Case Scm German Mfg Industry

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performance (Christopher and Ryals, 1999 ; Cochranand Wood, 1984 ; Epstein and Roy, 2003 ; Klassenand McLaughlin, 1996 ; Li et al., 2006 ; Porter andKramer, 2006 ). The literature has dealt with multi-ple issues: green product development (Chialin,2001 ), green purchasing (Chen, 2005 ), ethicalsourcing (Roberts, 2003 ), sustainable transportation(Murphy and Poist, 2000 ; Murphy et al., 1996 ),sustainable operations and production (Kleindorfer et al., 2005 ), issues related to governance andreporting (Hervani et al., 2005 ; Keating et al., 2008 ;Tate et al., 2010 ) and product carbon management(McKinnon, 2010 ). Most of this research has beenfragmented and considered single activities in isola-tion (Svensson, 2007 ). Recently, research on SSCM

started to integrate the supplier perspective (Foerstlet al., 2010 ; Pullman et al., 2009 ) but such ap-proaches are still scarce (see also the critique putforward by Svensson, 2007 ). There is far less researchthat addresses the relationship between a rms sus-tainability strategy, its internal integration in form of supply chain sustainability strategy and the externalintegration with customers and suppliers (Keatinget al., 2008 ; Pagell and Wu, 2009 ; Seuring andMu ller, 2008 ; Svensson, 2007 ). Such an integrativeperspective appears to have the potential to improveefforts in making supply chains more sustainable.Applying the concept of integration to sustainabilitymay help us to better understand the practices whichmake supply chains more sustainable and to assess theimpact of such activities on sustainability perfor-mance. To the best of the authors knowledge, thereis no earlier research that has tried to do this.

The overall objective of the present research is tocontribute to closing this gap in literature by pro-viding a coherent and testable model of sustainablesupply chain management integration (SSCMI). Bydrawing on traditional supply chain integration lit-

erature and the insights gained from four case studiesof the German manufacturing industry, we seek toidentify the most important factors that enable or impede the integration of sustainability in SCM.

Literature review

The concept of supply chain integration asserts thatthe objectives of different functional areas andpartners in a supply chain need to be arranged

according to the same set of objectives in order todeliver the highest value to the customer. Poorlymanaged supply chains are characterized by one or more value creating processes working at crosspurposes to other processes (Pagell, 2004 ). Flynndenes supply chain integration as the degree towhich a manufacturer strategically collaborates withits supply chain partners and collaboratively managesintra- and inter-organization processes. The goal isto achieve effective and efcient ows of productsand services, information, capital and decisions, toprovide maximum value to the customer (Flynnet al., 2010 ). The question is how this denitionneeds to be modied to include sustainability.

There is empirical evidence that customers

increasingly want to understand the conditions un-der which products have been produced (Gonza lez-Benito and Gonzalez-Benito, 2006b ; Locke andRomis, 2007 ; Locke et al., 2007a , b) and desireproducts that have been produced in an environ-mentally sustainable way (Collins et al., 2007 ). Inaddition, stakeholder theory (Freeman, 1984 , 2004 ,2005 ) asserts that rms should not only seek to satisfycustomer needs but also the expectations of other stakeholder groups. Governmental organizations andnon-governmental organizations (NGOs) have beenfound to be the most important drivers for theadoption of sustainability strategies for corporaterms (Gonzalez-Benito and Gonza lez-Benito, 2005a ,b, 2006a , b, 2008 , 2010 ; Sharma and Vredenburg,1998 ). Firms need to understand these expectations inorder to dene appropriate sustainability goals andstrategies at the corporate level. It will be essential for rms to break down the corporate sustainabilitystrategy into appropriate supply chain sustainabilitystrategies to achieve maximum performance. For example, Hayes and Wheelwright ( 1984 ) assert that abusiness strategy needs to be supported by various

functional strategies which are internally consistent.This consistency allows the rm to be competitive(Hayes and Wheelwright, 1984 ). Applying this tosustainability suggests that the goal of sustainablesupplychain integration is to achieve sustainableowsof products, services, information and capital to pro-vide maximum value to all corporate stakeholders.

Integration can be studied at two different levels.Internal integration examines integration betweendifferent areas of the same organization, whereas exter-nal integration analyzes integration at the interface of

222 Julia Wolf
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different organizations (Flynn et al., 2010 ). Pagell(2004 ) suggests that aligning performance measure-ment and reward systems, organizational structures,and information and communication pro-cesses is among themost important determinant factor for successful internal integration between the cor-porate and thesupply chain level. External integrationmay cover both the upstream and downstream supplychain. Stakeholder theory (Freeman, 1984 , 2004 ,2005 ) suggests that any stakeholder should be inte-grated that is affected by the rms operations. Theexpectations of stakeholders are those of downstreamsupply chain partners. They should be integrated intoSSCM strategy formulation and then be transferred tothe upstream supply chain in the stages of supply chain

partner selection (Jiang, 2009 ), relationship manage-ment (Reuter et al., 2010 ) and performance man-agement (de Brito et al., 2008 ). The underlyingassumption is that increased integration leads to better performance (Narasimhan and Wook, 2001 ).

It seems close at hand to simply transfer existingknowledge of supply chain integration to sustain-ability. However, if this would be the perfect solu-tion, why can we observe so many practical caseswhere this does not hold true? We believe that thelack of supply chain sustainability integration is partlydue to a lack of knowledge as to how internal andexternal integrations of sustainability can be achieved.Furthermore, we contend that it will be essential for rms to not only integrate immediate tier-1 suppliersinto sustainability strategies, but to extend these totier-2 to tier- n. This increased degree of complexityhas been insufciently addressed in earlier supplychain integration literature.

For the purposes of this article, we dene supplychain sustainability integration as the degree towhich a manufacturer strategically collaborates withits supply chain partners and collaboratively manages

intra- and inter-organization processes for sustain-ability. The goal is to achieve economic, environ-mental and social sustainability by integrating owsof products and services, information, capital anddecisions, to provide maximum value to multiplestakeholder groups. In the following section, weprovide a model of SSCMI which identies thefactors that support or impede integration. This lit-erature review served to identify a general theoret-ical model (Figure 1) to be assessed in the subsequentdiscussion.

Methodology

The goal of this research is to develop a conceptualtheoretical model of SSCMI that enables futureempirical testing. According to Eisenhardt, the casestudy logic is an appropriate methodology for anyresearch targeted at theory development (Eisenhardt,1989 ). For this reason, an exploratory researchdesign, using qualitative information from four casestudies, was adopted. Siggelkow ( 2007 ) suggests thatresearch, which is based on inductive theory build-ing, can be based on a limited number of cases,provided that the conceptual argumentation isplausible and the cases are used as additional justi-cation for argumentation (Siggelkow, 2007 ). Sincewe were interested in understanding how traditionalsupply chain integration differs from sustainabilityintegration, the two key dimensions to be consid-ered for case selection were rm experience insupply chain integration and in sustainability. Wechose four cases from four different industrial sectors

of the German manufacturing industry based onthese selection criteria. PharmaChem and Apparel-Comp have received numerous rewards and havebeen recognized in sustainability rankings for their sustainability efforts. In addition, we identied tworms from newspaper and business press articles,which are renowned for their supply chain integra-tion activities: ApparelComp and FoodFirm. Thistheoretically guided approach to case study selectioncontributes to the external validity and generaliz-ability of ndings (Gibbert et al., 2008 ; Numagami,

Internal Integration

External UpstreamSupply Chain Integration

External DownstreamSupply Chain Integration

SustainableSupply Chain

Integration

Figure 1. Model of SSCMI based on prior literature.

223Sustainable Supply Chain Management Integration
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1998 ; Yin, 2002 ). Figure 2 summarizes the samplingstrategy and sampled rms.

Multiple data sources, combining primary inter-view data and secondary archival data, were used for the development of a case study database (Eisen-hardt, 1989 ; Yin, 2002 ). The interview partnerswere senior managers and responsible for translatingcorporate sustainability strategies into supply chainstrategies. Interviews lasted between 30 min and 2 h.Each interview was conducted by two researchers:the main researcher, who participated in all inter-views, and a second researcher, who differed for each case company. We used a structured interviewprotocol at each visit which is included in theAppendix . Interviews were tape-recorded and

transcribed in their entirety. We employed eldnotes taken during and directly after the interview asa primary information source. Further informationwas collected from secondary data sources, such ascompany reports, information on sustainability andcorporate social responsibility strategies from cor-porate websites, supplier codes of conduct whereavailable, and other material that interview partnerswere willing to share. This triangulation of primaryinterview data and secondary data sources increasesreliability and internal validity of research ndings(Yin, 2002 ).

Qualitative data were analyzed using a groundedtheory approach (Glaser and Strauss, 1967 ; Miles andHuberman, 1994 ). Within-case analysis supported usin understanding sustainable supply chain integrationin a specic context. The objective of within-caseanalysis was to identify key factors that enable andinhibit the level of interaction and coordinationacross different functional areas and with key

external stakeholders. These factors were compiledand presented in a table, which displays the con-structs and their direction of inuence on sustainablesupply chain integration at each sample rm. Thistable helps to condense the cases to their key ele-ments. Table I provides one example of the initialtable that was constructed for FoodFirm. In addition,we created maps of each case to achieve a pre-liminary understanding of how these constructsrelate to each other and to sustainable supply chainintegration. The map for PharmaChem is displayedin Figure 3.

Cross-case analysis was conducted in order tomove from the four specic cases to the identica-tion of a general model of sustainable supply chain

integration across all four cases. The second stepenabled the investigation of whether and to whatextent elements of interest in one setting are repli-cable in other settings (Miles and Huberman, 1994 ; Yin, 2002 ). The objective of this process was toidentify patterns across case examples. Tables, such asTable I for FoodFirm, were generated for each caserm. The factors that enable and inhibit sustainablesupply chain integration for each sample rm werethen extracted from the individual case setting andgrouped around constructs. Cross-case analysisrearranges information from a case-by-case format toa construct-by-construct format (Miles and Huber-man, 1994 ). For example, all items identied at thesingle case level on internal organizational structureswere combined in one construct for organization.This second step of the research required severaliterations. Our emphasis was on being both parsi-monious and complete. In the course of theresearch, we were able to identify ve factors centralfactors that enable or inhibit SSCMI.

Results

Strategic internal integration

Prior research on strategy dened it as a set of decisions and activities directed towards the achieve-ment of a specic goal (Mintzberg and Waters, 1985 ;Porter, 1998 ). Following this school of thought,rms ought to dene precise strategic goals anddirect all strategic decisions and organizationalstructures towards the most efcient and effective

CarComp PharmaChem

FoodFirm ApparelComp

Renonwnedfor sustainability

no yes

R e n o n w n e d

f o r

S C i n t e g r a

t i o n

n o

y e s

Figure 2. Sample rms.

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achievement of these goals. This implies that cor-porate strategic goals need to be integrated intofunctional strategic goals (Mintzberg, 1979 ). How-ever, we could not nd a clear supply chain sus-tainability strategy that was integrated into a broader corporate sustainability strategy at any of the samplerms. All case companies issued some form of asustainability report, which was more or less anoverview of activities in the areas of environmentalprotection and social responsibility. Three of thefour companies included a collection of sustainability

performance metrics and information about howthese gures had improved in the past. The inter-view partners of all case companies reported a lack of integration of corporate sustainability strategieswith functional and, in particular, supply chain sus-tainability strategies. The impact of this lack of integration differed among rms. At CarComp,interviewees felt that this lack of integration inhib-ited sustainable supply chain integration. Here,employees felt that they could not engage in anyform of activities or invest in the development of

TABLE I

Factors that enable and inhibit sustainable supply chain integration at FoodFirm

Construct Impact Note

Internal integrationGoal setting Negative Formulation of sustainability goals at corporate level vague; no goals

formulated for different functional areasOrganizational structureleaves initiative tofunction

Positive Motivates and inspires; employees are empowered with responsibility

Limited communicationbetween functions

Negative SCM perceives a need to integrate other functions, such as Marketing,to achieve better results

Limited availability of data and information onsustainability

Negative Perceived lack of substantiated basis for decision making; lack of information both internally (within rm) and externally (customersand suppliers)

Lack of additionalhuman resources Negative SCM employees burdened with sustainability issues in addition totheir daily workLeadershipcommitment

Positive Employees perceive strong moral support from superiors despite thelack of guidance in terms of key gures

External downstream supply chain integrationInteraction withconsumers

Neutral SCM is unsure whether sustainability should be a strategic goal of therm per se or whether sustainability is something valuable in the eyesof consumers

Interaction with NGOs Positive Pressure exerted by NGOs is perceived as very strong; leads tonumerous supply chain risk management activities

Interaction with other stakeholders

Positive Serves to better understand needs and expectations

External upstream supply chain integrationSource situation Negative Single source situation leaves limited room for manoeuvringSupplier selection Positive Sustainability objectives can easily be integrated into existing supplier

selection mechanisms (e.g. audits, certication)Supplier relationshipmanagement

Positive/neutral Pilot projects with selected suppliers; perceived dependenceon suppliers willingness to share information

Supplier performancemeasurement

Neutral No tracking of environmental and social performance measures;contribution of SCM unclear

Limited integration of tier-2 to tier- n supplychain partners

Negative No transparency of who these supply chain partners are and how theywork; SCM might be held accountable for things that may happensout of its control

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sustainability structures without having a clear signfrom top management that these were in line withcorporate strategy. In contrast, interviewees atFoodFirm perceived the lack of a clear supply chainsustainability strategy as an opportunity to realizeown ideas and to assume an active role in settingstandards. The informants felt that these ideas, oncedened, would be approved by top managementbecause the leadership team encourages efforts insustainability without setting limitations on activities.This strongly motivates employees within the supplychain function. A similar motivation was expressedby interviewees of PharmaChem and ApparelComp.ApparelComps focus is on continuously decreasingthe corporate environmental footprint. In order toachieve this goal, ApparelComp sets similar targets to

its suppliers. CarComp strives to become the pro-ducer of a car with the least amount of emissions.PharmaChem aspires in becoming the leader inenvironmental sustainability in its industrial sector.Therefore, all rms have clear and ambitious sus-tainability goals, but they adopt different strate-gies for internal implementation. The sustainabilitystrategies of the case companies rather resembled theschool of Hamel and Prahalad ( 1993 ), who per-ceived strategy as stretch. The principle of stretchrequests the active creation of a mist between an

organizations resources and its aspirations. Highaspirations unleash potential within an organizationthat might not have been discovered otherwise(Hamel and Prahalad, 1993 ). Findings from the casecompanies suggest that supply chain sustainabilityintegration is stronger when corporate sustainabilitystrategies leave supply chain decision makers roomto manoeuvre.

Organizational internal integration

According to Mintzberg, an organization is denedas the set of mechanisms by which a rm organizesits activities and the parameters it uses to design itsstructures (Mintzberg, 1979 ). The organizational

structures used to integrate sustainability internallyvaried strongly across the sample rms. CarCompinstalled one entity at the central level which was incharge of sustainability. Although this unit wasperceived as highly efcient, interview partners ex-pressed some concerns. They were afraid that allsustainability matters would be delegated to thisentity, while they asserted that sustainability shouldbe the responsibility of everyone. PharmaChememphasized sustainability risk mitigation. This wasassociated with additional work and interviewees felt

Corporate SustainabilityStrategy

Focus on emissions andsecurity

Supply Chain SustainabilityStrategy

Focus on productavailability and security

Sustainability PerformanceRisk mitigation

External StakeholderIntegration

ActivitiesStakeholder dialogues

Enablers (+)Market position

Inhibitors (-)Willingness to pay for

sustainability

Expectations do not matchbuying behavior

Risk from adverse actionof NGOs

Internal Integration ActivitiesSustainability risk

management Enablers (+)Sustainability trainingGoal alignmentAdditional human

resources

Inhibitors (-)Disconnect on incentivesKnowledge

External SupplierIntegration

ActivitiesAudits

Enablers (+)Market positionInformation sharingThird party certification

Inhibitors (-)

Disconnect on costsDisconnect on time

requirements

Figure 3. Map of SSCMI of PharmaChem.

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that this burden could not be allocated to employeesin addition to their regular work. For this reason,PharmaChem set up an additional central unit whichis in charge of sustainable supply chain risk man-agement. This organizational structure allows for building up and storing expert know-how at thecentral level, which the decentralized level couldonly extend with difculty. Information technol-ogy structures were adapted correspondingly, i.e.employees at the central unit receive automaticinformation about potential sustainability risks in thesupply chain without additional workload for supplychain employees. Although supply chain employeesperceived this organization as highly efcient, theyalso recognized that this risked decreasing the

opportunities for others to contribute to sustain-ability. ApparelComp integrated sustainability objec-tives into classical performance measurement andreward systems. Individual supply chain employeesand their supervisors determined a certain share of their variable pay component which was allocated tothe realization of a sustainability project. The inter-viewees perceived this very positively but, at thesame time, expressed some concerns because sus-tainability projects are normally team projects butincentives were not aligned across teams. At the timeof data collection, FoodFirm was still about to deneits supply chain sustainability strategy. Similar toPharmaChem, FoodFirm felt it needed additionalhuman resources to be able to handle the workloadassociated with sustainability. The rm had justcreated a new job position for which it had searchedfor someone with experience in sustainability, incontrast to experience in SCM. The task of thisperson will be to help dene the supply chain sus-tainability strategy and then support the rm inredesigning its internal supply chain structures tooptimally realize the strategy. Findings from the cases

suggest that sustainable supply chain integration atthe central level reduces costs but decreases its im-pact. The ApparelComp case reveals that higher levels of sustainable supply chain integration can beachieved if responsibility is shared across functions.The cases provide some weak support of the asser-tion that well-designed performance measurementand incentive systems lead to higher levels of sus-tainability integration. In contrast, incentive systemsthat foster competition between functions seem toinhibit sustainability integration. While information

technology seems to be an important carrier of information on sustainability, the interview part-ners perceived that it was not a central factor for enablement or inhibition of sustainability.

External stakeholder integration of downstream supplychain partners

A stakeholder of a rm is any person or entity whocan affect or may be affected by the operations of therm (Clifton and Amran, 2011 ; Freeman, 1984 ,2004 , 2005 ). Stakeholders may include NGOs,regulators, customers or local communities. Earlier empirical research has demonstrated that the per-

ceived pressure of such stakeholder groups is onefactor that inuences the adoption of supply chainsustainability strategies by rms (Carter, 2000 ; Carter and Jennings, 2002a , b, 2004 ). Data from the casecompanies suggest that the mere perceived pressureis only one of the factors that lead to sustainablesupply chain integration. Respondents from all caserms felt this pressure but were unsure about what itactually meant. Three of the four rms reported thatthey perceive that their customers expected sus-tainability but were uncertain about their willingnessto pay higher prices for sustainable products. Theappropriate strategic direction was also not nal atthese rms. PharmaChem perceived a strong risk of being publicly accused by NGOs for non-sustainablebusiness practices along their upstream value chain.As a consequence, the rm adopted a supply chainsustainability strategy focused on risk prevention andmitigation, and has invested substantial human andnancial resources into this strategy. CarCompreported an increased share of customers, whorequested that the rm contractually conrm that allproducts were produced under environmentally and

socially responsible conditions. This led CarComp tointegrate similar requirements into its own supplier contracts. FoodFirm collected information aboutstakeholders sustainability expectations. It foundthat consumers expect sustainable products but werenot willing to accept a price premium for these.ApparelComp engages in diverse forms of stake-holder dialogues to explore the expectations of multiple stakeholder groups in terms of sustainability.Although external stakeholder pressure is a driver for the adoption of SSCM strategies, the insights from

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the case studies suggests that a rms competence inintegrating diverse stakeholder groups into strategyformulation provides for appropriate focus anddirection. This competence involves the ability toestablish trust-based, collaborative relationships witha variety of stakeholders, in particular those withnoneconomic goals (Sharma and Vredenburg,1998 ). According to our data, perceived pressure isnot enough for successful sustainability implemen-tation. Rather, rms need to understand moreprecisely the nature and range of stakeholder expectations to design appropriate strategies. Thekey implication here is that the information gainedfrom stakeholders needs to be integrated intostrategy formulation and included in communica-

tion channels throughout the supply chain.Therefore, rms need to develop capabilities instakeholder integration.

External integration of upstream supply chain partners

External integration of upstream supply chain part-ners recognizes the importance of establishing close,interactive relationships with suppliers (Flynn et al.,2010 ). Earlier research suggests that supplier integra-tion involves core competencies related to coordi-nation with critical suppliers (Bowersox et al., 1999 ).We have found similar approaches among the caserms and the objective to structure inter-organiza-tional sustainability strategies, practices and processes.FoodFirm and CarComp work with strategic sup-pliers in the area of sustainability. For both rms, theobjective is to generate product and process innova-tions in sustainability. For example, CarComp seeksto develop automotive vehicles that cause a minimumof carbon emissions throughout their lifecycle. Therm integrates key suppliers into product develop-

ment teams. In addition, both rms ask their criticalsuppliers to share information on sustainability. For example, FoodFirm asks strategic suppliersabout their energy usage and water consumption levels in pro-duction. However, in both cases, information systemsand processes have not been aligned in order toautomatically track such information. In addition,interview partners mentioned that the degree of information provided depends on the supplierswillingness to share this information. Findings fromthese two cases suggest that the level of sustainability

integration is lower than that which could be found inearlier research for classical supply chain integration(Flynn et al., 2010 ). The strong emphasis of Phar-maChem on risk mitigation results in a concentrationon commodity suppliers. This rm nds that thehighest sustainability risks are with those suppliers thatare not very well known. For such suppliers, Phar-maChem performed additional processes in order totrack relevant information on potential sustainabilityrisks that might arise. In addition, it adjusted infor-mation systems. For example, PharmaChem denedcertain risk classication indices. Once a supplier fallsunder certain criteria, there is an automatic alert.Findings from this case suggest that sustainabilityintegration, in terms of risk management, goes be-

yond traditional supply chain integration to includeall suppliers and only the most strategic ones.ApparelComp seeks to asses the environmental im-pact of its products throughout their lifecycle andexplicitly includes all suppliers, from tier-1 to tier-n. The suppliers are asked to provide information onkey sustainability areas, such as the amount of carbonemissions for production. ApparelComp receivesinformation from tier- n suppliers through its contactswith tier-1 suppliers. If a tier- n supplier cannot pro-vide the requested information, either the tier-1supplier provides support to the tier- n supplier, or tier-1 suppliers provide ApparelComp with completecontact information, and ApparelComp solves theproblem directly. Thus, ApparelComp has adjustedoperational processes and information ows to sup-port sustainability. In addition,ApparelComp seeks toensure the long-term survival of its upstream supplychain partners. In order to do so, it requests economicperformance information across multiple supply chaintiers. The objective is to understand the wealth dis-tribution across the entire chain in order to ensure thelong-term economic protability of all its supply

chain partners. Classical supply chain integration seeksto achieve effectiveandefcientows of products andservices, information and capital, to provide maxi-mum value to the customer at low cost and high speed(Bowersox et al., 1999 ; Flynn et al., 2010 ; Frohlichand Westbrook, 2001 ). Findings from ApparelCompsuggest that sustainability integration also encom-passes equal distribution of capital to provide long-term business continuity of all supply chain partnersinvolved. This is an extension of classical supply chainintegration.

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Sustainability performance

It has been argued that internal integration con-tributes to operational performance because it breaksdown functional barriers and engenders cooperationto meet customer requirements (Flynn et al., 2010 ).In addition, there is evidence that internal integra-tion positively relates to business performance, for example, through improved product innovation(Koufteros et al., 2005 ). External integration withcustomers offers opportunity to better understandcustomer expectations and their needs (Song and DiBenedetto, 2008 ). The exchange of informationwith suppliers has been claimed to improve per-formance because of more accurate production and

delivery plans (Flynn et al., 2010 ; Koufteros et al.,2005 ). Sustainability performance is more complexthan traditional economic performance for threereasons. First, it adds two additional dimensions toclassical economic performance: social and envi-ronmental performance (Epstein and Roy, 2003 ).Second, performance is not only measured in termsof customer expectations but in terms of multiplestakeholder group expectations (Freeman, 1984 ,2004 , 2005 ). Third, it requests information trans-parency across multiple upstream supply chain tiersthat are normally out of the control of the manu-facturer (Amaeshi et al., 2008 ). All sample rms hadproblems in understanding and assessing the con-tribution that sustainable supply chain integrationhas on sustainability performance. PharmaChem andApparelComp altered internal performance evalua-tion and incentive schemes that integrated sustain-ability goals. However, both only concentrated onone aspect of sustainability, environmental or social,not both. In terms of external stakeholder integra-tion, FoodFirm relied on publicly available data,such as the Dow Jones Sustainability Index, and

benchmark reports to assess its performance inrelation to competitors. ApparelComp collectedsome information on environmental sustainabilityfrom its upstream supply chain partners, but thisinformation was collected for a specic projectpurpose and was not a regular activity. All rmscollect some information on the sustainability per-formance of their supply chain partners at the initialphase of supplier selection but, normally, thisinformation is not regularly updated. Most interviewpartners pointed to a perceived gap between the

costs incurred for sustainable supply chain integra-tion and customers unwillingness to accept higher prices. They felt that this had a negative effect ontheir sustainability initiatives. This issue points to apotential negative relationship between economicperformance on the one hand and social and envi-ronmental performance on the other. The samplerms were just about to explore appropriate per-formance measures and quantifying the impact of different activities on sustainability performance atthe corporate and supply chain level. At this stage, itseems too early to draw any valid conclusions on theperformance contribution of sustainable supplychain integration.

Discussion

The data were collected and analyzed with theobjective of furthering our understanding of thefactors that enable and inhibit sustainable supplychain integration. The ndings suggest that inte-gration for sustainability complements traditionalSCM integration in several ways. The ability todevelop a more sustainable supply chain has beenlinked to a more ne-grained understanding of

expectations of multiple external stakeholder groups,as opposed to a mere understanding of customer expectations. Earlier research perceived stakeholder expectations in the form of pressure (Gonza lez-Benito and Gonza lez-Benito, 2006b , 2010 ; Preuss,2009 ; Sarkis et al., 2010 ). Our ndings reveal a morepositive picture of external stakeholders. We urgeorganizations to closely collaborate with multiplestakeholder groups in order to fully recognize thediversity of their expectations and to translate theminto appropriate strategies.

Proposition 1: Stakeholder integration capability isrequired for sustainable supply chain managementintegration.

In terms of internal integration for sustainability,two factors emerge from the data: strategy andorganization. The importance of leadership supportfor successful sustainability strategies has beenstressed in earlier research (Carter and Rogers,2008 ; Pagell, 2004 ; Pagell and Wu, 2009 ). How-ever, whereas prior research asserts that leadership

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support is one important element of a wholebundle of effective sustainability strategies, our ndings suggest that leadership support can evencompensate for a lack of clear sustainability goalsand direction. Furthermore, insights from the casestudies suggest that sustainability strategies are mostefcient when they create a strong stretch betweenwhat a rm can actually do in terms of existingresources and its aspirations. High aspirations appear to support and motivate employees to fully tap their potential. Finally, organizations need to deneappropriate sustainability performance measures tomonitor progress.

Proposition 2: A sustainability strategy and appropri-ate performance measures are required for sustain-able supply chain management integration.Proposition 2a: Leadership support is required for sustainable supply chain management integration.Proposition 2b: Strategic stretch between resourcesand aspirations supports sustainable supply chainmanagement integration.

In all sample rms, we found evidence that aperceived gap of experience and knowledge of sus-tainability impeded its implementation. Elements,such as creating new job positions, investing intraining, and relying on external expert advice, seemto be linked to SSCMI.

Proposition 3: Investment in additional human re-sources and the development of expert know-howare required for sustainable supply chain manage-ment integration.

The patterns for internal organizational integra-tion of sustainability into SCM are similar to those of traditional SCM integration. The cases providesupport for the hypothesis that process thinking isnecessary to overcome functional silos. Responsi-bility for sustainability should be shared acrossfunctions in order to achieve best results. In addi-tion, it seems to be appropriate to integrate sus-tainability objectives into performance assessmentschemes. In contrast, information technology inte-gration across functions and across businesses doesnot seem to play such a strong role for sustainabilityas it does for other forms of internal integration(Flynn et al., 2010 ).

Proposition 4: Internal procedural integration sup-ports sustainable supply chain management integra-tion.Proposition 4a: Internal procedural integration is

evidenced by sharing responsibility for sustainabilityacross functions.Proposition 4b: Internal procedural integration isevidenced by an alignment of incentive and rewardsystems.

Traditional SCM integration has been conceptu-alized as strategic cooperation with key suppliers(Flynn et al., 2010 ; Kraljic, 1984 ). The ndings fromthe case rms differ from this conception in severalways. First, the practices of integrating suppliers gobeyond the tier-1 level to include tier- n suppliers.Second, SSCMI does not only concentrate on stra-tegic suppliers, but seems to include all suppliers even commodity suppliers. All case rms integratedsustainability into all central elements of supplymanagement processes. At the supplier selectionstage, rms asked for information about past expe-rience in sustainability, either evidenced by dedi-cated certications or through site visits. Mostsample rms integrated suppliers into developmentprocesses to create new, more sustainable productsand processes. All sample rms tried to measure the

sustainability performance of their suppliers and sub-suppliers but lacked an understanding of how to bestdene such measures and collect the information inan efcient and effective way. Classical SCM inte-gration normally does not include risk managementbecause presumably supply risks are more likely tooccur within non-strategic suppliers, which are notin the focus of traditional SCM integration. Theintegration of all suppliers in sustainability effortsseem to lead to a stronger emphasis of risk man-agement. Findings from the cases suggest that riskmanagement is an integral part of SSCMI.

Proposition 5 : Close supplier relationships with allsuppliers at all levels support sustainable supply chainmanagement integration.Proposition 5a: Close supplier relationship practicesare evidenced by joint creation of sustainable prod-uct and process innovations.Proposition 5b: Close supplier relationship practicesare evidenced by the integration of sustainability into

230 Julia Wolf
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all key interaction processes from strategy formula-tion to performance measurement.Proposition 5c : Sustainability risk management is acentral element of sustainable supply chain man-agement integration.

The ndings from the cases enable only limitedconclusion about the performance impact of SSCMI. The data suggest that rms believe in apositive impact but have difculties in its quanti-

cation. All rms felt that the engagement in sus-tainability is cost intensive and requires a large sumof investment in human resources, time and tech-nology. Therefore, if the impact of SSCMI is sup-posed to be positive, the result of these activitiesshould at least compensate for their costs. Our ndings are summarized in Figure 4.

Our results have implications for both researchand practice. Based on our ndings, decision makersin SCM will need to integrate external upstream and

downstream supply chain partners and internalprocesses to create more sustainable supply chains.Thus, this research supports practitioners with abetter understanding of how to dene and imple-ment SSCM strategies. Furthermore, this researchcontributes to the SSCM body of knowledge byadding a conceptual model of SSCMI.

The research also has some limitations. Our sample covered rms from the German manufac-turing industry. Future research should collect

information from rms from other countries andindustrial sectors to explore whether and to whatextent geographic location and industrial sector inuence the ndings. Moreover, we collectedinformation from interview partners at the samplerms only. The analysis would prot from morediverse viewpoints, such as the perspective of suppliers, NGOs and other groups. Finally, futureresearchers may use the proposed theoreticalframework for empirical testing. The collection of

Understand expectationsof multiple stakeholder groups

Integrate expectationsinto SSCM decisionmaking

Strategy IntegrationFoster leadership supportCreate stretch between resources

and aspirationsCreate transparency on

sustainability performancemetrics within the firm

Organizational IntegrationShare responsibility for

sustainability among functionsand employees

Align incentive and rewardsystems

Integrate internal processes acrossfunctions

Build upsustainabilityexpertise

Invest inhumanresources

Downstream SSCMIntegrationCapability

Supplier ManagementSelectionLong-term relationshipsProduct innovationProcess innovationPerformance metrics

Upstream SSCMIntegrationCapability

Risk ManagementSelectionTransparency beyond

tier-1

Upstream SSCMIntegrationCapability

SustainabilityPerformance

Balance discrepancies between economic,environmental andsocial performance

Internal SSCMI

Figure 4. A theoretical model of sustainable supply chain management integration.

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quantitative information on its construct and their linkages would help to further rene the model.

Acknowledgement

The author would like to thank Dachser GmbH & Co.KG for the nancial support of the research.

Appendix

Introduction

Introduce the study, its aims and the researcher Assure condentiality, anonymity, inform about

recording

Corporate sustainability strategy

Could you please describe your rms sustain-ability strategy?

Where are the priorities at the corporate level? How does this strategy respond to expectations

from different stakeholder groups?

Were they involved in strategy formulation? Are there clear objectives associated with thecorporate sustainability strategy?

How do you measure and control progress? Ability to predict/direct changes in the competi-

tive environment?

Supply management sustainability strategy

Is there a sustainability strategy within supplymanagement?

How does it link to the corporate strategy? Considering key elements of corporate sustain-ability strategy: How are they prioritized for supply management? If there are differencesfrom the overall corporate prioritization, pleaseexplain.

Are there clear objectives associated with thefunctional sustainability strategy?

To which extent is there an alignment betweeneconomic, environmental and social objectives?

Which metrics are tracked?

Internal integration

Measurement and rewards Have internal mechanisms for performance eval-

uation been changed to adapt to sustainability?Please give examples.

How about rewards? In how far are sustainability objectives included

in individual annual performance agreements? Are there differences between hierarchical levels?

To classical systems? What do they focus on? Differences between individual level and func-

tional level performance? How does your function contribute to corporate

level sustainability goals?

Organizational structure Who is responsible for sustainability within the

supply management function? How is responsibility shared between different

individuals/roles/units? Are individuals trained in sustainability?

If yes, what is the impact? If no, problems?

How do you perceive leadership support? Do you think that sustainability performance

of supply management would increase if therewere

More persons with specied training? More persons with particular responsibility?

Communication and information In how far is sustainability a topic that is ad-

dressed in general day-to-day discussions anddecisions?

Have IT systems been adapted to include infor-mation on sustainability?

232 Julia Wolf


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External supplier integration

Supplier performance What are the key motivating factors to include

supplier management into sustainability? Who is included? How do you evaluate progress? What happens to suppliers who fail to meet sus-

tainability expectations? How do your suppliers perform in terms of

meeting supply management and corporate levelsustainability goals?

Supplier selection

How is sustainability included in supplier selec-tion practices?

Supplier relationship management How are sustainability expectations communi-

cated? Which information is shared? How are IT sys-

tems integrated? To which extent is sustainability included in

day-to-day communications and decisions withsuppliers?

What is the role of sustainability in supplier development? How is it included? Gaps? Prob-lems?

What are mechanisms for incentives and re-wards?

Performance How does supply management perform in terms

of meeting goals of corporation? What is the contribution of the suppliers?

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Supply Chain Management & InformationSystems Department,

EBS Business School,Soehnleinstrasse 8 F, 65201 Wiesbaden, Germany

E-mail: [email protected]

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