Copyright is owned by the Author of the thesis. Permission is given for a copy to be downloaded by an individual for the purpose of research and private study only. The thesis may not be reproduced elsewhere without the permission of the Author. Embedding Sustainability into Supply Chain Management: A New Zealand Perspective A thesis presented in partial fulfilment of the requirement for the degree of Doctor of Philosophy in Management At Massey University, Albany, Auckland, New Zealand. Aymen Sajjad 2015 i Embedding Sustainability into Supply Chain Management: A New Zealand Perspective Abstract Sustainable supply chain management (SSCM) refers to the integration of social, environmental and economic practices into supply chain management (SCM). Despite its increasing prominence both in academia and practice, there is a paucity of empirical research on SSCM. In particular, SSCM has not been adequately explored in New Zealand. To address this knowledge gap, this study empirically investigates why and how companies are integrating sustainability practices in their SCM. The study is positioned within an interpretive paradigm using a qualitative case study design, primarily drawing on the interview data from 23 New Zealand-based companies. This thesis comprises three empirical chapters. The first chapter examines the factors that motivate and inhibit companies to adopt SSCM strategy. The findings indicate that financial and operational efficiency, reputation/risk management, customer pressure and top management support are prime motivators for companies to embrace SSCM strategy. Conversely, economic difficulties, strategic/structural constraints, suppliers’ related issues, and inadequate customer demand are key obstacles encountered by companies in the successful implementation of SSCM strategy. The second chapter explores how companies govern their SCM activities with the aim of improving SSCM performance. The findings suggest that a company’s choice of an appropriate mechanism is determined by context-dependent factors such as perceived level of risk with suppliers, regulatory regimes and cultural differences. Based on the empirical findings, this chapter proposes a sustainable supply chain governance (SSCG) ii model that classifies companies’ SSCM progression into five stages based on two dimensions – corporate pro-sustainability orientation and SSCM maturity. The third chapter investigates how companies manage their green supply chain management (GSCM) issues. The findings indicate that the current focus of companies is on developing internal environmental performance that relates to their mid-stream SCM practices. At the external (upstream and downstream) SCM level, the implementation of environmental practices is relatively limited, and few companies are actively collaborating with supply chain partners in terms of developing their SSCM performance. Overall, the empirical findings of this study reveal that SSCM is relatively new but is evolving rapidly in New Zealand. This study contributes to theory by offering new insights regarding the integration of sustainability into SCM, suggesting that diligent and prudent management of SSCM can possibly lead to achieving competitive advantage1. In addition, this thesis explicates an integrative SSCM framework that provides new insights linking sustainability and SCM disciplines. Hence, this study has several implications for practitioners to adopt SSCM practices. First, businesses will learn (and benefit from) how to integrate different aspects of SSCM strategy into their overall business model, enabling them to reduce their business risk. Second, this study enables managerial understanding as to how their businesses can progress through the different stages of SSCM integration. The main limitation of this study is that the findings cannot be generalized to any specific industry or larger population. Future research should therefore focus on an industry-specific exploration of SSCM strategies, and also test the study’s findings in a large-scale survey. iii Acknowledgements First and foremost, I would like to praise and give thanks to Allah (Glory to Him, the Exalted) the most Gracious and the most Merciful for giving me the strength and perseverance to complete my PhD thesis. I would like to express my sincere gratitude to my chief supervisor, Associate Professor Gabriel Eweje, whose scholarly advice, emotional support and valuable feedback have given me much-needed inspiration and encouragement throughout my PhD journey. He has been a great motivator, and his never-ending support not only helped me to accomplish my PhD work but also enabled me to nurture my academic and professional career. I would like to acknowledge the invaluable guidance of my co-supervisor, Dr David Tappin, for his ongoing assistance, mentoring, insightful comments and thought- provoking ideas on my research work. I also extend my special appreciation to Associate Professor Lynn Geffrey for being a compassionate mentor and excellent teacher, especially in my post-graduate certificate studies. My greatest gratitude goes to my family for their unconditional support, love and care. I have no words to express my indebtedness to my parents (Abbu and Mama) for their unconditional love, affection and prayers, since my childhood, for me to succeed and flourish in my professional and social life. iv Special thanks go to my beloved wife for her unwavering love, support, sacrifice, understanding and patience. I also appreciate the persistent faith my siblings have in me. I owe gratitude to my lovely, sweet and charming kids, Ayesha, Hamza, Talal and Fatima for their hugs, patience and trust in their Baba (me). They have been a profound source of inspiration throughout my PhD journey. I dedicate this thesis to them. I appreciate the involvement of all the participants of this New Zealand study, who spared precious time from their busy schedules to take part in interviews. Without their help I would not have been able to gather data to complete my work. I am also grateful to my PhD colleagues and the academic and support staff of the School of Management of Massey University, and to my friends for their congeniality, encouragement and help in my times of need. Last but not least, I am indebted to the Higher Education Commission (HEC), Government of Pakistan, for funding my post-graduate certificate in business (a pathway to PhD study) and for providing a partial grant for my PhD study. I am also grateful to Massey University, New Zealand, for awarding me a vice chancellor doctoral scholarship for my PhD studies. Aymen Sajjad, 18 September 2015 v Related Publications Journal Articles and Book Chapters 1- Eweje, G & Sajjad, A (2015). Corporate greening – A conceptual analysis. Annual Book 2015 Sustainability and Strategy. Japan Forum of Business and Society, 95–117. 2- Sajjad, A; Eweje, G & Tappin, D (2015). Sustainable supply chain management: Motivators and barriers. Business Strategy and the Environment, 27(4), 643– 655. 3- Sajjad, A & Eweje, G (2014). Corporate social responsibility in Pakistan: Current trends and future directions. In G. Eweje (Ed.), Corporate social responsibility: Emerging trends in developing economies (pp. 163–190). Emerald Publishing Group. 4- Sajjad, A & Eweje, G (2013). Sustainable supply chain management: A conceptual framework. Meiji Business Review, 60(4), 53–74. Conference Presentations and Proceedings 1- Sajjad, A (2015, August). Embedding sustainability into supply chain management: A New Zealand perspective. Paper presented at the Massey Business School PhD Symposium, Palmerston North, New Zealand. 2- Sajjad, A & Eweje, G (2014, December). Motivators and barriers for sustainable supply chain management: A New Zealand Perspective. Paper presented at the 28th Australian and New Zealand Academy of Management (ANZAM), Sydney, Australia: University of Technology, Sydney. vi 3- Sajjad, A (2014, November). Sustainable and green supply chain practices: A case of New Zealand business sector. Paper presented at the Massey Business School PhD Symposium, Auckland, New Zealand. 4- Sajjad, A & Eweje, G (2014, August). Motivators and barriers to sustainable supply chain management: Empirical evidence from New Zealand. Paper presented at the First Annual Conference of the Global Corporate Governance Institute (GCGI), London, UK: University of Surrey. 5- Sajjad, A (2013, November). Trends in sustainable supply chain management: A New Zealand perspective. Paper presented at the Sustainability Conference 2013, Auckland, New Zealand: Massey University. 6- Sajjad, A (2013, November). Embedding sustainability into supply chain management: A New Zealand perspective. Paper presented at the PhD colloquium, sustainability conference 2013, Auckland, New Zealand: Massey University. 7- Sajjad, A (2011, December). Sustainable supply chain management: A qualitative inquiry of socially responsible New Zealand businesses. Paper presented at the ANZAM Doctoral Workshop, Wellington, New Zealand. 8- Sajjad, A (2011, October). Integrating sustainability into supply chain management: A New Zealand perspective. Paper presented at the 15th Annual Waikato Management School Student Research Conference, Hamilton, New Zealand. vii Tables of Contents Abstract …………………………………………………………………….……..…i Acknowledgements …...………………..……………………………………...…...iii Related Publications ………………………………………………………………..v List of Figures …………………………………………………..……….…..…….xii List of Tables ……………………………………………………………………..xiii Chapter 1 Introduction ….…………………………………….………...……......01 1.1 Background of the Study ...…………………………………...……....…..01 1.2 Justification for the Study ……………………………………...…,……...07 1.3 Research Objective, Goals and Questions ……………………………......10 1.4 Research Paradigm and Methodology …………………………...…….....12 1.5 The Significance of the Study ……………………………………..….….14 1.6 Working Terms ...……………………………………...…………..……...17 1.7 Thesis Structure ...……………………………………....…………..….…20 Chapter 2 Literature: Sustainable Supply Chain Management ...……….……23 2.1 Introduction ……………………………………………………....……....23 2.2 Sustainability ....………………………………….………………….…....24 2.2.1 Economic Aspects of Sustainability ……………………….……...27 2.2.2 Environmental Aspects of Sustainability ...…………………..……29 2.2.3 Social Aspects of Sustainability …………………….…………......31 2.2.4 Sustainability in New Zealand ….……………..………....……...…33 2.3 Supply Chain Management ...………………………………….………....38 viii 2.3.1 Defining the SCM Concept ….………………………..….…………41 2.3.2 Key Functional Areas of SCM Discipline …………...……….……..47 2.4 Linking Sustainability and SCM: Literature on SSCM ….……..........…...49 2.4.1 Classification of SSCM Research …..………..……………..……….51 2.4.2 Motivators for Implementation of SSCM Strategy ….…………....…54 2.4.3 Barriers for Implementation of SSCM Strategy ...……...……...…….63 2.4.4 Socially Responsible Supply Chain Management (SRSCM) ….….....67 2.4.5 Green Supply Chain Management …..………………...………..…....78 2.5. Conclusion ……..…………………………………………………..........89 Chapter 3 Research Methodology ..........................................................................91 3.1 Introduction………………….……………………………….…….…......91 3.2 Theoretical Framework …...………………………………….….….……92 3.2.1 Stakeholder Theory ……..….……………………………………..….95 3.2.2 Transaction Cost Economics Theory ………...…………………...….99 3.2.3 Contingency Theory ………...………………………………..….….101 3.3 Research Philosophy …..…………………………………………..……104 3.4 Research Strategy …………………………………………………...…..106 3.4.1 Research Approach – Inductive Reasoning ………………………....107 3.5 Case Study Design …..……………………………………………..…...109 3.5.1 The Application of Case Study Design in SSCM Research ……...…112 3.5.2 Case Selection – Sampling Procedure …….…………………….…..113 3.5.3 Multi-industry Design …….……………………………..…………..115 3.5.4 Data Collection Methods …………………………………..………..116 3.6 Data Analysis ……….…………………………………………….……..125 ix 3.7 Research Quality – Validity and Reliability Criteria …………..……….131 3.8 Ethical Considerations .............................................................................135 3.9 Conclusion ….……………………………………………………...……137 Chapter 4 SSCM: Motivators and Barriers ........................................................139 4.1 Introduction …………….………………………………………..……...139 4.2 SSCM Motivators ....................................................................................139 4.2.1 Internal Motivators ………..................................................................143 4.2.2 External Motivators ............................................................................152 4.3 SSCM Barriers .........................................................................................163 4.3.1 Internal Barriers ..................................................................................165 4.3.2 External Barriers .................................................................................173 4.4 Conclusion ...............................................................................................181 Chapter 5 Sustainable Supply Chain Governance ……………….….………...182 5.1 Introduction ……………………………….…………………..………...182 5.2 SSCM Policy ……………………………….……………….….……….182 5.3 SSCG Systems – Hands-off Approach …………………….…….…..…186 5.4 SSCG Systems – Hands-on Approach …………………………..……...195 5.4.1 Sustainable Procurement Process ...……….……………….….…….196 5.5 Sustainable Supply Chain governance (SSCG) Model ...….….….….…237 5.6 Conclusion ...………………………………………………...................251 Chapter 6 Green Supply Chain Management …………………………..……..253 6.1 Introduction …………………………………………….………..……...253 x 6.2 Overview of the Chapter ……………………………….………..……...254 6.3 GSCM Initiatives, Strategies and Performance Outcomes ……..………258 6.3.1 Green Product Design and LCA ….……………………………..…..258 6.3.2 Green Procurement ……………….…………………………..……..262 6.3.3 Green Operations and Manufacturing Management (GOMM) …..…265 6.3.4 Green Logistics and Distribution Management …………...……...…285 6.4 Conclusion …………………………………………………………..….295 Chapter 7 Discussion …………………………………………………..…….…..297 7.1 Introduction ………………………………………………………...…...297 7.2 SSCM – Motivators and Barriers …………………………………….....297 7.3 Sustainable Supply Chain Governance …………………………..……..302 7.4 Green Supply Chain Management ……………………………….…….312 7.5 An Integrative SSCM Framework ……………………………….…….314 7.6 Conclusion ……………………………………………………….….…317 Chapter 8 Conclusion …………………………………………….……….….….319 8.1 Introduction ………………………………………………..…………....319 8.2 Overview of the Study ……………………………………….…….…...319 8.2 Research Findings …………………………………………….…….…..320 8.2.1 SSCM – Motivators and Barriers …………………………..…….….321 8.2.1 Sustainable Supply Chain Governance ……………………….….….322 8.2.3 Green Supply Chain Management ………………………….….……323 8.3 Theoretical Implications …………………………………………..…….323 8.4 Practical Implications ……………………………………………..….…324 xi 8.5 Limitation of the Study …………………………………………..……...327 8.6 Suggestions for Future Research ……………………………..…….…...329 8.7 Researcher’s Reflections ………………………...………….…….…….332 8.8 Concluding Remarks …………………………………………..…….….333 Notes……………………………………………………………………………….335 References ………………………………………………………………..…….....336 Appendix 1 – Interview Guide ……………………………………………..…....398 Appendix 2 – Ethics Approval Letter ……………………………………..……400 Appendix 3 – Information Sheet ……………………………………………..…401 Appendix 4 –Invitation Letter ………………………………………………......403 Appendix 5 –Consent Form ………………………………………………..…....404 Appendix 6 – Sustainable Supply Chain Governance Criteria …………..…...405 xii List of Figures Figure 2.1. Types of channel relationships ..………………………………………40 Figure 2.2. Matrix for multi-level studies conducted for SSCM ..……………….53 Figure 3.1. Research process ………………………………………………………91 Figure 3.2.Theoretical framework ………………………………………………...93 Figure 4.1. SSCM motivators …………………………………………………….162 Figure 4.2. SSCM barriers ……………………………………………………….180 Figure 5.1. Sustainable procurement process …………………………………...196 Figure 5.2. Sustainable supply chain governance (SSCG) model …………...…239 Figure 5.3. SSCG mapping ……………………………………………………….250 Figure 7.1. An integrative SSCM framework …………………………………...315 xiii List of Tables Table 1.1. The key goals of the study..………...……………………………………11 Table 3.1. Major differences between deductive and inductive approaches to research ……………………………………………………………………………109 Table 3.2. Case profiles …………………………………………………………...117 Table 3.3. Participant profile …………….………………………………………124 Table 3.4. Criteria for research quality …………………………………………132 Table 4.1. Frequency of SSCM motivators ……………………………………...142 Table 4.2. Frequency of SSCM barriers …...……………………………………164 Table 6.1. Distribution of GSCM practices adoption in the sample companies …....…………………………………………………………………………………256