness to pay more for its products (Hazen, Wu, Cegielski, Jones-

Farmer, & Hall, 2012). On the other hand, Andersen and Skjoett-Larsen (2009) claimed that image, reputation and brand protection are critical factors encouraging a company to adopt and implement codes of conduct in its global supply chain operations. Sarkis, Gonzalez-Torre, and Adenso-Diaz (2010) posited that good reputation can be a helpful tool that permits companies to negotiate future regulations with regulators and government agencies.

Customer Pressure/Expectation

Customers are the most influential business stakeholders, and their expectations must be taken into account when a company identifies its priorities, develops policies or implements a certain decision. By buying or boycotting a particular product or company, customers’ actions, behaviours, and preferences can impact the survival of a company in the marketplace (Collins, Steg, & Koning, 2007; Teuscher et al., 2006). According to Mahler (2007, p. 59), “companies and consumers realize that customers

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study, Trudel and Cotte (2009) found that on the one hand customers are willing to pay a price premium for ethically produced products. On the other hand, customers tend to punish those companies perceived as unethical or socially irresponsible.

Accordingly, a company’s financial performance is affected by consumer awareness of

where and under what conditions products are produced, which in turn influences their purchase decisions (Carter & Rogers, 2008). Furthermore, factors such as advancement in information and communication technologies, including the use of the internet and social media, have make it difficult and very risky for companies to hide their ethical or moral misconduct from the public, media and customers (Carter & Rogers, 2008; Dey et al., 2011). Against this background, customers’ expectations with regard to social and environmental transparency and performance are often cited as one of the primary factors for implementing SSCM practices (Barker & Zabinsky, 2010; Carter & Rogers, 2008).

Government Legislation and Regulation

A significant body of research has revealed that regulation and legislation act as a strong driver for the adoption of SSCM practices (Ageron et al., 2011; Berns et al., 2009; Doonan, Lanoie, & Laplante, 2005; Giunipero et al., 2012; Routroy, 2009; Schultmann et al., 2006; Zhu et al., 2008). Companies face stern legal penalties and fines for non- compliance to environmental or social regulations, which may negatively impact their performance. A recent example is the British Petroleum (BP) oil spill in the Gulf of Mexico, which severely impacted on the economic performance of the company. Gosden (2013) estimated that the BP oil spill cost more than $90 billion, including civil and criminal penalties, to the company. These penalties, fines and legal costs have

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caused many difficulties for BP in maintaining its economic performance. BP’s output

fell 5.7 percent over the few years and profits halved in 2012 when BP sold its assets to help pay for costs related to the disaster (Gosden, 2013). Dunphy (2011, p. 5) argued

that when the present state of “environmental crisis becomes widely accepted, governments are under pressure to lead in taking effective environmental actions”.

However, Walker et al. (2008) noted that environmental regulations play a significant role in the implementation of environmental practices, but these regulations are not a triggering factor. In their study, Barker and Zabinsky (2010) found government legislations a key motivator for companies to adopt a reverse logistics strategy in their operations. Conversely, González-Benito and González-Benito (2006) revealed that the pressures from government did not constitute a driver for sustainable purchasing. They further argued that government pressures promote observation of regulations, and thus

limit a company’s capability to develop innovative solutions for environmental issues.

Public and NGO’s Pressure

Public sentiment and NGO pressure may influence companies to adopt a SSCM strategy (Mont & Leire, 2009; Perez-Aleman & Sandilands, 2008; Sharfman et al., 2009; Teuscher et al., 2006). This is evident from a recent campaign launched by Greenpeace against Nestlé, blaming the company for sourcing unsustainable palm oil, which has led to rainforest deforestation issues (Wolf, 2014). Thus, it is well documented that contemporary civil society organizations such as NGOs and media exert an intense pressure on companies to upgrade their social and environmental performance by implementing SSCM strategy (Carbone, Moatti, & Wood, 2012; Peters, Hofstetter, & Hoffmann, 2011).

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2.4.3 Barriers for Implementation of SSCM Strategy