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COMPETITION AS FORCE: THE EFFECTS OF COMPETITION ON
SSCM DECISIONS
Master thesis, MSc SCM Final version
University of Groningen, Faculty of economics and business economics
June 22, 2018
Tim Landsman Student number 2031590 email: t.landsman@student.rug.nl
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Table of content
Frontpage ... 1 Table of content ... 2 Abstract ... 4 1. Introduction ... 5 2. Theoretical background ... 82.1 Sustainable supply chain management ... 8
2.1.1 Definition SSCM……….………..8
2.1.2 Development of SSCM……….….………8
2.1.3 Firm's adaption of SSCM……….9
2.2 Managerial decision making ... 9
2.2.1 Definition and complexity………9
2.2.2 Time horizon of managerial decision-making……….…………9
2.3The relation between competition and sustainable decision-maki …….………..10
2.4 Conceptual framework ... 11
2.5 Hypotheses development based on literature ... 12
3. Empirical studies………..………...13
3.1 Research methods ... 14
3.2 Study 1 (Vignette)………...………...14
3.2.1 Method Study 1 (Vignette)………...15
3.2.1.1 Development of Vignette………...……..….15
3.2.1.2 Data collection vignette……...………..………..15
3.2.1.3 Data analyses vignette……….17
3.2.2 Results Study 1 (Vignette)……… ..……...18
3.2.2.1 Manipulation and Hawthorne checks…………..………...…….18
3.2.2.2 Influence of competition on sustainability decisions managers....….….18
3.2.2.3 Influence time horizon on relation competition and sustainability ………decisions managers……….………19
3.3 Study 2 (Interviews)………..………22
3.3.1 Method study 2 (Interviews)………..……….………..22
3.3.1.1 Development of interview protocol………...22
3.3.1.2 Data collection interviews………22
3.3.1.3 Data analyses interviews……….………...22
3.3.2 Results Study 2 (Interviews)……….….……….…...23
3.3.2.1 Relation with sustainability in the focal company………...…………..23
3.3.2.2 Influence level of competition on sustainability decisions managers...23
3.3.2.3 Influence competition on environmental sustainability decisions……....23
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3.3.2.5 Influence time horizon on sustainability decisions managers………..…27
3.3.2.6 Other influence factors on sustainability decisions managers……….…29
4. Discussion………..………...31
5. Conclusion……….……….………..35
5.1 Managerial implications………...35
5.2 Limitations and suggestions for further research……….35
6. References………...……….37
Appendix 1: Questionnaire based on Vignette………..………...43
Appendix 2: Interview protocol………..………...47
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Abstract
The purpose of this study is to reveal the influence of competition on decision-making of managers in the supply chain of a firm and to reveal which influence the time horizon of managers has on the relationship between the level of competition and sustainability decisions. Mixed results are found for the influence of the level of competition on sustainability decisions. Competition leads to the preferred, most sustainable option not always being available and indirectly sets the degrees of freedom a manager has in making sustainable decisions. On the other hand, sustainability of the finished products does give companies a competitive advantage. This study found mixed results on the moderating influence of the time horizon of managers on the relationship between competition and sustainable decision-making. This study closes the gap in literature on the influence of
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1. Introduction
Scientist state that global temperatures must not increase with more than 2 degrees Celsius in order to avoid the worst consequences of climate change (NASA). Awareness of the
seriousness of this problem is growing. The pressure society puts on companies to behave responsible and to clearly demonstrate their ethical and environmental behaviour has grown dramatically in recent years (Ashby et al., 2012; Kim & Lyon, 2015). Despite the increased focus on sustainability, almost all companies remain unsustainable (Montabon et al. 2016). This results in a further deterioration of the environmental situation (Whiteman et al., 2013), which could be disastrous.
There could be multiple reasons why managers of firms still make unsustainable choices. Choosing profit maximization over sustainability seems the most evident one. Closely related to a firm’s amount of profit is the level of competition. Competition has always been seen as good for society, because it leads to a higher rate of total productivity growth (Nickell, 1996). But one of the main principles of economics is that when the level of competition increases, the profit of a firm decreases (Koskela & Stenbacka, 2005). Competition therefore leaves managers less room to opt for the non-profit maximizing, more sustainable options. As a result, competition between firms could be a factor in the question why managers still make unsustainable choices. However, every manager will react different to a situation based on personal characteristics. When it comes to sustainability, the short-term effects will not have that much impact, but the long term effects will be major. Therefore, it could be expected that the time horizon of a manager, which is the level of future focus, will have an influence on the relation between competition and sustainability decisions. The aim of this paper is to come one-step closer to truly sustainable firms. The research question this paper addresses is
therefore as follows: How does competition influence sustainability decision making and how does the time horizon influence this relationship?
Most organisations are a part of at least one supply chain (Samaranayake, 2005) and the current global market competition is increasingly based on supply chain vs supply chain (Gold et al., 2010). The expected responsibility regarding sustainability of a company therefore extents along the full extent of a company its supply chain into all its processes, products and suppliers. Supply chain management is therefore highly relevant in both
successfully competing in today’s global economy and in addressing responsible behaviour in all stages of the supply chain (Ashby et al., 2012). The environmental, social and economic objectives of a company form together the Triple Bottom Line (TBL) of a company
(Elkington, 1997) and in order to come to the most sustainable outcome all three dimensions should be treated as equals. Sustainable supply chain management (SSCM) adds to the basic concepts of supply chain management by considering also the two sustainability dimensions of the TBL when evaluating performance (Meixell & Luoma, 2015).
6 point out that the current way in which literature addresses trade-offs between the three
dimensions of the TBL, by prioritizing the economic objective over the environmental and social objectives, will not lead to truly sustainable firms. Shevchenko et al. (2016) argue that external stakeholders yet have to create the conditions that would oblige firms to become truly sustainable. It could be concluded that although sustainability research has become
mainstream and the field of SSCM has become mature (Quarshie et al., 2016), there is still a lot of knowledge missing. A generic framework for SSCM applicable to all industries has not been developed yet (Ansari & Kant, 2017) and practical implementation has proven to be difficult (Ashby et al., 2012). The current SSCM research is limited in focus and lacks theory development backed by rigorous research approaches (Winter & Kneyemer, 2013). Next to that, the field of SSCM seems to be rather theoretical according to Reefke & Sundaram (2017), who formulated research opportunities based on the combination of literature and practicing experts opinions. ‘The impact of competitive forces on sustainability, e.g. sustainability efforts prevented due to cost pressures’ (p. 204) is in their top 10 of SSCM research opportunities. This research follows the lead and research this impact.
Being more sustainable as a company could lead to a competitive advantage, a better
reputation and more customer satisfaction (Saeidi et al., 2015). Furthermore, most papers that have studied the relationship between environmental sustainability and financial performance of companies came to the conclusion that it ‘pays to be green’ (Voegtlin & Pless, 2017). Based on the conclusions of these papers it would seem logical that companies would become more sustainable when the level of competition increases in order to gain a competitive advantage over their competitors. On the other hand, managerial decision-making suffers from uncertainty, partly due to the complexity of supply chains. This uncertainty is according to Wu & Pagell (2011) the reason why managers make unsustainable decisions. Furthermore, recent research on competition has shown that competition can be socially costly, because an increase in competition encourages firms to unethical or even illegal behaviour (Cai & Liu 2009; Kilduff et al. 2010; Bennett et al., 2013; Branco & Villas-Boas, 2015). According to Shevchenko et al. (2016) it is clear that a firm is behaving unethical when it continues contributing to social and environmental degradation. Hershfield et al. (2012) found that the time horizon of a person has an influence on his ethical decision-making. Based on this research, it could be expected that the time horizon of a manager will have an influence on the relationship between the level of competition and managerial decision-making regarding sustainability issues.
7 This research investigates sustainability decisions concerning both the upstream and
downstream contacts of a focal firm, to get a more complete view. The practical contribution of this paper lies in revealing the underlying mechanisms of unsustainable decision making by managers. Firms could anticipate on these mechanisms in order to have their managers make more sustainable choices.
The following research question is formulated based on the above addressed gaps:
RQ: How does competition influence sustainability decision making and how does the time horizon influence this relationship?
The remainder of this paper is organized as follows: First, a theoretical background is
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2. Theoretical background
2.1 Sustainable supply chain management 2.1.1 Definition SSCM
For this paper the definition of SSCM by Carter & Rogers (2008) is adopted, because it has a specific reference to the three dimensions of the triple bottom line (TBL) (Elkington, 1997) and therefore focusses on all aspects of sustainability. The definitions is as follows: ‘The strategic, transparent integration and achievement of an organization’s social, environmental, and economic goals in the systemic coordination of key inter-organizational business
processes for improving the long-term economic performance of the individual company and its supply chains’ (Carter & Rogers, 2008 p.368). According to Carter & Rogers (2008), the triple bottom line suggest that at the intersection of economic, environmental and social performance, a firm can engage in activities which will have a positive influence on environment and society and also result in long term economic benefits and competitive advantages for the firm. The concept of the TBL is not without critics. According to Montabon et al. (2016) and Matthews et al. (2016) the problem with this approach is that there is frequently no agreement between the different stakeholders, which makes it hard to include all stakeholders in decision making. Managers therefore choose to emphasize the economic dimension over the other two dimensions. This paper agrees with Pagell & Shevchenko (2014) that for the TBL to be effective ‘Future research will have to explicitly recognize the claims of stakeholders without an economic stake in the chain, treat these claims as equally valid to economic claims, and start to focus on ways to deal with situations where synergies cannot be created’(Pagell & Shevchenko, 2014 p.47). That is why this paper treats the environmental and social dimension of the TBL with equal importance as the economic dimension and next to that reveals the underlying mechanisms of decision making in situations where synergies cannot be created, in order to provide managers handles to solve the core problems of unsustainable decision making.
2.1.2 Development of SSCM
Academic research focusing on sustainability issues in the supply chain management
literature started about two decades ago, see for example the papers of Klassen & McLaughlin (1996); Murphy et al. (1996); Walton et al. (1998). An important first step towards paying attention to sustainability was the establishment of the World Commission on the
9 plays a major role in creating the future roadmap of an economy's growth’ (Rajeev et al., 2017, p. 301).
2.1.3 Firm’s adoption of SSCM
Firms are, just like researchers, putting more effort in SSCM. They are increasingly under pressure from stakeholders to consider, besides their economic responsibilities, also their environmental and social responsibilities into their supply chain strategies and corresponding operations (Tate et al. 2010). Being ‘green’ as a company has become that important that ‘greenwashing’ is becoming a problem: Companies that are misleading consumers about firms environmental performance (Delmas & Burbano, 2011). SSCM has become an industrial practice and several firms have recently announced the adoption of sustainability values as part of their corporate culture (Wu et al. 2017). Examples of such firms are Coca Cola, Apple (Kumar et al., 2012) and British Aerospace (Gopalakrishnan et al., 2012). 2.2 Managerial decision making
2.2.1 Definition and complexity
Managerial decision making involves the commitment of organisational resources in order to fulfil goals and purposes through appropriate means (Shrivastava et al., 1985). Managers face uncertainty when making decisions, for example about government actions and regulations, the demand of consumers, the competitive advantage and strategy of the organisation and the outcomes of their decisions (Abbasi & Nilsson, 2012). The complexity of the decision-making is related to the uncertainty and is inherent in the way supply chains work and affect environment and society. The complexity makes that the effects of management decisions are hard to measure, and therefore contributes to the uncertainty (Abbasi & Nilsson, 2012). 2.2.2 Time horizon of managerial decision making
It could be stated that the impact of environmental sustainability decisions will be best noticeable in the long term. In the short term, the consequences of making environmental unsustainable decisions will be not that severe. So when having a stronger focus on the present, managers may be more inclined to prioritize cutting costs over being sustainable and therefore to prioritize the economic dimension of the TBL over the environmental dimension in their decision-making.
The potential for short-term gains can often be an important motivator because the future consequences of decisions that are made in the present are not fully appreciated (Hershfield et al., 2012). The corresponding model of these intertemporal choice failures states that people frequently act as if they are under the influence of multiple selves (Parfit, 1971; Bazerman et al., 1998).
10 Parfit (1971), people tend to think about their future selves as if they are different people (Pronin & Ross, 2006; Wakslak et al., 2008). Even on neural level such differences have been detected, as Ersner-Hershfield et al. (2009) showed that similar neural activities occur when someone thinks about another person.
This above described tendency of seeing the future self as another person can have important behavioural implications. A for this research interesting implication is described in the research of Hershfield et al. (2012). They found that there is a relation between an individual his focus on the future and the degree of ethical responsible behaviour. Feeling less continuity with a future self will lead to less ethical decision making, when unethical behaviour can lead to gains or rewards in the present but to potential long-term punishments. Feeling more continuity with a future self will instead lead to more ethical decision making, because the person feels more continuity with his future self and therefore with other people in the future. Therefore possessing the ability to project one’s self into the future , and feeling a sense of continuity with that self, is a critical deterrent of unethical behavior.
2.3 The relation between competition and sustainable decision-making
Competition is typically considered as desirable in economic theory. Competition improves the functioning of markets, guarantees efficiency by forcing firms to produce at their lowest costs, encourages innovation by companies and stimulates employees to put maximum effort in their work (Schwieren & Weichselbaumer, 2010). This will lead to a greater consumer surplus (Syverson, 2004).
In SSCM literature there are a number of papers who focus on the long term competitive advantage which being sustainable can give companies, see for example Rao & Holt (2005), Ferguson & Toktay (2006), Walker et al. (2008). Companies who not only focus on their economic return, but also consider the impact of their actions on environment and society will attain a long-term competitive advantage (Hart, 1995). Literature (Gimenez et al., 2003; Ayuso, 2006) suggests that companies in fact often adopt sustainability as an opportunity to gain a competitive advantage. Being sustainable is a virtue, which cannot easily be copied by other companies. Furthermore, as showed earlier, there is a continuously growing social and environmental public awareness of sustainability and respective customer demands, so the value of being sustainable as a company grows. Sustainable business practices could improve the firms operational processes due to innovations (Porter & Linde, 1995) and decrease the risk of bad publicity and reputational damage. Therefore sustainability would ultimately lead to enhanced competitive advantage (Christmann, 2000). Other papers have researched the relationship between corporate environmental performance and corporate financial
performance. The majority of the papers suggest a positive relationship, being more
11 Besides the earlier mentioned positive effects of having increased competition between firms, there exist also negative sides to it. An example is the ‘race to the bottom’ effect, in which companies are competing by offering ever decreasing prices in order to gain market share of each other (Fischel, 1981). This usually leads to companies going out of business and jobs being lost. More recently, economists are interested in more than only the economic effects of competition (Schwieren & Weichselbaumer, 2010). Examples of such papers are Niederle & Vesterlund (2006), who investigate the difference between gender in selection of competitive environments, or Brandts et al. (2009) who experiment with the effects of rivalry on social wellbeing. This research is however interested in another negative effect of increased competition, namely the related increase in unethical decision-making.
Not only economists have published articles on the effect of competition on unethical behaviour, but also researchers from different areas have investigated this relationship. Shleifer, (2004), Shleifer (2007), Kulik et al. (2008) Cai & Liu, (2009), Schwieren &
Weichselbaumer (2010), Pierce et al. (2013), Bennett et al. (2013) and Branco & Villas-Boas (2015) all found that an increase in competition leads to an increase in unethical behaviour. The underlying economic key mechanism are the market rewards for doing so, according to Bennett et al. (2013). There are costs of making unethical choices, like potential sanctions and reputational losses, and rewards for making unethical choices, like higher profit margins or more customers. The rewards for the unethical decision under increased competition are higher than the costs, because the higher the competition, the higher the benefits of doing better than other firms are, and therefore the more unethical behaviour would appear (Schwieren & Weichselbaumer, 2010). Besides these economical motives, there are also psychological motives why competition increases unethical behaviour. Schwieren & Weichselbaumer (2010) found that competition draws the attention from the well-being of society to the well-being of the individual.
2.4 Conceptual framework
Given the above discussed literature, the following conceptual framework is presented in figure I. This paper argues that the level of competition the firm of the manager is
experiencing influences the decision making of managers regarding SSCM issues.
12 Figure I: Conceptual Framework
2.5 Hypotheses development based on literature
The phenomenon of interest in this research is to what extent and in what ways competition influences sustainability decisions of managers. The key concepts in this research are competition and sustainability. In the SSCM literature, sustainability is generally seen as a way of creating a competitive advantage. Next to that, the main consensus in literature is that being environmental sustainable has a positive effect on the firm performance. Based on these papers, one would expect that managers decide for sustainability under increased competition, because it would lead to a competitive advantage and better financial performance. On the other hand, there are quite some papers, which report that an increase in competition would lead to an increase in unethical decision-making. Competition increases the pressure on the managerial decision-making, which will lead to managers willing to choose the option from which their company will gain the most, even if it would harm the well-being of society. Managers make their decisions under high uncertainty because of the complexity of the supply chain. Although being sustainable can create a competitive advantage, this would only appear in the long run. Being more sustainable means significant investments in the short term. Managers would view these investments as costs. They have high uncertainty of the effects of these investments, but they can be certain of the direct costs of investing in sustainability. The general idea is that these investments will pay off in the future, as stated above, but managers do not have certainty about what it will yield to them, when it will yield to them and even if it will have a yield for the company at all. As a result, it is not possible for managers to make a proper cost-benefit analyse of their sustainability decision under
13 because the manager will decide for the more unethical and therefore more unsustainable option in a tempting situation with short-term gains and potential long-term punishment. On the other hand, when having more future self-continuity and accordingly a longer time horizon as manager, the relationship between the level of competition and sustainability decisions will be weakened. The manager will decide more sustainable in the same tempting situations. Based on this, the following hypotheses are formulated:
Hypothesis 1: An increase in the level of competition will increase unsustainable decision making of managers.
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3. Empirical studies
3.1 Research methods
A multiple method case study is utilized in this study. First, an experiment in the form of a vignette study is conducted to investigate the causal inference between competition and the decisions managers take regarding sustainability issues. According to Highhouse (2009), the strength of an experiment is determining whether or not x causes y, which applied to the hypothesis of this research translates to whether or not competition leads to unsustainable decision making of managers. The advantage of an experiment is that it makes it possible to control all factors (Highhouse, 2009) when letting managers decide about sustainability related issue. It therefore allows to variate the level of competition while keeping all other factors constant and investigate the difference in the managerial decision making regarding sustainability issues. This unique feature of experiments results in being able to draw very precisely conclusions about the causal inference between the level of competition and managerial decision making regarding sustainability.
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3.2 Study 1 (Vignette)
3.2.1 Method Study 1 (Vignette)
3.2.1.1 Development of vignetteThe vignette is developed in cooperation. The entire vignette is available in Appendix 1. The experiment is divided in a case with a social dilemma and a case with an environmental dilemma. Furthermore, there is an upstream version and a downstream version of each case. A participant conducts only one version, based on his function.
The upstream version focusses on the likelihood of going into business with a new supplier or subcontractor. It gives participants the dilemma of meeting your targets as supply chain manager by sourcing from the (potential) unsustainable supplier or not meeting your targets by refusing this collaboration. It will be measured with a 7-level Likert scale, with 1 being completely disagree to source and 7 being completely agree. Higher scores therefore translate to less sustainable decisions. The downstream version focusses on the likelihood of sharing information as sales manager about possible unsustainable decisions of the supply chain department with the customer. It gives participants the dilemma of sharing this sensitive information with the customer, which could lead to you not meeting your targets because the customer refuses to conduct business with you, or not sharing this information with the customer, in which case you would definitely meet your targets. It will also be measured with a 7-level Likert scale, with 1 being completely disagree to share information and 7 being completely agree to share information. Therefore, a higher score translates to being more sustainable.
The competition manipulation consists for the upstream case of another buyer approaching the supplier, which can only serve one. For the downstream case, a similar company as the focal company has approached the client and both compete for the same contract. The other circumstances are exactly the same. This manipulation will measure the degree of influence of competition on sustainable decision-making.
The time horizon of the managers is tested after the questions about the case by using the future self-continuity scale. The participant are instructed to choose one of the seven pair of circles which they feel describes best how similar they feel with their future self’s, with option 1 being not similar at all and option 7 being extremely similar. Higher scores therefore indicates a higher future self-continuity. The self-continuity scale is developed by Ersner-Hershfield et al. (2009) and furthermore used in the research of Bartels (2010) and in the research of Hershfield et al. (2012). Ersner-Hershfield et al. (2009) showed the scale has a good test-retest ability and Bartels & Urminsky (2011) demonstrated that it tests a construct which has discriminant validity from related concepts.
3.2.1.2 Data collection vignette
16 should be active in the business-to-business (B2B) sector, it should have an upstream and a downstream department both consisting of at least 10 people each, and the company should have their (regional) headquarter in the Netherlands due to time and budget restrictions. The selected focal company is a logistical service provider. It operates as an independent
company, but is a special department of a heavy automobile manufacturer, which therefore is its only customer. This company is chosen because it is a critical case (Flyvbjerg, 2006). Sustainability issues are very prominent in the automobile industry in the day-to-day decision-making. Furthermore, this industry is in the process of slowly moving from fossil fuels
towards electricity as power source, which could be seen a critical further step in the direction of becoming truly sustainable.
The unit of analyses for the vignette study are the decisions the managers make regarding sustainability issues. Secondary data from seven colleague researchers who have conducted the same experiment at seven other firms following the same principles of selecting
companies is used as complement of the collected data. Characteristics of those seven companies can be found in Table I.
Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Industry Logistic Service Provider Financial Services Logistics Service Provider Manufacturer/ Logistics Service Provider Logistics department supermarket Manufacturer Wholesaler
Table I: Characteristics of companies used for data collection experiment.
I selected the participants of the case company based on the either upstream or downstream contact they have with suppliers or clients of the focal firm and on their function, so that the sample would from a good reflection of the population. Each participant did get an envelope or a Qualtrics survey with a social and an environmental case. The upstream cases were giving to the upstream informants and the downstream cases to the downstream informants. Before the experiment, the envelopes or Qualtrics surveys were sorted so that participant 1 gets a competitive case, participant 2 gets a non-competitive case and so on. Furthermore, the cases were labelled 1 and 2 and the sequence between the environmental and social case changes. The seven colleague researcher have selected around 20 participants each, while selecting on the same criteria in order to have a good reflection of the population of their company. This makes the total of participants 143, from which 77 have conducted the
upstream experiment and 66 have conducted the downstream experiment. The characteristics of this total sample of the managers is displayed below.
Function Frequency (%) Sales 28,4% Logistics 19,9% Operations 16,3% Purchasing 12,0% RISK 8,5%
Supply chain management 7,1%
Marketing 2,1%
17 Gender Male Female
85,3% 14,7% Age 18-30 years 29,5% 31-40 years 33,8% 41-50 years 22,3% 51-70 years 14,4% Nationality Dutch 71,3% German 14,7% Polish 1,4% Turkish 1,4% Spanish 1,4% Chinese 1,4% Italian 1,4% Other 7%
Table II: Characteristics of participants experiment 3.2.1.3 Data analyses vignette
All the collected data of the experiment is used as input for Excel. Two files are made, one with the upstream and one with the downstream data. The for this research relevant columns are ID participant, Social or Environmental, Competition High or Low, Manipulationcheck1 and 2, Hawthorne check 1 and 2, FutureSelf and furthermore Sourcing 1, 2 and 3 for the upstream data and Info-sharing 1,2 and 3 for the downstream data. This data is used as input to SPSS.
The first analyses in SPSS existed of executing manipulation checks and Hawthorne checks. Secondly, the Cronbach’s Alpha of the upstream variables Sourcing 1, 2 and 3 and the
downstream variables Info-sharing 1, 2 and 3 was calculated. Because the results (Cronbach’s Alpha greater than 0,8) show that the items measure the same underlying constructs, two new variables are made in SPPS for these constructs. Sourcing 1, 2 and 3 are bundled in the construct Sourcing Scale and Info-sharing 1, 2 and 3 are bundled in the construct InfoSharing Scale.
Thirdly, an Independent-Samples T Test was executed to find out if the level of competition does have a significant influence on the sustainability decisions of managers. Competition High or Low is used as the independent variable. The dependent variable for the upstream cases is the Sourcing Scale, while for the downstream cases the dependent variable is the InfoSharing Scale.
To test if the time horizon has an influence on sustainability decisions of managers, a
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3.2.2 Results Study 1 (Vignette)
3.2.2.1 Manipulation and Hawthorne checks
The participants reacted correctly to the manipulation check. An independent-Samples T Test was executed with Competition High or Low being the independent variable and
Manipulation check 1, Manipulation check 2 being the dependent variable. For the upstream cases, the first manipulation check gives Mean High = 5,36 and Mean Low = 3,51 with SD = 0,269 with p = 0,000 and the second manipulation check gives Mean High = 5,00 and Mean Low = 3,26 with SD = 0,249 with p = 0,000. For the downstream cases, the first
manipulation check gives Mean High = 5,63 and Mean Low = 3,45 with SD = 0,271 and p = 0,000 and the second manipulation check gives Mean High = 5,32 and Mean Low = 3,33 with SD = 0,262 with p = 0,000. Based on these results, the participants who made the high
competition cases experienced significant (p-values less than 0,05) higher levels of
competition than the participants who made the low competition cases, in both the upstream and downstream variant.
In addition to the manipulation checks, an independent-Samples T Test was executed with Competition High or Low being the independent variable and Hawthorne check 1 and
Hawthorne check 2 being the dependent variables. Three out of four Hawthorne check results revealed that there was no significant difference (p-value greater than 0,05) between
participants who made the high competition cases and participants who made the low competition cases, with regard to how they scored the importance of securing supplies or customer and how good they rated the chosen strategy. For the upstream cases, the first Hawthorne check gives Mean High = 5,30 and Mean Low = 5,40 with SD = 0,244 and p = 0,668. The second Hawthorne check gives Mean High = 4,57 and Mean Low = 4,44 with SD = 0,227 and p = 0,565. For the downstream cases, the first Hawthorne check gives Mean High = 5,27 and Mean Low = 5,38 with SD = 0,239 and p = 0,655. The second Hawthorne check gives Mean High = 4,71 and Mean Low = 3,94 with SD = 0,280 and p = 0,007. For this last Hawthorne check, the p-value is less than 0,05 and therefore the high competition group does score the growth strategy of their company significant higher than the low competition group. This will be taken into consideration by reviewing the results. Based on the overall results of the manipulation checks and Hawthorne checks, it can be concluded that results of the vignette study provide insights into the influence of the level of competition on sustainability decisions of managers.
3.2.2.2 Influence of competition on sustainability decisions managers Upstream results
19 The Mean for the sourcing decision in the upstream cases is higher when the manager
experienced high competition, as displayed in Table III below. Upstream
Dependent variable
Independent variable
Mean Standard Error Mean
T-value
Sourcing Scale High 4,38 0,190 1,584
Low 3,97 0,176
Table III: Test results upstream
The T – Test showed for the construct Sourcing Scale that the Mean difference = 0,409 with SD = 0,258 and p = 0,115. For the upstream cases, the p-value is greater than 0,05. The result therefore displays that managers who experience high competition are not significant more likely to source from (possible) unsustainable suppliers, than managers who experience low competition. The results do not provide support for hypothesis 1.
Downstream results
An Independent-Samples T Test was executed to find out if the level competition does have a significant influence on the info sharing decisions made by the managers who mainly have contact with the costumers. The Cronbach’s Alpha of the scale of all three sharing info items is 0,851. This means the internal consistency of the three items is good (Gliem & Gliem, 2003). Therefore, the new construct of these three items named InfoSharing Scale is computed in SPSS.
For the information sharing decision in the downstream cases, the Mean is lower when the manager experienced high competition instead of low competition, as displayed in Table IV below. Downstream Dependent variable Independent variable
Mean Standard Error
Mean
T-value
InfoSharing Scale High 4,39 0,196 3,222
Low 5,31 0,224
Table IV: Test results downstream
InfoSharing Scale gives that the Mean difference = 0,928 with SD = 0,288 and p = 0,002. The p-value for the construct InfoSharing Scale is less than 0,05, so for the downstream cases, managers who experience high competition are significant less likely to share information with the customer about sourcing from a (possible) unsustainable supplier, than managers who experience low competition. The results for the downstream cases provide support for hypothesis 1.
3.2.2.3 Influence time horizon on relation between competition and sustainability decisions managers.
20 decisions are the dependent variables and the FutureSelf is the independent variable. It gave a Wilk’s Lambda of 0,629, with F = 1,602 and p = 0,065. Because the p-values for both
upstream and downstream are higher than 0,05, the influence of the Futureself on the upstream and downstream sustainability decisions is not significant. Therefore it could be concluded that the time horizon of managers does not have a significant influence on their sustainability decisions. Next to that, a linear regression was executed to test the effect of the Futureself as a moderator on the relation between the level of competition and sustainability decisions. First, for both the upstream and downstream dataset, the values of the variable Competition High or Low are converted to a dummy variable in Excel, with High = 1 and Low = 0. This dummy variable is imported to SPSS. Secondly, for both the upstream and downstream dataset, two new centralized variables are calculated in SPSS for the independent variable Competition 1 or 0 and the moderating variable FutureSelf. To do so, first the mean of each variable is calculated and secondly the new centralized variable is calculated by extracting the mean from the value of the variable for each participant. These new variables are called CompetitionCentr and FutureSelfCentr. The third step is computing a interaction variable which consists of the new centralized independent variable CompetitionCentr
multiplied by the new centralized moderating variable FutureSelfCentr. This variable is called CompetitionFutureSelf. The fourth step is executing the linear regression. For the upstream cases, the Sourcing Scale is the dependent variable and the three new variables
CompetionCentr, FutureSelfCentr and CompetitionFutureSelf are the independent variables. For the downstream cases, the InfoSharing Scale is the dependent variable and the three new variables CompetionCent, FutureSelfCentr and CompetitionFutureSelf are the independent variables. The results of the linear regression in Table V and Table VI show that the effect of FutureSelf as a moderator is not significant, because the p-values of the interaction variable CompetitonFutureSelf are for both the upstream and downstream cases greater than 0,05. The combination of the influence of the level of competition with the influence of the futureself of managers does not have a significant influence on sustainability decisions of managers. The results of the linear regression do not provide support for hypothesis 2. The results of the linear regression are displayed in Table V below.
B value SD error Beta T-value p-value
Constant 3,966 0,198 19,998 0,000
CompetitionCentr 0,306 0,398 0,094 0,770 0,444
FutureSelfCent 0,103 0,124 0,101 0,829 0,410
CompetitionFutureSelf -0,045 0,249 -0,021 -0,182 0,856 Table V: Linear regression upstream cases
B value SD error Beta T-value p-value
Constant 4,789 0,223 21,519 0,000
CompetitionCentr -0,825 0,446 -0,230 -1,850 0,069
FutureSelfCent -0,005 0,151 -0,004 -0,033 0,974
21 After this test, a two way ANOVA was executed as an alternative test. The variables
Competition 1 or 0 and FutureSelf are the independent variables for this test and for the upstream cases the Sourcing Scale is the dependent variable, where as for the downstream cases the InfoSharing Scale is the dependent variable. This test also found no significant interaction between the effects of Competition and Futureself on the sourcing and info sharing decisions. For the effect of Competition and FutureSelf on the Sourcing Scale, F(6,61) = 0,153 with p = 0,988. The effect of Competition and FutureSelf on the InfoSharing Scale gave F(5,53) = 0,122 with p = 0,987. Both p-values are greater than 0,05 and therefore the two way ANOVA provides no support for hypothesis 2.
In Table VI below are the findings of the results section summarized. Summary hypothesis testing
Hypothesis Prediction Finding
H1 An increase in the level of
competition will increase unsustainable decision making of managers.
Partly Supported
H1 The long-term time horizon
of the managerial decision-making will have a negative moderating effect on the relation between the level of competition and sustainable decision making, whereas the short-term time horizon will have a positive moderating influence.
Not supported
22
3.3 Study 2 (Interviews)
3.3.1 Method study 2 (Interviews)
3.3.1.1 Development of interview protocolThe data for the second study in this thesis is collected through semi-structured interviews, consisting of predetermined questions after which clarification can be asked from the
participants on their answer (Doody O, 2013). The predetermined questions are formulated in the interview protocol and are attached to this paper in Appendix 2. They make sure that similar type of data is collected from all participants.
The key concepts of interest during the interviews are the influence of competition on sustainability decisions and the influence of the time horizon of managerial decision making on the relation between competition and the sustainability decisions of managers. These concepts are operationalized in interview questions by asking the participants about real life decisions they made regarding sustainability. Reasons behind sustainable or unsustainable choices are asked and the influence of competition and the time horizon of managerial decision-making is evaluated with the participants.
3.3.1.2 Data collection interviews
The same focal company as in study 1 is used for the interviews. I selected, in cooperation with the HR manager, seven managers of the case company on key positions for the interviews and approached the managers by mail. Eventually four out of these seven
managers did have time to participate. One extra interview with another manager was added, after a tip by one of the interviewees. The interviews are conducted by one researcher. Four interviews were conducted at the case company in Zwolle, and one interview was conducted by Skype. The interviews were audiotaped and later transcribed. Table VII below gives the specific information on the interviews.
Function interviewee Duration interview Head re-usable package
material
0:33:09 hours Head development
engineering
0:33:25 hours Supervisor engineering 0:45:43 hours Head quality department 0:27:54 hours Manager engineering and
development
0:22:21 Table VIII: Characteristics interviewees 3.3.1.3 Data analyses interviews
23 an influence on the strength of the relationship. There are three options, the participants could explain the researched mechanism themselves, they could explain it after they are asked about it more directly or they could explain it only after they are asked directly for it. Thirdly, general underlying mechanisms are revealed, which explain the sustainability decisions. Quotes of the participants are used to illustrate these underlying mechanisms.
3.3.2 Results Study 2 (Interviews)
3.3.2.1 Relation with sustainability in the focal company
The case company employs a lean production system, visualized in a house, and within that house there is a window with priorities. Those priorities determine the way in which decisions should be made. ‘Number one is safety, health and environment. On two quality. On three
delivery and on four costs. Those priorities are often used to support decision making, if you have multiple scenarios, which we often have in projects, multiple scenarios. You are going to evaluate what the impact will be of the different scenario’s you can choose from on these four aspects’ (Upstream_4). Based on the business strategy of the case company, one would
expect that the environmental and social dimension of the TBL have priority over the
economic dimension in decision-making. Furthermore, in 2015 the case company has set the goal of reducing their CO2 emission with 50 percent in all its industrial activities in 2025. 3.3.2.2 Influence level of competition on sustainability decisions managers
In the interviews there appeared to be a large difference in the influence of competition on environmental sustainability decisions and social sustainability decisions. Where the managers are willing to make compromises on the environmental dimension, they are not willing to do so on the social dimension. Therefore, first, the influence of competition on environmental sustainability decisions will be discussed and after that, the influence on social sustainability decisions will be discussed.
3.3.2.3 Influence competition on environmental sustainability decisions
In the table VIII below is a short overview provided of the different ways in which
competition influences the environmental sustainability decisions of managers, and in which way. The results will be discussed in depth below.
Factor Effect
1.Competition between carriers Indirect negative influence
2.Competition for carriers Negative influence 3.Competition for parts of suppliers Negative influence 4.Competition decides the cost price Neutral influence 5.Sustainability provides a competitive
advantage, therefore a higher level of competition should lead to more sustainability
Positive influence
24 1. Competition between carriers (indirect negative influence)
Without asking specific, it was mentioned that the case company wants to keep competition alive between carriers who transport parts for the case company. This relationship is therefore very strong. The case company prefers not to give too much volume to a carrier. When asked why they do not give all the volume to the few best carriers, the answer was ‘Pure
competition. If we would give as a company all the volume to the large carriers and depend as a company on two or three big carriers, than it would give a problem. Therefore, we would like to spread our risks, and also in negotiations it is better. That they do not become too big, that we cannot do it without them’ (Upstream_3). Competition therefore has an indirect
negative influence on sustainability. The case company chooses to divide its volume over multiple carriers. It does not choose for the most efficient and therefore most sustainable carrier. Instead, it chooses multiple carriers, who could be less efficient or drive with older, more polluting trucks. The case company does so to keep competition alive between their carriers. ‘The carrier was smaller, so that we would not give everything (volume) to the big
carrier, despite the larger carrier being more sustainable.’ (Upstream_3).
2. Competition for carriers (negative influence)
When specifically asking about the influence of competition for carriers, it was mentioned that this has certainly an influence on sustainability decisions. Because of the current economic high conjuncture, there is more demand for transport, which leads to the carriers having more power. Competition has a negative influence on sustainability in this case, because the most efficient carrier is not always willing to employ his capacity for the case company. This leads to the case company choosing for a less sustainable carrier, because the parts have to be delivered. This relationship is not very strong, because it was specifically asked for. ‘Yes, I do certainly believe this. It is also the availability. If you cannot get what
you want because of competition, than you do have to make a less sustainable decision sometimes. You do not have the option to not do it’ (Upstream_3).
3. Competition for parts from a supplier (negative influence)
Without asking about competition, the competition with other customers for parts of a supplier is mentioned as an influence factor on sustainability decisions. This relationship is therefore very strong. ‘The shipment of wooden packaging material instead of cardboard
packaging material. The reasons being that it was not in stock at our supplier, because we did not had good forecasts, and therefore, our purchasing at our supplier was not smart enough. We did produce more than expected, and the supplier told us that he also needed to supply other customers.’ (Upstream_2). There was the decision to wait for that specific supplier, or
to invest a lot of effort to get the package material from another supplier, which would both be the sustainable option. The less sustainable option would be to use alternative material, which was already in possession. The competition for parts led to an unsustainable decision from this manager ‘The short term decisions we made was to use the alternative material. By
doing so our customer is satisfied, the world maybe a bit less’ (Upstream_2). When
25 Competition would lead to not always being able to get the parts from the preferred, more sustainable supplier. This would lead to getting the parts from another, less sustainable supplier, because maintaining the production flow has priority. ‘We feel for sure the influence
of this, certainly now the economy is doing well this is a big topic. It is not always, because the supplier does not want it, but sometimes it just cannot produce more. Or their supplier cannot produce enough. We are now right in the middle of this process. (…) It would
certainly influence my decisions. If it is possible, we would choose for the sustainable option, but if it is not possible we would have to carry on, and choose for the less sustainable option in order to remain able to produce trucks’ (Upstream_3).
4. Competition indirectly decides the cost price, which indirectly influences sustainability decisions (neutral influence)
When asking specifically about the influence of competition on sustainability decisions, the influence on the cost price per unit was mentioned. This relationship is therefore not very strong. The case company is in fierce competition with other brands in the truck market. This leads to cost goals, because the company should be able to bring their product to the market for a certain price, which is set together with its competitors. This influence is indirect for the logistics department, because it is not directly in competition with other brands, but delivers its services to the production department. ‘Derivate from this, there is a cost goal, which is
broken down in a cost per unit, which is our goal. That is monitored very closely, because that is very important for our competitive position in the market’ (Upstream_4). The cost
goal decides the ‘degrees of freedom’ a manager has in deciding between more or less sustainable options. But the case company sells the most expensive trucks, compared to its competitors, so it does not solely compete on the costs of production. Furthermore,
sustainability is ‘one of our core values’ (Upstream_3). Therefore an increase in the level of competition would not lead to less sustainability because of more competing on the costs. ‘I
do not believe that we will let this (sustainability goals) go because of competition or our position on the market. I think that (case company) is constant in these sustainability goals. You will have to use your common sense, because you can be 100 percent sustainable but bankrupt in 2 years’(Downstream_1). Competition does set a goal for the costs. An increase
in the level of competition does not lead to a sharper cost goal and therefore less degrees of freedom for a manager to make a sustainable choice resulting in less sustainable decision making.
5. Sustainability as competitive advantage (positive effect)
When asked about the influence of competition on sustainability decisions, it was mentioned by two managers that sustainability would be a competitive advantage. Therefore, this relationship is strong. ‘..at the same time, sustainability decisions are a competitive
advantage, (case company) is profiling itself as leader in sustainable transport. So everything which involves sustainability will get a lot of exposure, because it gives a competitive
advantage’ (Upstream_4). There is here a clear difference between at the one hand
26 At the product level, sustainability is a competitive advantage. The main reason being that sustainability goes hand in hand with efficiency in transport. ‘..in a lot of cases, sustainability
and economically does not conflict but often amplify each other, most certainly in transport. (Case company) profiles itself for years, even before sustainability became a hot theme, with fuel efficiency. Because it is a cost aspect. But it is just as much a sustainability aspect’
(Upstream_4). The initial purchasing price of trucks of the case company is higher than the trucks of the competitors, but in time the customers would have lower costs due to being more fuel-efficient and having lower maintenance costs. ‘The trucks we sell we want to make as
efficient as possible. In this way not only customers who are triggered by sustainability will buy our trucks, but the trucks will also be very fuel efficient, which is a very big cost for transporters. So there you also see that sustainability and efficiency goes hand in hand’
(Upstream_3). It can be concluded that if the sustainability of products is a competitive advantage, an increase in the level of competition could lead to an increase in the sustainability of the products, because more sustainable products would sell more.
For the back-office activities, the mechanism works different. A goal the case company has lay down on itself to reduce their CO2 pollution with 50 percent, because it wants to be the leading company in sustainability. ‘It would not be lead to credibility when aiming to deliver
a contribution to sustainable transport of customers while being a very polluting company yourself’ (Upstream_4). But ‘You should not forget that the world is not idealistic, but is led by economic rules and transport companies have small margins. So also, transport companies cannot afford it to make very non-economic choices’ (Upstream_4). So at the one hand, the
logistics department would like to have their activities as sustainable as possible, because it wants to be the leader in sustainability and it is the only way in which that would be credible. At the other hand, clients do not select their truck based on how sustainable the back office activities of the truck builder are. The logistics department is a spinoff, and to the customer, the product, the truck, is very important. How that truck is built is less important to them.
‘..logistics just a service providing department in order to be able to produce a truck. How further away from the core business, in our case, the less important it (sustainability) is for the time being’ (Upstream_2). However, in the long run, the back office processes will
become more sustainable and the case company will contribute to their own back office sustainability by building more sustainable trucks. The highest environmental impact of the logistics department are the transports, and the new, more sustainable trucks will be used for a small percentage to transport for the case company itself.
Another manager thinks that if sustainability will become even more important in the future, an increase in competition would have a positive effect on front office and back office
sustainability decisions. ‘I think it will have a very large impact. I think that the influence will
be that if the competitor sells more products because they can prove that they contribute to sustainability, that we will automatically join them’ (Upstream_2).
3.3.2.4 Influence competition on social sustainability
27 relationship is therefore strong. The degree of competition therefore has, until a certain level of social sustainability is reached, no influence on social sustainability decisions. After that is does have influence on the social sustainability decisions. ‘But were we would never
compromise, and I am sure of this, is safety of people in such a company (a supplier). And how people are treated in such a company. And also in the transport world. If there is pressure and you have to be quick, there is not always time to check this. You can believe someone on his word, but actually, you should check this. Under pressure of time it could be possible that you do not have the time to do so’ (Upstream_3). When asked about the
influence of competition on social sustainability, the same manager stated that ‘I think that
there is a certain lower limit to which you have to meet. Otherwise, we will not work with you. I think that this is one of those. You have good, less good and OK companies, but also
companies that are not OK, and we will not work with those’ (Upstream_3).
Another manager confirms that there is a certain lower limit, which transport companies should fulfil: ‘We lay down restrictions in our specification, and certain ambitions. (…) So we
look at which parties we go into business, and with what kind of subcontractors do these parties conduct business. (The case company) does imply strict rules to these parties, to be sure that there are no sub-sub-subcontractors driving in conditions were you do now want to be held responsible for. (…) That is a package of conditions. After that, the cheapest who will met these conditions will get the business.’ (Upstream_4). So there is a set lower limit which
their subcontractors should fulfil. Competition does not have any influence on this limit. After that, competition does have an influence, because the subcontractor who is the cheapest will get the order. This would not lead to the subcontractors having the best possible working conditions, because they have to compete on costs.
For their own intern activities, competition does have no influence on social sustainability decisions. It will always have the priority that the employees can do their work in social, physical and emotional safety. Employee satisfaction is very important.
3.3.2.5 Influence time horizon on sustainability decisions managers 1. The time horizon of a manager decides if sustainability is relevant
The team of this interviewee is responsible for the logistical lay-out of two recently build warehouses of the case company. ‘Yes, I think for sure it has an influence. The reason being
that it will at all be spoken of. For example if you built a logistic centre for the middle-long term, than you will get to speak about subjects as: what to do with installing energy saving lighting, what to do with a climate system, subjects like that. If you will focus on the short term, you will just say: We are going to build a warehouse, it has to be always 20 degrees and there has to be light, than it (sustainability) will be quicker overlooked’ (Upstream_2).
2. Investments in sustainability are only in the long-run profitable, the time horizon decides if that is what you are aiming for
In the short run, investments in sustainability will not be profitable, because the initial cost price is higher than the non-sustainable solution. The logistics department recently opted to install solar panels on the roof of their building. ‘Yes, that is right. Because most
28
your scope, if you are looking at the long term. For example solar panels, very expensive to install, you should only install it if you have some money left at the moment and you will see a few years of yield on it, than eventually it will pay itself back and most people even hope to earn a little bit extra on top of the initial investment’ (Upstream_2).
3. The combination of both horizons are needed to succeed at becoming more sustainable. According to a manager, it is needed to first implement the practical, short term, steps in order to reach your long-term sustainability goal. ‘What you see is that we have very good plans,
and that is really long term. To get there, you must have very tangible short term plans who are less fancy and maybe less sustainable, but you have to start from there. (…) People will do very fancy, but I think you also need to be practical and think on the short-term; otherwise you will never reach your goals’ (Upstream_3).
4. The time horizon decides the degrees of freedom in making a decision
A manager who has, due to the different area’s which fall under his responsibility, both a short term horizon for a part of his job and a long term horizon for another part of his job explains that the time horizon determines how many degrees of freedom a manager has in deciding for sustainable or non-sustainable options.
‘On short term you have less influence space. That is the same in the cases you gave me. There is a situation in which you now would have to make a decision for the short term, because certain agreements are being made, and there is only one way to honour these agreements. Then the degrees of freedom are very small. So then you really do not have another choice. The problems of today you have to fix today. As we have an issue in our region, if we cannot unload our transport at our normal location, then we would drive it to another location. This would require an extra transport to solve this situation, which would not be sustainable, but is needed to solve it. The number is options you have is limited.’ ‘On the longer-term, you are going to think about which processes have to be allocated where in order to get a sustainable flow and to come to sustainable solutions. The same goes to packaging solutions. If we have to send it today, then we would send it by plane to Iran, if they need parts there today. That would not be sustainable, but it would be needed to solve the problems of today. On the long term we would look at ways of avoiding transports by plane, and how can we see these problems coming earlier, and how can we solve them on an
economical and sustainable way. So there is a large difference between the two time horizons’
(Upstream_4).
The manager who is in contact with the customers of the logistics department explains the same mechanism in different words. In the short term, the upstream department will do everything in cooperation with the customer. The wishes of the customer have priority above anything else, because the most important task of the logistics department is creating the optimal conditions so that the production department is always able to produce trucks. ‘We
29
send it by plane’ (Downstream_1). In the long term, the focus lies to do it right the first time
as an organisation, instead of accommodating the wishes of the customer. Additional shipments as mentioned in the example above are no longer necessarily. ‘So it will lead to
more sustainability, as an additional advantage. And you have a satisfied customer, so everybody will be happy’ (Downstream_1). So in the long term the manager will have more
degrees of freedom to find the solution for the problem instead of only symptom treatment.
5. The influence of the time horizon on the relation between the level of competition and sustainability decisions.
When asked about the above-mentioned possible relationship, the manager who has two time horizons during the execution of his job confirms that this has an influence on the relation between the level of competition and sustainability decisions. ‘With a short time horizon, you
have the commercial pressure, do we got the order or do we not? In a commercial company, there is the necessity to make the economical decision priority above the sustainable decision. For example, we have the economic situation in which the market is very good. We can practically sell more than we can produce. On the short-term, you focus on how do we deliver these products to the market. In this situation, you do not choose the most sustainable, but also not the most economical, short-term solution, in production allocation. You maybe are producing trucks in Brazil for the European market, because the European production system is full and there is capacity left in Brazil. That is not the most sustainable; it will lead to a lot of extra transport. First materials to Brazil, and after that (finished) products from Brazil to Europe. On the long term you will focus on where the markets are expanding, and where we should allocate our production capacity’ (Upstream_4).
3.3.2.6 Other influence factors on sustainability decisions managers
In the interviews with the managers, different factors, besides competition, were being mentioned when asked what the difference was between a situation in which they decided to choose for the sustainable option and a situation in which they decided to choose for the non-sustainable or less non-sustainable option. These influence factors are shortly mentioned in Table IX below. See Appendix 3 for an in-depth discussion of these factors.
Factor Short description
1.Costs (Profit) Cost get in practice the priority over sustainability. Sustainability cannot cost too much.
2.Finance model of resources Ownership of the resources will make choosing for sustainability easier than when the resources are leased. 3. Capacity Capacity limits of storage space and employees interfere with
sustainability
4. Urgency of the situation The higher the time pressure, the less sustainable the decision will be.
5. Time to plan the decision The more time to plan the decision, the more sustainable the decision will be.
30 company sustainability, initiatives will stop because of no support. 8. Effort it would take The sustainable option cannot cost a lot more extra effort than
31
4. Discussion
The purpose of this research is to investigate how competition does influence sustainability decision-making and how the time horizon does influence this relationship. The results of the vignette study show only for the downstream cases that the level of competition does have a significant negative influence on the sustainability decisions taken by managers. The
interviews point out that the level of competition has a negative influence, because higher levels lead to the most sustainable option not always being available. Next to that,
competition dictates how many degrees of freedom the manager has in making sustainable choices, by setting the cost price. Competition can also have a positive effect on sustainability decisions, if the sustainability of the finished product or the back-office processes leads to a competitive advantage. The results of the vignette study show that the time horizon does not have a significant moderating influence on the relationship between competition and
sustainability decisions, but the interviews contradict this results by showing that the time horizon dictates how many degrees of freedom a manager has in making sustainable decisions.
The major findings of this study will be discussed below. Mixed findings are found for the influence of competition on sustainability decisions. The vignette study found for the upstream cases no significant difference between high and low competition. On the other hand, in the downstream cases, the high competition group was significant more likely to choose for the (potential) unsustainable solution than the low competition group (see Table IV and Table V). Compared to prior research on the influence of competition (Cai & Liu 2009; Kilduff et al. 2010; Bennett et al., 2013; Branco & Villas-Boas, 2015) the results of this study prove that for the downstream department, a higher level of competition does not only lead to more unethical decision making, but next to that also leads to more unsustainable decision making. For the upstream department, it is not proved that a higher level of competition leads to more unsustainable decision-making. This difference in results between the upstream and downstream department was not expected. There could be multiple reasons for this difference. It could be that there is a difference between the upstream and downstream departments in how important they find sustainability and in how impressionable they are by external factors in their sustainability decision-making. The difference could also lie in the type of decision chosen for the vignette study. The two decisions could be on a different level as far as impact and influence on sustainability. Not sharing the information with a customer could be seen by the participants as less severe than sourcing from a unsustainable supplier. By deciding to source, the company does indeed buy from the unsustainable supplier. The downstream department only has to decide how likely they are to share information about this
unsustainable action of another department. Not sharing the information with the customer could be seen as not very influential on sustainability, but is very influential on the sales rate. Therefore, the increased competition would lead to the downstream department sharing less information with the customer, but does not have significant influence on the more severe measure of sourcing from a unsustainable supplier.
