The effect of supplier integration on a firm’s international sustainability
strategy in developed and emerging economies.
A data-based research into an increasingly relevant business topic.
Master Thesis
Student: Evert van Dijk
Student number: 10663142
University of Amsterdam, Business studies- Strategy Track
Supervisor: Dr. Sebastian Kortmann
University of Amsterdam, Amsterdam Business School
Table of contents
Abstract ... 3
1. Introduction ... 4
2. Literature review ... 6
2.1 Supplier integration ... 6
2.2 International sustainability strategies ... 9
2.3 Emerging and developed economies ... 13
3. Theoretical framework ... 16
4. Methodology ... 20
4.1 Research design ... 20
4.2 Sample ... 21
4.3 Measurement of variables ... 21
4.3.1 Independent variable ... 21
4.3.2 Dependent variable ... 22
4.3.3 Moderating variable emerging economies ... 23
4.3.4 Moderating variable developed economies ... 24
5. Results ... 25
5.1 Descriptive analysis ... 25
5.2 Crosstabs and Chi-square test ... 27
5.3 Logistic regression ... 33
5.3.1 Interaction of emerging and developed markets ... 44
6. Discussion ... 51
6.1 Managerial implications ... 55
7. Conclusion ... 56
8. Limitations ... 57
9. Future research ... 58
10. References ... 59
Abstract
Sustainability has increasingly become important to business research and practice as a result of concerns over natural resources and corporate social responsibility. The so-called triple bottom line seeks to evaluate business performance on its impacts on the stakeholders and environment. Existing knowledge on sustainability has acknowledged the role of sustainability in long-term profitability. In attempting to operate more sustainable, companies start to integrate suppliers. The suppliers of developed companies are increasingly located in emerging markets, since substantial cost savings can be achieved there. The several differences between developed and emerging markets has resulted that a firm’s international sustainability strategy in one specific market may be less applicable and in need of modification in another market. In an attempt to explain the relation between supplier integration and a firm’s international sustainability strategy in different markets, several indicators are selected to measure the variables. A quantitative database study is performed to research this relationship. The results showed a positive relationship between supplier integration and a firm’s international sustainability strategy. Significant moderating effects have been found on this relationship. From developed markets mostly positive and from emerging markets negative. Although interacting effects have been found, the expected impact of the moderator is lower than the positive effect between de independent and dependent variable. However, the results provide contributions to theory and practice, as well as avenues for future research.
1. Introduction
‘You can never have an impact on society if you have not changed yourself. Nelson Mandela
(Escotet, 2013)
Society calls for sustainability. For sustainability, every stakeholder of society has to look to itself to have an impact on society according to Mandela. Individuals cannot contribute significantly, since their impact is relatively low. Therefore, pressure from politics and NGO’s on companies to contribute to sustainability because they can make a significant impact (Eweje, 2011). This pressure is based on the widespread acknowledgement that business can play a significant role in reducing declining environmental quality, poverty, and social inequality ,and in advancing society towards sustainable development (Dao, Langella, & Carbo, 2011). Therefore, their contribution might be larger than it is individually. As a result, legislation concerning the responsibility of firms is expanding. Translating this into Mandela’s words: if my company works more sustainable, we can have an impact on society.
What does it mean, working more sustainable? A sustainability-oriented firm strives for financial and competitive success, social legitimacy, and efficient use of natural resources (Perrini & Tencati, 2006). This may be beneficial for companies, because scholars argue that a firm’s long-term profitability and existence are best realized by balancing them with social and environmental goals (Dao et al., 2011). Next to the profitability, society could benefit as well in terms of social, environmental and economic factors. If companies aim for profitability and existence on the long run, they should take sustainability into account.
In attempting to operate more sustainable, companies can amongst others improve their supply chain to enhance their overall sustainability profile (Koplin, Seuring, & Mesterharm, 2007). Companies should look critically, because they are the one held responsible for environmental and social problems caused by their suppliers, which become more and more important (Carter & Jennings, 2004). One way to improve the supply chain is the integration of external business processes, which is labeled as supplier integration (Yeung, Selen, Zhang, & Huo, 2009). Supplier integration is relevant, because many scholars believe that effective supplier integration is a key factor to enhance firm performance, keep competitive advantage, is paid better and more examined by managers (Fu-jiang, Ye-zhuang, & Xiao-lin, 2006).
The likelihood that these suppliers are located in emerging economies is rising, companies from developed markets such as the United States and Europe increasingly rely on suppliers from emerging markets in favor of their global competitiveness (Ehrgott, Reimann, Kaufmann, &
Carter, 2011). This expectation is based on the economic growth of Asian countries, coupled with substantial cost savings, achieved through access to low cost labor, capital, machinery and land (Enderwick, 2009). There are several differences between emerging and developed markets such as language, politics and culture (Kearney, 2012) . That is why a distinction between developed and emerging economies is interesting since international business strategies in developed economies are less applicable and in need of modification in emerging economies (Peng & Heath, 1996). Consequently, corporate strategies should take this distinction into account (Jansson, 2008).
Why this study? There is a need to understand the business cases for sustainability better. It is important to measure, identify, and understand how firms change through adopting and implementing the concept of sustainability ( Lee, 2009). Current literature suggest a strong link between supplier integration and firm performance (Eltantawy, Giunipero, & Fox, 2009). Moreover, research on collaborative approaches within the supply chain and their impact on performance measures have already been extensively researched (Thun & Müller, 2010). There seems to be a common view that a positive correlation between supplier integration practices and firm performance exists (Aviv, 2001). Current research on supplier integration in emerging economies is scarce (Lockstrom, Schadel, Moser, & Harrison, 2011). To conclude, the effect of supplier integration on a firm’s sustainability strategy is still an underexposed research topic, especially in combination with developed and emerging economies despite of the increasing relevance.
This study will contribute to the knowledge about supplier integration in combination with a firm’s sustainability strategy, especially in developed and emerging economies. As a result, the following research question can be formulated:
What is the effect of supplier integration on a firm’s international sustainability strategy in developed and emerging economies?
According to this research question, the following sub-questions are developed to also shed a light on the context of the main research question:
- Is there an alignment of the supplier’s strategy and the international strategy of the firm?
- To what extend should suppliers be integrated? - What is the specific contribution of suppliers?
- Why do companies develop international sustainability strategies? - Why a distinction between emergent and developed economies?
After introducing the research topic, available literature will be collected and discussed. The current literature and research topic will result in a theoretical framework. In the following section the methodology of the research conducted will be explained and justified. As a consequence, a qualitative KLD database will be analysed to test the hypotheses. In the end, the conducted research will be discussed, conclusions drawn, limitations mentioned and opportunities for future research suggested.
2. Literature review
This chapter will give insights of the current relevant literature for this paper. A literature review is necessary to find out what is researched and what is told about this topic. Current literature combined with new research will contribute to more knowledge in this field of studies. The literature is divided into three sections: supplier integration, firm’s international sustainability strategy and research concern emerging and developed economies.
2.1 Supplier integration
The trend towards globalization has intensified business competition and resulted in shrinking profit margins in many industries. One strategy to restore profit margins is the shift from the firm level competition to the supply chain level competition (Ketchen Jr. & Giunipero, 2004). Increasing demands for reduced costs, increased quality, improved customer service and continuity of supply have significantly affected supply management within organizations (Ogden, Petersen, Carter, & Monczka, 2005). This is supported by Walton, Handfield, & Melnyk (1998) who argue that large customers have exerted pressure on their suppliers for better environmental performance, which results in greater motivation for suppliers to cooperate with customers for environmental objectives. Commodity and price based supplier relationships are no longer satisfactory for suppliers of critical materials or for firms that seek to enhance their supply chain, especially firms that focus on socials and environmental issues. Solely being cost efficient in supply chain management does not suffice. Alternatively, supply chains should be agile, adaptable and aligned to meet the challenges of competitive environments (Lee, 2004). In this context, the need for supply chain integration has been set in various industries, and it requires cooperation among firms in the same supply chain enhance performance (Yeung et al., 2009). According to Flynn, Huo, & Zhao, (2010), three dimensions of supply chain integration can be identified: customer, supplier and internal integration. The preliminary focus will be on supplier integration. Actions, such as supplier participation in cross-functional teams, proactive support for product development processes, and early involvement in the design process are indicators of supplier integration in the supply management process (Jaspers & van den Ende, 2006). Supplier integration is distinguished
from the broader concept of supply chain integration by a primary focus on intra-company and supply base integration (Das, Narasimhan, & Talluri, 2006).
Multiple authors have researched supplier integration and used different definitions. What is meant by supplier integration? One of the definitions is: “the combination of internal resources
of the buying firm with the resources and capabilities of selected key suppliers through the meshing of inter-company business processes to achieve a competitive advantage” (Wagner,
2003, p.926). In other words, it is the process of incorporating or bringing together different groups, functions, or organizations, physically or by information technology, to work jointly and on a common business-related assignment or purpose
(Eltantawy et al., 2009).
To show the diversity of supplier integration another definition can be “the degree to which a
firm can partner with its key supply chain members (suppliers) to structure their inter-organizational strategies, practices, procedures and behaviors into collaborative, synchronized and manageable processes in order to fulfill customer requirements.” Zhao, Nie,
Huo, & Yeung, 2006) This means in practice that supplier integration favors the use of a supply chain optimization approach to reduce the supply chain base through intensive information sharing, supplier involvement and supplier development, based on the rationale that collaborating with key suppliers can improve the operational efficiency and responsiveness of the entire supply chain (Yeung et al., 2009).
As a consequence, companies critically observe their supply chain. Krause, Handfield, & Scannell (1998) pointed out that many companies seek supplier improvements in delivery and costs. Supplier integration goes beyond improvements in delivery and costs, and concentrate on single or dual sources of supply, assessing alternative sources on the basis of quality and delivery instead of price, work with long term contracts, reducing buffer inventories and eliminating formal paperwork (Handfield, 1993). The supplier improvements enables firms to meet customers’ requirements and responding to changes in the marketplace (Koufteros, Vonderembse, & Jayaram, 2005). This supplier integration is appealing for the following reasons (Ragatz, Handfield, & Petersen, 2002); 1) supplier integration improves information exchange and expertise, which will enhance the quality of the final product, 2) it improves the coordination of activities, 3) it creates an improved relationship with the supply base, which will have a positive effect on future projects. These activities of supplier integration can be a valuable source of supply management’s competitive advantage since it enhances; responsiveness, flexibility, timesaving capabilities, higher quality, sharing of cost savings, which all increase supply chain value (Eltantawy et al., 2009). Moreover, supplier integration
contributes to a firm’s competitive advantage, since it is hard for competitors to copy this process or at high economic costs (Eltantawy et al., 2009). Other benefits from supplier integration include improved supplier reliability and communication (Carr & Pearson, 1999). As a result, studies have linked supplier integration to greater performance (Frohlich & Westbrook, 2001).
Negative effects of supplier integration exist as well. Researchers have attacked integration as a strategy that slows an organization's response to change. By fostering interdependencies, integration potentially creates inflexibility and hinders adaptation to uncertainty. Another issue is the unanticipated subsequent costs of successfully implementing an integration program. Among the costs of integration are the costs of coordination, the costs of compromise and the costs of inflexibility (Horwitch & Thietart, 1987). The need for participation and coordination may lead to longer response times or increased human capital requirements (Das et al., 2006).
There is also an external dimension of supplier integration and can be viewed as inter-firm collaboration, which exist because of knowledge that is ‘’imperfectly embedded’’ in the product and requires a separate exchange device to be fully understood and internalized by the supplier (Grant & Baden-Fuller, 1995). This external dimension of supplier integration incorporates buyer-supplier sharing of sensitive data and information (Frizelle & Efstathiou, 2003), strategic buyer–supplier partnerships, high levels of trust and joint buyer–supplier problem solving (Scannell, Vickery, & Droge, 2000), purchasing investment in supplier development (Hahn, Watts, & Kim, 1990), direct investments with suppliers (Krause et al., 1998a), and the development of collaboration structures (Das et al., 2006). These inter-firms collaboration activities possibly increase the supply chain performance, since studies showed that supply chain’s profits can be maximized if the individual partners would act as if they were one profit-maximizing firm, and can be referred as supply chain coordination (Li & Wang, 2007). The supply chain performance can also be measured in sustainability performance, instead of profit performance. Logically, in order to be effective in sustainability terms, the entire supply chain must operate in a sustainability manner (Carter & Rogers, 2008). It makes little sense if one supply chain partner has a strict sustainability policy and its supplier or distributor makes decisions without regard to sustainability consequences. Firms that truly consider sustainability issues will seek to do business with other firms that appreciate this view. This will lead to a sustainable supply chain of partners who integrate the planet and people into managerial decision-making (Dao et al., 2011).
Sustainability issues are important for companies and are perceived as their largest supply chain risk. Moreover, firms require suppliers to obey social and ecological standards in order to diminish supply chain risk (Harwood & Humby, 2008). The nature of this desire stems from
the desire of external stakeholders such as NGO’s and customers to consider social and economic production at the company’s supplier’s sites. So, any kind of irresponsible sustainability behavior of the supplier may be projected to the buying firm, causing adverse publicity, reputational damage, and costly legal obligations (Carter & Jennings, 2004). This means that firms cannot transfer the risk of unacceptable sustainability standards to the supplier when they outsource production, but must manage actively the supply base for sustainability (Foerstl, Reuter, Hartmann, & Blome, 2010).
In short, companies have to find ways to incorporate environmental and social aspects into their supply chain management (Koplin et al., 2007). Consequently, supply management has become more involved in developing and implementing strategies and enjoys a larger role in formulating corporate strategies (Ogden et al., 2005).
The importance of incorporating sustainability within the company, especially the supply chain, has been discussed extensively. Other topics have not been discussed yet such as the meaning of sustainability and what kind of international sustainability strategies exist.
2.2 International sustainability strategies
Today, the concept of sustainability has a vast position in society. There is an obvious difference in sustainability between firms five years ago and now. That is why multiple questions can be raised: Why do companies implement sustainability in their organization? Do they really believe in a better world? Change company image towards the outside world? Maximize profits? The trend of corporate social responsibility prompts management scholars and practitioners pay more and more attention towards the social responsibility of organizations (Dao et al., 2011). Current research seems to show that corporate social responsibility (CSR) and corporate sustainability (CS) are converging due to their shared environmental and social concerns. A slight difference can be found in that corporate sustainability is more focused on the social dimension as part of the sustainability paradigm and corporate social responsibility is more concentrated on environmental issues as part of the social performance dimension. However, both concepts comprise economic, social, and environmental dimensions (Montiel, 2008). In this perspective, value creation processes are diverse and meet the stakeholder expectations (Perrini & Tencati, 2006). The sustainability of a company depends on the relationship with multiple stakeholders, a firm must involve all their stakeholders; shareholders, suppliers, public authorities, employees, clients, civil society, financial partners et cetera (Perrini & Tencati, 2006). These relationships become more and more a guiding principle for managerial decision-making process, to assure the quality of sustainability, and are the pillar of a more comprehensive corporate strategy (Perrini & Tencati, 2006). Literature of business disciplines such as management and operations, support the view that companies adopt the term
sustainability in their business. A majority of the global firms generate a separate annual sustainability report, which refers to an integration of social, environmental, and economic responsibilities. In addition, a large majority of these firms discus supply chain-related issues (Carter & Rogers, 2008). So companies are aware of the importance of sustainability and most managers have accepted corporate sustainability as a precondition for doing business. Moreover, numerous firms appoint corporate sustainability officers, publish sustainability reports, and incorporate sustainability into their corporate communication strategies (Dyllick & Hockerts, 2002).
Numerous leading companies such as IBM, Hewlett Packard and Nike emphasize that sustainability initiatives are closely interwoven in their corporate strategies (Carter & Rogers, 2008).
Despite of this, companies adopt sustainability in their business, there is some critique that firms do not pay enough attention to their social and environmental impact. In most cases, caused by the firm’s lack of understanding that environmental and social issues have become an economic reality (Schaltegger & Synnestvedt, 2002). Firms do not acknowledge that environmental and social issues influence both costs and income of company and thus have a direct influence on the economic performance (Eweje, 2011). Sustainability does not have to be perceived as a liability, research have shown that environmental performance and economic performance are positively linked (Russo & Fouts, 1997), and companies engaging in sustainability activities have gained legitimacy and increased market value (Dao et al., 2011).
The concept sustainability is complex and will be explained in more detail. Sustainability aims to achieve societal evolution towards a more fair and wealth world, in which the natural environments and cultural achievements are preserved for generations to come (Dyllick & Hockerts, 2002). That is the reason why organizations, in particular with a global presence, are required to adopt sustainability in their strategy, many of these organizations have accepted their responsibility (Eweje, 2011). In practice, companies develop new business opportunities in order to stay competitive. For example, firms strive to produce cleaner as more businesses are realizing that reducing pollution and their social impact can lead to economic benefits (Eweje, 2011).
Multiple authors defined the term sustainability, but the most well-adopted and most often quoted definition of sustainability is the of the Brundtland Commission (World Commission on Environment and Development, 1987, p. 8): “Development that meets the needs of the
present without compromising the ability of future generations to meet their needs.” Crane &
long-term maintenance of systems according to environmental, economic and social considerations.” The environmental perspective of sustainability deals with environmental
impacts due to corporate activities, such as the effect of industrialization on the production of pollution. The economic view of sustainability contains the long-term economic performance as well as their impact on the economic framework in which it operates. The social perspective emphasizes the notion of social justice; values such as freedom and extreme poverty, hunger and disease, the right to basic education, and the promotion of gender equality (Bonn & Fisher, 2011). Furthermore, social sustainability is aimed to positively affect all present and future relationships with stakeholders (Baumgartner & Ebner, 2010).
When translating this concept to the business level, corporate responsibility is considered to meet the need of firm’s direct and indirect stakeholders, taking into account the needs of future stakeholders as well (Dyllick & Hockerts, 2002). It can be rather complicated for firms to understand, how to effectively balance organizational responsibilities to multiple stakeholders such as employees, shareholders, other organizations, society and the natural environment (Carter & Rogers, 2008). In a direct response to this, Welford (1995) indicated that strategies are necessary to translate this conceptual subject into practical reality.
In other words, organizations will have to develop appropriate environmental, economical, and social strategies for a dynamic sustainability policy (Eweje, 2011).
As a starting point, a perspective has emerged that divides organizational sustainability in three components: economic performance, the natural environment, and society (Elkington, 2004). This perspective is called as the Triple Bottom Line (TBL) (Dao et al., 2011). Organizations take people and the planet into account in addition to profit, effects on the stakeholders and environment will be considered when choosing between alternatives, leading to a more sustainable outcome (Dao et al., 2011). A growing majority of firms have embraced TBL reporting, alternatively labeled sustainability report or corporate responsibility (Dao et al., 2011). This means that firms’ financial and economic results need to go hand in hand with the minimization of ecological footprints and increased attention to social aspects (Lee, 2009). Moreover, Shrivastava (1995) argues that even risk factors can be assigned to sustainability issues, such as environmental waste, harm resulting from its products, and labor conditions. These risks can be managed by addressing these long-term sustainability issues early, by assessing the scarcity in resources used as inputs to the supply chain and fluctuations in energy costs (Carter & Rogers, 2008).
Porter & Van der Linde (1995) elaborate on that vision and believe that sustainability provides an opportunity to improve competitiveness in win-win logic. The literature supports this vision
that several benefits can arise from integrating sustainability issues into business operation; increased sales, development of new markets, increased efficiency in the use of resources, return on investment, improved corporate image, product differentiation and enhanced competitive advantage (Shrivastava, 1995). This means in practice that organizations face the task of identifying and implementing strategies that will allow them to effectively respond to environmental issues (Williams, Medhurst, & Drew, 1993).
Those strategies contain sustainability and aiming integration of long-run profitability with their efforts to protect the ecosystem, providing them with opportunities to achieve competitive advantage via environmental responsibility (Stead & Stead, 1992).
The firms that incorporate sustainability in their strategies/business operation can be described as sustainability-driven companies. The produced sustainable products may have a strategic role in economic, social and environmental terms (Albino, Balice, & Dangelico, 2009). Upfront, firms have to identify which aspects of business activities have substantial impact on sustainability issues; including energy consumption, labor practices, and work force diversity. The formulated sustainability strategy must be aligned with company’s values, commitment, and goals (Epstein & Roy, 2001). Since companies operate in a global environment, and sustainability issues go beyond country borders, we can assume that firms implement an international sustainability strategy rather than adapt it locally.
By researching the sustainability concept, different types of sustainability strategies can be identified (Baumgartner, 2005). The first one is an introverted strategy that aims on avoiding risk for the company, by the compliance of standards regarding social and environmental aspects. The pressure for compliance to these aspects originates from outside the company, however action is largely internally oriented, that is why it is labelled ‘’introvert’’. Action will only be taken if standards force a risk for the company. For instance, stakeholder pressure for labour conditions. Second, an extroverted strategy can be identified, focusing on external relationship of the company. The company aims to receive public acceptance including ‘’the license to operate and grow’’. The firm is transparent about relevant activities in favour of a trustful relationship. This does not imply automatically that these companies put maximal effort and progress in view of sustainability values. In numerous cases, firms communicate sustainability, such as sustainability reports, instead of real action taking towards sustainability. This strategy can lead to a transformative strategy that tries altering market conditions by interaction with the market. New market opportunities may show up in the light of sustainable development. Third, a conservative strategy can be recognized, focusing on eco-efficiency and cleaner production. These strategy concerns low consumption of materials and energy, and low costs by providing services and products. This efficient production processes bring forth
competitive advantage while environmental impacts are reduced. This strategy has a strong internal orientation. At last, a visionary strategy can be identified, focusing on sustainability issues within all business activities. A firm incorporates sustainable development in its vision and strategy. It attempts to offer customers and stakeholder’s unique advantages, through differentiation and innovation; logically competitive advantage has to be derived from it. Two different perspectives can view this visionary strategy; an outside-in perspective; focusing on market opportunities, and an inside-out perspective; concentrating on the resources of the company (Baumgartner & Ebner, 2010).
2.3 Emerging and developed economies
The world’s emerging markets has attained increased attention of sustained research in the past years. This increased attention has some reasons behind it. The majority of the world’s people and land originates in emerging economies, and they still grow faster than the developed world (Kearney, 2012). These emerging markets are increasingly recognized as a varied set of business, legal, political, cultural, institutional, economic, financial, and social environments. This provides the opportunity to obtain a better understanding about how the business world works, and potentially offers new insights that will enhance human welfare all over the world (Kearney, 2012). Companies in various industries, especially in developed economies, outsource in order to survive in the domestic and international marketplaces, and emerging markets such as China and India, have become increasingly attractive locations (Javalgi, Dixit, & Scherer, 2009). The majority of these suppliers will be located in Asia in the next couple of decades (Zhu & Sarkis, 2006). This expectation is based on the economic growth of Asian countries, coupled with substantial cost savings, achieved through access to low cost labor, capital, machinery and land (Enderwick, 2009).
The expected growth of the world’s manufacturing in Asia will create opportunities in this part of the world, but it will also cause (environmental) challenges (Zhu & Sarkis, 2006). The quality and quantity of the products/services produced by (local) suppliers in emerging countries is increasing dramatically (Enderwick, 2009). Moreover, the integration with (local) suppliers originated in emerging markets has affected the strategic thinking of companies (Enderwick, 2009). They are confronted with a continuing discussion about corporate social responsibility initiatives and practices, promoted by (business) leaders around the world, particularly in developed countries. These (business) leaders realize the importance of survival in the face of global competition (Eweje, 2011).
Yet not all organizations are exposed to the same types of pressure or to the same extend. This pressure is increasing, also for developing countries, since emerging countries enter into the World Trade Organization (WTO) which may result in higher pressure and drivers for emerging
countries enterprises to improve environmental performance (Zhu & Sarkis, 2006). NGOs try to contribute to this higher pressure, although they are not politically legitimated in all emerging economies, they will certainly play an important role in the future as social and economic development moves forwards (Child & Tsai, 2005). The pressure from different angles is necessary, since emerging economies prioritize economic development, and had contributed little to historic environmental harm (Eberlein & Matten, 2009). However, some emerging countries face problems regarding enforcing regulations, due to factors such as; a culture of corruption and a lack of sufficiently qualified personnel (Child & Tsai, 2005). Moreover, emerging countries are not familiar with sustainable initiatives, because it has been tolerated in the past, and the companies do not have to defend global reputations.
Another challenge for emerging countries is monitoring firms in their supply chain, since they have lower capabilities to do so in comparison to companies from developed countries (Christmann & Taylor, 2006). This is all contradictory for developed countries, there exist even a platform of fair trade advocates, consumer groups, and environmental lobbies, these are rare in developing countries (Reardon, Codron, Busch, Bingen, & Harris, 1999).
This increases the interest in who and what we mean with emerging markets. There is actually not a generally agreed consensus on theoretical or either operational definition of an emerging market. Emerging economies can be defined as ‘low-income, rapid-growth countries using
economic liberalization as their primary engine of growth’ (Hoskisson, Eden, Lau, & Wright,
2000, p.249 ). Czinkota & Ronkainen (1997) identified three characteristics associated with an emerging economy: economic growth, level of economic development, and market governance.
Economic growth is normally measured in terms of a country’s gross domestic product (GDP)
growth rate. Countries are referred as an emerging market when their GDP growth rates exceeds five percent in the last couple of years, with some markets, especially in East-Asia, presenting double-digit growth rates. The level of economic development is also measured in GDP, but in GDP per capita. This is a good indicator for an emerging market since it is related to population’s wealth and level of industrial and service sector development. The last criterion is
country’s market governance. Market governance incorporates the following: government
control of key resources, the level of free-market activity, the regulatory environment and the stability of the market system.
In short, emerging markets are diverse in language, politics, and culture. Their physical financial infrastructure is relatively well-developed including central banks, but they tend to have less developed processes and systems in terms of accounting, regulation, governance, and less efficient markets, compared to developed markets (Kearney, 2012). Other characteristics of an emerging market are bureaucracy, high inflation rates, corruption, and poor infrastructure
(Zhou & Hui, 2003). A range of international financial institutions, such as the Financial Times Stock Exchange, uses different methodologies and categories to assign countries to an emerging or developed market. If we combine the classification of the Financial Times Stock Exchange (FTSE) and the Bloomberg's Morgan Stanley Capital International (MSCI) emerging market index, we yield the following 27 countries: Argentina, Brazil, Czech Republic, Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Israel, Jordan, Malaysia, Morocco, Mexico, Pakistan, Peru, Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand, Turkey, United Arab Emirates, and Venezuela. Most importantly, the remark must be made that emerging markets are distinct in terms of language, politics and culture (Kearney, 2012).
On the other hand are developed economies; they consist of countries that have developed markets and are therefore considered to be less risky. We use the International Monetary Fund (IMF) list to develop this list. This way of reasoning is supported by previous research of (Demirgüç-Kunt & Detragiache, 1998). This list is made on the basis of; market and regulatory environment, income, custody and settlement, and dealing landscape. The following countries are covered by these characteristics; Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Luxembourg, The Netherlands, New Zealand, Norway, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, United Kingdom and the United States of America. Current literature emphasizes mostly on a comparison of two countries instead of two economies.
The growing importance of emerging economies continues, their population levels and high rates of economic growth provide the opportunity to reach a large target market for consumer durables. Second, large emerging markets offer the possibility to produce at lower costs through global sourcing or local production. That is the reason why we can expect that the development of emerging markets significantly affect the strategies of international business (Enderwick, 2009). Some researchers suggest that emerging markets become increasing important in strategy formulation, cause a change in the composition top management teams, and are interrelated to more complex and integrative strategies (Hitt, 2006). Despite of that, most research was focused on strategy adaption for successfully entering emerging markets (Enderwick, 2009). Although, it would be interesting to research the factors of sustainability strategies in emerging markets, and especially whether they differ from those in developed markets (Danis, De Clercq, & Petricevic, 2011). Different results will be expected since; the rapidly changing institutional environments that illustrate emerging markets will differ in fundamental ways from those in developed markets (Danis et al., 2011). Emerging markets are shaped by the formal and informal institutions, who determine ‘’the rules of the game’’ (North, 1990), strategy and performance can be derived from these institutions in these emerging
economies (Peng, Wang, & Jiang, 2008). Furthermore, companies in emerging markets are for a greater degree guided by informal institutions, this is the result of not promoting mutually beneficial exchange between economic participants by the formal institutions that do exist in emerging markets (Young, Peng, Ahlstrom, Bruton, & Jiang, 2008). For example, emerging markets do not have an effective and predictable rule of law, which builds a weak governance environment, in the case of corporate governance (Young et al., 2008). Therefore, strategies in emerging economies differ from those in developed economies (Peng & Heath, 1996) and successful strategies in one country may fail in another. Consequently, corporate strategies should be based on incorporating the specific institutional context (Jansson, 2008). It is contradictory in developed markets, with relatively long histories of private enterprise and institutions, where firms are encouraged and supported new businesses, firms are perceived as positively and innovators whose activities contribute to the capitalist economic growth (Danis et al., 2011).
A difference between emerging and developed economies can also be found in perceived quality of products by clients. Clients in emerging economies perceive products from developed markets to be of superior quality, and products from other emerging economies to be of equal or lower quality compared to their domestic products. This is the same for clients from developed economies, which perceive products from less developed markets to be of lower quality, compared to products from developed economies (Kinra, 2006).
In case of emerging markets, there are two perspectives on strategic choice that work out environmental issues within governmental regulation. The first perspective incorporates significantly governmental or political involvement, the institution, in sustainability issues (Peng, 2000). The other perspective considers firms to implement their own preferred sustainability policies, aiming to contribute to the investment climate and technology in emerging markets. When combining these two perspectives, sustainability actions of companies in emerging economies should be addressed within a framework that considers both the institution and the strategy of the firm (Child & Tsai, 2005).
This literature review is helpful to discover what is written in this field of studies. Plenty of theories are discussed, although literature is not complete yet. Therefore this study will continue with the theoretical framework. By taking the current literature into account, the theoretical framework can be developed in the next section.
3. Theoretical framework
Particularly corporations that have a global presence commit to social responsibility issues as a means of expressing their support and commitment to the notion (Eweje, 2011). This means
in practice that organizations face the task of identifying and implementing strategies that will allow them to effectively respond to sustainability issues (Williams et al., 1993). Improving a company’s supply chain is an option to respond to these sustainability issues (Koplin et al., 2007). Sustainability issues are important for companies and are perceived as their largest supply chain risk. One way to improve their supply chain is by supplier integration. Commodity and price based supplier relationships are no longer satisfactory for suppliers of critical materials or for firms that seek to enhance their supply chain, especially firms that focus on socials and environmental issues. Firms require that, because external stakeholders, such as NGO’s and customers, expect the buying firms to assure social and economic production at their supplier’s sites. This is supported by Walton, Handfield, & Melnyk (1998) who argue that large customers have exerted pressure on their suppliers for better environmental performance, which results in greater motivation for suppliers to cooperate with customers for environmental objectives.
The strategic and sustainability factors play a considerable role for the long-term preserve of a supply chain (Bai & Sarkis, 2010). The integration of external business processes offers the firm that integrates, the opportunity to improve their supply chain and align it to their international sustainability strategy. Hypothesis 1: There is a positive effect of supplier
integration on a firm’s international sustainability strategy.
Leaders, especially from developed countries, promote corporate social responsibility initiatives and practices, as they realize the importance of survival in the face of global competition (Eweje, 2011). The promotion of sustainability issues is more or less intertwined in the society of developed markets including; fair trade advocates, consumer groups, and environmental lobbies (Reardon et al., 1999). This has also resulted in both better corporate governance and rules requiring more socially responsible behavior of companies in developed markets. Moreover, financial and capital markets, elements of corporate governance, are well advanced in developed markets with strong protection of property rights (Claessens, 2006). Sustainability and corporate governance practices are closely related in terms of ethical responsibility (Kocmanova, Hrebicek, & Docekalova, 2011). Hypothesis 2: There is a
positive effect of supplier integration on a firm’s international sustainability strategy, and strengths of corporate governance moderates this effect.
Emerging markets countries offer the possibility to produce at lower costs through local production of global sourcing. However, the health and safety conditions for these workers are less in comparison to developed countries (Widmer, Oswald-Krapf, Sinha-Khetriwal, Schnellmann, & Böni, 2005). This stems from social and institution difference, different welfare regimes, and has different capacities for state economic management (Boyer &
Drache, 1996; Coates, 2000). Since external stakeholders, such as customers and NGO’s, expect the buying firms to assure sustainable production at their supplier’s sites (Carter & Jennings, 2004), we can expect that firms themselves take labor conditions into account as well in order to avoid adverse publicity and reputational damage. Hypothesis 3: There is a
positive effect of supplier integration on a firm’s international sustainability strategy, and employee health and safety moderates this effect.
Consumers from both developed and emerging markets, perceive products from developed markets to be of superior quality. In contrast, consumers from both developed and emerging markets perceive products from emerging markets to be of inferior quality. The attitude towards products from emerging markets is a result of recent quality concerns (Sharma, 2011). Product quality concerns a firm’s efforts to improve the safety and health effects of its services/products and therefore we can expect a positive relationship between product quality and a firm’s sustainability strategy. Hypothesis 4: There is a positive effect of supplier
integration on a firm’s international sustainability strategy, and product quality moderates this effect.
However, not all companies are exposed to the same extent of corporate social responsibility pressure. We can expect different findings for emerging economies since rapidly changing institutional environments that illustrate emerging markets will differ in fundamental ways from those in developed markets (Danis et al., 2011). First, emerging countries are not familiar with sustainable initiatives, because it has been tolerated in the past, and the companies do not have to defend global reputations. Second, countries with emerging economies prioritize economic development, and had contributed little to historic environmental harm (Eberlein & Matten, 2009). Last, the pressure for corporate social responsibility is especially originated from countries with developed economies and just a few countries with emerging economies that are member of the World Trade Organization (WTO) (Zhu & Sarkis, 2006).
Emerging markets are shaped by formal and, for a greater degree, informal institutions, which determine the ‘’rules of the game’’ (North, 1990). They face regulatory problems since they suffer an inadequate codification of regulations and limited effectiveness of their
enforcement, due to factors as insufficiently qualified personnel and a culture of corruption (Child & Tsai, 2005). We can expect that these factors affect a firm’s compliance with sustainable regulation, such as environmental, ethical and social responsibilities negatively (Eberlein & Matten, 2009). Hypothesis 5: There is a positive effect of supplier integration on
Firms in emerging countries are likely to have lower capabilities to monitor firms in their supply chains than customers from developed countries (Dunning, 1995). Moreover, firms from emerging countries are limited encouraged by their governments to enhance product safety since; these countries encounter inadequate codification of regulations and limited effectiveness of their enforcement (Child & Tsai, 2005). Finally, emerging countries face greater problems like mortality and give product safety less priority (Child & Tsai, 2005). We can expect that controversies related to product safety have a negative effect on
sustainability initiatives. Hypothesis 6: There is a positive effect of supplier integration on a
firm’s international sustainability strategy, and controversies related to product safety diminish this effect.
Emerging markets around the world take developed markets as an example how to set up their own economic and corporate governance systems (Denis & McConnell, 2003). Currently, emerging markets face an overall weak legal system and score, therefore low on corporate governance rankings (Klapper & Love, 2004). This is caused by family ownership and weak enforcement of shareholder rights (Gibson, 2003). Since sustainability and
corporate governance practices are closely related in terms of ethical responsibility (Kocmanova et al., 2011), we expect a negative relationship between sustainability and corporate governance controversies. Hypothesis 7: There is a positive effect of supplier
integration on a firm’s international sustainability strategy, and controversies related to corporate governance diminish this effect.
Figure 1: Theoretical framework
Developed markets:
- Corporate governance number of strengths - Employee health & safety
- Product quality
Emerging markets:
- Regulatory problems
- Corporate governance number of concerns - Product safety controversies
Supplier integration:
- Supply policies, programs & initiatives
- Supply chain controversies
A firm’s international sustainability strategy:
- Environmental management system - Environmental strength
- Reporting quality
H2, H3,H4, H5, H6, H7
4. Methodology
In the following chapter the research approach and design of this paper are explained.
First the used database is presented and the section continues with a description of the sample and the data collection method. Finally, a detailed operationalization of the variables is explained, including a description of the measurements instruments.
4.1 Research design
As empirical evidence on the relationship between supplier integration and a firm’s international sustainability strategy in developing and emerging economies is lacking, it seems straightforward to perform a quantitative study. The principal orientation of this study is deductive, hypotheses will be tested and no new theories will be generated. The aim of the study is to find the effect between supplier integration and a firm’s international sustainability strategy moderated by emerging and developing markets. The aim is not to deepen our understanding of why the effect is positive or negative. Therefore, a qualitative nature is necessary to increase the understanding of the cases (Patton, 1990). As this study is focusing on the “what” question, a quantitative database research is performed, since relevant information concerning the research question variables, is captured in databases. This quantitative database research enables the researcher to answer the sub-questions and in particular the research question in an appropriate way. The KLD Database is chosen out of many databases of WRDS.
The data of social rating scores are collected from the Kinder, Lydenberg, Domini (KLD) to test the developed hypotheses about the interaction between supplier integration and a firm’s international sustainability strategy, with the distinction between emerging and developed economies. KLD is the leading authority in assessing corporate social performance (CSP) across a broad range of dimensions linked to stakeholder interests. KLD data have been also used in previous studies (Graves & Waddock, 1994; McGuire, Dow, & Argheyd, 2003). This study can be replicated by others since the procedures and database are clearly spelled out.
The KLD database consists of the largest 2965 U.S companies by market capitalization, and has been considered one of the best data sources for corporate social responsibility (CSR) performance. With the sample of 2965 firms, the findings of this study can be generalized among firms from developed countries. KLD uses diverse sources to capture firm’s
performance along various social dimensions. This enables KLD to report results of strengths (excellent social performance) and concerns (poor social performance), in thirteen qualitative issue areas; Community, Corporate Governance, Diversity, Employee Relations,
Power, Tobacco. The database consists of nominal dichotomous indicators. These thirteen indicators are a strength or weakness criterion and are rated on a scale from 0 (neutral) to 1(significant strength or significant weakness), a 2 or higher number indicates whether the company had two or more strengths or concerns in a particular issue area (KLD Research & Analytics, 2006). If the resulting index of a CSR indicator is positive, we can identify the firm as socially responsible, while a negative or zero index of a CSR indicator, classify the firm as less socially responsible.
4.2 Sample
The sample selection process will be explained now. The sample consists of the entire U.S firms incorporated in the database in 2010, since this data is the most accurate and most complete of all the data since 2005. A distinction between companies in different industries is not necessary since this study incorporates companies from all industries. So all 2965 companies of the database are selected for the sample.
4.3 Measurement of variables
Validity refers to whether an indicator measures the concept, in the study face validity is applicable as new indicators are established to measure the concept. Although, this is an intuitive process, literature suggests that those indicators could measure the concept of the independent and dependent variable as they fit the concepts. The internal reliability of this study comes from the Database, as the scale is consistent. An indicator is either applicable or not. There is no use of multi-items scale and therefore not necessary to measure Cronbach’s Alpha. Missing values are kept in the sample as it was large enough to measure significant effects as there are only system missing values and were indicated in the diagrams as “-“.
Since this research identifies multiple variables, are the selected indicators, which can be found below, classified as; independent variable, dependent variable or moderating variable. According to the research question; belong the indicators of supplier integration to the independent variable, the indicators of a firm’s international sustainability strategy to the dependent variable, and the indicators of an emerging or developing economy to the moderating variable.
4.3.1 Independent variable
Supply Chain Policies, Programs & Initiatives
This indicator measures a firm’s policy commitments and management systems designed to monitor the human and labour rights performance of its suppliers and contractors. Firms take supply chain initiatives due to the fact that large customers have exerted pressure on their
suppliers for better environmental performance, which results in greater motivation for suppliers to cooperate with customers for environmental objectives (Walton et al.,
1998).These initiatives mean in practice that companies assessing alternative sources on the basis of quality and delivery instead of price, with long-term contracts, reducing buffer inventories and eliminating formal paperwork (Krause, Handfield, & Scannell, 1998).These activities of supplier integration can be a valuable source of supply chain competitive advantage (Eltantawy et al., 2009).
Logically, in order to be effective in sustainability terms, the entire supply chain must operate in a sustainability manner (Carter and Rogers, 2008). It makes little sense if one supply chain partner has a strict sustainability policy and its supplier or distributor makes decisions without regard to sustainability consequences. Consistency will lead to a sustainable supply chain of partners who integrate the planet and people into managerial decision making (Dao et al., 2011).
Supply Chain Controversies
This indicator measures the severity of controversies related to a firm’s supply chain. Sustainability issues are important for firms and are perceived as their largest supply chain risk. That is the reason why firms require suppliers to obey ecological and social standards, in order to diminish supply chain risk (Harwood & Humby, 2008). These conditions stem forward from pressure from external stakeholders, such as customers and NGO’s, who expect the buying firm to assure social and economic production at their supplier’s sites. Therefore, any kind of irresponsible sustainability behavior of the supplier may be projected to the buying firm, causing adverse publicity, reputational damage, and costly legal obligations (Carter & Jennings, 2004).
4.3.2 Dependent variable
Management Systems strength
This indicator focuses on the managerial role to facilitate a foundation and conditions to run the company in a sustainable way. This means that companies’ financial and economic results need to be hand in hand with minimization of ecological footprints and increased attention to social aspects (Lee, 2009). Companies are aware of the importance of sustainability and the majority of the managers have accepted corporate responsibility in their corporate strategies (Dyllick & Hockerts, 2002). Sustainability becomes more and more a guiding principle for the development of sustainable managerial decision-making and managers are trained in a sustainable way (Dao et al., 2011). These measures are taken to assure the quality of sustainability (Perrini & Tencati, 2006). This is necessary since legislation concerning the responsibility of firms is expanding. This means in practice that organizations face the task of
implementing strategies that will allow them to effectively respond to environmental issues (Williams et al., 1993). The active participation towards environmental issues enables the company to monitor and management of its environmental practices.
Environment
This indicator differs from the management system, in a way that this indicator focuses on the realization of environmental initiatives. Sustainability-oriented organizations strive for social legitimacy and efficient use of natural resources (Perrini & Tencati, 2006). This means in practice that firms develop new business opportunities, trying to enhance their environmental performance. For instance, firms are engaged in activities to produce ‘’green’’ as more businesses realize that reducing pollution will reduce their environmental impact (Eweje, 2011).
Transparency
The transparency indicator measures the quality of a firm’s reporting on its corporate social responsibility (CSR)/sustainability efforts. The increased pressure of external stakeholders had shown that numerous firms appoint corporate sustainability officers, publish sustainability reports and incorporate sustainability into their corporate strategies (Dyllick & Hockerts, 2002). A majority of the international firms generate a separate annual sustainability report, which refers to an integration of social, environmental, and economic responsibilities. In addition, a large majority of these companies discuss supply chain- related issues (Carter & Rogers, 2008).
4.3.3 Moderating variable emerging economies
Regulatory Compliance
This indicator measures a firm’s record of compliance with environmental regulations. Regulation defines entirety of rules, laws, and codified norms which are part of the legal framework of business and which manage its environmental, ethical and social
responsibilities (Eberlein & Matten, 2009). Emerging markets are shaped by formal and for a greater degree by informal institutions, which determine the ‘’rules of the game’’ (North, 1990). This is the result of not promoting mutually beneficial exchange between economic participants by the formal institutions that do exist in emerging markets (Young et al., 2008). In case the formal institutions want to be involved in sustainability issues of firms in
emerging markets, they can suffer an inadequate codification of regulations. Furthermore, it may also originate from the limited effectiveness of their enforcement, due to factors like; a lack of sufficiently qualified personnel or a culture of corruption (Child & Tsai, 2005).
Product Safety
of a firm’s products and services. Firms in emerging countries are likely to have lower capabilities to monitor firms in their supply chains than customers from developed countries (Dunning, 1995). Moreover, emerging countries are limited, encouraged by their governments to enhance product safety since; they encounter inadequate codification of regulations and limited effectiveness of their enforcement (Child & Tsai, 2005). At last, emerging countries face greater problems like mortality and give product safety less priority (Child & Tsai, 2005).
Corporate governance total number of concerns
The corporate governance total number of concerns indicator measures the rules and practices by which a board of directors ensures accountability, fairness, and transparency in a
company’s relationship with all its stakeholders. It can be assigned to emerging markets since, they face an overall weak legal system and therefore, they score lower on corporate governance rankings. This means in practice that firms originated from emerging markets cannot complete compensate for the absence of a strong legal system (Klapper & Love, 2004). Moreover, this is the result of family ownership and weak enforcement of shareholder rights. We should not underestimate the corporate governance situation in emerging markets. Some investors have identified corporate governance as a key factor affecting their
willingness to invest in emerging markets, and that’s why they call for improving enforcing shareholders legal rights, and need to improve their accountability and transparency (Gibson, 2003).
4.3.4 Moderating variable developed economies
Employee health and safety
This indicator measures the initiatives towards employee health and safety.
Emerging markets offer the possibility to produce at lower costs through local production of global sourcing. However, the health and safety conditions for these workers are less in comparison to developed countries. The majority of these workers are not aware of
environmental and health risks and the companies they work for, do not know better practices or have no access to financial resources to implement safety measures (Widmer et al., 2005). The other way around is the case for developed countries, because of social and institution difference, different welfare regimes, and has different capacities for state economic management (Boyer & Drache, 1996; Coates, 2000).
Product quality
By using the product quality indicator we measure a firm’s efforts to improve the safety and health effects of its products/services. This indicator has assigned to developed markets since consumers from both developed and emerging markets, perceive products from developed
markets to be of superior quality. In contrast, consumers from both developed and emerging markets perceive products from emerging markets to be of inferior quality. The attitude towards products from emerging markets is a result of recent quality concerns (Sharma, 2011).
Total number of corporate governance strengths
This indicator measures the rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with all its
stakeholders. Developed countries tend to have both better corporate governance and rules requiring more socially responsible behavior of companies. Moreover, elements of corporate governance, financial and capital markets are well developed in developed countries with strong protection of property rights (Claessens, 2006).
The research design is clarified and the selected indicators of supplier integration, firm’s international sustainability strategy, and emerging and developed economies are assigned to the responsive independent, dependent or moderating variable.
5. Results
In this section the results of the different analyses will be discussed. First, a descriptive analysis will be performed, followed by a cross-tabs and chi-square test. Finally, a logistic regression analysis will be performed for more results.
5.1 Descriptive analysis
In this study, eleven categorical indicators contained from the database were used in measuring the independent variable “supplier integration”, the dependent variable “international
sustainability strategy” and the moderator “Emerging/Developed market”. All indicators are
Categorical as they have two categories “yes” or “no” without intrinsic ordering. A description of all categorical variables is outlined in table 1 – Frequency statistics for Categorical Variables. Frequency table provides numbers belonging to the categories variable, it refers to one variable at the time. In total, the used database contains information of 2965 companies (N). The database contains 458 were missing system values. With respect to the independent variable supplier integration, 2773 companies indicated to be neutral in supply chain policies, programs and initiatives, meaning that only 3,5% of the companies have policy commitments designed to monitor the human and labor rights performance of its suppliers and contractors. In the case of “Supply Chain controversies” 64 companies have a significant weakness, implying that 2,2% of the companies face controversies related to their supply chain. For example, abuse of supply chain employee labor rights.
With respect to the dependent variable a firm’s international sustainability strategy, 254 companies indicated to have a strength in environmental management system, meaning that 8,6% of the firms monitor and manage its environmental practices. In the case of ‘’environmental strength’’, 15,7% of the companies has a significant strength, meaning that those 466 firms measure their environmental management policies. For the last indicator reporting quality, 214 firms indicated to report quality, meaning that 7,2% of the companies reports the quality of its corporate social responsibility (CSR)/ sustainability efforts.
With respect to the moderating variable developed market, 230 companies indicated to have a strength in corporate governance, meaning that 7,8 % of the companies comply the rules and practices in relationship with all its stakeholders. In the case of ‘’employee health & safety’’, 2,5 % of the firms has a significant strength, meaning that 73 companies has strong health and safety programs. For the last indicator product quality, 123 companies indicated to have strength in employee health and safety, meaning that 4,1% of the companies strive to improve the safety and health effects of its products/services.
With respect to the second moderating variable emerging markets, 88 companies indicate to have a weakness in regulatory compliance, meaning that 3,0% of the companies have problems to comply with environmental regulations. From the database “Corporate governance number
of concerns” appeared to have the most significant weakness, 25,9% of the companies face
corporate governance concerns, meaning that 768 companies face weaknesses to comply the rules and practices in relationship with all its stakeholders. The last indicator product safety controversies, 223 of the companies indicated to face product safety controversies, meaning that 7,5% of the firms have controversies related to the quality/safety of their products and services.
Table 1: Descriptive analysis for the indicators of supplier integration, a firm’s international sustainability strategy, developed markets, and emerging markets
Variable Indicator Frequency % Valid % Cumulative %
Supplier integration Supply Chain policies, programs and
initiatives 103 3,5 3,6 100,0
Supply Chain controversies 64 2,2 2,2 100,0
A firms international sustainability strategy
Environmental management system
254 8,6 8,6 100,0
Environmental strength 466 15,7 16,4 100,0
Reporting quality 214 7,2 7,2 100,0
Developed market Corp. Gov Number of strengths 230 7,8 7,8 100,0
Employee health and safety 73 2,5 2,5 100,0
Product quality 123 4,1 4,4 100,0
Emerging market Regulatory problems 88 3,0 3,0 100,0
Corp. Gov Number of concerns 768 25,9 25,9 100,0 Product safety controversies 223 7,5 7,5 100,0
