Incorporating Impoverished

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Incorporating impoverishedcommunities in sustainable

supply chainsJeremy Hall and Stelvia Matos

Faculty of Business Administration, Simon Fraser University, Burnaby, Canada

Abstract

Purpose The purpose of this paper is to explore recent calls to include social and environmentalconsiderations in supply chains by analyzing the sourcing of raw materials from impoverishedcommunities to reduce environmental impacts and social exclusion in biofuels production.

Design/methodology/approach A case study methodology based on interviews and focus

groups with supply chain members and other stakeholders is conducted in Brazil, a major biofuelsproducer and user. Two supply chain cases, fuel ethanol and biodiesel, illustrate the challenges ofrecent government policies and industry attempts to improve sustainability within the supply chain.

Findings Although government and industry recognize the importance of providing opportunitiesfor impoverished communities in biofuels supply chains, there remain considerable pressures toeconomize at the expense of sustainable supply chain policies. Sourcing from impoverished farmerswho lack basic business knowledge, and distrust industry and government policy, compound thesechallenges.

Research limitations/implications While sustainability research now emphasizes theimportance of considering interactions among economic, environmental, and social parameters,little is known about integrating poorly educated, impoverished farmers within supply chains. Basicbusiness education is needed, and further research should explore entrepreneurial dynamics withinimpoverished communities.

Practical implications Supply chain managers should acquire skills for engaging withimpoverished farmers lacking formal education. Cooperatives can bridge knowledge asymmetriesbetween buyers and suppliers, but will require support from industry if sustainable supply chainpolicies are to succeed.

Originality/value Most sustainable supply chain scholars acknowledge the importance providingopportunities for impoverished communities, but few have explored how potential entrepreneurs fromimpoverished communities can participate as productive supply chain members.

Keywords Sustainable development, Supply chain management, Brazil, Fuels, Agriculture

Paper type Research paper

1. IntroductionThis paper explores supply chain relationships between relatively modernorganizations employing educated personnel and impoverished, often illiteratefarmers. The research is framed within the sustainable supply chain discourse (Carter,2005; Green et al., 1996; Hall, 2000, 2001; Hill, 1997; Lamming and Hampson, 1996;Linton et al., 2007; Sarkis, 2001; Seuring et al., 2008; Srivastava, 2007) that has

The current issue and full text archive of this journal is available at

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The Social Sciences and Humanities Research Council of Canada (SSHRC) supplied funding forthis research. The authors would like to acknowledge those who agreed to participate in theirfield studies.

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Received May 2009Revised June 2009,August 2009, October 2009Accepted November 2009

International Journal of PhysicalDistribution & Logistics ManagementVol. 40 No. 1/2, 2010pp. 124-147q Emerald Group Publishing Limited0960-0035DOI 10.1108/09600031011020368


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identified the supply chain as a powerful means by which social and environmentalimpacts of industrial systems can be improved. We respond to calls to take intoconsideration longer parts of the supply chain (Handfield et al., 1997; Kogg, 2003;Kleindorfer et al., 2005), and to look at the more complex relationships among

economic, social, and environmental parameters rather than only environmental issues(Linton et al., 2007; Matos and Hall, 2007; Seuring and Muller, 2008).

We present two supply chain cases, fuel ethanol and biodiesel, drawn fromqualitative data collected in Brazil, a major emerging economy (Wilson andPurushothaman, 2003), yet one dealing with poverty and economic disparity. Brazilwas selected because it is currently one of the worlds largest producers and users ofautomotive biofuels, and a global leader in biofuel technology (Hall et al., 2009; Reid,2007). Additionally, recent Brazilian policies have encouraged refiners and distributorsto source from small-scale farmers that have previously been excluded fromparticipating in Brazils growing biofuels sector, yet there remain major problems withthese wider participatory schemes. Matos and Hall (2007) argue that such socialconcerns are emerging as the key challenge in sustainable supply chains, yet remainpoorly understood.

Biofuels have been recognized as a more sustainable energy source when comparedwith fossil fuels such as oil, coal, and natural gas due to their potential to be renewableand reduce environmental impacts such as CO2 emissions (Zarrilli, 2006; DAgosto andRibeiro, 2009; Laser et al., 2009). They have also been identified as a potential source ofemployment for impoverished farmers (Hall et al., 2009). However, biofuels have alsobeen criticized for creating the so-called food for fuel crisis, where demand forbio-fuels may have increased prices for commodities such as corn and soybeans, withharsh impacts on impoverished communities (Hoyos and Blas, 2008; FAO, 2008), orexacerbating social exclusion by concentrating agricultural production at the expenseof small scale farmers (Hall et al., 2009). Thus, while environmental advantages of

biofuels have been broadly accepted, social concerns need to be clarified.We focus on recent Brazilian policies designed to encourage impoverished farmer

participation in the biofuels supply chain. This involves relationships betweenrelatively modern organizations employing educated personnel, with impoverishedand often illiterate suppliers at an extreme part of the supply chain. To the best of ourknowledge, no sustainable supply chain studies have explored the integration ofilliterate farmers within the supply chain (although Majumdar and Nishant (2008) haveacknowledged the issue). Such segments of society are particularly vulnerable, andmay hinder wider environmental and social improvement out of desperation, by forexample over-exploiting local resources or engaging in crime.

Trading relationships between modern organizations and impoverishedpopulations have been explored by scholars focused on the so-called base of the

pyramid (BOP), where an estimated four billion people in impoverished regions earnless than $2,000 per year (Kandachar and Halme, 2007; Karnani, 2007; London andHart, 2004; Prahalad, 2007). The BOP discourse emphasizes the importance of povertyreduction within the holistic approach of sustainable development, whereinterdependence among social, economic, and environmental parameters from anintergenerational perspective is recognized (Elkington, 1997; WCED, 1987). BOPscholars argue that different business models are needed if impoverished communitiesare to be included within modern economic systems. We similarly suggest that

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logistics scholars interested in supply chain sustainability need to recognize the need toinclude impoverished communities, yet such potential suppliers often lack basicbusiness knowledge, making traditional logistics management approaches deficient.We further found that mistrust of industry and government policy by impoverished

farmers hinders sustainable supply chain initiatives.In the next section, we outline the problems of social exclusion and the recent BOP

discourse that has begun to explore how participation in supply chains can improveimpoverished communities. We then review the sustainable supply chain literature,recognizing that academic calls for longer accountability in the supply chain by focalcompanies creates greater challenges in terms of complexity, ambiguity, andtransaction costs, yet is necessary for overall social and environmental improvement.We then outline our methodology, followed by our two illustrative cases, Brazilian fuelethanol and biodiesel supply chains. We conclude with a discussion of our findings andimplications for research and supply chain managers.

2. Addressing social exclusion through supply chain participationResolving poverty and economic disparity have been a key policy challenge since atleast Smith (1776, p. 36), who asserted, No society can surely be flourishing andhappy, of which the far greater part of the members are poor and miserable. Morerecently, Stiglitz (2002) argues that countries with high levels of social instability andweak public-sector institutions are unlikely to benefit from economic integration intothe global economy, whereas Sen (1997) recognizes that unemployment, lower skills,family crises, and political inactivity intensifies racial and gender inequalities, and thatthese costs may not be adequately reflected in market prices. These disparity concernshave been termed social exclusion, and are now a major policy issue in Latin America(Buvinic et al., 2004). According to Ocampa (2004), a paradox of emerging economies inLatin America during the 1990s was the emergence of companies capable of

integrating into the global economy, but also growth in the informal (often illegal)economy composed of mostly low-end entrepreneurial ventures and subsistence jobs,what Mazza (2004) calls poverty employment.

Hall et al. (2008) suggest that social exclusion, particularly with the modernizationof agriculture, led to wider problems such as crime and corruption in Brazil. Socialexclusion is now a major policy issue for the Government of Brazil under left-of-centrePresident Luiz Inacio Lula da Silva[1], and his government has implementedprograms encouraging socially excluded populations to participate within for examplebiofuels supply chains. Up until recently, large-scale, sophisticated actors havedominated Brazilian biofuel production, providing only very low paying povertyemployment under harsh working environments for socially excluded populations(Hall et al., 2009).

Providing greater participation of impoverished communities within the supplychain has been the focus of the recent BOP literature. Prahalad (2007), London and Hart(2004) and Hart (2007) argue that opportunities in the top of the pyramid (TOP), maturemarkets in industrialized nations, are becoming increasingly saturated, and that newbusiness opportunities should increasingly be sought in the BOP. Although the earlyBOP perspective was based on the assumption that multinationals benefit by turningimpoverished people into consumers (Calvano, 2007), more recently, there has been a callfor research exploring how impoverished communities can also participate as suppliers

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within the global market system (Kandachar and Halme, 2007). For example, Karnani(2007) argues that the BOP should be encouraged to develop self-reliant producers andconsumers who can design and make products suitable for sale in both BOP and TOPmarkets, thus providing greater economic stability through integration into the global

economy. However, the BOP discourse has yet to explore empirically the role ofentrepreneurial dynamics by those within improvised communities, nor how suchentrepreneurs can participate within sophisticated supply chains (Kandachar andHalme, 2007). In addition, Landrum (2007), Calvano (2007) and Karnani (2007) questionthe feasibility of the BOP concept, given that power asymmetries betweenmultinationals and local communities make mutually beneficial outcomes unlikely.Differences in knowledge levels and absorptive capacities (Cohen and Levinthal, 1990)among supply chain members will also likely exacerbate power asymmetry and hinderinter-firm learning. Thus, while the recent discourse on social exclusion and BOP hasidentified participation of impoverished communities within modern supply chains as asolution to poverty, little is known about how this can occur.

3. Sustainable supply chainsAccording to Seuring and Muller (2008), over 190 papers have been published on therelationship between environmental issues/sustainable development and supply chainmanagement. As can be expected from a multidisciplinary topic, these papers havebeen published in environmental/sustainability management journals, traditionaloperations and supply chain management journals, and to a lesser degree journalsconcerned with ethics, economics, marketing, and technical topics. According to Zhuand Sarkis (1994), a number of definitions and terms have emerged. Table I providesexamples of the earlier and later definitions.

In addition to advocating supply chain dynamics as a mechanism for sustainabilityimprovements, the underlying logic of these definitions and more generally the

sustainable supply chain discourse is that systemic approaches to sustainabilityconcerns are necessary i.e. pollution does not necessarily respect firm boundaries.Thus, a wider range of issues and a wider part of the supply chain needs to beconsidered (Handfield et al., 1997; Kogg, 2003; Kleindorfer et al., 2005). Other commonthemes within the sustainable supply chain literature relevant to this study include theneed to expand from purely environmental impacts towards the more complexrelationships among economic, social, and environmental parameters, and thecircumstances under which sustainable supply chain members emerge and succeed.

3.1 From environmental to sustainable supply chain managementAccording to Seuring and Muller (2008), the sustainable supply chain discourse hasevolved towards the Brundland Commissions (WCED, 1987) definition of sustainabledevelopment that emphasizes the interdependence among social, economic, andenvironmental parameters from an intergenerational perspective. The underlying logicis that a greater understanding of the complex relationships among economic, social,and environmental parameters is needed to fully understand, and hence manage, afirms social and environmental impacts while maintaining profitability (Linton et al.,2007; Matos and Hall, 2007; Seuring and Muller, 2008).

Matos and Hall (2007) suggest that the transition from mostly environmentalconcerns towards a sustainable development perspective creates greater managerial


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challenges due to complexity, a situation with many interacting parameters. Because ofcomplexity, decision makers are limited in what they can know, what Simon (1969)called bounded rationality, and thus should pursue satisfactory solutions to their

problems rather than look for optimal solutions. Matos and Hall (2007) further arguethat the trend towards sustainability presents greater dimensions of ambiguity, whereneither the parameters nor probabilities can be identified or estimated (Knight, 1921).Matos and Hall (2007) suggest that the social dimension of sustainable development isemerging as the key challenge in sustainable supply chains, as it may involve a widerange of stakeholders with disparate goals, demands, and opinions that may interpretthe same situation differently, what Hall and Vredenburg (2003, 2005) call stakeholderambiguity. The sustainable supply chain discourse thus differs from mainstreamsupply chain management, as it involves the recognition of stakeholders within andbeyond the supply chain.

Freeman (1984) makes a distinction between primary stakeholders, those with a

direct interest in the organization (e.g. customers, shareholders, employees, suppliers,and regulators) and secondary stakeholders, those that are not engaged in transactionswith the organization but can affect, or are affected by the organization (e.g. academicinstitutions, non-government organizations (NGOs), neighbors, and social activists).For example, those within the supply chain are more likely to have similar interests,claims or rights (Clarkson, 1995) because of common goals and pressures associatedwith a market relationship, and have a clear concept of what is expected from therelationship. In contrast, those outside of the supply chain such as regulators,

Drumwright (1994) Socially responsible organizational buyingis that which attempts to takeinto account the public consequences of organizational buying or bringabout positive social change through organizational buying behavior

Green et al. (1996, p. 188) Green supply refers to the way in which innovations in supply chainmanagement and industrial purchasing may be considered in thecontext of the environment

Narasimhan and Carter(1998, p. 6)

Environmental supply chain management consists of the purchasingfunctions involvement in activities that include reduction, recycling,reuse, and the substitution of materials

Hall (2000, p. 456) Environmental supply chain dynamics (ESCD) are a phenomenon whereenvironmental innovations diffuse from a customer firm to a supplierfirm, with environmental innovation defined as being either a product,process, technology or technique developed to reduce environmentalimpacts

Srivastava (2007, pp. 54-5) Green supply chain management(GrSCM) is defined as integratingenvironmental thinking into supply-chain management, includingproduct design, material sourcing and selection, manufacturing

processes, delivery of the final product to the consumers as well asend-of-life management of the product after its useful lifeSeuring et al. (2008, p. 1545) Sustainable supply chain management as the management of material

and information flows as well as cooperation among companies alongthe supply chain while taking goals from all three dimensions ofsustainable development, i.e. economic, environmental and social, andstakeholder requirements into account

Note: Terminologies are italicized

Table I.Sample definitions of therelationship betweenenvironmental/sustainable developmentand supply chainmanagement

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government policy makers, activists, the media, and NGOs, may have dissimilar goalsand their behavior moderated by non-market concerns and pressures.

Managing supply chain risk, defined by Carter and Rogers (2008, p. 366) as theability of a firm to understand and manage its economic, environmental, and social

risks in the supply chain, may thus involve ambiguous risk as stakeholders withinand outside the supply chain may be difficult to identify, and/or present conflictingpressures which may not be easily reconciled. We suggest this is inevitable when awider range of issues and longer parts of the supply chain are taken into consideration,as called for by Handfield et al. (1997), Kogg (2003) and Kleindorfer et al. (2005).

3.2 The emergence and evolution of sustainable supply chainsAnother key issue within the sustainable supply chain discourse is under whatconditions they emerge and when they succeed. Seuring and Muller (2008) argue thatthere needs to be pressure exerted on a focal company within the supply chain. Theydefine a focal company as one that governs the supply chain, provides the directcontact with the consumer and usually designs the product or service offered. Hall(2000) found that there needs to be a channel leader, a firm that can control otherchannel members (El-Ansary and Stern, 1972), with sufficient technical competencies,and are themselves under environmental pressure. These pressures are usuallycontext-specific and often most effective when influenced by non-regulatory secondarystakeholders such as NGOs and activist groups, as they encourage inter-firm learning,whereas firms responding only to regulations often put the onus of learning on thesuppliers and move the costs on to the consumer (Hall, 2000). Large, high-profile firmsare often under considerable pressure to improve their sustainability performance,especially those that span a wide sphere of control (Hall, 2001), whereas manysuppliers buried within the supply chain lack incentives (Hall, 2000, p. 467). Roberts

(2003) similarly emphasizes that the actions of NGOs can erode the reputation of thedominant supply chain member responsible for environmental and social problems.Carter and Rogers (2008) suggest that transaction cost economics can provide

insights in how and why sustainable supply chains develop. Coase (1937) suggests thatfirms are a governance structure that replaces markets because they can reducetransaction costs. The primary focus for the make or buy decision is to minimizeproduction (make) and transaction (buy) costs (Williamson, 1975), which in turn areshaped by asset specificity, purchasing frequency and uncertainty in the form ofshirking (Williamson, 1985). Hall (2000) suggests that while transaction cost economicsis a useful theoretical starting point, it does not fully describe sustainable supply chaininnovation, nor does it reflect much of the supply chain literature that argues forcollaborative, trust-based approaches (Lamming, 1993; Lyons et al., 1990; Sako, 1992).

Hall (2000) suggests that knowledge transfer between supply chain members isnecessary for successful sustainable supply chains; collaborative approaches are thusnecessary. Liker et al. (1996) argue that markets are appropriate for commodity goods,whereas goods requiring specialized knowledge would be less appropriate. Later wewill show that while biofuels are commodities, the sourcing from impoverished farmerscreates greater transaction costs due to widely dispersed, small-scale suppliers, pluscosts associated with specialized knowledge to manage suppliers unfamiliar with basicbusiness knowledge such as the value of long term, stable contracts. Such costs and


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knowledge asymmetries are pressuring firms to concentrate their purchases fromlarge-scale operations, hindering sustainable supply chain initiatives.

In this paper, we suggest that the relationship among government policies(regulations and incentives), secondary stakeholder pressures and the profile and

pressure placed on the focal firm plays an important role in sustainable supply chains.However, we also argue that there are impediments to knowledge diffusion betweencustomer firms and impoverished farmers, such as power and knowledge asymmetriesthat hinder sustainable supply chain policies. Furthermore, the complex andsometimes ambiguous interactions of these relationships within economic,environmental, and social parameters calls for an evolutionary perspective, as thedevelopment of a specific policy often leads to unintended consequences that may laterbe under scrutiny from various stakeholders. Nelson and Winter (1982) suggest thatsuch dynamics can be expected with economic change, which resolves some problemsbut also creates negative externalities that must also be addressed. In Brazilianagriculture, Matos and Hall (2007) found that a companys policies may adapt to social

pressures and then once an innovation is introduced, new social pressures may emerge.A recent example is the controversy over traditional food crops such as corn andsoybeans being used for biofuels, leading to accusations that it has increased staplefood costs, the so-called food for fuel crisis (Hall et al., 2009). We later draw on theseconcepts to analyze our findings in Section 8.

4. MethodologyThe study presented here emerged from a broad, ongoing research program onsustainable development and industrial performance in various national and industrialsettings conducted by the authors since 2001. We apply case study methodology tounderstand the dynamics present in a particular setting (Eisenhardt, 1989; Gephart,

2004; Yin, 1994), more specifically, the participation of impoverished communities inthe energy supply chain. According to Siggelkow (2007), case study methodology cansharpen existing theory by pointing to gaps and fill them in, and also provideconceptual contributions when employed as illustrations. We selected two cases,Brazilian ethanol and biodiesel supply chains, to illustrate the challenges ofgovernment policy and industry attempts to improve sustainability within the supplychain. These cases were selected for theoretical, not for statistical reasons (Eisenhardt,1989; Glaser and Strauss, 1967). In addition to being the two major biofuel sources,these two cases present similar technological attributes, distribution structures andpotential environmental improvements, as well as transparently observable differences(Eisenhardt, 1989) regarding social inclusion policies.

Brazil is a large emerging economy driven by a number of world-class industries

(Hall et al., 2005; Reid, 2007), including an energy sector that has allowed the country tobecome energy self-sufficient (Silvestre and Dalcol, 2009). According to Almeida (2007)and Zarrilli (2006), Brazil is one of the worlds largest automotive biofuels producers,and is a global leader in biofuel distribution, with the vast majority of domesticallyproduced flex fuel automobiles able to operate on ethanol, natural gas and/orgasoline (including combinations of these fuels). However, the country also has majorproblems with poverty and social exclusion, and is now attempting to use biofuels as ameans of reducing these social ailments while improving the sustainability of their

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energy matrix (Hall et al., 2009), making it an ideal location for exploring socialdynamics within sustainable supply chain initiatives.

To ensure construct validity, Yin (1994) recommends using multiple sources ofevidence (triangulation), establishing a chain of evidence, and providing draft case

study reports reviewed by key informants. Our data were drawn from academic, policyand technical documents, semi-structured interviews with supply chain members, andother stakeholders conducted between 2006 and 2009. Interviews were conductedin-person in a number of Brazilian cities[2] and supplemental interviews were alsoconducted with United Nations (UN) officials in Brasilia, New York, and Rome.A phone interview was conducted with Greenpeace International.

As shown in Table II, we interviewed a variety of supply chain members andstakeholders in an attempt to provide insights from various perspectives of the supplychain, as suggested by Hall (2000). Interviewees were identified from our desk researchand then through the snowball technique (Berg, 1988), where participants suggestadditional people for the study. Interview questions were developed through literaturereviews and used to open the discussion, but not to limit the interviewees scope forraising relevant issues. For example, we asked interviewees to draw a map of theirsupply chain and enquired about key issues and stakeholders in their sector. Wesupplemented the interviews with academic papers, government reports and thepopular press to establish a chain of evidence and reinforce triangulation (Yin, 1994).

Individual interviews with nine impoverished biofuels farmers were conducted inthe poorer Northeast region. Interviews were arraigned with the assistance of BrazilianAgricultural Research Corporation (EMBRAPA), which have close ties to the farmingcommunity. Given that there are thousands of small farmers involved in the production

Supply chain stakeholdersFuel distributors (Petrobras, BP, and Exxon) senior and middle managers 8

Ethanol refineries and sugarcane plantationsa

(senior managers) 4Subsistence farmers (individual interviews) 9Subsistence farmers (four focus groups) 48Biodiesel feedstock producers (large scale farmers) 3Biodiesel co-ops (presidents) 3Biodiesel refiners (CEOs or senior managers) 9Non-supply chain stakeholdersBrazilian Government officials (senior officials) 7SEBRAE: Brazilian Service of Support for Micro and Small Enterprises (senior managers) 6EMBRAPA: Brazilian Agricultural Research Corporation (senior scientists and managers) 4Industry trade association officials 4United Nations (UN) officials: Food and Agricultural Organization (FAO), UNEnvironmental Program, UN Division for Sustainable Development, Economic Commissionfor Latin America and Caribbean, and UN Development Program 7

NGOs: Greenpeace Brazil, Greenpeace International, Sierra Club, Brazilian Institute forConsumer Defense, Project Tamar, Polo Sindical da Borborema (translates as BorboremaFarmers Union), Esperanca, and Lagoa Seca divisions 7Community representatives 3Academics 12Total (including farmer focus groups) 135

Notes: aThe sugarcane producers interviewed for this study also refined ethanol (as is the case formost other sugarcane producers in Brazil); number of subjects

Table II.Interview subjects


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of biofuels in Brazil, we also conducted four focus groups that explored in-depth issuesidentified in the individual interviews with farmers and other stakeholders. Thesefocus groups were organized with the assistance of local presidents of biofuel co-opsrather than EMBRAPA, which we believed would strengthen validity. Data saturation

(Eisenhardt, 1989) in the form of repetition of common issues emerged within thisphase of the research.

We also recognized that, given the controversial nature of the research, there was arisk of social desirability bias, whereby research participants might expressviewpoints that they think the interviewer wants to hear or is politically appropriaterather than what the participants truly believe (Fisher, 1993). To reduce this risk, weinformed interview subjects that we would keep their names and participationconfidential, as suggested by Singer et al. (1992); that we would not use informationthat could place the interviewee in any form of jeopardy, and that we would check ourdata against observed behavior and the perspectives of other supply chain members.Following the interviews, the research team discussed, reviewed, and summarized thedata (presented in the next three sections). EMBRAPA officials with extensive

knowledge of Brazilian biofuels production also reviewed drafts of the cases.

5. The evolution of economic efficiencies and social exclusion in BrazilianagriculturePrevious generations of agricultural modernization, such as capital and chemicalintensive Green Revolution techniques, the introduction of foreign crops such ascoffee and soybeans, and most recently agricultural biotechnology, have increasedeconomic efficiencies, making Brazil one of the worlds leading agricultural producersand exporters (Reid, 2007). At the same time, large-scale production techniques usingmodern concentrated farming practices have also been scrutinized for excluding smallfarmers from participation (IFPRI, 2002; Aerni, 2002). Brazilian policy makers have

recognized that these disruptions on small-scale farmers have contributed towardseconomic disparity, poverty, and social exclusion (Hall et al., 2008). For example, twogovernment ministries were established explicitly to deal with these issues; theMinistry of Agriculture Development established specifically for the concerns ofsmall-scale and subsistence farming, and the Ministry of Social Development and FightAgainst Hunger, which was established under President Lula to resolve socialexclusion. According to government officials from both ministries, there was a beliefwithin policy circles that Green Revolution technologies, while vastly improvingagricultural output, also led to millions of small farmers being dislocated. Manymigrated to urban centers seeking other opportunities, but often ended up destitute andliving in favelas, or shantytowns (Ferraz, 1999) known for high crime rates and othersocial problems. According to our focus groups with impoverished farmers, there was

a widespread belief that previous government policies favored large-scale agricultureat their expense, and that they were now highly skeptical of industry and government.

6. The Brazilian fuel ethanol supply chainThe development of ethanol as an automotive fuel is an example of Brazils agriculturalparadox of high productivity and social exclusion. Fuel ethanol production in Brazilemerged with the Federal Governments ProAlcool Program, which was a response tothe oil crises in the 1970s, and to save sugarcane producers from bankruptcy after

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major modernization investments were followed by a significant drop in sugar prices(Rosillo-Calle and Cortez, 1998). According to Oliveira (2002), the ProAlcool programinvolved a wide range of stakeholders such as numerous government ministries, themilitary, the ethanol industry, researchers, the media, and established sugarcane

producers controlled by wealthy families to create a market and stimulate the use ofethanol as an automobile fuel. The EMBRAPA, a government-owned organization,played a major role in the technological development of ethanol and other sectors ofBrazilian agriculture.

During this time, the national oil company Petrobras was opposed to the program.According to a senior Petrobras manager, oil and gas companies at the time did notbelieve that ethanol was a viable energy source, and would only result in unfaircompetition due to heavy subsidies that supported the ProAlcool program. However,technological innovation, supply chain improvements and increases in petroleumprices made it a viable fuel, and it is no longer directly subsidized. Sugarcane, a cropwell suited for Brazils climate, is currently the most efficient crop for ethanolproduction. For example, while Brazil produces an average of 7,000 liters of ethanol perhectare of sugarcane, the USA produces 3,800 liters per hectare from corn and theEuropean Union 5,400 liters per hectare from sugar beet (IAE, 2007). Brazil is currentlythe worlds second largest producer of ethanol, which fuels the worlds largest flexfuel fleet of vehicles (Zarrilli, 2006).

However, Brazilian ethanol production is concentrated and capital-intensive,although the harvest is still carried out manually, creating a strong demand fortemporary low-skilled labor that have been heavily scrutinized for poor workingconditions (Hall et al., 2009; Saint, 1988). Under the ProAlcool program, governmentsubsidies and credit programs favored large-scale farmers and sugar mill ownersconcentrated in the wealthier and more developed southeast and central regions of SaoPaulo and Mato Grosso, the location of the incumbent sugarcane producers, as opposed

to poor Northeast and North regions (Martinelli and Filoso, 2008; Oliveira, 2002). Theseproducing areas are far from protected rainforest regions[3], refuting initial claimsfrom NGOs and the media that ethanol has expanded into protected areas, leading todeforestation and species depletion in, for example, the Amazon. However, concernsthat are more legitimate include the displacement by ethanol of other agriculturalsectors such as cattle production, which has in turn expanded into the Amazon, as wellas local environmental impacts due to large-scale production. This includes the impacton biodiversity due to mono-crop production and environmental impacts regardingwater usage, waste disposal, soil erosion, energy requirements, pesticide and herbicideusage commonly used in large-scale production (Rajagopal and Zilberman, 2007)[4].

Concentrated ethanol farming has also led to controversial social impacts. Manyworkers are illiterate and receive below minimum wage, and few independent

small-scale farmers participate in this sector. In response, the Landless Rural WorkersMovement (Movimento dos Trabalhadores Rurais Sem Terra (MST)), Latin Americaslargest protest group, emerged in the 1980s to deal with the concentration of land by afew and the expulsion of the poor from rural areas due to agricultural modernization[5].Brazilian policy makers have since recognized these detrimental effects onemployment and migration, exacerbating social exclusion and providing some of theworst working conditions in the country (BBC News, 2007; MST, 2007). Thus, althoughconsidered a technical and economic success, the sector has also been under scrutiny


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for poor working conditions and not providing opportunities for small farmers(Martinelli and Filoso, 2008; MST, 2007).

Figure 1 shows the ethanol supply chain in Brazil. It includes various stakeholdersthat initiated the program, as well as the ProAlcool incentives and pressures (for

example, from MST and the national and international media). Over the years,ownership of sugarcane plantations and ethanol refineries merged to exploitefficiencies and reduce transaction costs. While the ProAlcool program providedincentives that allowed the industry to become economically competitive, there were noprovisions for improving the working conditions of temporary harvesters. Media andactivist pressure were mostly targeted at the government and sugarcane plantations,and more recently at Petrobras. In response, the sugarcane producers are now engagedin social responsibility programs and are investing in education and health for theworkers children, but they are still criticized by the international and national mediafor poor working conditions. Petrobras has also responded by implementing policiesthat discourage sub-standard labor policies within their supply chain. However,

Petrobras CEO, Gabrielli de Azevedo (2009) has argued that, while the company takessustainability seriously, fuel produced from substandard labor practices do not make itinto their supply chain (BBC News, 2009). Recall also that Petrobras was opposed to theProAlcool program, and thus did not play a major role in its development. A majorresponse of the government was the implementation of social inclusion policies forbiodiesel production, discussed below.

Although the environmental impact of sugarcane ethanol remains contentious, moststudies suggest it provides benefits over petroleum fuel sources (IAE, 2007), and thuscan be regarded as a win-win example when only economic and environmentalparameters are considered, as discussed by Carter and Rogers (2008). However, whensocial parameters are also included, trade-offs emerge and outcomes become blurred.

Figure 1.Ethanol supply chain andkey stakeholders

Sugarcane

plantations

(large scale)

Fuel distributors (e.g.

Petrobras, Esso, etc.)

Incentives

Ethanol

refineries

Government stakeholders

Regulators, various Govt Ministries, Military

Consumers

Car manufacturers

Secondary Stakeholders

Local social activists (e.g. MST)

Int. NGOs (e.g. Greenpeace)

Local and int. media

Early ProAlcool subsidies focused

on economic efficiencies

Govt affiliated stakeholders

E.g. EMBRAPA, universities

Key:Product flowInformation flowsPressure/Incentives flows

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Currently, the sugarcane plantations and refineries are relatively unknown within thecountry and unknown internationally except by industry insiders, so there is no focalleader with which activist campaigns can target. The dominant channel leader,Petrobras, did not play a role in the early development of the sector, but may be

expected to a larger role due to its increasingly important profile in the energy sectorand largest company in South America.

7. Brazilian biodiesel sustainable supply chain policyIn response to the problems of social exclusion in ethanol and other agriculturalsectors, the Federal Government of Brazil initiated an executive inter-ministerialcommission for biodiesel production in 2003. It was composed of the Ministry of Minesand Energy, Petrobras, EMBRAPA (which had recently been mandated to improvesmall farmers capability development), the National Agency of Petroleum, and theBrazilian Development Bank among others. The National Program of Production andUse of Biodiesel (Programa Nacional de Producao e uso de Biodiesel, henceforthrefereed to as the Biodiesel Program) was launched in December 2004, with the explicitgoals of stimulating the biodiesel market, promoting social inclusion and regionaldevelopment in poor regions, and to encourage technology research (Governo Federaldo Brasil, 2008). The Program included mandates to stimulate market demand forbiodiesel in the Brazilian energy mix, requiring a minimum of 2 percent biodiesel in thenational diesel supply between 2008 and 2013 and a minimum of 5 percent thereafter(Pousa et al., 2007). It also provides research incentives to promote technologydevelopment throughout the supply chain, and encourages research networks fromuniversities and other research institutions such as EMBRAPA.

A third pillar of the Program is an explicit policy to encourage small farmerparticipation in the supply chain through the Social Fuel Stamp (Selo Combustivel

Social), through tax benefits and special credit to industries that encouraged smallproducer participation from the poorer North and Northeast regions, particularly forcastor and palm seeds from small-scale producers. To receive the Social Fuel Stamp,biodiesel refiners and fuel distributors must purchase part of its feedstock from smallfarmers, sign commercial agreements with those farmers and provide them with technicalassistance. The tax exemptions for the producers can range from R$0.07 (,US$0.03) toR$0.218 (,US$0.1) per litre, depending on the feedstock and region in which it is sourced,which represents about 4-12 percent of the retail price of diesel in Brazil.

To receive the highest tax exemption, the industry must purchase castor or palm oilproduced by small farmers in the North, Northeast or semi-arid regions. According toEMBRAPA technical officers, these crops were selected because mechanized productionis currently not cost-effective, thus making it more suitable for small-scale farming

(Garcia, 2007). They also require less water (making them suitable for arid areas) andcrop management techniques that avoid using pesticides and herbicides are available.According to EMPRAPA officials, Brazil is one of the few countries in the world that stillhas vast areas of uncultivated lands, although most of these areas are arid[6]. In additionto better environmental performance, EMBRAPA technical officers also stated that theavoidance of chemical inputs is an attractive attribute for impoverished farmers becausethey usually are unable to afford upfront costs, an issue that was confirmed in our focusgroups. The government estimates that around 100,000 small-scale farming families


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have participated in the Program, based on contracts presented by biodiesel refinersclaiming the Social Fuel Stamp tax rebates (MDA, 2008).

Figure 2 is a schematic of the biodiesel supply chain. In contrast to ethanol, therehas been an explicit policy mandate to include independent, small-scale farmers in the

supply chain through the Social Fuel Stamp, energy mix requirements and researchincentives for institutes, which in turn are expected to assist various members of thesupply chain, especially impoverished farmers. This includes EMBRAPA for technicaldata, and the Brazilian Service of Support for Micro and Small Enterprises (SEBRAE),an industry-sponsored agency for entrepreneurial capability development. In the past,SEBRAEs activities were focused on capability development with relatively educatedentrepreneurs, but were recently mandated under President Lulas social exclusionpolicies to stimulate entrepreneurial activities within impoverished communities,including biofuels. According to SEBRAE and Ministry of Social Development andFight Against Hunger officials, a key focus of the biofuels policy was to encourageindependent, entrepreneurial producers rather than only low skilled, temporary labor,

as was the case for ethanol. Senior EMPRAPA representatives in a poor regionacknowledged that there are fundamental differences between educated andimpoverished people, and that there remain major challenges in understanding andencouraging entrepreneurial dynamics within impoverished communities.

According to our interviews, the results of the Program have been mixed. Manyrefiners and distributors were concerned whether farmers were able to produce whathad been negotiated, and whether prices of for example soy, palm and castor forbiodiesel would remain competitive with other markets. Soybeans for example arecommodities with prices that fluctuate with global demand. Palm and castor oils arevalued for other industrial purposes, and their production costs are higher than otheroils (Garcia, 2007). Furthermore, although the Social Fuel Stamp is relatively simple in

theory, in practice there have been some problems between industry and farmers.A biodiesel refinery manager stated that some farmers fail to honor contracts and sellthe seeds to other buyers, typically as a one-off transaction at higher prices:

Figure 2.Brazilian biodieselsupply chain

Feedstock

production (smallfarmers)

Wholesalers

Government stakeholders

Ministries of mines & energy,

Petrobras, Nat. Agency of Petroleum,

Brazilian development bank, etc

Fuel distributors (e.g.

Petrobras, Esso, etc.)

Secondary stakeholders

Social activists (e.g. MST)

Int. NGOs (e.g. Greenpeace)

Local and int. media

Co-opsBio-diesel

refinersFeedstock production

(large producers)

Consumers

Govt affiliated stakeholders

EMBRAPA

Universities

SEBRAE

Research incentives

Biodiesel programIncentives Regulations

Social fuel stamp Mandates in energy mix

?

Key:Product flowInformation flowsPressure/Incentives flows

?

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[. . .] sometimes it is hard to deal with these farmers. Because of their lack of education, theyare not used to dealing with contracts and do not understand the advantages of a potentiallong term and stable business relationship against an unstable short opportunity.

The level of education and experience in long-term planning played an important rolein how small farmers responded to biodiesel business opportunities. As discussed inSection 5, distrust between industry and farmers was also common. For example,according to our focus groups, many farmers believed that they were being offeredlower prices that what was being offered by other sectors. Castor has many otherindustrial applications, and can thus fetch higher prices than other biodiesel feedstocksuch as soy and palm oil, albeit at much smaller volumes. However, farmers oftenexpect similarly high prices, even though the volume needed for biofuels is muchgreater and thus may provide greater profitability through economies of scale.

Consistent with much of the sustainable supply chain literature that emphasizes theimportance of knowledge diffusion, one of the requirements placed on industry toobtain the Social Fuel Stamp is providing technical assistance to small farmers.

However, industry executives and EMBRAPA officials stated that many farmers oftendid not follow advice. For example, since castor plants can be found almost anywhere(including empty lots and landfills), farmers unfamiliar with this crop assumed thatspecialized techniques were unnecessary, but without proper crop management andenhanced varieties, productivity is low and of poor quality (Severino et al., 2006a, b).Biodiesel refinery managers stated that the costs for the technical assistance were oftenhigher than the Social Fuel Stamp tax exemptions, and that operational andtransaction costs required to manage contracts with thousands of geographicallydispersed small farmers created difficulties. Most of these farmers had no experiencewith contracts, simple accounting principles or other basic management knowledgesuch as the benefits of scale economies. For example, we tried to explain the theoreticalbenefits of long term, high-volume contracts over small, one-off sales (at a higher price)

in a follow-up interview with the president of a small castor farmers co-op, but he wasadamant that such contracts were only another mechanism to keep poor farmers poor.Conversely, farmers often complained that the refiners failed to provide useful advice.

The president of a chemical company that refines castor oil, as well as a seniormanager of Petrobras stated that the social program for biodiesel will not work, and thatit will follow a similar route as ethanol, with only large-scale producers, in spite of thesetax incentives. They further suggested that soybeans would likely emerge as thedominant crop, which, in contrast to palm and castor, is highly suitable for mechanized,large-scale production and already has an established supply chain in Brazil foodproduction. Unlike sugarcane, soybean farming has infringed on protected areas in, forexample, the Amazon region. Although biodiesel from soybeans may likely to be themost cost-effective crop, it is less attractive than castor or palm on environmental and

social parameters, and it would thus not qualify as a sustainable supply chain.Dispersed biodiesel suppliers have increased transaction costs, leading to a greater

role for co-ops and wholesalers. According to a senior manager of a national biodieselrefinery company, the wholesalers play only an arbitrage role and do not participate ininformation diffusion or social programs. The co-ops are typically small operations,but possess adequate managerial and technical staff, and act as a bridge betweenimpoverished farmers and the refiners and research institutes. We thus suggest thatthe co-ops are an important mechanism in the diffusion of technical and basic business


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knowledge up the supply chain. However, we also suggest that economizing pressuresto avoid shirking costs and to reduce transaction costs from a widely dispersed supplybase encourages sourcing from large-scale farmers, at the expense of the socialprograms, much like ethanol.

Another factor hindering effective sustainable supply chain dynamics is therelatively limited pressure from activism, which can be partly attributed to the noveltyof the industry. At the time of writing, only limited activist regarding, for example, theexpansion of soybean farming into protected areas like the Amazon Rainforest wasemerging. Most activism was targeted at the government, and while our interviewswith activists groups talked about the industry in a general sense, none made explicitreference to a specific company or large-scale producer. Most of these firms are buriedin the supply chain, unknown by the general population and internationally. Theexception is Petrobras, located at the end of the supply chain. This company possessesthe capabilities necessary of a channel leader/focal firm channel power, technicalcompetencies and a national and international high profile near the end customer.

8. DiscussionSustainability researchers have argued that supply chain managers need to play agreater role in improving the social and environmental impacts of industrial systems.The resultant sustainable supply chain discourse has further argued for the diffusionof not only environmental, but also social improvements throughout the supply chain.Another stream of sustainability research argues that social inclusion in impoverishedBOP segments of society can be achieved by providing entrepreneurial opportunitieswithin supply chains. This paper discussed the challenges of implementing sucharguments in the biofuels supply chain, which, to the best of our knowledge, has notbeen explored empirically in the sustainable supply chain literature.

Table III is a comparative summary of our two cases and the key sustainable supply

chain issues discussed in Section 3, with our assessment of either positive () ornegative (2) for each issue. As shown in the table, the ethanol supply chain providesgreater economic benefits over the Social Stamp biodiesel supply chain through greatereconomies of scale and lower transaction costs. For environmental issues, both types offuel are renewable and emit lower CO2 emissions when compared to petroleum-basedfuels. Large-scale ethanol production typically creates greater environmental impacts,although large-scale biodiesel from soybeans is likely to have similar impacts, andcould additionally threaten protected rainforests.

For social issues, both biofuels contribute towards national energy self-sufficiencyand employ thousands of people. However, ethanol contrasts with biodiesel by onlyoffering poor working conditions for impoverished communities, with fewopportunities for social inclusion. Policies shaping the biodiesel supply chain haveexplicitly addressed the governments social inclusion mandate, in an attempt todistribute wealth more equitably by encouraging poorer communities to compete viasuitable crops. However, there were also impediments to supply chain knowledgediffusion. We found that extending the supply chain to include BOP segments ofsociety exacerbates transaction costs due to their geographically dispersed, small-scaleproduction and due to impoverished farmers lack of understanding of basic technicaland business knowledge. Many farmers also did not trust other supply chain membersand technical advisors from for example EMBRAPA, and were skeptical that these

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new biodiesel policies were no more likely to improve their situation than previousgenerations of agricultural modernization. This distrust is perhaps understandable,given that previous attempts at agricultural reform led to social disruption. AlthoughBrazilian policy makers have recognized the importance of providing entrepreneurialopportunities for impoverished communities in the biodiesel supply chain, thereremain considerable economic pressures to economize on transaction costs by avoidingthe sourcing of raw materials from dispersed illiterate farmers.

Ethanol supply chainBiodiesel (social stamp) supplychain

Economic issues Low transaction costs,economies of scale throughmodern, concentrated farmingpractices ()

High transaction costs; lack ofeconomies of scale due to widelydispersed suppliers (2)

Environmental issues Renewable energy source () Renewable energy source ()CO2 emissions reductionattributes ()

CO2 emissions reductionattributes ()

Potential impact on biodiversitydue to mono-crop production (2)Displacement of other farming(e.g. cattle) into protectedareas (2)Environmental impacts fromlarge-scale production (e.g.

water usage, waste disposal,energy requirements, andpesticide and herbicideusage) (2)

Dispersed production likely tohave lower local environmentalimpacts (e.g. water usage, wastedisposal, energy requirements,and pesticide and herbicideusage) than large-scaleproduction ()

Potential problem if soybeansbecame main feedstock andmove into protected areas (2)

Social issues Contributes towards nationalenergy self-sufficiency ()

Contributes towards nationalenergy self-sufficiency ()

Poor working conditions (2)Does not provide opportunitiesfor social inclusion (2)

Consistent with governmentmandate for social inclusion, andpotential to distribute wealthmore equitably ()Opportunity for poorercommunities to compete viasuitable crops (e.g. castor andpalm) ()

Impediments to knowledgediffusion within the supplychain

Power and knowledgeasymmetries among supplychain members relatively low()

Power and knowledgeasymmetries between farmersand other supply chain membershigh (2)

Lack of incentives to diffusesustainability practices withinthe supply chain (2)

Lack of basic businessknowledge among impoverishedfarmers (2)Lack of trust between farmersand refiners, technical advisors(2)

Profile of focal firm Most supply chain memberslow-profile

Petrobras emerging as dominantfocal company

Table III.Summary of findings:ethanol versus social

stamp biodiesel supplychains


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In the future, government and industry could improve trust by engagingimpoverished farmers in early stages of policy development. We also suggest basicbusiness education targeting impoverished farmers is needed. However, we alsoacknowledge that further research is needed to understand how such education can be

provided to people that have never received formal training. Indeed, entrepreneurialdynamics within impoverished communities remains largely unexplored[7]. The recentBOP discourse is starting to investigate entrepreneurial dynamics of illiterateentrepreneurs, and a stream of research on social entrepreneurship is emerging (for asummary, see Zahra et al., 2009). An example within Brazilian agriculture is the roleplayed by the presidents of the co-ops, some of which are educated and competententrepreneurs. Such actors are often capable of bridging the gap between impoverishedfarmers and the distributors and refiners, and could act as a conduit for basic businesseducation and the establishment of trust.

The role of Petrobras as the focal firm is also crucial. The sustainable supply chainliterature has emphasized the importance of a channel leader/focal company with ahigh profile, under pressure and with sufficient competencies. Petrobras is the onlycompany that fits this profile. Their role in ethanol has been secondary, and there arecurrently no other dominant players in this supply chain. As a result, no single firmwith sufficient channel power is under pressure to encourage social inclusion policies,and thus there is a lack of incentives to diffuse sustainability practices within thesupply chain. For biodiesel, Petrobras have not to date been under any significantactivism pressure to enforce the biodiesel social policies, albeit this may be due to thenovelty of the programs. Petrobras, like other firms, are under pressure to economize,but unlike many firms, the social policies are consistent with their recent strategicorientation towards sustainable development (Gabrielli de Azevedo, 2009) that hasreceived international acclaim[8]. Without action from a focal company like Petrobras,we believe that the sustainable supply chain for biodiesel will fail and follow a similar

path as ethanol, with large-scale producers under pressure to reduce labor costs andexpand into protected areas. A failure of the Social Stamp could also lead to NGOactions against Petrobras and an erosion of their reputation, as cautioned byRoberts (2003).

The message for supply chain managers and logistics scholars is twofold. First,there is increasing pressure for firms to improve the environmental and socialimpacts of their supply chains by providing opportunities for impoverishedcommunities. However, such potential suppliers will likely differ from traditionalsuppliers, due to knowledge asymmetries, increased transaction costs and, in thecases presented here, distrust of companies trying to implement such programs.Second, supply chain approaches that solely emphasize efficiency are incongruentwith the sustainability concept, and would likely lead to large-scale production,

resulting in the failure of environmental and social policies. Collaborative approachesmay be more conducive of such policies, but dealing with poorly educated farmersremains an insufficiency understood challenge, reiterating our call for further researchon entrepreneurial dynamics within impoverished communities. We suggested thatco-ops can bridge this knowledge asymmetry, and recommend that supply chainmanagers should encourage the selection of competent co-op presidents, foster theirdevelopment and eventually develop their trust through collaborative supply chainefforts.

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9. Concluding remarksAlthough the challenges of incorporating impoverished farmers within the biodieselsupply chain may seem daunting, there are likely to be long-term benefits that willeventually make such efforts worthwhile. Consistent with Nelson and Winters (1982)

evolutionary perspective on economic change as the driver of, and solution to negativeexternalities, the development of Brazilian ethanol involved a series of solutions tospecific problems, which in turn created more problems that are now being addressed.During this process, Brazilian ethanol producers overcame significant challenges tobecome one the worlds most efficient producers. Biodiesel supply chain managers arenow in a similarly challenging stage. However, while the difficulties of generatingbasic business knowledge and trust with poor farmers may be a major challenge, thepotential payoff, if successful, could for example be applied to the ethanol sector, oropen major sources of biofuels in other impoverished regions throughout the world.

Notes

1. See, web site: www.fomezero.gov.br/o-que-e (accessed December 22, 2008).2. On site interviews were conducted in Brasilia, Campina Grande, Foz do Iguassu, Joao Pessoa,

Petrolina, Manaus, Porto Alegre, Recife, Rio de Janeiro, Salvador, and Sao Paulo.

3. According to EMPRAPA, over 99 percent of sugarcane production is at least 2,000 km awayfrom the Amazon (Goes and Marra, 2008).

4. The scientific and technical attributes of environmental impacts of biofuels are beyond thescope of this research.

5. See, web site: www.mstbrazil.org/?q1/4about (accessed December 21, 2008).

6. According to Reid (2007), only about half of Brazils arable land, excluding protected regionssuch as rainforests is currently under cultivation.

7. For example, until recently the mainstream entrepreneurship journals such as the Journal of

Business Venturing, Entrepreneurship: Theory & Practice and the Journal of Small BusinessManagement have published no substantial empirical studies on illiterate entrepreneurs,whereas the empirically-based sustainable supply chain literature has generally assumedrelative homogenization of knowledge levels among supply chain members.

8. Since 2006, Petrobras has been listed in the Dow Jones Sustainability Index, and wasrecognized as an industry exemplar in a Management and Excellence (2008) Survey, whichrecognized Petrobras as the worlds most sustainable oil company. A Goldman Sachs Group(2007) study on sustainability, firms competitive advantage within its industry and cashreturn in four major industry sectors found Petrobras was one of only four energy companiesevaluated to be among the leaders and the only one from an emerging economy. SeeGoldman Sachs Group (2007), available at: www.unglobalcompact.org/docs/summit2007/gs_esg_embargoed_until030707pdf.pdf (accessed February 16, 2009). Fortune Magazinesranking of the top 100 most accountable firms, based on the quality of their commitment to

social and environmental goals, placed Petrobras at 41. See, web site: http://money.cnn.com/magazines/fortune/global500/2008/accountability/index.html (accessed February 10,2009).

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Further reading

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About the authorsJeremy Hall (DPhil, Science and Technology Policy Research, University of Sussex (1998-1999))is an Associate Professor of Strategy in the Faculty of Business Administration, Simon FraserUniversity. His research interests include sustainable development innovation, stakeholderambiguity, sustainable supply chains, radical technology development, and entrepreneurial

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learning for social inclusion. He has conducted international research in a wide range ofindustrial settings with support from Genome Canada, the Social Sciences and HumanitiesResearch Council, the International Development Research Centre and the CanadianInternational Development Agency. His research has been published in, for example,

Entrepreneurship Theory & Practice, Greener Management International, Harvard BusinessReview (Latin American Edition), Industrial & Corporate Change, Journal of Business Ethics,Journal of Business Venturing, Journal of Cleaner Production, Journal of OperationsManagement, MIT Sloan Management Review, and R&D Management and Research Policy.Jeremy Hall is the corresponding author and can be contacted at: [email protected]

Stelvia Matos (PhD, Civil Engineering University of Sao Paulo, Brazil) is a ResearchAssociate with the Centre for Policy Research on Science and Technology and an AdjunctProfessor with the Faculty of Business Administration, Simon Fraser University. Her researchareas include Brazilian industrial and sustainable development policy, sustainable developmentinnovation, life cycle assessment and environment management tools, performance indicators,and social aspects of innovation. Her work has been supported by Genome Canada, the SocialSciences and Humanities Research Council, the International Development Research Centre andthe Canadian International Development Agency, resulting in publications in Harvard Business

Review (Latin American edition), International Journal of Technology, Knowledge and Society,Journal of Cleaner Production, Journal of Operations Management, and Research Policy andJournal of Business Ethics.


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