Master Thesis
“Why do European first-tier suppliers establish collaborative relationships
on sustainability with second-tier suppliers in emerging economies?”
A case study on collaborative relationships as regards sustainability in the fashion industry.
Author: Kim Reinders (11420847) Supervisor: Francesca Ciulli Second reader: Ilir Haxhi Date: June 18th 2018
Statement of originality
This document is written by Kim Reinders who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document are original and that no
sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of
completion of the work, not for the contents.
Kim Reinders June 18th 2018
Acknowledgements
I would like to thank my thesis supervisor Francesca Ciulli from the Business School of the University of Amsterdam for her involvement, trust and critical feedback during the writing process of this master thesis. Her great input and guidance motivated me to challenge myself, which resulted in this paper that I am very proud of. I would also like to sincerely thank all participants of the interviews. Without their time and the valuable information they provided this research would not have been possible. They provided detailed and very relevant contributions that helped me to understand why European first-tier suppliers develop collaborative relationships on sustainability with second-tier suppliers in emerging economies.
Abstract
This research investigates why European first-tier suppliers develop collaborative relationships on sustainability with second-tier suppliers in emerging economies by determining what relationship type (collaborative vs. arms-length) is established on sustainability, what factors affect this relationship and which pressures lead to a collaborative relationship on sustainability between the first-tier and second-tier supplier. In order to address this research question, qualitative data was gathered through four case studies. Based on the results, this paper presents that in three out of four cases a collaborative relationship on sustainability was established between European first-tier suppliers and second-tier suppliers in emerging economies in order to work towards more sustainable activities in the fashion supply chain. This thesis highlights that this collaborative relationship on sustainability is affected by several factors that emerged from the literature. Also some additional factors that affected this relationship were identified from the data.
Keywords: sustainability, collaborative relationship, lower-tier suppliers, sustainable supply
Index
Chapter 1: Introduction 6
Chapter 2: Literature Review 10
2.1 Supply Chains 10
2.2 Buyer Supplier Relationships 15
2.3 B2B Markets 20
2.4 Influencing factors on managing sustainability 22
Chapter 3: Theoretical Framework 29
3.1 Research Question 29 3.2 Working Propositions 31 Chapter 4: Method 38 4.1 Research Design 38 4.2 Case Selection 40 4.3 Data collection 43 4.4 Data analysis 45
4.5 Quality of the research 47
Chapter 5: Results 49
5.1 Within case analysis 49
5.2 Cross case analysis 64
Chapter 6: Discussion 76
6.1 Theoretical and managerial contributions 79
6.2 Limitations and suggestions for future research 80
Chapter 7: Conclusion 82
Appendix
Appendix A: semi-structured interview questions 96
Chapter 1: Introduction
The past few years major disasters shed light on the dark side of the manufacturing industry. For example the collapse of the Rana Plaza factory in Bangladesh in April 2013, where 1.134 people died and many more got injured, was a big wake-up call. Big fashion companies as Primark, El Corte Ingles and Mango were sourcing from this factory (Guilford, 2013). From this moment, there has been a drastic shift in the way the world sees manufacturing companies and their international supply chains (Siegle, 2016). This incident forced the big international players in the fashion industry to re-evaluate their production processes and develop sustainability reports which contained action plans to improve their supply chain. Where a sustainable supply chain used to be adopted only by the niche players in this industry, these days it is also a necessity for large multinationals and medium enterprises to have a sustainable production process (Wu & Pagell, 2011).
The example above perfectly illustrates the importance and urgency of more sustainable supply chains, as many social aspects of the fast fashion supply chain have been criticized (Strähle & Muller, 2017; Yang, Song, & Tong, 2017). Furthermore, also the enormous amount of waste that consumer goods industries causes leads to demand for more sustainable supply chains. With a waste of 16 million tons of textile in only the U.S. in 2014 (Environmental Protection Agency, 2016) the fashion industry is extremely polluting. By sending 65% of the textile waste to landfill instead of being recycled or combusted for energy recovery, the damage that is caused by the fashion industry is very big (The Balance, 2017). As Wael Safwat, Board Member of the Supply Chain Management Association said: “It’s not the organizations that are competing. It’s the supply chains that are competing” (Safwat, as cited in Bronwen, 2015). This is exactly what is currently happening in the fashion industry as the world expects brands to produce in a sustainable way, but so many actors are
involved in the supply chain and the brands cannot control sustainability along the complete production process. Besides, customers are reluctant to pay higher prices. Therefore, the supply chains of fashion companies are competing with each other and research on implementation of sustainable supply chains (both towards the aspect on human rights as towards the aspect on environmental damage) is highly needed (Horvath, 2001).
In the existing literature on sustainable supply chains many studies have been done on the sustainability of B2C companies (Strähle & Muller, 2017; Yang, Song, & Tong, 2017), because of their strong drive to implement sustainability into supply chains due to pressure from institutions and stakeholders (Hoejmose, Brammer, & Millington, 2012). However, integrating sustainability by first-tier suppliers is mainly unexplored because of fewer incentives to adopt a sustainable approach by normative, mimetic and coercive pressures. Nevertheless, it emerged from the literature that the sustainability of these companies is at least as important because 50% - 70% of the value of a product comes from suppliers (Mahler, 2007; Seuring & Muller, 2008). In addition, it also emerged from the literature that the relationship type that is mostly established on sustainability is a collaborative relationship type (Gold, Seuring, & Beske, 2010). Therefore, it is important to research why first-tier suppliers should establish a collaborative relationship on sustainability with second-tier suppliers by looking at which relationship type they are currently having on sustainability and what factors are affecting this relationship. Factors that derived from the literature as expected factors to affect the collaborative relationship on sustainability are institutional factors, agency factors, power factors and relational factors. Establishing a relationship on sustainability in a complex supply chain is very difficult and having an overview of influencing factors on the relationship will contribute to understanding why a collaborative relationship type on sustainability by first-tier suppliers is developed. As production of the
product by second-tier suppliers often takes place in countries with emerging economies, the complexity of relationships in the supply chain increases (Braaksma, 2009).
To fill this gap, the research question that will be investigated is: “Why do European first-tier suppliers establish collaborative relationships on sustainability with second-tier suppliers in emerging economies?” By researching what type of relationship is established on sustainability by first-tier suppliers and the factors affecting this relationship, light will be shed on why first-tier suppliers establish this type of relationship on sustainability with second-tier suppliers. This research will adopt a multiple case study research design with semi-structured interviews and four cases from the fashion industry will be studied. By identifying the type of relationship on sustainability within these four cases, as well as the institutional factors, agency factors, power factors, and relational factors affecting this relationship, the research question will be answered.
This research aims to contribute to the literature stream on sustainable supply chains by deepening knowledge in three ways. First, knowledge on relationships on sustainability in the supply chain is presented by exploring what type of relationship is currently established on sustainability and what factors affect this relationship. Secondly, by focusing on first-tier and second-tier suppliers, knowledge on these specific actors in the supply chain is deepened. The literature review indicated that there is a high need for more knowledge on relationships as regards sustainability between first-tier and second-tier suppliers and therefore this is a relevant contribution to the literature. Lastly, by presenting new factors that came up from the case studies and seem to affect the collaborative relationships on sustainability between first-tier and second-first-tier suppliers, knowledge on affecting factors is explored.
The structure of this research will be as follows. In the next chapter, a literature review on this topic will be presented. Within the theoretical framework the main gap in the literature, the research question and the working propositions will be explained. After that, in
the method section, justification for the decisions made on the structure of this research will be presented, followed by the results of the qualitative research data that is derived in the results section. Finally, there will be a discussion, which provides a link between the results and the theory, theoretical and managerial contributions, limitations and suggestions for future research. The conclusion will cover the key findings.
Chapter 2: Literature Review
In this chapter an overview of the literature will be presented. The overview starts with explaining the supply chain in further detail and taking up on sustainability, the barriers towards implementing a sustainable supply chain and the different actors in the supply chain. This is followed by an overview of the different factors that describe the buyer-supplier relationship and the different types of relationships in sustainable supply chains. These relationships are shaped by specific characteristics of the market they operate in, and therefore a paragraph on B2B market characteristics will be presented. Eventually, several factors that may influence the relationship on sustainability are derived from the literature. These are institutional factors, agency factors, power factors and relational factors.
2.1 Supply Chains
2.1.1 International, sustainable Supply Chains
“A supply chain is a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer” (Mentzer et al., 2001, p. 4). This definition of Mentzer et al (2001) gives a clear overview of what is meant by a supply chain. For this research the focus will be on implementing sustainability in supply chain activities. As defined in the literature, sustainability is “development that meets the needs of the present without compromising the ability of future generations to meet their needs” (Movahedipour, Zeng, Yang, & Wu, 2017, p. 1825). The definition of sustainable supply chain that we will use in this research is the one presented by Ahi and Searcy: “The creation of coordinated supply chains through the voluntary integration of economic, environmental, and social considerations with key inter-organizational business systems designed to efficiently and effectively manage the material, information, and capital flows associated with the
procurement, production, and distribution of products or services in order to meet stakeholder requirements and improve the profitability, competitiveness, and resilience of the organization over the short- and long-term” (2013, p. 339).
Detailed attention to the environmental and social aspects is key to become more sustainable as a company. However, the integration of a sustainable supply chain, as well as the literature on this topic, is still very rare (Seuring & Muller, 2008). On one hand, very little companies integrate sustainability in the supply chain. The focus of firms is often on the optimal use of scarce resources and providing high service levels at the lowest price, and as a consequence little attention has been paid to the effect of upstream supply chain activities on social and environmental aspects (Piplani, Pujawan, & Ray, 2008). On the other hand, very little research has been done on the companies who do implement sustainability in the supply chain. In the past few years only a few papers are published on this topic. Seuring and Muller (2008) provided an overview of this limited literature and presented two main dimensions of sustainability: environmental aspects and social aspects (Carter & Rogers, 2008; Seuring & Muller, 2008).
The manufacturing industry is characterized by producing in emerging economies because of the low wages and production costs. This leads to a very international supply chain for different industries (Taylor, 1997). In most emerging countries, where second-tier suppliers (the factories) are located, environmental and social regulations are not even required (Tachizawa & Wong, 2014). Next to the absence of environmental and social regulations in emerging economies, the geographical and institutional distance bring new challenges (Wilhelm, Blome, Wieck, & Xiao, 2016).
2.1.2 Barriers to a sustainable supply chain
For most companies it is quite hard to implement applications of sustainability as the perspective that is presented in the literature is often a very theoretical perspective (Carter & Roger, 2008). Barriers that arise when trying to implement sustainability in the supply chain are often internal. Three barriers that are presented in the literature by Seuring and Muller (2008) are higher costs, coordination effort and complexity, and insufficient or missing communications in the supply chain. Also Morana (2013) presents significant higher costs, complexity of coordination and insufficient communication as main barriers in her book ‘Sustainable Supply Chain Management’.
When it comes to sub-suppliers implementing sustainability there are even more barriers. Grimm et al (2014) present the importance of barriers that arise by implementing sustainability with sub-suppliers supply chain activities. They looked for barriers that were specific to applying sustainability for these sub-suppliers (n-tier suppliers) and found that the factors that caused problems for first-tier suppliers were lack of contractual agreements, power asymmetries, and limited transparency on sub-suppliers (2014). In addition, Fawcett et al (2008) found lack of top management support, non-aligned strategic and operating philosophies, inability or unwillingness to share information, risks and rewards, lack of trust, inflexible processes and conflicts as main barriers. Also Tachizawa and Wong (2014) looked into the details of applying sustainability when it comes to sub-suppliers and validated information asymmetries and lack of control as barriers.
To conclude, most researchers link barriers to adopting sustainability in the supply chain to costs, coordination and communication. When specifically looking at adopting sustainability in the supply chain activities of sub-suppliers the barriers are mainly related to influence and power, lack of contractual agreements or control and fewer incentives or pressure.
2.1.3 Actors within a sustainable supply chain
Different actors are present within the supply chain. In order to research how to implement sustainability in the supply chain, an overview of the actors involved in the supply chain is necessary. These actors control resources and perform activities. By linking activities and resources to each other, supply chain actors aim to increase their control in the network (Harland, 1996). Vachon and Klassen (2006) visualized a simplified supply chain in the following figure:
In the figure above the three main players in the supply chain are illustrated: the suppliers, the focal plant (B2B companies/ first-tier supplier), and the customers (the brands/ B2C companies). However, many more actors exist as the B2C companies also have their own customers (end-users) and the suppliers have many other suppliers (n-tier suppliers). The relationship between the first-tier supplier and the second-tier supplier is an upstream activity, as it needs material inputs for production (Bass, 2018). The relationship between the first-tier supplier and the customer is a downstream activity, as products are already produced and only get distributed (Bass, 2018). In general, pressure on implementing sustainability is on the B2C company, but most of the time the misconduct occurs in organizations much
earlier in the supply chain (with the sub-suppliers) (Grimm, Hofstetter, & Sarkis, 2016; Tachizawa & Wong, 2014). Depending on the industry and type of product made, there are a few, up to many sub-suppliers (Mena, Humphries, & Choi, 2013). In this research, the relationship between the first-tier supplier and second-tier supplier will be studied. Wilhelm et al (2016) highlight the importance of the relationship between these two actors. Therefore, the focus of this research will be on these two actors in the supply chain.
First-tier suppliers are in direct contact with both the B2C company and the second-tier supplier. They are therefore responsible for aligning the processes in the supply chain. B2C companies are dependent on these first-tier suppliers when it comes to supporting and controlling sustainability in the supply chain (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). Although B2C companies would like to manage the sustainability of second-tier suppliers, first-tier suppliers are the key strategic business partners that lead to achieving better results and more sustainable activities by second-tier suppliers (Grimm et al, 2014). First-tier suppliers are in the position where they can help and stimulate second-tier suppliers on implementing sustainability, and therefore they are able to establish a relationship on sustainability with the second-tier supplier.
Second-tier suppliers are often characterized by low integration of sustainability and are seen as a place where much misconduct occurs (Grimm, Hofstetter, & Sarkis, 2016; Tachizawa & Wong, 2014). Because of relatively low pressures from stakeholders, motivating second-tier suppliers to implement sustainability is quite hard. However, as a large percentage of the value of a product comes from them it is really important that they adopt a sustainable approach (Mahler, 2007; Seuring & Muller, 2008). Bad sustainability standards in this part of the supply chain contribute to negative publicity for the large global brands (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). Wilhelm et al (2016) call this the chain liability effect and show the importance of managing sustainability in the upstream supply
chain activities of second-tier suppliers or even lower tier suppliers. To manage this process transparently it would be best to manage these relationships individually. However, the complexity of this activity and the dispersed locations make this very difficult (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). A look on the longer part of the supply chain and focusing on the second-tier supplier will contribute on the sustainable supply chain management literature (Seuring & Muller, 2008).
2.2 Buyer Supplier Relationships
After an overview of (sustainable) supply chains, the barriers towards implementing sustainability in supply chains and the different actors within these supply chains, the next step is to look at the relationships between the different actors within these supply chains. First, the scenario of sub-sourcing and different relationship types will be further explored, followed by several aspects that will help identifying the first-tier – second-tier supplier relationship.
2.2.1 Relationship types
Many different types of relationship exist between supply chain actors. For this research, it is important to know which relationship types are established between first-tier suppliers and second-tier suppliers on sustainability. First, the scenario of sub-sourcing in the supply chain will be further explained. After that, different existing relationship types will be presented, followed by explanation of two relationship types. Several relationships in the supply chain can be
identified. To start, Niu et al (2018) distinguish three types of actors: the fashion brand (B2C Figure 2 Sub-sourcing scenario by Niu et al (2018; p.23)
fashion company), the procurement agent (first-tier supplier), and the factory/ material supplier (second-tier supplier). Between these actors, different relationships are possible like for example direct relationships or indirect relationships. This research focuses on an indirect relationship scenario of sub-sourcing, which is illustrated in figure 2. The relationship in this particular scenario needs to be researched in further detail as through sub-sourcing there is no direct contact between the B2C company and the second-tier supplier and therefore it is very difficult to convince the second-tier suppliers of the importance of integrating sustainability. Second-tier suppliers have lower incentives to adopt sustainability compared to B2C companies, but as much misconduct comes from these second-tier suppliers, it is important for them to adopt a more sustainable approach. In addition, this scenario is very common in the fashion industry and therefore important to research (Niu, Chen, Zhuo, & Yue, 2018). Through researching the relationships in a supply chain that is characterized by sub-sourcing, this research will shed light on what type of relationship is established on sustainability.
Bruce and Daly (2006) identified different types of first-tier supplier – second-tier supplier relationships when analyzing the literature. They distinguish the strategic alliance, cooperative, partnership, collaboration, operational partnership, opportunistic partnership, arms length, adversarial, and conflictual relationships, which are listed from high quality and long-term focused to low quality, price-term and short-term focused. Within this research, which is focusing on the relationship as regards sustainability, two relationship types will be reviewed. These are the collaborative relationship and the arms-length relationship.
Collaborative relationships are very important relationship types when it comes to sustainable supply chain management as it stimulates integration of actors to reach goals with economic, environmental and social aspects simultaneously (Gold, Seuring, & Beske, 2010). It also stimulates building non-substitutable competitive advantages (Rota & Zonasi, 2013) because they are socially complex, causally ambiguous and historically grown, which make
them difficult to imitate (Gold, Seuring, & Beske, 2010). A collaboration is defined as “two parties who remain economically independent and act under decentralized control, that is, each party takes its own decision. Nevertheless, the coordination that the parties agreed upon makes sure that each of them improves upon its profits” (Meca & Timmer, 2008, p. 11). It is a good relationship type for sustainable buyer – supplier relationships because it’s not too restrictive (which causes problems achieving flexibility) and not too soft (which causes the risk of opportunism) (Hoyt & Huq, 2000). To conclude, the literature shows a link between collaborations in the supply chain activities and implementation of sustainability as within collaborations the relationship is built on working jointly in order to achieve competitive advantage in a more sustainable way (Carnwell & Carson, 2008; Gold, Seuring, & Beske, 2010). Therefore, this study will research if a collaborative relationship type on sustainability is established between first-tier suppliers and second-tier suppliers.
The arms-length relationship type is characterized by a short-term, low price and low quality focus (Bruce & Daly, 2006). Arm’s length relationships are quite common in many creative industries because of focus on profit making rather than excellence (Chartrand & McCaughey, 1989). This is confirmed by Bruce and Daly (2006) who say this relationship type is typical for the fashion industry. When focusing on relationships on managing sustainability in general this relationship type is not very common as it is not long-term and high quality focused as most relationships regarding sustainability are (Bruce & Daly, 2006). However, as this research will be conducted on cases in the fashion industry where this relationship type between first-tier suppliers and second-tier suppliers is very common, this study will research if an arms-length relationship type on sustainability is established between first-tier suppliers and second-tier suppliers.
To conclude, between a first-tier supplier and a second-tier supplier different types of relationships can be established. Within this research, we will distinguish the collaborative
relationship, which is characterized by high quality and long-term focus, and the arms-length relationship, which is characterized by low-quality, price-term and short-term focus.
2.2.2 Aspects identifying the first-tier supplier – second-tier supplier relationship
In order to research how to manage second-tier suppliers, it is important to define aspects of the first-tier supplier – second-tier supplier relationship that will help identifying the type of relationship that is established (collaborative or arms-length).
First, from research from Hoejmose et al (2012), it resulted that development of trust in combination with top management support are related to implementing environmental sustainability by B2B firms (first-tier suppliers). This is confirmed by Hann and Childs (2016) who state that trust seems to be an important characteristic when assessing the relationship between a first-tier and second-tier supplier. They even link this to the concept of reputation and mention that reputation influences trust. Additionally, Tidy et al (2016) conclude that trust is one of the key characteristics to achieve a successful relationship between a first-tier and a second-tier supplier. The definition of trust that is used for this research comes from Doney and Cannon and describes the phenomenon of trust as followed: “we define trust as the perceived credibility and benevolence of a target of trust (cf. Ganesan 1994; Kumar, Scheer, and Steenkamp 1995). The first dimension of trust focuses on the objective credibility of an exchange partner, expectancy that the partner's word or written statement can be relied on (Lindskold 1978). The second dimension of trust, benevolence, is the extent to which one partner is genuinely interested in the other partner's welfare and motivated to seek joint gain (1997; p.36). Trust is not a factor that can be measured as high or low. However, the two dimensions credibility and benevolence can be measured. Therefore, the first aspect that categorizes the relationship between the first-tier supplier and the second-tier supplier will be trust, which is measured through credibility and benevolence. Within a
collaborative relationship the level of trust is measured as high, while within an arms-length relationship the level of trust is measured as low.
Secondly, Tidy et al (2016) mention that communication is a major aspect of successful supplier relationship management. Communication is represented in the supplier orientation and supplier dependency and good communication within the relationship indicates lower risks and higher performance (Hallikas, Immonen, Pynnonen, & Mikkonen, 2014). In addition, top management support has been proven to be a crucial driver in a sustainable supply chain within the first-tier – second-tier supplier relationship and is mainly related to the way in which the top management communicates with the company (Hoejmose, Brammer, & Millington, 2012). Two-way inter-organizational communication is seen as a necessity in order to have a successful first-tier supplier – second-tier supplier relationship (Chen & Paulraj, 2004). Dimensions that can measure the level of communication are frequency and involvement of personal contact between personnel of both organizations (Chen & Paulraj, 2004). Therefore, the second aspect that assesses the first-tier – second-tier supplier relationship is communication, which can be measured through the dimensions frequency and involvement of personal contact. Within a collaborative relationship the level of communication is measured as high, while within an arms-length relationship the level of communication is measured as low.
To conclude, the aspects that are selected from the literature to identify whether the type of relationship that is established on sustainability is collaborative or arms-length are trust and communication.
2.3 B2B markets
After carefully reviewing the literature related to supply chains and buyer – supplier relationships, the next step is to review the characteristics of the market first-tier suppliers operate in. The following paragraph will illustrate specific characteristics related to this market.
B2B markets differ significantly in multiple ways from B2C markets. First, the B2B markets are characterized by working with large volumes per customer (Abrella, Pihlajamaab, Kantob, Brockec, & Uebernickela, 2016; Hutt & Speh, 2012; Peppers & Rogers, 2001; Rauyruen, Miller, & Barrett, 2007). Instead of working with many smaller customers as in B2C markets. Therefore, the relationships in B2B markets are very important and loyal customers can be considered as a crucial factor because they contribute to a huge revenue stream (Rauyruen, Miller, & Barrett, 2007). Notable is the high impact of the customers in B2B markets as they purchase high volumes and therefore have a big influence in the product development (Abrella, Pihlajamaab, Kantob, Brockec, & Uebernickela, 2016). Secondly, the long-term focus of these relationships is a characteristic of the B2B market (Hallikas, Immonen, Pynnonen, & Mikkonen, 2014). Increasing amount of supplying and selling firms recognize the importance of engaging in a long-term relationship (Rauyruen, Miller, & Barrett, 2007) and especially recognition of deepening this relationship arises as these deep relationships create the potential for first-tier suppliers to become irreplaceable (Peppers & Rogers, 2001).
A third characteristic of the B2B market is the relative stable environment. Although many technological innovations changed the pace in the manufacturing B2B industry in the last years, the overall B2B manufacturing market can be considered as relative stable (Abrella, Pihlajamaab, Kantob, Brockec, & Uebernickela, 2016). However, the stability of the environment is also related to the industry the B2B is operating in. This is definitely
something that needs to be taken into consideration next to the relative stable environment of overall B2B manufacturing markets. In this research the case studies will be conducted on B2B firms operating in the fashion industry. This industry can be described as increasing complex and dynamic because of its short product lifecycle, enormous product variety, and huge uncertainty in demand and inflexible supply processes (Sen, 2008). Where the fashion industry used to be defined as a stable environment (Djelic & Ainamo, 1999), these days the environment fashion companies operate in is much more turbulent. Therefore, B2B markets in the fashion industry are characterized by a stable market in a turbulent environment.
Increasingly complex and time consuming buying and product development processes are other characteristics of the B2B manufacturing industry according to Buss & Begorgis (2015). Because of many criterions from the customer as well as from the end user, they conclude that making buying decisions is quite complex and this is a specific characteristic of B2B markets.
Lastly, as mentioned before, B2C companies have a strong drive to implement sustainable supply chain activities due to pressure from institutions and stakeholders (Hoejmose, Brammer, & Millington, 2012). However, integrating sustainability for first-tier and second-tier suppliers is mainly unexplored because these companies feel much lower pressure. Nevertheless the sustainability of the supply chain of these companies is at least as important because 50% - 70% of the value of a product comes from suppliers (Mahler, 2007; Seuring & Muller, 2008). Therefore, the B2B market is also characterized by a high percentage of value creation of a product.
To conclude, the B2B market is characterized by large volumes, long-term focused relationships, a relative stable market, complex and time consuming buying and product development processes and a high percentage of value creation of a product. Because of these
characteristics, relationships play a very important role in the B2B market and more research should be conducted on this topic (Woodside & Baxter, 2013).
2.4 Influencing factors on managing sustainability
In the following chapter, different views towards explaining why first-tier suppliers develop a relationship on sustainability with second-tier suppliers will be addressed by reviewing factors that are identified by the literature as factors that may affect the relationship on sustainability. By drawing on the literature and multiple theories, the factors that are expected to affect the first-tier – second-tier supplier relationship on sustainability are institutional factors, agency factors, power factors and relational factors and therefore these factors will be reviewed in the following chapter.
2.4.1 Institutional factors
“Institutions are systems of established and embedded social rules that structure social interactions” (Hodgson, 2006, p. 18). They move firms in a certain direction when it comes to notions and routines and these institutions can be divided into three different categories: normative, mimetic and coercive institutions (Liu, Ke, Wei, Gu, & Chen, 2010).
Normative pressures come from professionalization and relate to collective expectations of what is considered appropriate and legitimate behavior (DiMaggio & Powell, 1983; Liu, Ke, Wei, Gu, & Chen, 2010). Professionalization is the interpretation of a certain occupation on what the appropriate way to act is. Normative pressures determine a set of practices in which routines and strategies of organizations are shaped (Johnston, 2013; Norus, 1997). Through these normative pressures the actors in the market have a high influence in pressuring the B2C company to adopt sustainability in supply chain activities, as customers
ask for transparent information on how brands are applying sustainable practices (Davis, 2011). The market asks for transparency and information about production processes and therefore their influence is important to consider when researching institutional factors. Through analyzing the factor of normative pressures in supply chain relationships, indirect pressure from the end-customer on the first-tier supplier and second-tier supplier will be researched.
Mimetic pressures arise from competitors. Because implementing sustainability doesn’t come with specific guidelines and applying sustainability can be overwhelming and unclear, companies tend to consciously mimic the strategy and actions of other companies in the industry (DiMaggio & Powell, 1983; Mizruchi & Fein, 1999). This mainly happens when the first-tier supplier rates their competitor as more legitimate and outstanding than their own company (Galaskiewics & Wasserman, 1989; Johnston, 2013). Next to seeking legitimacy, reducing risk is also a reason to mimic competitors (Liu, Ke, Wei, Gu, & Chen, 2010). Because of mimetic pressures, competitors are important to take into account when searching for factors that influence the collaborative relationship as regards sustainability.
Coercive pressures are related to the government, NGO’s and B2C firms. These pressures emerge from political influences and are brought to the field by the actors on which the first-tier supplier depends (Johnston, 2013; Liu, Ke, Wei, Gu, & Chen, 2010). First-tier suppliers are dependent on the government, B2C companies and NGO’s, as those organizations have more power and the first-tier suppliers have to follow their requirements in order to seek legitimacy. The government pressure on first-tier suppliers emerges mainly from formal institutions as rules and regulations. Environmental regulations, tax law requirements, and financial reporting requirements contribute to shaping organizations similarly (DiMaggio & Powell, 1983). These regulations are set by the government and their
main objective is to force suppliers and sub-suppliers to become more sustainable. However, these regulations can also lead to obstacles as they increase costs and ask for new management skills (Morris & Kaplinsky, 2017). B2C companies also practice coercive pressures on first-tier suppliers because they are powerful in comparison with the first-tier supplier and therefore in a position where they can require specific needs. These companies are the ones who experience most normative pressures and therefore influence first-tier suppliers on implementing sustainability (Hoejmose, Brammer, & Millington, 2012). Related to sustainability, their requirements can be on both environmental level (e.g. requirements on use of materials and ways of transportation) and social level (e.g. requirements on wages and working conditions). Finally, influences from NGO’s are also coercive pressures, which arise by their powerful position. By raising public awareness, lobbying state decision makers, coordinating boycotts to alter harmful corporate practices, participating in sustainability negotiations and helping to implement international agreements they link local demands with global organizations (Betsill & Corell, 2001). This causes demand for sustainability and pressures first-tier suppliers to apply sustainability in their supply chain.
To conclude, institutional factors are related to a set of social rules, which can be divided into normative pressures (e.g. the market), mimetic pressures (e.g. competitors), and coercive pressures (e.g. government, B2C companies and NGO’s). By looking at the level of influence of these pressures, it is likely to find reasons why first-tier suppliers establish collaborative relationships on sustainability with second-tier suppliers.
2.4.2 Agency factors
“Agency theory is relevant for the situations wherein one party (the principal) delegates authority – in terms of control and decision-making about certain tasks – to another party (the agent)” (Fayezi, O'Loughlin, & Zutshi, 2012, p. 1) and offers “unique insight into
information systems, outcome uncertainty, incentives, and risk” (Eisenhardt, 1989; p.1) This theory could help understanding why first-tier suppliers establish a specific type of relationship on sustainability because it focuses on the relationship between the principal (first-tier supplier) and the agent (second-tier supplier), which are both involved in the relationship but have different goals and non-identical information (Delbufalo, 2018; Wilhelm, Blome, Bhakoo, & Paulraj, 2016). As integrating sustainability is a complex process, understanding how behavior and actions are affecting the first-tier – second-tier supplier relationship on sustainability is important (Vongalis-Macrow, 2013).
Important factors that arise when looking at agency factors are the duration of involvement and information asymmetries. The duration the first-tier and second-tier supplier are working together is an important agency factor as the longer period of time the first-tier supplier is involved in the relationship with the second-tier supplier, the easier it is to manage difficult aspects as sustainability (Vongalis-Macrow, 2013). When the first-tier supplier is only focusing on short-term relationships and is continuously working with different second-tier suppliers, it will be more difficult for them to participate and create a voice in managing this difficult subject. Therefore, the duration of involvement in general is likely to be a factor that influences the relationship on sustainability. Secondly, information asymmetries arise as second-tier suppliers (the agents) see all actions happening within the firm and first-tier suppliers (the principals) are dependent on the information they get from the second-tier suppliers. Therefore, some information that is very important to manage sustainability may not reach the first-tier suppliers in the same way as it is actually happening, which could lead to misinterpretation and imbalance in knowledge (Panda & Leepsa, 2017; Vongalis-Macrow, 2013; Wilhelm, Blome, Bhakoo, & Paulraj, 2016). Misinterpretation and imbalance in knowledge is therefore a factor that may affect the first-tier – second-tier relationship as regards sustainability.
To conclude, the duration of involvement and the level of information asymmetries are agency factors that are important to consider in this research as they are likely to shed light on how the relationship type on sustainability between the first-tier supplier and second-tier supplier relationship is affected.
2.4.3 Power factors
Power plays an important role in supply chain relationships as depending on where the power is positioned, relationships in the supply chain will be shaped (Benton & Maloni, 2005). Therefore power factors may affect the first-tier – second-tier supplier relationship. According to Benton and Maloni (2005), both the power source and the power target influence the supply chain and positioning of power is an important aspect in relationships in the supply chain. The type of power can differ per topic, so power in economic decisions can be with the power source and power in non-economic decisions with the power target or the other way around. In addition, more knowledge about the location of power in the supply chain will give insights into sustainability flow-through effects (Wilhelm, Blome, Bhakoo, & Paulraj, 2016). In most cases, power is located with the actor in the supply chain that has the closest relationship to the end-customer. This will affect the structure and the relationships within the supply chain and power, or absence of power, will influence the commitment of the company (Lambert & Cooper, 2000). Different bases of power will help to examine which actor has more authority over the other (Benton & Maloni, 2005). Power bases are reward power, coercive power, and legitimate power and relate to the level of commitment, cooperation and conflicts in the relationship (Maloni & Benton, 2000). An explanation of the power bases can be found in table 1. In order to draw conclusions on the power location and the consequences of these power locations, the power bases need to be identified in the case studies.
Bases of inter-firm power
Power base Description Fashion Industry Example
Reward Source retains ability to mediate reward to target
First-tier supplier awards additional business to second-tier supplier
Coercion Source holds ability to mediate punishment to target
First-tier supplier cancels business with second-tier supplier
Legitimate Target believes source retains natural right to influence
Second-tier supplier views itself as lower in power.
To conclude, different power bases are the indicators of the location of power in the supply. Depending on the location and distribution of power, the power factors are likely to affect the relationship type on sustainability between the first-tier supplier and the second-tier supplier.
2.4.4 Relational factors
The type of relationship the B2C company is having with the first-tier supplier may affect the relationship between the first-tier and second-tier supplier on sustainability because a closer relationship between the B2C company and the first-tier supplier might increase the willingness of the first-tier supplier to establish a relationship on sustainability with the second-tier supplier. By reviewing the literature on relationship characteristics in section 2.2.2, two main aspects were identified as indicators of a collaborative or arms-length relationship in the first-tier – second-tier supplier relationship. In order to bring consistency into the research, the same aspects will be used in identifying the first-tier – B2C relationship. The first factor is trust, which is related to confidence and faith, and which can be measured through the indicators credibility and benevolence (Doney & Cannon, 1997; Hoejmose, Brammer, & Millington, 2012; Tidy, Wang, & Hall, 2016). The second factor is communication, which is related to contact and connection, and which can be measured through the indicators frequency and personal contact (Chen & Paulraj, 2004; Hallikas, Immonen, Pynnonen, & Mikkonen, 2014; Tidy, Wang, & Hall, 2016). First, the type of Table 1 overview of the bases of inter-firm power from Maloni and Benton (2000, p.54). Adjusted for this
relationship between the B2C company and first-tier supplier will be identified. Secondly, drawing from the literature, it is likely that the B2C company – first-tier supplier relationship is going to affect the first-tier – second-tier supplier relationship on sustainability, which will be researched in this study.
Chapter 3: Theoretical Framework
In this chapter the gap in the literature will be identified and the research question that is going to be investigated is presented. In addition, all working propositions that are derived from the literature review will be presented. Figure 3 is a visual representation of the research that will be conducted.
3.1 Research Question
The literature review showed that research has been done on relationships on sustainability in upstream supply chain activities. However, most research has been done on implementation strategies of sustainability practices in the relationship of the B2C company towards the customer and the first-tier supplier because B2C companies experience the highest pressure from stakeholders to adopt a sustainable approach (Hoejmose, Brammer, & Millington, 2012; Strähle & Muller, 2017; Yang, Song, & Tong, 2017). Research on sustainability in the first-tier – second-first-tier supplier relationship is very limited. The problem is that B2C companies do not always have full knowledge of the circumstances under which their products are made as they are not in direct contact with the lower-tier suppliers (Niu, Chen, Zhuo, & Yue, 2018). As B2C companies are only in contact with tier suppliers, more research on why first-tier suppliers establish a relationship on sustainability with second-first-tier suppliers in sub-sourcing scenario supply chains should be done (Carter & Rogers, 2008; Grimm, Hofstetter, & Sarkis, 2016; Tachizawa & Wong, 2014; Wilhelm, Blome, Bhakoo, & Paulraj, 2016). According to the research of Grimm et al (2014), first-tier suppliers are the key strategic business partners that lead to achieving more sustainable activities by second-tier suppliers. Therefore, it is important to research why these first-tier suppliers establish a specific relationship type on sustainability with second-tier suppliers by looking at which relationship
type they are currently establishing in order to manage sustainability, as well as the factors affecting this relationship. By analyzing aspects that identify which relationship type is established between the actors and by analyzing factors that affect the relationship of first-tier suppliers with second-tier suppliers on sustainability, light will be shed on why first-tier suppliers establish a specific relationship type on sustainability with second-tier suppliers. This research will focus on why first-tier suppliers establish a collaborative relationship type on sustainability with second-tier suppliers because a collaborative relationship is the most common relationship type as regards sustainability (Gold, Seuring, & Beske, 2010). Because production of the product by second-tier suppliers often takes place in emerging countries, an international aspect arises and the complexity of management in the supply chain increases (Braaksma, 2009). The research question that will be addressed is:
“Why do European first-tier suppliers establish collaborative relationships on sustainability with second-tier suppliers in emerging economies?”
Figure 3 Visual overview of research question, including factors affecting the relationship. Agency Factors Collaborative relationship on sustainability between first-tier and second-tier supplier Power Factors Relational Factors Institutional Factors
3.2 Working propositions
Different relationship types can be established between first-tier suppliers and second-tier suppliers on sustainability. From the literature review, collaborative relationships seem to be most effective when implementing sustainable supply chain activities because a collaborative relationship type stimulates economic, environmental and social aspects, as well as building non-substitutable competitive advantage (Gold, Seuring, & Beske, 2010; Rota & Zonasi, 2013). By being not too restrictive and not too soft, a collaborative relationship type is likely to be a successful relationship type to establish on sustainability. Therefore, working proposition 1 is:
WP1: European first-tier suppliers are likely to establish a collaborative relationship on sustainability with second-tier suppliers in emerging economies.
The following working propositions (WP 2 – WP5) are about factors that are expected to affect the relationship type between the first-tier supplier and the second-tier supplier as regards sustainability. These factors are likely to explain why first-tier suppliers establish collaborative relationships on sustainability with second-tier suppliers.
Institutions have the power to move firms in certain directions through normative, mimetic and coercive pressures (Liu, Ke, Wei, Gu, & Chen, 2010). They have a high authority and can pressure firms to transform their current activities into more sustainable activities with help of formal rules and informal beliefs. By analyzing the different types of pressures, institutional factors are likely to shed light on why first-tier suppliers develop a collaborative relationship on sustainability with second-tier suppliers. Therefore, working proposition 2 is:
WP2: Institutional factors are likely to explain why European first-tier suppliers establish a collaborative relationship on sustainability with second-tier suppliers in emerging economies.
Collective expectations of what is considered appropriate and legitimate behavior relates to the expectations of the market and are defined as normative pressures (DiMaggio & Powell, 1983; Liu, Ke, Wei, Gu, & Chen, 2010). These expectations are likely to put pressure on the brands (B2C companies) as the end-consumers are having a direct relationship with these B2C companies (Davis, 2011). Because of the indirect relationship between the end-consumer and first-tier suppliers, it is not likely that first-tier suppliers will feel pressure on establishing collaborative relationships as regards sustainability with the second-tier supplier by normative pressures. Therefore, working proposition 2a is:
WP2a: Normative pressures are not likely to explain why European first-tier suppliers establish a collaborative relationship on sustainability with second-tier suppliers in emerging economies.
Competitors that are seen as more legitimate and outstanding are likely to be imitated by first-tier suppliers, as they set a good example on having relationships as regards sustainability (DiMaggio & Powell, 1983; Galaskiewics & Wasserman, 1989; Johnston, 2013; Mizruchi & Fein, 1999). Mimicking a competitor leads to higher legitimacy and lower risks. This indicates that high mimetic pressures are likely to explain why first-tier suppliers are establishing a collaborative relationship as regards sustainability with the second-tier supplier. Therefore, working proposition 2b is:
WP2b: Mimetic pressures are likely to explain why European first-tier suppliers establish a collaborative relationship on sustainability with second-tier suppliers in emerging economies.
Organizations on which first-tier suppliers depend, like the government, B2C companies and NGO’s, can move first-tier suppliers in the direction of their desire (Johnston, 2013; Liu, Ke, Wei, Gu, & Chen, 2010). The authority of those organizations will contribute to shaping first-tier suppliers (DiMaggio & Powell, 1983), and are consequently likely to explain why first-tier suppliers feel pressure to establish collaborative relationships as regards sustainability with the second-tier supplier. Therefore, working proposition 2c is: WP2c: Coercive pressures are likely to explain why European first-tier suppliers establish a collaborative relationship on sustainability with second-tier suppliers in emerging economies
To shed light on why first-tier suppliers establish a relationship on sustainability with second-tier suppliers, research about the role of both parties is important. Agency factors will affect this as first-tier suppliers delegate authority to second-tier suppliers. In this case the first-tier supplier is labeled as the principal and the second-tier supplier is labeled as the agent (Fayezi, O'Loughlin, & Zutshi, 2012). Analyzing agency factors will contribute to understanding how behavior and actions are organized and integrated (Vongalis-Macrow, 2013). Subsequently, the outcome of these behavior and actions are likely to affect the relationship between the first- en second-tier suppliers. Therefore, working proposition 3 is:
WP3: Agency factors are likely to affect the collaborative relationship on sustainability between European first-tier suppliers and second-tier suppliers in emerging economies.
The timeframe the first-tier supplier is working with the second-tier supplier is likely to affect their relationship. The longer both actors are involved in the relationship in general, the easier it is to manage difficult aspects as sustainability. This is based on the fact that trust and communication are high influencers of a relationship and increase with time (Chen & Paulraj, 2004; Hallikas, Immonen, Pynnonen, & Mikkonen, 2014; Tidy, Wang, & Hall, 2016). When
the first-tier supplier is focusing on only short-term relationships, it will be more difficult for them to participate and create a voice in managing this difficult subject. Therefore, the expectation is that a high duration of involvement is affecting the first-tier suppliers collaborative relationship on sustainability with the second-tier suppliers and working proposition 3a is:
WP3a: Duration of involvement between European first-tier suppliers and second-tier suppliers in emerging economies is likely to affect the collaborative relationship on sustainability.
Information asymmetries arise because second-tier suppliers (the agents) see all actions happening within the production process of the product and first-tier suppliers (the principals) are dependent on the information they get from the second-tier suppliers about sustainable activities. Therefore, some information that is very important to have while managing sustainability may not reach the first-tier suppliers in the same way as it is actually happening, which could lead to misinterpretation and imbalance in knowledge (Panda & Leepsa, 2017; Vongalis-Macrow, 2013; Wilhelm, Blome, Bhakoo, & Paulraj, 2016). Information transparency between the first-tier supplier and second-tier supplier will contribute to a close relationship because sharing knowledge and information is at a higher level when two actors are collaborating then when two actors are working together through a contract (Bruce & Daly, 2006). Consequently, a high level of information transparency is expected to affect the collaborative relationship on sustainability. Therefore, working proposition 3b is:
WP3b: Information transparency between European first-tier suppliers and second-tier suppliers in emerging economies is likely to affect the collaborative relationship on sustainability.
Depending on the location of power, relationships in the supply chain will be shaped and therefore power factors will affect the relationship (Benton & Maloni, 2005; Maloni & Benton, 2000; Wilhelm, Blome, Bhakoo, & Paulraj, 2016). In the first-tier – second-tier supplier relationship, several powerbases examine the location of different types of power. When power is very unequally divided over the two actors in the relationship, establishment of an arms-length relationship is most likely (Carnwell & Carson, 2008). However, if the power is a bit more equally divided but still with one actor, the two actors in the relationship are likely to work together through a collaborative relationship. As the most power is often located with the actor that is closest to the end user of the product, the first-tier supplier is expected to have more power in this first-tier supplier – second-tier supplier relationship (Lambert & Cooper, 2000). This means that it is likely that more equality of power factors will lead to a collaborative relationship. Therefore, power factors are likely to affect the collaborative relationship on sustainability and working proposition 4 is:
WP4: Power distribution is likely to affect the collaborative relationship on sustainability between European first-tier suppliers and second-tier suppliers in emerging economies.
B2C companies are likely to be the first actors that want to integrate sustainability because of the pressure they receive from the market (Davis, 2011). B2C companies manage sustainability by establishing relationships with first-tier suppliers on sustainability. The quality of these relationships can be measured by trust and communication (Chen & Paulraj, 2004; Hallikas, Immonen, Pynnonen, & Mikkonen, 2014; Tidy, Wang, & Hall, 2016). The quality of this relationship is likely to affect the willingness of first-tier suppliers to integrate a collaborative relationship on sustainability with the second-tier supplier. This indicates that relational factors may affect the collaborative relationship on sustainability. Therefore,
working proposition 5 is:
WP5: Relational factors in the B2C – first-tier supplier relationship are likely to affect the collaborative relationship on sustainability between European first-tier suppliers and second-tier suppliers in emerging economies
The first factor is trust, which is related to confidence and faith, and which can be measured through the indicators credibility and benevolence (Doney & Cannon, 1997; Hoejmose, Brammer, & Millington, 2012; Tidy, Wang, & Hall, 2016). A high level of trust of the first-tier suppliers in their relationship with the B2C company indicates high willingness of the first-tier supplier in establishing a relationship on sustainability with the second-tier supplier. As a collaborative relationship is mainly based on trust, a high level of trust is likely to affect the collaborative relationship on sustainability with the second-tier supplier. Therefore, working proposition 5a is:
WP5a: Level of trust in the B2C – first-tier supplier relationship is likely to affect the collaborative relationship on sustainability between European first-tier suppliers and second-tier suppliers in emerging economies.
The second factor is communication, which is related to contact and connection, and which can be measured through the indicators frequency and personal contact (Chen & Paulraj, 2004; Hallikas, Immonen, Pynnonen, & Mikkonen, 2014; Tidy, Wang, & Hall, 2016). When the level of communication between the first-tier supplier and the B2C company is high, the first-tier supplier is more likely to understand the importance and need to establish a close relationship with the second-tier supplier on sustainability. Again, a collaboration is a close relationship type on sustainability and requires a high level of communication; so level of communication is likely to affect the collaborative relationship with second-tier suppliers on sustainability. Therefore, working proposition 5b is:
WP5b: Level of communication in the B2C – first-tier supplier relationship is likely to affect the collaborative relationship on sustainability between European first-tier suppliers and second-tier suppliers in emerging economies.
Chapter 4: Method
In this chapter an in-depth explanation of the method used to conduct this research will be presented. First, the research design will identify why a qualitative approach and a case study research design is suitable for this research. After that, a paragraph on the case selection will elaborate on the criteria that need to be met in order to be selected as a case for this research and the selecting procedure. In addition an introduction to the four cases is presented. The data collection paragraph will give insight in the semi-structured interviews that are conducted and the data analysis paragraph will shed light on how all gathered data is analyzed by different themes. Finally, a paragraph on the quality of the research will elaborate on the reliability and validity of this research.
4.1 Research design
This study addresses the problem of very limited research on relationships as regards sustainability in the first-tier – second-tier relationship by a qualitative approach. To answer the research question a central phenomenon, relationships on sustainability, needs to be understood. Because of multiple arguments a qualitative approach is chosen for this research. First, because of the complex nature of the question and the fact that it’s not possible to collect data via numbers and measurements, data needs to be collected through text, and therefore this research will have a qualitative approach (Yin, 2013). Second, a qualitative approach is suitable for this specific research question as it focuses on understanding the dynamics within the first-tier – second-tier supplier relationship (Eisenhardt, 1989). In addition, other papers that are doing a similar research also adopt a qualitative approach like the research from Wilhelm et al (2016) and Grimm et al (2014). Lastly, this research will have a deductive approach but with an openness for identification of further relevant and not
expected factors. In order to capture factors that affect the first-tier supplier – second-tier supplier relationship that were not derived from the literature, a qualitative approach is necessary. This specific type of research is labeled as an explanatory study because the aim is to provide explanations through looking at the causal relationships between factors and their affect on the first-tier supplier – second-tier supplier relationship on sustainability (Saunders, Lewis, & Thornhill, 2012). The relationship is identified as collaborative or arms-length by measurement of the aspects communication and trust, and research will be done on whether the relationship is affected by institutional factors, agency factors, power factors and relational factors.
By conducting a case study research design, the theory about relationships on sustainability between the first-tier and second-tier supplier can be tested through real-life cases (Zainal, 2007). Managing sustainability is a highly complex part of the relationship due to sensitiveness of the topic and complexity of multi-tier supply chain partners. A case study approach will allow for a more comprehensive understanding of this complex part of the relationship (Grimm, Hofstetter, & Sarkis, 2016; Hodkinson & Hodkinson, 2001). Secondly, a case study approach is appropriate for this research because of the immaturity of research on sub-supplier management on sustainability (Grimm, Hofstetter, & Sarkis, 2016). In addition, a case study provides the ability to give insights into underlying relationships, which contributes to discovering why first-tier suppliers establish relationships on sustainability with second-tier suppliers, how they do this and what factors affect this relationship (Wilhelm, Blome, Wieck, & Xiao, 2016). This research adopts a holistic multiple case study design for two reasons. First, the multiple case study is holistic because no sub-units are identified and the research is only on the relationship as regards sustainability. Secondly, the research design is holistic because a helicopter view of the cases will present how the company in each specific case manages sustainability (Yin, 2009, 2013). The
number of case studies that will be conducted is four. The reason for conducting research on multiple cases is because it strengthens grounding of results (Eisenhardt, 1989). Conducting multiple case studies will make the evidence more plausible because of the literal replication of the multiple cases. Through literal replicating a case study it can be checked if results from one case also appear in other cases (Yin, 2009). Besides, management of sustainability in multiple cases should be researched due to limitations in generalizability when only one case is studied. Also, a pattern cannot be explained from one single case and by conducting four case studies, comparisons can be made (Eisenhardt, 1989). The method that will be used for this research is a mono method, as only qualitative research will be used.
4.2 Case selection
The cases that are selected are all first-tier suppliers in the fashion industry. The focus on first-tier suppliers is because of their direct contact with both the B2C companies and the second-tier suppliers and therefore they are the ones that establish a relationship with both parties. The fashion industry is selected because of two reasons. First, because this specific industry is producing high social and environmental damage (Environmental Protection Agency, 2016; Guilford, 2013) and therefore research should be done on how this industry can become more sustainable. Multiple big scandals happened in the fashion industry in the past five years (e.g. Rana Plaza in Bangladesh (Guilford, 2013)). These scandals illustrate the high need of research on making the fashion industry more sustainable. Secondly, there is a high need for research on the first-tier – second-tier supplier relationship in the fashion industry because production through sub-sourcing is a relationship type that is highly adopted in the fashion industry (Niu, Chen, Zhuo, & Yue, 2018). Therefore, the cases that are selected are first-tier suppliers that operate in the fashion industry. They are selected by
