Integrating Sustainability in Product Development : An Investigation of Drivers, Challenges, and Decision Support Tools for Sustainability Integration in the Early Phases of Product Development

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Linköping University | Department of Management and Engineering Master Thesis, 30 ECTS | Strategy & Management Control Spring 2020 | ISRN-number: LIU-IEI-TEK-A--20/03693--SE

Integrating Sustainability in

Product Development

- An Investigation of Drivers, Challenges, and Decision Support Tools for Sustainability Integration in the Early Phases of Product Development

Joakim Koski

Oscar Lindskogen

Supervisor: Carl-Johan Petri Examiner: Alf Westelius

Keywords: Sustainable Product Development, Challenges Sustainable Product

Development, Drivers Sustainable Product Development, Decision Support Tools Sustainable Product Development

Linköpings universitet SE-581 83 Linköping, Sweden 013-28 10 00, www.liu.se

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Abstract

The purpose of this study was to increase the knowledge for both academia and practitioners on how to integrate sustainability aspects in product development by studying current research and comparing these findings to empirical material retrieved from an industrial company. Seco, which functioned as the case company of this study, was used as the source for the empirical data collection. The study used a deductive research approach, which implicates that the literature has steered the collection of the empirical material.

In the literature, eight key drivers and seven challenges for sustainable product development were identified to be significantly important. The drivers were categorized as either internal or external for an organization and the challenges were all categorised as internal. Of these eight drivers, one internal and one external driver was identified at Seco to be particularly important. The internal driver was the corporate sustainability strategy from Sandvik Group, which is the corporation Seco is part of, and the external driver was upcoming and existing regulations. Moreover, all six challenges were found to be relevant for Seco. These were handling trade-off situations, short-term economic thinking, lack of information in early phases of product

development, measuring sustainability, sustainability strategy remains at the strategic level, and perceived risk of implementing sustainability.

This study also examined what attributes that are important in decision support tools to enable the integration of sustainability aspects in product development. To identify important attributes in this study, Seco’s current decision support tools at the strategic, tactical, and operational planning levels were analysed by putting the theoretical framework in relation to the empirical material. From the analysis, the initial seven attributes from the theoretical framework were complemented with the following five attributes identified as important: a top-down approach that focuses on integrating sustainability on all planning levels of the product development process, enabling follow-up on strategic decisions, reduce the room for free interpretations, reduce the complexity and amount of time to use decision support tools, and lastly

methodologies to support the collection of the required information to use decision support tools. Thus, it is emphasized that researchers and practitioners continue to develop new and existing decision support tools so that the sustainability of products can be defined and measured. A focus on developing methodologies that guides how the required information can be obtained to use decision support that incorporates all life-cycle phases of a product is also identified as

important.

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Acknowledgment

This thesis marks the end of our studies at Linköping University, Sweden. We would like to emphasise how rewarding and interesting the work during this thesis has been, even if the circumstances have been extraordinary due to the COVID-19 pandemic.

Our sincere thanks go to all involved employees at Seco. Your contributions have been truly valuable for improving this thesis. We appreciate all fruitful discussions during the project that have helped us to increase our understanding within the studied area. Luckily, we had time to visit the HQ in Fagersta, Sweden, before the pandemic forced us to continue the study from distance. Your warm reception and genuine enthusiasm have left a very positive impression with us. We would especially want to thank Ted Forslund, our company supervisor, for the support throughout the thesis. We hope that all of you find this thesis interesting.

Early in the study, we came in contact with Sophie Hallstedt, who is a professor at Blekinge Institute of Technology. We are very thankful for you taking your time and supporting us on the way. Without hesitation, you have shared your knowledge and research material with us. We are very grateful for your contributions that without a doubt have improved this thesis. We hope that the findings from this study can function as valuable contributions to your research.

We would also like to send our sincere thanks to Associate Professor Carl-Johan Petri, our supervisor from Linköping University, for your time and devotion to this thesis. Your experience and support have been important elements in this thesis. We would also like to thank you for the interesting discussions throughout the thesis that have helped us to see things from different angles. It is always interesting to listen to knowledgeable individuals like you.

We also thank our knowledgeable examiner from Linköping University, Professor Alf Westelius, for his valuable input during the thesis project. You have contributed with insightful comments that have been very appreciated from our side, and valuable for the quality of this thesis.

Furthermore, we would like to thank our opponent Sara Lillehagen for important feedback. You have performed outstandingly in your role as our opponent by providing us with useful

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List of Figures

Figure 1: Seco’s product segments, showing a milling tool to the left, stationary tool centre-left,

holemaking tool centre-right, and toolholder to the right (Seco, 2020) ... 3

Figure 2: Seco’s product range showing an insert component to the left, a milling tool centre-left, and a toolholder centre-right ... 4

Figure 3: Example of steps for qualitative research based in Bryman’s (2012) model. The data-collection loop is circled in red ... 8

Figure 4: The areas of interest for data collection at Seco changed during this study in the sequence shown this figure ... 9

Figure 5: The mechanical design process by Ullman (2010, p. 82) ... 10

Figure 6: The used process for the literature review based on Bryman’s (2012) version... 11

Figure 7: Research areas for this study with their subcategories ... 12

Figure 8: The process of theoretical sampling based on Bryman’s (2012) model ... 18

Figure 9: Triple bottom line with common measures (Savitz & Weber, 2014) ... 21

Figure 10: The definition of product development and life-cycle aspects (Hallstedt, et al., 2013) ... 25

Figure 11: Product development project categories (Wheelwright & Clark, 1992) ... 28

Figure 12: The early phases of the stage-gate model (Cooper, 1990) ... 30

Figure 13: Internal and external drivers for sustainability in PD identified in the literature study ... 32

Figure 14: Paradox between available information and knowledge of design, and opportunity of sustainability performance enhancement, and degree of design freedom (Bhander, et al., 2003; Argoti, et al., 2019) ... 40

Figure 15: The three design spaces described by Hallstedt (2017) and the SCI-scale visualizing the level of compliance with the sustainable design space ... 47

Figure 16: Sustainability Compliance Index (SCI) Scale (Hallstedt, 2017; Schulte & Hallstedt, 2018) ... 48

Figure 17: The SCIM including sustainability criteria and formulations supported by the tactical guidelines (Hallstedt, 2017) ... 52

Figure 18: The analytical model of this study. Each box represents one of the three research questions . 54 Figure 19: Sandvik’s sustainability strategy ‘Make the Shift’ with four goals for 2030, namely more than 90% circularity, halve CO2 impact, zero harm to people, and always to the right thing ... 57

Figure 20: The three planning levels for product development and their content as defined by Seco with numbers representing the order in which the empirical material was collected ... 59

Figure 21: The early phases of the stage-gate model at Seco ... 61

Figure 22: The current decision support tools used at Seco within the strategic, tactical, and operational planning levels ... 78

Figure 23: The sustainable design space’s placement at Seco and how a concept’s compliance with it can be represented by a radar chart covering all life-cycle phases ... 85

Figure 24: A revised analytical model, highlighting the identified drivers and challenges at Seco ... 89

Figure 25: Sandvik’s vision and strategy from their annual report 2019 (Sandvik, 2019) ... 103

Figure 26: Formulated goals by Sandvik in their annual report for 2019 considering customers, operations, and suppliers for reaching their targets from the ‘Make the Shift’ initiative (Sandvik, 2019) ... 104

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List of Tables

Table 1: Sandvik’s sustainability goals for 2030 from the initiative ‘Make the Shift’ which are adopted by

Seco ... 5

Table 2: The documents collected from Seco sorted in four categories ... 14

Table 3: Number of interviews and interviewees for each department at Seco ... 16

Table 4: The Sustainability Compliance Index Matrix’s generic layout ... 51

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List of Abbreviations

BTH Blekinge Institute of Technology CSR Corporate Social Responsibility DFLC Design for Life-Cycle

DFX Design for X

FSSD Framework for Strategic Sustainable Development

GPM Global Product Management

KPI Key Performance Indicator

LCA Life-Cycle Assessment

PD Product Development

PLR Product Line Review

PMO Product Management Office

PPM Product Portfolio Management R&D Research & Development

RDC Research and Development Council

RQs Research Questions

SAM4SIP Self-Assessment Method of Capabilities for Sustainability in the Product innovation process

SBCE Set-Based Concurrent Engineering

SCI Sustainable Compliance Index

SCIM Sustainability Compliance Index Matrix SDC Strategic Development Council

SDG Sustainable Development Goals

SPD Sustainable Product Development

TBL Triple Bottom Line

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1 Introduction

This chapter introduces this study and the focus area sustainability in product development (PD). Firstly, the background is presented, which touches sustainable development at an overall level before introducing sustainable product development (SPD). Thereafter, the case company of this study, Seco is introduced. Lastly, the purpose, research questions, and delimitations are

presented to define the focus of this study. 1.1 Background

The background firstly presents sustainable development at an overall level. This is followed by the challenges with sustainable development. Lastly, the focus area of this paper is introduced namely, sustainable product development.

1.1.1 Sustainable Development

Sustainable development is a concept that gained focus on the publication of the Brundtland Report (Brundtland et al., 1987). However, recognizing and integrating sustainability aspects into an organisation is still challenging for companies, as it is not a simple, one-step change process (Petala, et al., 2010). Still, the trend is that a small but growing share of companies voluntarily is integrating sustainability into their strategies (Eccles, et al., 2014). One common way of doing so is by acknowledging commitment towards some of the United Nations

Sustainable Development Goals (SDGs). This results in that companies must achieve a sustainable development to progress towards the achievement of these goals. Regarding

sustainable development, some researchers even go as far as stating that there is no alternative to it (Nidumolu et al., 2009). Even though, there are varying opinions on whether integrating sustainable aspects into a company should be pursued at all. On one side, the argument is that company productivity can be enhanced by doing good, i.e., by addressing aspects as

environmental impact, energy and water use, and employee health (Porter & Kramer, 2019). Another view is that these externalities, e.g., air and water pollution, results in additional constraints for a company, making it harder for these companies to be profitable in competitive environments (Jensen, 2010). Improving the social and environmental performance of a

company is also argued by some to often result in increased costs within several areas of the company (Eccles et al., 2014). For example, some CEOs believe that companies would end up in a situation where suppliers cannot provide green inputs and turning their manufacturing green requires investments in new equipment and processes, which would result in more expensive products that customers are not willing to pay for (Nidumolu et al., 2009). For this reason, most executives do not include the need to become sustainable in the business objectives but rather view it as corporate social responsibility, leaving environmental and social aspects as an ancillary activity (Eccles et al., 2014; Nidumolu et al., 2019).

In general, communicating the opportunity of value creation of sustainability inclusion in global strategic decisions to tactical management, and to employees at operational levels within a company, is difficult (Bertoni, 2017). This becomes palpable in current multi-disciplinary decision-making situations, which typically leads to trade-off situations between insights of professionals with a poor understanding of each other’s challenges (Petala, et al., 2010). The discussion of sustainability tends to be held and remain on a strategic level, which is primarily linked to managerial decision-making (Bertoni, 2017). Furthermore, O’Rourke (2014) claims

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2 that companies often have low knowledge of their social and environmental impacts from e.g., their production, and refers to it as a complicating situation. As Bertoni (2017) describes, aspects as lifetime, specific fuel consumption, and weight reduction for a motor vehicle are less complex to quantify than other aspects such as material circularity. Therefore, when companies are

handling sustainable-oriented decisions in general, they face the challenge to show numbers or hard facts of the value generated by these, making it problematic to use in decision-making (Isaksson et al., 2015; Bertoni, 2017; O’Rourke, 2014). Thus, implementing sustainability dimensions in a company is challenging (Argoti et al., 2019) and as a result, the integration of sustainability aspects might meet lacking support at an operational level (Bertoni, 2017). 1.1.2 Sustainability in Product Development

The focus on sustainable development by companies stimulates the development of sustainable products. However, PD is often a complex process facing many different trade-off situations between elements such as material, function, energy, cost, social aspects, and market aspects (Byggeth & Hochschorner, 2006; Faulkner & Badurdeen 2014). Due to the complexity of PD-processes, many organisations need some form of decision support for better decision-making on sustainability issues (Hallstedt, et al., 2010). On the other hand, Hallstedt (2017) argues that sustainability has not been widely discussed in direct contact with decision-making for product design in the development process. Instead, she argues that the discussion has mainly taken place on an organisational level, why there is a gap to bridge to include sustainability into the decision-making process in the design phase. Waage (2007) also states that the proliferation of tools, actions, and strategies for sustainability assessment creates confusion, as it is unclear if existing approaches are distinct or complementary. Some researchers emphasize that bridging this gap by including sustainability into the decision-making process is not an easy task, since it must be pursued from a perspective that considers the whole life-cycle of the product and all its appurtenant stages (Faulkner & Badurdeen, 2014; Gmelin & Seuring, 2014).

One approach that considers the whole life-cycle of a product in PD is the life cycle assessment (LCA). Bhander et al. (2003) argue that it should be performed early in the PD-process because it can help decision-makers identify potential waste and process outputs which are either

indirectly or directly linked to the product’s and system’s life-cycle. This is in line with the European Commission’s (2018) estimation that over 80 % of product-related environmental impacts are determined in the design phase of a product. However, the applicability of LCA in the early stages of PD, where little information is available on processes and materials, is argued to have a great improvement potential, if less information with high reliability could be used (Huijbregts, et al., 2006). While some researchers alludes to the capabilities of organisations to support the implementation of SPD tools (Pigosso, et al., 2013), other researchers claim that tools for SPD have to be improved to reduce the time and effort they required, since in industrial PD there is neither data nor enough time available to conduct rigorous analyses of sustainability (Ahmad & Wong, 2018; Hallstedt, 2017). There are also indications that current tools and methods used by industry are not enough to support day-to-day decisions in order to avoid confusion on how to relate these to long term sustainability requirements (Gaziulusoy et al., 2013). Thus, there is an identified need to introduce new pragmatic approaches to sustainability in the early stages of PD and continue research to increase the understanding of sustainability in PD (Watz & Hallstedt, 2020; Hallstedt, 2017).

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3 1.2 Seco

Seco’s headquarter is located in Fagersta, Sweden, where they were founded in 1960. Since then, the company has grown significantly and today Seco consist of approximately 4400 employees and are present in more than 75 countries worldwide with sales-units, production sites, and distribution centres. Their customers can be found within various segments such as the

aerospace, power engines, and automotive industry. Seco is the company used for the empirical data collection for this study. By using Seco as a case company, insights can be retrieved into how an industrial manufacturing company, with PD activities being a major element in its operations, works with sustainability. Seco is an interesting case company since they in 2019 established ambitious strategical sustainability goals. These are linked to the R&D function, which is a significant part of their business. Therefore, Seco has an acknowledged commitment in their strategic plan to get this overarching strategy embedded in the development of their products. Connecting and analysing the theoretical data of this study with the collected empirical data from a manufacturing company as Seco, that has a great focus on R&D and PD activities, can result in positive contributions to the research in the field of SPD.

Seco’s Products

In a company presentation from Seco they stated that ‘We provide the full scope of metal-cutting products from high-precision inserts to equip our advanced tools to appropriate toolholders for a variety of machines’. Seco manufactures and provides comprehensive metal cutting solutions for milling, stationary tools, holemaking, and tooling systems seen in Figure 1 below.

Figure 1: Seco’s product segments, showing a milling tool to the left, stationary tool centre-left, holemaking tool centre-right, and toolholder to the right (Seco, 2020)

Within these product segments, Seco manufactures a variety of products with different

specifications. To clarify and exemplify, Seco’s Milling product range is shown in Figure 2 on the next page illustrating an insert component to the left, a milling tool centre-left and a

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Figure 2: Seco’s product range showing an insert component to the left, a milling tool centre-left, and a toolholder centre-right

Seco and Sandvik

Seco is a part of Sandvik Machining Solutions since 2011, which is one of the three business areas within Sandvik Group (Sandvik). Sandvik strives to have a sustainable business and have sustainability as an integral part of their business model. Hence, they have applied a holistic view on sustainability including customers, suppliers and own operations when establishing targets and plans for sustainability. Furthermore, Sandvik is committed to the United Nation’s Sustainable Development Goals (SDGs) for 2030 and have identified that seven of them are particularly relevant for their business, namely: Good health and well-being, Industry innovation, Gender equality, Responsible production, Clean energy, Climate action, and Decent work. Seco have, as a part of Sandvik, adopted the same SDGs and specified what they should focus on to meet these goals. Seco is putting much effort into integrating sustainability in different parts of their organisation and has done so for more than 15 years. For example, they have created a sustainability council with various roles in the organisation to coordinate and drive sustainability within Seco. Additionally, in 2010 they initiated a circularity program for the recycling of the materials in their products, and in 2012 they launched a ‘green fund’ for investing in

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5 Moreover, Sandvik launched an initiative in 2019 called ‘Make the Shift’. With this initiative, they specified four ambitious sustainability goals for 2030, seen in Table 1 below. These goals are also adopted by Seco and are part of their strategy.

Table 1: Sandvik’s sustainability goals for 2030 from the initiative ‘Make the Shift’ which are adopted by Seco

Slogan from the ‘Make the Shift’ initiative

Goal for 2030

We build circularity More than 90 % circularity of materials

We shift climate Halve the CO2 emissions

We champion people Zero harm to people

We play fair Always do the right thing

With Seco being a manufacturing company, the products and to them related aspects have a central role in fulfilling the sustainability goals for 2030 in Table 1. Thus, this is further

motivation to use Seco as a case company for this study, as it can provide valuable insight of the connection between a company’s operational PD and its strategic goals. By studying this

connection, current drivers and challenges for increasing the sustainability focus in the PD can be highlighted, and the need for support in decision-making on sustainability aspects can be investigated.

1.3 Purpose

The purpose of this study is to increase the knowledge for both academia and practitioners on how to integrate sustainability aspects in product development. This is achieved by studying current research and comparing these findings to empirical material retrieved from an industrial company. To get deeper insights in making sustainability a more significant part of the

company’s product development process, the empirical data collection focuses on important attributes for decision support tools, and the identification of current drivers and challenges with assessing sustainability. By solely focusing on one company in this study and relating the findings to current research within the area, depth is achieved. However, researchers and practitioners are encouraged to identify areas in this study that might be of interest in other settings.

Studying the issue of sustainability in product development is important because there is a great focus on the sustainability-topic in society today, with initiatives such as the United Nation’s Sustainability Goals (SDGs) for 2030. In turn, this needs to be adopted by various companies. However, to make decisions in companies with sustainability as an included aspect is not a transition that is happening overnight. To fulfil the purpose described above, current research and previous empirical findings are functioning as the foundation for this study. The empirical

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6 findings from Seco, which is the case company of this study, contribute with illustrations from one specific company, that after being analysed together with current research, move the

research forward and address the transition towards more sustainable development. This is done by highlighting support, or lack of support, for certain theoretical statements with findings from the empirical material. By focusing on Seco, empirical findings are derived from a

manufacturing company that is striving to make sustainability a part of every business aspect, including the development of products.

1.4 Research Questions

Following the purpose of this study, the research questions are presented below. The word integration in the RQs is used with the same meaning as the definition in the Cambridge

Dictionary, namely ‘The action or process of combining two or more things in an effective way’. What is meant with integrating sustainability aspects in product development in this report is to study sustainability among existing aspects related to decision-making in product development, such as profitability, producibility, quality and performance of the products. The first two research questions are formulated to investigate the drivers and challenges for integrating sustainability in product development.

RQ1: What drivers are there for integrating sustainability aspects in product development? RQ2: What challenges are there for integrating sustainability aspects in product development? The third research question is formulated to explore what attributes that are important for

decision support tools for integrating sustainability aspects in product development. Attributes in this study refers to the qualities and features as a characteristic or inherent part of decision support tools. In this study, the meaning of decision support tools is tools, methods or

assessments that are used to support decision makers in making better decision within a system of organisational processes (Keen, 1980), which in this case is focused on product development processes.

RQ3: What attributes are important of decision support tools to enable the integration of sustainability aspects in product development?

All research questions are answered by a combination of theoretical material from a literature review and empirical data from Seco. For all RQs, the theoretical framework provides a foundation that is complemented with empirical findings from Seco.

1.5 Delimitations

The analysis conducted in this paper is based partly on a literature study and partly on an empirical data collection from Seco. It could have been of interest to use more case companies from different industry sectors. However, this study focuses on depth rather than breadth, why this approach has been chosen. Also, four of Seco’s departments were focused on for the empirical data collection, namely finance, R&D, strategy & product management, and

environment, health & safety. To cover a greater portion of the company’s departments could have been of interest. On the other hand, with the argument on a focus of depth, this was not done due to the limited amount of time available. One other limiting factor that has become more

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7 palpable as the study continued is the COVID-19 pandemic, that resulted in less available time for employees at the case company to allocate time for interviews.

Furthermore, as described in the chapter about Seco above, their sustainability strategy is closely linked to Sandvik’s corporate strategy. This paper focused on how this strategy could be adopted in Seco’s PD-process and no effort was put on interviewing employees at Sandvik about the strategy itself. This could have been useful to get a deeper understanding of Sandvik’s strategy but is viewed to be outside the scope of this study. Moreover, after the literature study, the early stages in the PD-process was identified to determine the greatest impact on sustainability for a product and, therefore, this phase received much focus in the empirical data collection at Seco. To focus on sustainability aspects in the later phases of the PD-process could have been of interest but were not examined due to the limited amount of time available and the chosen focus on the early phases of the PD-process.

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2 Method

The methodology for this study is presented in this chapter with the chosen research approach, what type of theoretical and empirical material that was collected, the used analysis method, criticism towards the method, and ethical considerations.

2.1 Research Approach

A deductive research approach was used for this study since the theory from the used literature drove the observations/findings rather than the other way around (Bryman, 2012). In other words, the theory deduced from the literature study was the basis that drove the process for gathering data, as deductive reasoning seeks to answer whether the identified generalisations can be applied to specific instances (Hyde, 2000). Seco functioned as the case company, hence the empirical data for the study was gathered from internal company documents and by interviewing employees. Moreover, the used research strategy was qualitative research. Why this strategy was chosen is explained in the next subchapter. Figure 3 below visualizes how the study was

performed in more detail, and it is based on Bryman’s (2012) model for qualitative research.

Figure 3: Example of steps for qualitative research based in Bryman’s (2012) model. The data-collection loop is circled in red

The first step was to formulate general research questions based on an initial literature study and a task description from the case company Seco. Next, a literature study was performed through the steps shown in Figure 4 in the next chapter. After that, an analytical model was created to get a clear structure of the different parts in the theoretical framework. The analytical model

functioned as a basis for the empirical data collection, the analysis of the theory from the literature, empirical data collection, and the conclusions. The fourth step was to collect relevant data at Seco, guided by the analytical model, which was followed by an interpretation of the gathered data. After that, a more focused literature study was performed to seek a deeper theoretical understanding, still within the limits of the defined analytical model. This was followed by more specific research questions that were specified by collecting further data that was once again interpreted. This close linkage between theory, concepts, and research data is a distinguishable aspect for qualitative research which can be explained as allowing the usage of theoretical ideas that arise out of the research data (Bryman, 2012) and it was one of the main reasons for choosing a qualitative research approach for this study. This loop of data collection is circled in red in Figure 3. The last step, after theoretical saturation was achieved, was to write down the findings and conclusions.

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9 The areas of interest for data collection at Seco changed in the sequence shown in Figure 4 below. The loop for data collection and literature study shown in Figure 3 above steered the study towards focusing more on how Seco’s Research & Development Council (RDC) and Strategic Development Council (SDC) work to make sustainability an integral part of their PD. The reason why the areas of interest changed in this direction was mainly that we wanted to investigate the potential of professor Hallstedt’s ideas and models from her research on SPD. Professor

Hallstedt’s research on SPD is the main source for this study which is further explained in the subchapter below about which theoretical material was used.

As the study progressed, the data collection shifted focus within Seco’s organisation, which is shown in Figure 4. Through the lens of the analytical model, the four areas in Figure 4 were subject for data collection. The collected data is later connected with the theoretical framework in the analysis, where it is studied whether the generalisations from the literature apply for our case company, thus motivating the use of a deductive approach.

2.2 The Prerequisites of the Authors of This Paper

In this chapter, the authors’ prerequisites before the study are explained. Both were fifth-year students at Linkoping University at the study program Industrial Engineering & Management. However, there are slight differences between the specialisation areas that are worth mentioning. Also, one author has a connection to the case company Seco before this study, which is an important aspect to highlight.

Oscar Lindskogen

Oscar Lindskogen has a bachelor’s degree within Mechanical Engineering and his master’s profile is Strategy & Management Control. The mechanical engineering orientation mostly contained courses within the areas of PD and production systems. To finalize his bachelor’s degree, he performed a group project which purpose was to develop a product, from idea to prototype, and in doing so follow the mechanical design process by Ullman (2010, p.82) seen in Figure 5 below, skipping the last step ‘product support’. This brought a deep understanding of various aspects related to PD which was useful for understanding Seco’s PD-process. For instance, the stage-gate model described in chapter 3.2.3 is used by Seco in a modified version for the planning of their projects for PD. Usage of a stage-gate model was also the planning method used during Oscar Lindskogen’s bachelor’s degree project and he, therefore, had knowledge and experience from before of planning projects with a stage-gate model approach. Moreover, Oscar Lindskogen’s acquired knowledge within the field of strategy and management control from his master’s studies brought an understanding of which aspects that were important to consider at Seco when trying to control the organisation towards its overarching sustainability

R&D department Project model for product development Research & Development Council (RDC) Strategic Development Council (SDC)

Literature study and data collection

Figure 4: The areas of interest for data collection at Seco changed during this study in the sequence shown this figure

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10 strategy. In all, the combination of having knowledge and experience within both PD and

strategy and management control was particularly useful when studying how to get the decision-making in a PD-process more closely linked to the company’s sustainability strategy.

Figure 5: The mechanical design process by Ullman (2010, p. 82)

Joakim Koski

Firstly, before describing Joakim Koski’s educational background, it should be mentioned that he has previously been working at Seco in their production. Therefore, the company’s products and production facilities at the headquarters in Fagersta are familiar to him. Even if this study focuses on an organisational part that Joakim Koski has not been working within before, he has an

understanding of Seco as a company before entering this project.

Joakim Koski’s background includes a bachelor’s degree in Energy Engineering. He also has a master’s degree in Energy- and Environmental Engineering. This resulted not only in a report focusing on water reduction measures in a large industrial corporation (Koski, 2019). It also resulted in experiences from an industrial company that to a certain extent have shaped Joakim Koski’s beliefs and values in the context of sustainability and industrial for-profit organisations. Furthermore, his technical interest is combined with an interest in how and why certain

improvements should be pursued by an organisation, which is the main reason for this project within the master’s profile of Strategy and Management Control.

To concretize the views and opinions of Joakim Koski before entering this project, it is according to him foremost evident that current payback-period requirements in for-profit organisations are too short and not enough to motivate some investments that focus on sustainability. This is resulting in inertia to required measures to progress towards the fulfilment of corporate sustainability goals (Koski, 2019). He also perceives that sustainability issues receive a high degree of attention within companies, but there is a lack of common understanding in

organisations of what ‘sustainability’ really means (Koski, 2019). Thus, when different company functions are included in decision-making, they tend to end up comparing apples with pears when discussing sustainability. It is also, according to him, important to measure progress, but it is not per se a solution to successfully implement and improve an organisation’s sustainability-related work. To successfully implement sustainability-sustainability-related actions, based on his previous work (Koski, 2019), he values the securing of commitment within the organisation.

Measurements as key performance indicators (KPIs) are, according to him, more important to monitor and correct behaviour in later stages. With this said, he emphasizes to answer the question of why and how something should be done. As this study focuses on sustainability in PD, he strives to clarify the answers to these questions, as they might result in securing commitment towards, for companies, favourable measures.

Product Discovery Project Planning Product Definition Conceptual Design Product Development Product Support

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11 2.3 Theoretical Material

To get a deeper understanding of concepts and theories related to the formulated research questions, literature reviews were carried out both before and after the data collection at Seco as can be seen in Figure 3 above. The first literature review was conducted before the data

collection at Seco, in order to obtain an initial understanding of the subject. This was later followed by another, more focused literature study after the data had been interpreted. The main finding at Seco that impacted the focus of the literature study the most was that the link between Seco’s overarching strategy for sustainability and operational PD-processes was identified to be of importance for how designers and other employees in PD are steered to work with

sustainability. Therefore, much literature that was searched for was about how to make a

company’s PD activates more embedded in its sustainability strategy. In the subchapters below, a description of how the literature review was conducted and a criticism towards the sources are presented.

2.3.1 Literature Review

The process of searching for literature for this study was based on Bryman’s (2012) working procedure for literature reviews which can be seen in Figure 6 below.

Figure 6: The used process for the literature review based on Bryman’s (2012) version

Study articles and books recommended by teachers and researchers at Linköping University that are relevant

to the research questions

Make side notes when reading the literature with often used keywords

and write down other literature of interest

Search for additional literature using the generated keywords

Study literature of interest in more depth

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12 First, teachers and researchers from Linköping University recommended relevant literature related to the research questions. When reading this literature, notes were taken to write down often used keywords and other literature of interest. After that, additional literature was searched for, using the generated keywords. The found literature was then studied in more depth. During this step, Hallstedt’s research on SPD was studied in detail which led to the decision that her research was going to be used as the main theoretical source for this study. The reason for this was because, at this stage in the study, the direction pointed towards focusing on how to make sustainability a more significant part of the decision-making of a manufacturing company’s PD-processes. Hallstedt’s research is much in line with this focus and she has conducted research in the field of SPD since 2008 and has published multiple articles in the area together with her research team at Blekinge Institute of Technology (BTH). As can be seen in the theoretical framework, much literature has been sought for in the area of drivers and challenges for

integrating sustainability in PD. This paper used Hallstedt’s research as a basis for which drivers and challenges that could be of interest to examine further in the literature study. A separate chapter about Hallstedt’s research is presented in the next section. Lastly, since sustainability is a topic with frequently new publications, regularly searches for new literature were conducted during the thesis.

Google, Google Scholar, and Linköping University’s search engine UniSearch were used to find articles within these research areas. The used keywords when searching for articles are the research areas and their subcategories seen in Figure 7 below.

Figure 7: Research areas for this study with their subcategories

•Triple Bottom Line

•Framework for Strategic Sustainable Development •Brundtland Commision

•United Nations Sustainable Development Goals

General Definition

Sustainability

•Design Paradox

•The Mechanical Design Process •New Product Development •Stage-Gate Model

Product

Development

•Drivers Sustainable Product Development •Challenges Sustainable Product Development •Green Product Innovation

Sustainable Product

Development

•Project Portfolio Management •Life Cycle Assessment

•Sustainability Assessment in Product Development •Decision Support Tools in Product Development

Tools for Sustainable

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13 What was important when searching for articles was to not use any keywords that supported or disagreed with any theories or concepts. In other words, minimization of cognitive biases was strived for such as confirmation bias of a belief or opinion that the authors of this paper had. The words in Figure 7 for each research area seen in the blue boxes to the left have been combined in search strings. For ‘General Definition Sustainability’, the search words have been, e.g., ‘Triple Bottom Line’; ‘Framework for Strategic Sustainable Development; ‘Brundtland Commission’; ‘United Nations Sustainable Development Goals’ etc. The words listed to the left in Figure 7 can be seen as the initial search strings, that eventually have led to new search words. Furthermore, from the articles found by using the search words, some of their cited works within the area of sustainability, PD, and decision-making have been identified and used in this study, which is also generally known as ‘snowballing’. In these cases, the articles that had received a significant amount of citations were prioritized.

2.3.2 Hallstedt’s Research on Sustainable Product Development

Sophie I. Hallstedt is an associate professor at Blekinge Institute of Technology (BTH) and she leads the research within the field of SPD. Her research is the main theoretical source for this study. Several interviews were conducted with professor Hallstedt to explicate the content in her research further, and to get access to different decision-support tools described in her articles. Hallstedt has conducted research within SPD since 2008 and today she also supervises multiple Ph.D. students at BTH within the area. We also had a meeting with two of these Ph.D. students to get more detailed information on their research. Their research is among IVA’s 100 list 2020, which is a list with research projects from Swedish Universities that focus on sustainability with great potential to have a positive impact in areas such as business, development of methods, and on society in general (BTH, 2020). More specifically, Hallstedt’s research is about how a strategic socio-ecological sustainability perspective can become an integral part of an organisation’s strategic, tactical, and operational levels, with a focus on PD. Her research is mostly in close collaboration with industrial companies to create and develop practical methods for assessing various aspects of sustainability in PD.

2.3.3 Source Criticism

Sustainability, and specifically how to make it an integral part of an organisation’s decision models for PD, is a relatively new research area. Therefore, the articles found focusing on this area were often published within the last ten years (2010-2020). The relatively new articles are a strength for the literature review, as the content is up to date. However, finding literature that supported or disagreed with previously found literature was not always possible, which is a disadvantage for this study since it in some cases gave a less nuanced picture of the findings. This was especially the case with the articles written by Hallstedt, who has conducted research within SPD since 2008. Finding articles that supported or disagreed with her articles was hence a deficiency. This is one reason why this study aims to contribute with more material for the research in the area. This is also viewed as important since the focus on sustainability in PD is dominated by relatively new literature, which often express the need for future research on the subject.

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14 2.4 Empirical Material

The empirical data for this study was primarily collected from two types of sources from Seco, namely documents provided directly from them and interviews with the employees at Seco. These two methods of data collection are described below.

2.4.1 Collection and Qualitative Analysis of Texts and Documents

The documents that were collected from Seco were in the forms of PowerPoint-presentations, Word-documents, and scientific articles. These documents were shared by using the Microsoft Teams-platform. Several interviews and other collaboration were also conducted on the same platform. The number of documents that Seco shared was 41 in total and most of them were created 2019, and a few 2018 and 2020. In Table 2 below the documents have been categorized based on which department at Seco that the document came from. Worth pointing out is that documents that only included efforts for sustainability were put in the category for the

Environmental, Health, and Safety (EHS) department. The R&D department, for instance, shared some documents that considered sustainability but many of them touched other aspects as well and were, therefore, put in the category for the R&D department and not the EHS department. As can be seen in Table 2 below, most of the documents came either from the R&D or EHS

department.

Table 2: The documents collected from Seco sorted in four categories

Department at Seco from where the document came from

Number of Documents

R&D department 14

Finance department 8

Strategy & Product Management 3

Environmental, Health, and Safety 16

The reason for this was because this study wanted to collect information on aspects that would be relevant for sustainability in PD, hence a combination of sustainability and PD. Additionally, another reason why many documents came from the EHS department was that the supervisor from Seco for this study works in this department. Furthermore, most of the documents were not produced specifically for this study and were created before the project was started, which is a strength for this study because then Seco did not highlight the content in the documents in a certain way only so that it would be suitable for the study. Another advantage of using

documents for the collection of data is that they are non-reactive (Bryman, 2012). Scott (2014) argues that four rigorous criteria can be used to assess the quality of a document. These four criteria were used in this study when evaluating the information in the documents. The first is

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15 authenticity: if the evidence is unquestionable and genuine. The second is credibility: if the evidence is free from distortions and errors. The third is representativeness: if the evidence is typical of its kind. The fourth is meaning: if the evidence is comprehensible and clear. If a document scored low in any of these criteria, additional information on the addressed topic was sought to be able the strengthen the quality of the sources and if no additional literature were found, the source was not used at all.

2.4.2 Qualitative Interviewing

Individual interviewing was used during this study for data collection at Seco by applying a semi-structured qualitative interviewing approach. The authors of this paper wanted to interview the employees at Seco more than once. This was done in order to process the information from the first interviews and thereafter ask more specific questions in a second interview to validate and confirm the obtained information. Below, a description of the start-up meeting for this study at Seco is presented. This is followed by a description of individual interviewing and how they were prepared and conducted during this study.

The Start-up Meeting at Seco

At the beginning of this study, there was a start-up meeting at Seco’s headquarters in Fagersta, Sweden. During this meeting, representatives from all of the four participating departments at Seco participated. With the main purpose of the study focusing on sustainability integration in PD, this meeting was of great interest, as increasing the focus on sustainability is a challenge that concerns many of Seco’s departments. Therefore, it was of interest to see how the employees at Seco discussed the matter internally, which in this case was done between representatives from the four departments included in Table 3. Moreover, this meeting was also used to get a deeper insight into the people that potentially could be of interest to schedule individual interviews with to get more detailed information in certain areas and to use their contact networks to book more interviews.

Individual Qualitative Interviewing

Bryman (2012) discusses mainly two types of qualitative interviewing, namely unstructured and semi-structured interviewing. Semi-structured interviews are the type chosen for this study. Unstructured interviews usually have few questions prepared which did not suit this study since it sought a clearer structure. Semi-structured interviews were, therefore, viewed as more

appropriate for this study since they normally have more questions and clearer defined topics prepared than unstructured interviews. This was important because the study wanted to get answers to specific issues related to sustainability in PD such as drivers, challenges, and decision support tools. The interviewees at Seco all belonged to some of the four different departments presented earlier and many of them were interviewed more than once. The number of interviews that were conducted for each department and how many interviewees who participated can be seen in Table 3 on the next page.

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16

Table 3: Number of interviews and interviewees for each department at Seco

Participating Departments Number of interviews Number of interviewees

R&D department 11 8

Finance department 5 3

Strategy & Product Management

2 1

Environmental, Health, and Safety

6 1

As mentioned before, PD was in the centre of this study and therefore, many employees from the R&D department were interviewed. Also, the supervisor from Seco for this study was from the EHS department, which is the reason why this person has been interviewed as many as six times. The employee from the strategy and product management department was the director for one of Seco’s product lines. This person worked with the strategic and tactical planning of the portfolio planning for products which, for instance, includes portfolio profitability, ordering of new development, and business and market intelligence. To get information on how much of this person’s working activities that were in the field of PD were of interest to see how involved product line managers on the strategic and tactical level are in the PD activities. Lastly, three employees in the finance department were interviewed to see how well involved they are in PD activities.

General Interview Guide

The individual interviews followed a structure of five general topics, all with appurtenant

questions, as it can be seen below. Depending on the individuals or groups that were interviewed, some questions were left out or added to better match the profile of the interviewee(s). The main literature that has stimulated the creation of each question are also placed in connection with the questions asked. The follow-up interviews of the employees that were interviewed more than once were conducted to search for more in-depth information within the areas covered in the interview guide.

Introduction

• Can you provide a brief overview of your responsibilities within Seco?

• How do you perceive that Seco defines the word ’sustainability’? (Broman & Robèrt, 2017; Savitz & Weber, 2014)

Strategic Focus

• How would you describe top-management commitment towards sustainability? (Brockhaus et al., 2019; Bertoni, 2017)

• Can you describe voluntary and mandatory sustainability policies that Seco has adopted? (Schulte & Hallstedt, 2018)

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17 Product Development Project Model

• Can you provide an overview of the current PD project model?

• How is the functionality of the PD-process perceived by the functions involved in it? • Is the project model somehow linked to or affected by the strategic sustainability

goals?

Sustainability in Product Development

• What are the drivers for integrating sustainability in the PD-process? (Katsikeas et al., 2016; Horbach et al., 2012; Schulte & Hallstedt, 2017; Dutton et al., 1994; Nidumolu et al., 2009; Bevilacqua et al., 2007; ECHA, 2020; Blackrock, 2020) • What are the challenges with integrating sustainability in the PD-process? (Hersh,

1999; Schulte & Hallstedt, 2017;Brockhaus et al., 2019; Bertoni, 2017;Short et al., 2012)

• How is sustainability information currently used in PD?

• How are trade-offs currently identified in PD for sustainable products? (Byggeth & Hochschorner, 2006; Bhander et al., 2003)

• How are these managed (e.g. trade-offs between cost, quality, performance, time to market and sustainability)?

Decision-Making and Tools

• What tools are currently used for decision-making in the PD-process? (Schulte & Hallstedt, 2018; Hallstedt 2018; Isaksson et al., 2015)

• How is sustainability currently considered in decision-making linked to PD? (Broman & Robèrt, 2017; Hallstedt et al., 2013; Hallstedt et al., 2010)

• At what level and how should sustainability aspects be regarded in decision making to successfully be considered in PD? (Hallstedt, 2017; Hallstedt et al., 2013; Schulte & Hallstedt, 2018, Sarkis, 2013)

• Are there any supporting design tools (LCA or similar) or criteria used in PD? (Hallstedt, 2017; Hallstedt et al., 2013)

• What are your views on the currently used decision support tools and their attributes? (Schöggl et al., 2017; Schulte & Hallstedt 2017; Hallstedt, 2017)

2.4.3 Theoretical Sampling

Theoretical sampling, a form of purposive sampling, was used for this study (Bryman, 2012). The reason why this approach was chosen was to be able to do the sampling concerning the goals of the research and, therefore, select the object of analysis depending on the research questions. The participants at Seco that were interviewed were selected depending on their relevance to answer the research questions. As previously stated, this study used a deductive approach, hence the literature was the rationale for which data that was aimed to be collected at Seco. The

theoretical sampling continued until theoretical saturation was attained which means that there was no need for further data collection (Bryman, 2012). In other words, sampling was pursued until all relevant theoretical ideas were tested. Another characteristic of this sampling approach is that there is usually a movement between theory and sampling until theoretical saturation is attained. This is also referred to as ‘constant comparison’ by Bryman (2012). In Figure 8 below, a model is presented that visualizes the process of theoretical sampling and it is based on

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18

Figure 8: The process of theoretical sampling based on Bryman’s (2012) model

One problem with theoretical sampling, among other sampling methods for qualitative research, is to determine an appropriate sample size since it can be difficult to know how much data that needs to be collected before theoretical saturation is achieved. Three aspects were considered when discussing how large the sample approximately should be. Firstly, the aim was to gather enough data to be able to perform an accurate analysis with the help of the analytical model which is presented in chapter 4. Secondly, what was important for this study was to have a close involvement with the participants at Seco to get more fine-grained data rather than much and unspecific data. Thirdly, Warren (2002) remarks that for a qualitative interview study to be published it needs to have somewhere between twenty and thirty interviews. This amount was therefore used as a benchmark for how many interviews that should at least be conducted. Following these three guidelines resulted in that 24 interviews in total were conducted with 13 interviewees. Moreover, no maximum number of documents were specified of how many should be collected. Instead, the authors of this paper encourage the participants at Seco to share all the information they had that could be of relevance to the study. What was important with this approach was to be clear towards the participants at Seco what the research questions and purpose of the study were to only get information that was of relevance for the study. The total amount of documents that were collected were 41.

2.5 Method Criticism

To evaluate the quality of this study, internal reliability, internal validity, and external validity were tested which are three of four aspects that LeCompte and Goetz (1982) argue is important to look upon when pursuing method criticism for qualitative research and these are explained below. External reliability, which is the degree of replicability, is not considered in this study because qualitative studies are often difficult, if not impossible, to replicate since it is

challenging to redesign a social setting in detail (LeCompte & Goetz, 1982). To replicate this study, it would mean to be able to find a similar case company with comparable departments, and within these departments find employees with similar responsibilities. This is considered to be unachievable because a specific description of the interviewed employees at Seco is not provided in this paper because of confidentiality. Furthermore, this study used a semi-structured interview guide which makes it difficult to replicate the interview sessions since the interviews sometimes led to side-tracks outside the content of the interview guide.

2.5.1 Internal Reliability

Internal reliability refers to if multiple members of the research team agree with each other about what they sense when studying something. This was important to consider in this study because it was performed by two students. Hence, a certain phenomenon needed to be perceived in the same way by the researchers for increasing the probability to arrive at the same conclusions. To cope with this, we allocated time after each interview for discussing what was perceived during the meeting so that key points could be written down in a document in which both parties agreed on the content. If there were any major differences in our perceptions or interpretations, we

Formulating General Research Questions Sample Theoretically Data Collection Analysis of the Data Theoretical Saturation

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19 wrote down how we perceived or interpreted it differently so that more information in the area was sought in the further data collection, either by interviewing or collecting documents. Since we have partially different academic backgrounds, one with technical specialisation within mechanical engineering and one with energy- and environmental engineering, it sometimes led to insights in different fields, both during the interview sessions and in the following discussions over the conducted interviews between us. This was used as an advantage since it was viewed as an opportunity to learn from each other’s previous experiences and to conduct more nuanced analyses of the retrieved material. SPD is in the borderland between mechanical engineering and energy- and environmental engineering and, therefore, previous experiences and knowledge in both fields contributed to driving the study forward.

2.5.2 Internal Validity

Internal validity refers to how well a match there is between developed theoretical ideas and the observations of the researchers. It can also be described as if the observer and participant share the same picture of the used concepts and theories. Internal validity tends to be greater for qualitative research than quantitative research since the often long-term and close contact between the observers and participants often leads to a high level of congruence between theory and observations. This is a strength for this study since close contact was held with Seco during the whole project.

Since a deductive research approach was used in this study, the literature steered the study towards which area to collect data. With this research approach, the theoretical ideas affect and form what the researchers see when collecting empirical data, which can lead to an increased risk of unfavourable biases. In the article of Klein and Myers (1999), a set of principles for evaluating the quality of interpretive research are presented. One of these principles is ‘the principle of dialogical reasoning’. With this principle, they mean that it is important for researchers that perform interpretive research to confront their preconceptions that they have established from the theory and its philosophical assumption when gathering data. It is, therefore, according to Klein and Myers (1999), important for the researchers to be transparent, both towards themselves and towards the readers, with the historical intellectual basis that the researchers stand on when conducting the research. For this paper, the intellectual basis was partly the studied literature in the theoretical framework in chapter 3 below and partly our academic backgrounds and previous experiences before the study which is explained in chapter 2.2 above. To be transparent with the intellectual basis was important in this study to not let biases interfere with the conducted analysis, presented in chapter 6.

2.5.3 External Validity

External validity refers to the extent to which discoveries can be generalized over a wide range of social settings, also referred as generalizability. Since the study has been performed focusing on one case company, namely Seco, the generalizability is limited due to a small sample size, which is a general disadvantage for qualitative studies according to LeCompte and Goetz (1982). Moreover, Lee and Baskerville (2003) present a framework for classifying different forms of generalizability. This framework has two dimensions resulting in four types of generalizability. The first dimension is if the generalization is performed from empirical or theoretical statements and the second is if the generalization is performed to empirical or theoretical statements. This study generalizes from theoretical statements to empirical statements, also referred to as

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20 ‘generalizing from theory to description’ by Lee and Baskerville (2003), which they write is classified as a deductive research approach. It can be described as generalizing from a theory that is already confirmed in, for example, a published scientific article, to reported descriptions of what could be expected if the theory is applied. Lee and Baskerville (2003) discuss

generalizability from Hume’s truism stating that ‘A theory may never be scientifically

generalized to a setting where it has not yet been empirically tested and confirmed’. According to Lee and Baskerville (2003), this would mean that an increase in the sample size, both within the organisation and across multiple organisational settings, does not increase the generalizability if it is beyond the domain where the theory has already been tested. For this study, much of the theory from professor Hallstedt’s research and articles were used which is presented in the theoretical framework and was hence a great portion of the intellectual basis for how the empirical data was interpreted. Many of professor Hallstedt’s conclusions from her research is drawn from empirical data collection from manufacturing and PD companies. This study can, hence, be viewed as being in the same domain as her research as it collects data from a manufacturing company that is similar to the companies Hallstedt involves in her research. It can, therefore, be argued that this study is, to some extent, generalizable. However, the

generalizability could be increased if the sample size were larger, either within Seco in terms of the number of interviewees interviewed or outside Seco in terms of the number of manufacturing and PD companies included in the study that is similar to Seco.

2.6 Ethics

To consider ethics is important when conducting social research. Bell and Bryman (2007) identified eleven categories of ethical principles and these were used as a guideline when performing this study, namely: Harm to participants, Anonymity, Confidentiality, Informed consent, Privacy, Dignity, Deception, Affiliation, Honesty & Transparency, Reciprocity, and Misrepresentation. Harm to people was dealt with by ensuring that no one that participated from Seco had any risk of getting harmed by, for instance, anonymizing the participants in this report. At the beginning of the study, confidentiality agreements were signed between us and Seco. The confidentiality was expressed to the participants at Seco in the introduction of every interview that was conducted to ensure fully informed consent. Consequently, before publishing this report, the content has been reviewed and approved by responsible employees at Seco, in order to avoid confidential information to be included. Seco’s privacy was also respected. For instance, when we visited and worked at Seco’s headquarters in Fagersta, restrictions concerning where in the facility we were allowed to be were strictly followed. Furthermore, deception was avoided by not perusing any behaviour that was misleading or to lie to the participants at Seco. Moreover, Joakim Koski had a personal affiliation with Seco before the study since he has previously worked there. Consequently, he already had a picture of Seco before the study started. How we could cope with this affiliation bias was discussed in the beginning of the study to not be too locked into one perception. Honesty and transparency were also expressed towards the

participants at Seco by having regular reconciliation meetings with them. Reciprocity between the researchers in the area of SPD and practitioners at Seco was also sought by interviewing both parties during the study to get a multilateral picture. Lastly, misrepresentation was also avoided by not asking any misleading questions during the interviews.

Integrating Sustainability in Product Development : An Investigation of Drivers, Challenges, and Decision Support Tools for Sustainability Integration in the Early Phases of Product Development