Sustained competitive advantage in the dry food packaging industry

Sustained competitive advantage in the dry food packaging industry

Author: Chantal van der Sluis Student number: S4177320 Email: c.van.der.sluis.1@student.rug.nl

Supervisor: P.J. Marques Morgado Co-assessor: G.B.W. Willenborg

Faculty of Economics and Business University of Groningen

Duisenberg Building, Nettelbosje 2, 9747 AE Groningen, The Netherlands P.O. Box 800, 9700 AV Groningen, The Netherlands

http://www.rug.nl/feb

TABLE OF CONTENT

Abstract ... 2

Introduction ... 3

Literature review ... 5

Dry food packaging industry ... 5

Main players in the dry food packaging industry ... 6

Research and Development ... 7

Research and Development in the dry food packaging industry ... 9

Environmental Sustainability ... 10

Environmental Sustainability in the dry food packaging industry ... 10

Environmental Sustainability and the main players of the dry food packaging industry ... 12

ABSTRACT

In today’s global dry food packaging industry, the importance of Environmental Sustainability is growing and debates are going on about providing more sustainable packaging. Previous studies of dry food packaging have mostly focused on how to reduce the environmental impact by applying new technologies to the production process (Lacey, 2018) and the entire supply chain (Rezaei, Papakonstantinou, Tavasszy, Pesch, & Kana, 2019) This study will focus on a specific stage of the supply chain, namely R&D, and research whether Environmental Sustainability matters in R&D to sustain a competitive advantage. The following research question will be studied: ‘’How does Environmental Sustainability matters in R&D for firms in the dry food packaging industry to a sustained competitive advantage?’’. The theoretical framework consists of the resource-based view and the stakeholder theory. Both theories provide an explanation on how to sustain a competitive advantage. Resources of the dry food packaging need VRIO characteristics and the competition should not be able to duplicate or neutralise it (Barney, 1995). The stakeholders come in play when the company is creating and appropriating value. A competitive advantage can be sustained if this value is more than the competitors can create and appropriate (Freeman, 1984) (Harrison, Bosse, & Phillips, 2010). This study shows that it possible for a company to create more value by developing dry food packaging with sustainable packaging materials, in particular the biodegradable plastic material, which leads to a higher return on investment. Therefore, it is recommended that dry food packaging companies take Environmental Sustainability into account during the R&D process.

Key words: sustainable packaging, Environmental Sustainability, dry food packaging, Research and

INTRODUCTION

In today’s global dry food packaging industry, significant quantities of plastics are used for the packaging of dry foods (Muncke, 2012). The importance of environment is growing, and therefore the unnecessary production and waste of plastic should be reduced. The waste of the plastic in the dry food packaging industry was 141 million tonnes in 2015 (Grand View Research, 2020)(Ritchie & Roser, 2018). Companies cannot ignore this anymore and are starting taking this into account (Goodland, 2002), (Fisk, 2010). Debates on providing more sustainable packaging is still an ongoing topic in this industry (Thomas, 2019) (Fresh Fruit Portal, 2018). The 10 main players in the dry food packaging industry together account for a revenue of USD 100.35 billion in 2017, which is a growth of 63.92% (Market Research Reports, 2017).

This study will research whether a company in the dry food packaging industry can gain a sustained competitive advantage when taking Environmental Sustainability into account during Research and Development (R&D). Since there a debates on more sustainable packaging in this industry, the environmental part of sustainability is an important topic to study. The activity R&D within a company is a way to integrate this into the packaging of dry foods.

To reduce plastic packaging, the R&D process within the company is the first place to start, since it is the first stage of a company´s supply chain. R&D activities help companies innovating with different kinds of packaging materials for dry foods to become more environment friendly. Key materials used for sustainable packaging materials are paper and cardboard, bio-based plastics and biodegradable plastics (OECD, 2015).

The packaging for dry foods should take into account the environmental part of sustainability. Plastic is the most used material for packaging dry foods, which is harmful for the environment (Muncke, 2012). When taking Environmental Sustainability into account, the packaging should result in an sustainable packaging that is not harming the environment (Goodland, 2002).

Previous studies of dry food packaging have mostly focused on how to reduce the environmental impact. A study of Lacey (2018) suggests to focus on applying new technologies to the production process which will make this process more sustainable. Rezaei et al. (Rezaei et al., 2019) focus on the entire supply chain since Environmental Sustainability has shifted from a corporate level to the whole supply chain. Therefore, each decision in the supply chain becomes a sustainable decision. This study will focus on a specific stage of the supply chain, namely Research and Development, and research whether Environmental Sustainability matters in R&D to sustain a competitive advantage. The objective of this study is to investigate how a company can sustain a competitive advantage when Environmental Sustainability is taken into account during the R&D process. This results in the following research question:

‘’How does Environmental Sustainability matters in R&D for firms in the dry food packaging industry to a sustained competitive advantage?’’

The importance of offering sustainable packaging is growing Therefore, it expected that can result in a sustained competitive advantage for a company who is taken Environmental Sustainability into account. Not only governments and initiatives are demanding Environmental Sustainability (UN environment programme, 2015), (Sustainable Packaging Coalition, n.d.), there is also a growing demand of customers for sustainable products (Holbrook, 2019). Therefore, it is expected the companies will listen to their consumers and start looking for different options for packaging.

LITERATURE REVIEW

The dry food packaging industry will be studied in this research. Therefore, a clear understanding of this industry and its main players will be given in this section.

A company which is active in the dry food packaging industry, is a company in the manufacturing sector that supplies the packaging of dry foods. ‘’Dry food’’ is all food which is free from liquid or moisture (Cambridge Dictionary, n.d.). Some examples of dry foods are biscuits, rice, chips, and, muesli.

The packaging design and the safety of the packaging during shipments the most important business activities for this industry (Sadrzadehrafiei, Chofreh, Hosseini, & Sulaiman, 2013). Problems can occur when the packaging design is not handled with the appropriate credence. These problems can be: failing to protect the product, failing to attract the customer for an initial purchase and failing to serve the customer (Bix, Rifon, & Obispo, 2004). When looking at these mentioned problems, it can be noticed that the packaging design is a part of the marketing mix. The packaging is an important aspect of the product’s design and ease of use, choosing a price, distributing/transporting products and promoting them (Bix et al., 2004).

The materials used in dry food packaging industry consist of glass, metal, plastics, and paper and carboard (Marsh & Bugusu, 2007). In 2012, the most used material for packaging was plastic with 37%, which consists of the categories rigid plastic and flexible plastic (Muncke, 2012).

This brings us to a current debate within the industry, namely providing (more) sustainable food packaging. The dry food should be packaged in a way that the dry food is protected and can be kept safe when the packaging is transported. Plastic food packaging has several benefits: it has the ability to endure extreme conditions and is also resistant to hot and cold temperatures. However, many plastic food plastics are being used only once, known as ‘single use plastics’. These plastics are not easily recycled which has a negative impact on the environment. The dry food packaging industry is therefore arguing whether they should replace and/or reduce plastics with more sustainable alternatives (Thomas, 2019) (Fresh Fruit Portal, 2018).

sustainable packaging materials to show that they are committed to Environmental Sustainability towards their customers (Smithers, 2018).

Main players in the dry food packaging industry

The 10 main players in the dry food packaging industry together account for a revenue of USD 100.35 billion in 2017. This is a growth of 63.92% compared to the revenues of the year before (Market Research Reports, 2017). The names, headquarter locations, revenue and % change from year ago and their product range of these 10 main players can be found in the overview in Table 1.

TABLE 1

Research and Development

Research and Development is a process within a company where the company is working on obtaining new and more knowledge. The company can use this knowledge, but also already available knowledge, for improving and/or creating new technology, services, products or systems for the company itself or to sell to other companies (OECD, 2015).

Research and Development has been developing in the past decades. According to Park and Kim (2006) we are now in the fourth generation of R&D. The past three generations have grown in line with the developments in technology and the changes in the environment. This fourth generation now focuses on identifying needs of (potential) customers and securing technical feasibility and marketability of the R&D result in the early stages. The role of information technology is emphasized and therefore Knowledge Management is a key element which cannot be missed in the present departments of R&D (Park & Kim, 2006).

Research and Development is an important department of a company. Research and Development is the first step within the supply chain of a company and it is a necessary element for a company to be successful. The supply chain starts with Research and Development, all other steps are based on this step. Once a new or improved innovation has been created, this creation will go further in the supply chain. The input for the Research and Development comes from the production and marketing department. The marketing department is the department that monitors the consumers and can translate possible needs to the R&D department. Manufacturing a specific packaging should be possible within the production process. Therefore, R&D is not sufficient on its own in order to secure a successful innovation. Companies should integrate R&D with other complementary assets or capabilities, such as the mentioned Marketing and Production department (Shin, Kraemer, & Dedrick, 2009).

FIGURE 1

Place of R&D in the supply chain

R&D activity is aiming to find new findings and it should be assessed if the R&D activity is also new to the industry. These new findings are based on original concepts and hypotheses. The people working in the Research and Development department are uncertain about the final outcome of the R&D activity. Therefore planning and budgeting should be in place when working on a R&D activity. The results of the R&D activity should be able to be transferred and/or reproduced in the market. There are three types of R&D activities: basic research, applied research, and experimental framework. These R&D activities are explained one-by-one in Table 2.

TABLE 2

TYPES OF R&D ACTIVITY (OECD, 2015)

Basic research Basic research is the experimental or theoretical work which leads to acquiring new information of the underlying principles of cases and observable facts, without thinking about a specific application or use in view.

Applied research Applied research is the investigation that has been done in order to acquire the new information. This is linked to a specific and practical aim or objective.

Experimental framework

The experimental framework is based on the information gained of the basic research and applied research and practical experience. It is the system work that is focusing on producing new products or processes, or to improve the existing products or processes

Research and Development in the dry food packaging industry

Environmental Sustainability

Sustainability is about managing the resource base of the present needs, and ensuring that the future generations will be able to meet their needs as well with the resource base. A system can be called sustainable when it survives or persists (Asheim, 1994), (Dresner, 2002), (Costanza & Patten, 1995). Sustainability consists of four different types: human sustainability, Environmental Sustainability, social sustainability and economic sustainability (Goodland, 2002). The environmental part of sustainability is being linked to R&D in the dry food packaging industry in this study because this industry is largest user of plastics. Environmental sustainability has come in play because of social concerns and the need for it by humans. It concerns maintaining and protecting the natural capital. Natural capital consists of water, land, air, mineral and ecosystems services. Much of this is converted to manufactured or economic capital. The environment consists of the sources of raw materials used for human needs, and ensures that zinc capacities that recycle human waste are not exceeded, which prevents damage to people. (Goodland, 2002).

These issues have become more important and the People, Planet, Profit (PPP) model can help companies take this into account. The model suggests to put the environmental impacts of your company central within the company and let it be the base for engaging differentiation within your product lines. Connecting capitalism with this model is likely to lead to radical innovations. The company can become a leader and show how companies can prepare for the future with profitable growth as well (Fisk, 2010).

Environmental Sustainability in the dry food packaging industry

A study of the Carbon Disclosure Project noted that the Return of Investment (ROI) of companies who are making their operations more environmentally friendly is increasing by 18% as much as the companies that do not invest in environmentally friendly operations. Packaging can become more environmental friendly by eliminating unnecessary materials of the packaging or change the material of the packaging (Roberge, 2017).

Most plastics used in the packaging industry are based on petro chemical products. Examples of these petro chemical products are polyethylene terephthalate (PET), poly vinyl chloride (PVC) or polypropylene (PP). These plastics are hurting the environment which results in risks to human health and ecosystems. This has led to an increasing demand by governments and customers for sustainable packaging materials and also finding ways to make plastic sustainable (Mahalik & Nambiar, 2010) (Thaler, n.d.). There is a growing consumer demand that wants Research and Development to focus on alternatives for plastics (Cutter, 2006). Recycling plastics is difficult since there are so many different types of plastic. Therefore, this study focuses on avoiding more new plastics to reduce the plastic waste.

A way to avoid plastics is to use plastic free packaging. Paper and cardboard are the most dominant materials used to avoid plastics (Transparency Market Research, 2020). Paper and cardboard packaging is the easiest material to use, since it is inexpensive and can be resourced. The packaging can be made from recycled paper and cardboard, and once the packaging has been used it can be recycled again (Owens, 2019).

Providing packaging without any plastics might not be possible (Owens, 2019). Bio-based or biodegradable plastics are sustainable solutions for packaging dry foods with plastics. Biodegradable material can be broken down by microorganism into water, naturally gasses like CO2 and methane and biomass. There are two main types of biodegradable plastics: oxio-biodegradable and hydro-biodegradable. Both types start with degradation with a chemical process (oxidation and hydrolysis), which is followed by a biological process. Both types emit CO2 during the degradation, however the hydro-biodegradable plastics are also emitting methane (Omnexus, n.d.).

Biodegradable plastics in the current market are mostly based on starch, bacteria, soy, cellulose, lignin, and natural fibres reinforcement (Omnexus, n.d.). The cheapest and easiest biodegradable materials to use are based on cellulose (Verma & Fortunati, 2019). However, the costs of all biodegradable plastic materials are relatively higher than normal plastic (Verma & Fortunati, 2019) and therefore the tendency of companies moving towards the biodegradable materials is relatively low (Burda, 2012). Bio-based plastic on the other hand cannot always be completely broken down. It is based on the waste streams of renewable, natural raw materials. An example is sugar-based plastic (Chiellini, 2008).

TABLE 3

Key materials used for sustainable packaging in the dry food packaging industry

(Garside, 2019), (European Bioplastics, 2019)

Key materials used for sustainable packaging Volume in 1,000 tonnes

Paper and cardboard 245,782

Bio-based plastics 885

Biodegradable plastics 1,175

Environmental Sustainability and the main players of the dry food packaging industry

The headquarters of the main players in the dry food packaging industry are all in countries that contribute to the United Nations Environment Programme (UNEP). This programme has set multiple sustainable development goals. This programme wants to ensure sustainable consumption and production patterns and take urgent action to combat climate change and its impacts (UN environment programme, 2015).

The Sustainable Packaging Coalition focuses on making packaging sustainable. The goal is to make use of research and science-based approach that are helping to establish a more positive environmental view on packaging. The coalition is also supporting innovative and functional materials and systems that are promoting economic and environmental health (Sustainable Packaging Coalition, 2011). Of the main players, only two companies (Ball Corporation and Smurfit Kappa) are not a member of this initiative (Sustainable Packaging Coalition, n.d.).

TABLE 4

Main players and Environmental Sustainability

(WestRock, n.d.), (International Paper, n.d.), (Evergreen Packaging, n.d.), (Smurfit Kappa, n.d.), (Amcor, n.d.), (Mondi Group, n.d.), (DS Smith, n.d.), (Berry Global, 2011).

Paper and cardboard

Bio-based plastics Biodegradable plastics WestRock

✓

✓

✓

✓

✓

✓

✓

✓

✓

Berry Group, Inc.

✓

Mondi Plc is the only company that provides all three sustainable packaging materials. WestRock, International Paper Company and Smurfit Kappa provide paper and carboard packaging. Amcor Limited provides bio-based plastics packaging. The table shows that paper and cardboard is already quite integrated in the dry food packaging industry/

Theoretical framework

To provide this study with a way to assess whether a (sustained) competitive advantage can be generated, two theories are introduced. The resource-based view and the stakeholder theory will be discussed one by one. The history and evolution of both theories is explained and finally how to get a (sustained) competitive advantage according to these theories.

Resource-based view

The resource-based view came into play to answer the question ‘’Why do some firms persistently outperform others?’’ To answer this questions, the firm’s resources and capabilities and how they help a firm pursue a more effective and efficient strategy than other firms was important (Barney & Arikan, 2008). Wernerfelt was the one who introduced the theory of developing a competitive advantage based on the company’s resources. According to Wernerfelt (1984), the resource-based view focuses on the internal resources of the organization in considering the source of competitive advantage. It suggests that it is unique clusters of internal tangible and intangible resources that determine profitability. For this study, the focus is on companies in the dry food packaging industry and their packaging materials as resources.

Resources are what the firm has, it is firm-specific but tradable. Capabilities are a special type of resource. Capabilities are what the firm can do with their resources and this is non-tradable (Amit & Schoemaker, 1993). In this study, the resources are the materials used for the packaging of dry foods. If a company uses materials to develop a sustainable packaging materials it results in a capability for the firm.

To assess if these resources can generate a competitive advantage, the resources first needed to have the following characteristics: Valuable (V), rare (R), inimitable (I), and non-substitutable (N). These VRIN characteristics are necessary, but not sufficient conditions for a sustained competitive advantage. A competitive advantage is sustainable when it persists despite the efforts by competitors or entrants to duplicate and/or neutralise it (Barney, 1991). Later on, Barney improved the VRIN framework to the VRIO framework. The change here is that the final part is focusing on organization instead of naming the non-substitutable characteristic. Barney now suggests that resources and capabilities need to be valuable, rare, and inimitable. To realise the full potential of the resources and capabilities, the organization comes in play. The company must be structured to exploit its resources and capabilities to the fullest (Barney, 1995).

Stakeholder theory

The stakeholder theory places the company central in a network of stakeholders, which is a complex system for exchanging services, goods, technology, information, and other resources of the company. The stakeholder theory is a framework for managing the relationships with a wide range of stakeholders in an increasingly complex environment (Freeman, 1984). The framework describes and supports the simultaneous attention paid to the legitimate interests of all relevant stakeholders (Donaldson & Preston, 1995).

The stakeholder is any individual or group that can affect the performance of the firm or who will be affected by the achievement of the firm´s objectives. Examples of the stakeholders of a dry food packaging company are suppliers, customers, competitors, governments, employees, media, and environmentalists. Each of these stakeholders play a vital role in the success of a company in today’s (business) environment. (Freeman, 1984). The stakeholders provide the companies resources, for example labour is supplied by employees. Stakeholders provide valued resources such as reputations or trusts for a company. These mentioned resources are often the result of the co-creation by the company and its stakeholders.

Sustaining a competitive advantage with the stakeholder theory is based on value. Which consist of value creation and value appropriation. Value creation is the source of competitive advantage. Value is created when the customer are willing to pay a price that exceeds the firm’s opportunity cost. A company should understand its customers and how their willingness to pay is shaped. The company must acquire knowledge about the customers’ welfare at first, but also of all other stakeholders of the company (Wu, 2013). The importance of the Environmental Sustainability is growing which results in the need for sustainable packaging materials and willingness of customers to pay more for sustainable products. In the dry food packaging industry, customers are willing to pay a higher price for a sustainable packaging (Holbrook, 2019).

The value appropriation is concerned with how the value is distributed. Power of particular stakeholders, ethical considerations, and/or results of strategic choices are influencing the value appropriation process (Harrison et al., 2010). Stakeholder power can be defined as ‘’the ability to use resources to make an event actually happen’’ (Freeman, 1984: 61). In the dry food packaging industry, this means that stakeholders, such as the customers and the environmentalists, can influence the company to replace its current packaging materials with sustainable alternatives.

RESEARCH DESIGN

The research design has been formulated with the use of the research onion from Saunders, Lewis, and Thornhill. The research onion consists of six layer: philosophies, approaches, strategy, choices, time horizons, and techniques and procedures (Saunders, Lewis, & Thornhill, 2019).

The philosophy used in this study is interpretivism, because the study should provide the information about the key concepts of the research question. The research question asked is a broad question, which needs literature of multiple topics. Information about the dry food packaging industry, R&D, Environmental Sustainability, the resource-based view, and the stakeholder theory is gathered in the literature review. The literature will be analysed and linked to formulate multiple hypotheses and give arguments for the hypotheses. This means that the information found is interpreted to formulate the final answer if Environmental Sustainability matters in the R&D process will lead to a sustained competitive advantage for a dry food packaging company.

The inductive approach is used, because the research question is a general question. It is asked if a sustained competitive advantage for dry food packaging companies can be generated when taking Environmental Sustainability in the R&D process. Existing theories, namely the resource-based view and the stakeholder theory, are explaining how a competitive advantage can be sustained. The conclusion will clarify if this is the case or not with the help of these theories.

The strategy of this study is systematic literature review, because the question asks for a broad view on the specific topics addressed in the research question. Of these topics, the dry food packaging industry, R&D and Environmental Sustainability, there is many existing research. Th theoretical framework is used to determine if a competitive advantage can be sustained or not, which has been researched extensively as well. Therefore, existing research on all these topics can be gathered, analysed and discussed. To get the data for the systematic literature review, the database of the library of the University of Groningen and internet will be used. Google will provide basic information. Google Scholar will provide reports, academic articles and case studies on topics.

The core of the onion is about the techniques and procedures of the research design, which consists of the data gathering and data analysis. The data gathered is secondary data and qualitative. The secondary data provides information on what is going on in the dry food packaging industry, R&D and Environmental Sustainability. To see if it can lead to a competitive advantage, the study is accompanied by the theories resource-based view and the stakeholder theory published by multiple academic writers. The data will be gathered from the internet and the library database of the University of Groningen only, which makes it a archival research. Google is used to find basic information, whereas Google Scholar and the library database are used to find reports, academic journals and case studies. The existing data is used to compile a literature review on the dry food packaging industry, R&D, Environmental Sustainability, the resource-based view and the stakeholder theory. An inductive approach is used on this study because the question is broad and therefore many aspects are researched. The time horizon of the data is cross-sectional with a time range of 10 years. In these 10 years all recent developments are captured and can be discussed.

ANALYSIS

The literature review focused on the dry food packaging industry, R&D, Environmental Sustainability, the resource-based view, and the stakeholder theory.

The dry food packaging industry is the largest user of plastics. The impact of plastic on the environment is a topic of debate in the industry. It is cheap and great to use, but it is harmful for the environment because it is hard to recycle. R&D is focusing on developing new sustainable alternative or improvising the current packaging materials. The R&D activities basic research, applied research and experimental framework help to do so. The importance of Environmental Sustainability is growing. Companies who are focusing on more environmentally friendly operations have an increased Return on Investment by 18%. The key sustainable packaging materials to replace or reduce the amount of plastics used in the dry food packaging industry are paper and cardboard, bio-based plastics and biodegradable plastics. Many of the main players have already integrated the paper and cardboard materials, but only a few are including and/or switching to bio-based plastics and biodegradable. All main players are in countries that contribute to the United Nations Environment programme and its Sustainable Development Goals. Many of the main players themselves are contributing to the Sustainability Packaging Coalition as well, which focuses exclusively on establishing a more positive environmental view on packaging.

If the sustainable packaging materials of a company in the dry food packaging industry have VRIO characteristics and the competition is not able to duplicate or neutralise it, a competitive advantage can be sustained by the company according to the resource-based view. If this leads to more value creation and appropriation than the competition can create and appropriate, the company can also sustain a competitive advantage according to the stakeholder theory.

Hypothesis 1: The process of the R&D activities basic research and applied research to the

R&D activity experimental framework are increasingly influenced by Environmental Sustainability. This leads to environmental friendly radical and/or incremental innovations in the experimental framework.

In the R&D activity experimental framework radical and/or incremental innovation takes place. The sustainable development goals of the United Nations are expected to influence the company when they are developing and/or improving packaging materials. The goals related to dry food packaging are focusing on minimizing waste and reducing the environmental impact, which is likely to be taken into account by the R&D activity to improve or develop new sustainable packaging materials. This has been formulated in hypothesis 2:

Hypothesis 2: The R&D activity experimental framework is increasingly influenced by the

UN sustainable development goals which leads to an increased amount of sustainable packaging materials innovations.

One of the three key sustainable packaging materials is bio-based plastics. Developing bio-based plastics is an alternative way to replace plastic packaging material. It is expected that this increases the return on investment of a company, since it could be considered as an environmental friendly operation by the company. This has been formulated in hypothesis 3:

Hypothesis 3: The use of bio-based plastics for dry food packaging increases the return on

investment of the company.

Another key sustainable packaging material is biodegradable plastics. Developing biodegradable plastics is an alternative way to replace plastic packaging material. It is expected that this increases the return on investment of a company, since it could be considered as an environmental friendly operation by the company. This has been formulated in hypothesis 4:

Hypothesis 4: The use of biodegradable plastics for dry food packaging increases the return

on investment of the company.

H4 + H3 +

CONCEPTUAL MODEL

Based on the analysis in the previous chapter, the conceptual model in figure 2 has been created with the hypotheses integrated.

FIGURE 2

Conceptual model of analysis

Sustained competitive

advantage

R&D activities - Basic and applied

Research

R&D activity - Experimental framework

Sustainable packaging materials

Value creation and appropriation Increased Return on

Investment (ROI)

H1 + H2

+

Paper and carboard Bio-based plastics Biodegradable plastics Environmental

Sustainability

CONCLUSION

The aim of this study was to answer the research question: ‘’How does Environmental Sustainability matter in R&D for firms in the dry food packaging industry to a sustained competitive advantage?’’. To find an answer to this question literature review has been conducted and this literature review has been analysed. Two formulated hypotheses help to answer and conclude this study.

The first hypothesis to answer the research question is Hypothesis 2: ‘’The R&D activity experimental framework is increasingly influenced by the UN sustainable development goals which leads to an increased amount of sustainable packaging materials innovations’’. The experimental framework is focusing on radical and/or incremental innovations. During these innovations the influence of the UN sustainable development goals is increased. All headquarters of the main players are in countries that contribute to the Environment Programme of the UN. Main players in the dry food packaging industry are already integrating more sustainable packaging materials, which shows that the influence of these UN sustainable development goals is increasing the amount of sustainable packaging materials used by main players in the dry food packaging industry.

The second hypothesis to answer the research question is Hypothesis 4: ‘’The use of biodegradable plastics for dry food packaging increases the return on investment of the company’’. Only one main player has biodegradable plastics as a sustainable packaging material for dry foods. This is the most sustainable packaging material, because it can be completely broken down. This environmental operation therefore leads to a higher return on investment for the company.

These two hypothesis show that it possible for a company to create more value by innovating with sustainable packaging materials, in particular the biodegradable plastic materials, which will lead to a higher return on investment. Therefore, it is recommended that companies are taking Environmental Sustainability into account during the R&D process. The company should make sure that the sustainable packaging materials have the VRIO characteristics.

to create biodegradable plastics. Radical innovations can still take place in the field of biodegradable plastics that are replacing the current biodegradable solutions. Once the biodegradable plastic sort is also inimitable and non-substitutable and cannot be duplicated and/or neutralised by a competitor, a competitive advantage can be sustained.

The stakeholder theory drives on value creation and appropriation. Once the company develops and innovates its sustainable packaging material, with valuable resources, it will increase the return on investment. This increase in the return on investment leads to more value for the company. If the competitors are not able to create and appropriate more value, it leads to sustained competitive advantage for the company.

Limitations

This research has several limitations. First, the study focuses only on the dry food packaging industry. Other packaging industries might have come up with new or improved sustainable packaging materials for their products as well to replace plastics. Second, only the effect of Environmental Sustainability on R&D has been taken into account. Other departments, such as marketing, have been left out. Whereas the marketing department might be able to generate value by the way it is marketing its sustainable products. Third, only the environmental part of sustainability has been taken into account, because of the current debate on plastics in the dry food packaging industry. Fourth, only sustainable material alternatives are studied and not the options to recycle and reuse plastics. Fifth, the theory dynamic capabilities, related to dry foods and packaging materials, has not been discussed in relation to sustaining a competitive advantage. Finally, the new or improved sustainable packaging materials are not analysed with the VRIO framework, because of the lack of specific information on the resources the current biodegradable plastic options consists of.

Future research

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