Purpose: This research aims on finding a relation between 1st-tier supplier integration into the product development process and environmental performance

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Acknowledgement

First, I want to thank my tutor, Peter Berling, for his valuable support and guidance during this long project.

Further, a big thank you goes to my examiner, Helena Forslund, for her valuable advice and especially her patience towards me during the last period of this thesis work.

I want to thank the three interviewees – Sebastian Ritter, Adrian Neumann, and Alexandra Fischer (names changed due to anonymity) – who kindly participated in this research, spending their time on patiently answering my questions and providing valuable empirical information.

Finally, I want to thank my family and friends who helped me through this though task over the last 8 months! Thank you Mum and Dad, Olli, Aser, Marcel, Nathalie, Lotti, Rebecca, Andi, Alex Sp, Melli, Dominik, Annie, Mikaela, Amber, Erika, Patrik, Alan, Paul, Ben, Eva, Laura, Koen, Dommi, Olaf, Sven, Manu, Oli, Sabrina, Alex B, Franzi, Jimi, the entire VIS Sports Committee Spring 2016 and all the people I forgot to mention here.

And finally my special thanks to Thomas, who it was great to discuss things with while spending a lot of time in the library. Sorry for “stealing” from you here a bit, I just really liked the idea of addressing everybody by name.

Hope to see many of the people addressed at some point in the future!

Servus!

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Abstract

Business Administration, Business Process & Supply Chain Management, Degree Project (master), 30 higher education credits, 5FE04E

Author: Alexander Stern Examiner: Helena Forslund Tutor: Peter Berling

Title: The Effect of Integrating 1^st-tier Suppliers into the Product Development Process on the Environmental Performance – A Study in the German Automotive Industry

Background: The research of this paper is based on the topics of 1^st-tier supplier integration into the product development process and corporate social responsibility, with the environmental dimension as field of research. Furthermore, the German automotive industry is selected as a sample industry in which research is undertaken.

Purpose: This research aims on finding a relation between 1^st-tier supplier integration into the product development process and environmental performance. The dyad being examined is manufacturer and their 1^st-tier suppliers – from the manufacturer’s point of view. I investigate the effect of supplier integration on the environmental performance in order to see whether the integration concept can support organizations in reaching their goals of customer satisfaction and image preservation. The German automotive industry is being utilized as it is recognized as pioneer industry in order to make an example for other sectors on how to measure 1^st-tier suppliers’ environmental performance and how to efficiently integrate them in the manufacturer’s product development with the overall aim of enhancing environmental performance of manufacturers.

Method: A qualitative research approach with multiple case studies based on semi- structured interviews has been applied for empirical data collection. The gathered data of three cases has been analyzed in a cross-case synthesis comparing the different cases with each other and with peer-reviewed literature.

Results, conclusion: The gathered empirical information showed that German car manufacturers only rarely measure their 1^st-tier suppliers’ environmental performance due to close and long-term relationships; additionally, the ISO 14001 standard is a minimum criterion of being a supplier in this industry and some quotes regarding

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environmental performance are being forwarded to suppliers by manufacturers. In terms of 1^st-tier supplier integration research shows in contrast to literature that the process of integration is not as relevant as other factors such as the supplier, the product and components. Regarding the 1^st-tier supplier integration into the product development process affecting manufacturers’ environmental performance, the research at hand has shown a positive correlation. I believe that these results can be an example for other industries and dyads within the industry.

Keywords

Supply Chain Integration, Environmental Performance, Sustainability, Automotive Industry, Product Development Process

Cover

Photo: Dr. Ing. h.c. F. Porsche AG, 2016 Design: Alexander Stern

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Table of Content

Acknowledgement ... 1

Abstract ... 2

List of Abbreviations ... 8

List of Figures ... 9

List of Tables ... 9

1 Introduction ...10

1.1 Background ...10

1.1.1 Supply Chain Integration ...10

1.1.2 Product Development Process ...12

1.1.3 Corporate Social Responsibility ...13

1.1.4 The German Automotive Industry ...14

1.2 Problem Discussion ...15

1.3 Research Questions ...19

1.4 Purpose ...19

1.5 Structure ...19

2 Methodology ...20

2.1 Research Philosophy ...20

2.1.1 Positivism ...20

2.1.2 Interpretivism ...20

2.1.3 Decision Motivation ...21

2.2 Research Strategies ...21

2.2.1 Quantitative Strategy ...21

2.2.2 Qualitative Strategy ...22

2.3 Research Approach ...23

2.3.1 Inductive Approach ...23

2.3.2 Deductive Approach ...23

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2.4 Research Design ...25

2.5 Research Method ...26

2.6 Sampling ...27

2.6.1 Probability versus Non-Probability Sampling ...27

2.6.2 Non-Probability Sampling Methods ...28

2.6.4 Presentation and Relevance of the Case Studies...29

2.7 Data Collection in a Qualitative Strategy ...31

2.7.1 Primary and Secondary Data ...31

2.8 Data Analysis ...32

2.9 Research Quality ...33

2.10 Research Ethics ...34

2.11 Summary of the Research Methodology ...36

3 Literature Review ...37

3.1 The Product Development Process ...37

3.1.1 The Product Development Process ...37

3.1.2 Green Product Development ...39

3.1.3 Operationalization of the Product Development Process ...41

3.2 Measuring Environmental Performance ...42

3.2.1 Operationalization of Measuring Environmental Performance ...43

3.3 1^st-tier Supplier Integration of the Product Development Process ...44

3.3.1 Extent of Integration ...44

3.3.2 Timing of Integration ...45

3.3.3 Process of Integration ...46

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3.3.4 Supplier’s Effect on the Three Dimensions ...47

3.3.5 Operationalization of 1^st-tier Supplier Integration of the Product Development Process ...48

3.4 Integration’s Effect on Environmental Performance ...49

3.4.1 Operationalization of Integration’s Effect on Environmental Performance 50 3.5 Summary...50

4 Empirical Findings ...53

4.1 Case Study 1 – Case Company 1 ...53

4.1.2 1^st-tier Supplier’s Environmental Performance ...54

4.1.3 1^st-tier Supplier Integration ...54

4.1.4 Effect of 1^st-tier Supplier Integration on Environmental Performance ...55

4.3.1 The OEM’s Product Development Processes ...57

4.3.2 1^st-tier Suppliers’ Environmental Performance ...59

5 Analysis – The German Automotive Industry as Example? ...64

5.1 Analyzing Case Study 1 – The Consultancy ...64

5.1.2 Measuring 1^st-tier Supplier’s Environmental Performance ...65

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5.2 Analyzing Case Study 2 – Manufacturer No. 1 ...67

5.2.1 Product Development Process and Environmental Performance ...67

5.3 Analyzing Case Study 3 – Manufacturer No. 2 ...68

5.3.1 Process and Environmental Performance Measurement at the OEM ...68

5.3.2 Measuring 1^st-tier Suppliers Environmental Performance ...70

5.4 Cross Case Analysis – The Bigger Picture ...72

5.4.1 Comparing the Product Development Processes ...73

6 Conclusion and Further Research ...78

6.1 Answering the Research Questions ...78

6.2 Limitations and Contributions of this Paper ...80

Reference List ...82

Appendices ...90

Appendix 1 – Interview Guide ...90

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List of Abbreviations

CDP = Carbon Disclosure Project CDR = Critical Design Review CO2 = Carbon Dioxide

CSR = Corporate Social Responsibility EPI = Environmental Performance Indicator GSCM = Green Supply Chain Management KPI = Key Performance Indicator

NGO = Non-Governmental Organization NPD = New Product Development OEM = Original Equipment Manufacturer

OICA = Organisation Internationale des Constructeurs d’Automobiles PDR = Preliminary Design Review

PET = Polyethylene Terephthalate RQ = Research Question

SAQ = Self-Assessment Questionnaire SCI = Supply Chain Integration

SCM = Supply Chain Management

SME = Small and Medium-sized Enterprises SoP = Start of Production

TBL = Triple Bottom Line VW = Volkswagen

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List of Figures

Figure 1: Five alternative arcs of supply chain integration ...11

Figure 2: Triple bottom line of sustainability ...13

Figure 3: The automotive supply chain ...14

Figure 4: The process of deduction ...24

Figure 5: Adapted stage-gate model ...37

Figure 6: Development process model (linearized) ...38

Figure 7: High-level process model ...39

Figure 8: The eleven pillars supporting green product development ...41

Figure 9: Influencer of environmental performance...43

Figure 10: Extent of supplier involvement ...44

Figure 11: Ease and cost of NPD design structure ...46

Figure 12: Supplier, product and determinants of supplier integration ...47

Figure 13: Supplier Assessment Process at Case Company 3 ...61

Figure 14: New Supplier Integration Model ...79

List of Tables Table 1: Major differences between deductive and inductive approaches to research .24 Table 2: Summary of the Research Methodology ...36

Table 3: Pillars of Green product development ...40

Table 4: Operationalization of the Green Product Development Process ...42

Table 5: Environmental Performance Indicators ...42

Table 6: Operationalization of Measuring Supplier’sEnvironmental Performance ...43

Table 7: Operationalization of Integration’s Effect on Environmental Performance ...50

Table 8: Summary of Operationalization ...51

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1 Introduction

Within the introduction chapter of this thesis work, I first elaborate on the background which means that the main concepts defined shortly and the industry the empirical data is gathered from be described. Afterwards, the problem being investigated and delimitations are being defined. Based on this, I identify research questions and develop a purpose. Finally, I give an overview of the paper’s structure.

1.1 Background

In order to start with this thesis project, I first want to define and give an overview of the main aspects of the chosen topic, meaning to develop an overview of the current theoretical state in supply chain integration, the product development process, corporate social responsibility as well as the German automotive industry.

1.1.1 Supply Chain Integration

Several authors identify supply chain integration (SCI) as one of the central issues practice as well as theory has to handle since a couple of years, but is still not well implemented (Childerhouse & Towill, 2011; Danese & Romano, 2012; Gimenez, et al., 2012; van der Vaart, et al., 2012; Danese & Bortolotti, 2014). Danese and Bortolotti (2014) identify SCI as a main concept that needs to be applied in order to improve customers’ satisfaction but also to enhance business processes throughout the supply chain. In their paper Danese and Bortolotti (2014) emphasize that recent studies do not show only positive but mixed results when it comes to testing whether SCI improves performance.

According to Danese and Bortolotti (2014) and Childerhouse and Towill (2011) SCI consists of two dimensions. First, there is the “arcs of integration” concept by Childerhouse and Towill (2011) which implies different alternatives of integration:

inward-facing (company-internal), customer-facing, supplier-facing, peripheral-facing, and outward-facing integration (both customer and supplier). For this thesis the decision is made to focus on the supplier-facing alternative as cooperation with suppliers is crucially important and very fruitful when it comes to the product development process (Garengo & Panizzolo, 2013).

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Figure 1: Five alternative arcs of supply chain integration (Childerhouse & Towill, 2011)

Second, Danese and Bortolotti (2014) describe differences in regards to the various processes that are part of supply chain management (SCM) when it comes to their integration. These processes are in line with the eight main SCM processes identified by Cooper et al. (1997):

- Customer Relationship Management - Customer Service Management - Demand Management

- Order Fulfillment

- Manufacturing Flow Management - Procurement

- Product Development and Commercialization - Returns

Kara et al. (2014, p. 868) identify in their work the need for “green, ethical and sustainable products” as great opportunities arise from being innovative and keen on improving products and processes. This shows how important the product development process is when it comes to improving a company’s environmental performance. In addition, Förster (2015) explains in her paper that various processes have been

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addressed in other studies throughout the past decade; however the product development processes has not been part of research when it comes to environmental sustainability. Therefore, this thesis is focused on the product development process and not any of the other SCM processes listed previously.

1.1.2 Product Development Process

With product development as being one of the SCM processes identified by Cooper et al. (1997) and one of the main concepts investigated within this thesis, it is crucially important to have a clear picture of it. Cadden and Downes (2013, p. 718) define the new product development (NPD) as “the complete process of bringing a new product or service to market.” Another attempt to define NPD was carried out by Krishnan and Loch (2005, p. 433):

“New Product Development (NPD) can be defined as the set of activities that start with responding to a market opportunity and end with the delivery of a differentiated product or service.”

Kong et al. (2015) confirm the importance of the process; however, they add that it is a very complex process where the successful execution is highly depending on a positive and reliable cooperation between the responsible departments of an organization.

Tuli and Shankar (2015, p. 2457) underline that the product development process is also highly “important to a firm’s profitability” and is able to foster long-term and sustainable competitive advantages. In addition, Menon et al. (2002) emphasize on the fact that especially in markets with short product lifecycles, high or even growing competitive pressure, and quickly changing customer expectations the successful execution of NPD processes is crucial. In order to achieve the goal of a successful product development process Petersen et al. (2005) expose five critical factors: design for quality, design for manufacturability (both internally focused), design for supply chain, design for customer requirements, and supplier integration (all externally focused).

According to Kara et al. (2014) the NPD process is also an important factor when it comes to sustainable development as environmental practices and sustainability in general affected the manufacturing industry in last decades and still does. This is due to factors such as changes in legislation, customer expectations, economic benefits, corporate survival, and other initiatives by companies within the market.

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13 1.1.3 Corporate Social Responsibility

The most common definition of “sustainability” was stated in the United Nations Report

“Our Common Future” in 1987 (Kannegiesser & Günther, 2013):

Sustainability implies a “development that meets the needs of the present without comprising the ability of future generations to meet their own needs” (United Nations, 1987 cited by Kannegiesser &

Günther, 2013, p. 25)

In its further development the concept of Corporate Social Responsibility (CSR) has been designed which is based on three pillars: economic development, environmental protection, and social wellbeing (Grunwald & Kopfmüller, 2012; Kannegiesser &

Günther, 2013). With these three aspects in mind, Kannegiesser & Günther (2013) state that maximum benefits from the CSR concept can only be achieved when integrating all three dimensions – the so called triple bottom line (TBL):

Figure 2: Triple bottom line of sustainability (Based on Kannegiesser & Günther, 2013, p. 25)

While economic development can be seen as central foundation of any profit- organization, the other two pillars might get lost. However, Cruz (2013) emphasizes on the fact that these two dimensions are crucial for companies due to growing “pressure from customers, non-governmental organisations (NGOs), local communities, as well as legislation and regulation” (Cruz, 2013, p. 3995). Considering this, the reputation of a firm is in danger if the CSR concept with all its features is not implemented successfully (Cruz, 2013). In common literature “environmental” happens to be

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replaced with the word “green”. Within this thesis the two words will be used interchangeably.

1.1.4 The German Automotive Industry

The Organisation Internationale des Constructeurs d’Automobiles (OICA) keep record of constructed cars and commercial vehicles worldwide. In 2014 almost 90 million motor vehicles have been produced, whereby China with 23.7 million had the biggest share (26.4 %). Nonetheless, the German automotive industry still had a share of 6.6 percent (5.9 million vehicles). Overall, Germany is placed fourth of the motor vehicle producing countries worldwide. (OICA, 2015) Therefore, Germany is an important production market of motor vehicles and, hence, of high interest for research (González-Benito, et al., 2013). González-Benito et al. (2013, p. 3849) also underline the “interests involved in researching improved ways of managing and organising all the processes involved in the production of motor vehicles.”

However, in order to investigate an industry and its processes efficiently and effectively the basis is to have a picture of the supply chain’s structure:

Figure 3: The automotive supply chain (Based on Lind et al., 2012, p. 95)

Caniels et al. (2013) describe motor vehicles as very complex products where it is necessary to outsource steps of the production to suppliers. This can be seen in the supply chain’s structure visualized in Figure 3 as stage 4 consists of system suppliers which deliver entire parts of a car such as seats, air conditioning systems, brake systems, etc. System suppliers are car manufacturers’ 1^st-tier suppliers and there for one subject of this thesis.

In addition, according to Caniels et al. (2013), the German automotive industry occupies the pioneering role when it comes to integrating the CSR concept in their processes throughout the supply chain. The original equipment manufacturers (OEM) – in this case the car manufacturers – create green standards that go beyond existing

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standards such as ISO requirements. Mostly they are defined by the OEMs;

nevertheless collaboration with key suppliers is happening from case to case.

The focus of this study is set on the German automotive industry as it is the most important industry in and for Germany (Förster, 2015). In addition, many small and medium-sized enterprises (SME) are in relation to this sector. Especially, as the automotive industry is ahead in sustainable development and concepts such as CSR as well as “green” product development, this can be used as an example for other industries while describing and analyzing how a leading industry is handling environmental matters in one of their SCM processes (Förster, 2015).

For this thesis, the dyad being investigated is stage 4 and 5 from the car manufacturers’ point of view (marked red in Figure 3). In my eyes, this is the main dyadic construct within the automotive supply chain and reflects the core in terms of decision making, production and other central processes. In addition, the point of view of the car manufacturers in Germany will be taken as they are the brand-owner within the chain and are mainly responsible for the reputation of the brand, business and the entire supply chain.

1.2 Problem Discussion

RQ1: How do German car manufacturers measure the environmental performance in the product development process of 1^st-tier suppliers?

Kogg and Mont (2012) emphasize on the fact that customers and other stakeholders expect companies taking over responsibility for their environmental impact. In line with that, Cruz (2013) and Agan et al. (2016) also see that end-customers are more likely to investigate the whole supply chain behind a product in order to get a glimpse on the impact production processes, the product itself and the firms within the supply chain have on the environment. Therefore, Agan et al. (2016) highlight the importance of green supply chain management (GSCM) as the climate change, transparency, environmental pollution, costs for energy are also playing a major role besides consumer awareness.

The sensibility of customers for expecting companies to take over responsibility for their environmental impact especially became apparent during the publication of the Volkswagen (VW) scandal in September 2015. Krall and Peng (2015) describe the VW scandal in detail from the beginning in September 2015 until mid-October 2015. VW

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manipulated the electronic systems of their diesel cars on purpose in order to match the official emission limits set by the US Environmental Protection Agency. However, the cars only matched the restrictions during official tests while the emissions were much higher outside test conditions. With this becoming publicly known, not only US citizens but also German citizens and people all over the world got upset due to the negligence of environmental restrictions and goals by a main player in the automotive industry.

Malik et al. (2016) describe in their paper that the environmental performance of a supply chain is highly depending on each firm within the chain and the individual performance in that matter. In order to integrate this in a form of green supply chain management, the authors highlight the importance of supplier selection and implementation of environmental issues into SCM processes. In addition, Bhattacharya et al. (2014) emphasize on the fact that consumers as well as governmental institutions expect companies to meet the need for “greener” products. Therefore, OEMs need to measure their suppliers’ environmental performance in order to allow them participating in NPD processes to develop more environmentally friendly products. However, no literature could be identified on where performance measures were specified when it comes to the German automotive industry. Hence, it could be interesting to identify whether OEMs currently measure their suppliers’ environmental performance, and if so, how they do that.

RQ2: How do German car manufacturers integrate their 1^st-tier suppliers into the product development process?

Kong et al. (2015) identify the product development process as a very complex process which is based on a smooth and reliable cooperation between different parts of an organization (i.e. research & development, marketing, procurement, etc.). Therefore, Tuli and Shankar (2015) describe the importance of collaboration between OEM and suppliers in the product development process in order to achieve technological and information advantages in comparison to competing supply chains. In addition, Petersen et al. (2005) identified supplier integration into the NPD process as one of the five crucial factors to a successful and prosperous product development process. This is due to the fact that suppliers can offer “relevant technologies and design expertise to enhance the final product” (Tuli & Shankar, 2015, p. 2458). Another relevant issue

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suppliers can support with is feedback on manufacturability and other additional skills, knowledge and resources OEMs do not possess. Furthermore, Peterson et al. (2005) highlight that cooperation in the product development process can enhance the results of the process as well as the time spent on the development of a new product can be reduced.

The German automotive industry is one of the most advanced industrial sectors worldwide. This is especially the case when it comes to innovation and product development as it is a fast changing industry with a lot of eyes looking upon it.

Therefore, it is crucial to have a well-functioning and efficient product development process in cooperation with suppliers that can build competitive advantages to other supply chains. Hence, the integration of 1^st-tier suppliers into the product development process is probably very advanced; however, no proof in literature could have been found.

Many authors (Kong, et al., 2015; Menon, et al., 2002; Petersen, et al., 2005; Tuli &

Shankar, 2015) cover aspects of why suppliers should be integrated into the product development process; still no literature could be identified where the dimension of how to integrate suppliers was discussed. With the German automotive industry being in a pioneer role in many ways, this industry will be used in order to gather empirical data on this matter and try to come up with a general scheme for how to integrate 1st-tier suppliers into the product development process of a manufacturer.

RQ3: How does 1^st-tier supplier integration of the product development process affect the environmental performance of German car manufacturers?

Various authors conducted research on the connection between SCI of the NPD process and organizations’ performance – mostly economic – recently (Handfield, et al., 1999; Vachon & Klassen, 2006; Handfield & Lawson, 2007; Rosell, et al., 2015; von Haartman & Bengtsson, 2015; Lii & Kuo, 2016). In general, authors identify mostly positive effects on the supply chain’s as well as firms’ performance; however, the influence on performance is bigger when it comes to a global context rather than a regional context (von Haartman & Bengtsson, 2015). These researches, nonetheless, examine the impact on the economic performance only.

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Therefore, Dai et al. (2015) together with Gattiker and Carter (2010), Hofer et al. (2012) and Cantor et al. (2012) underline the fact that it is crucially important to additionally include environmental matters into SCM and especially the SCI concept. With customer expectations been changing towards more environmentally friendly and green products, innovation is an important dimension firms have to revise considering sustainability. According to Dai et al. (2015) as well as Ziegler and Nogareda (2009) this is necessary in order to improve environmental performance and avoid or reduce the environmental impact of new products and processes.

Particularly the supply chain integration of the NPD process offers good opportunities to improve environmental performance in the long-run. However, there was no empirical research in this area that confirms an improved performance when integrating the NPD process. As described previously, it has been discussed in how far process integration within a supply chain affects economic development of the organizations;

still, no focus was put on the NPD process in particular and its impact on the environmental performance.

Luo and Du (2015) identify a connection between a good CSR performance and innovativeness, describing CSR even as a “catalyst for innovation” (Luo & Du, 2015, p.

703). The authors describe a correlation from CSR performance to improved innovativeness; however it could be interesting to investigate whether this correlation also exists vice versa. In addition, Tsinopoulus and Mena (2015) see the necessity of defining the degree of integration. Literature shows that integration is not either happening or not happening but different levels can be realized when it comes to integration of processes within a supply chain (Cadden & Downes, 2013; Handfield, et al., 1999; Koufteros, et al., 2005; Koufteros, et al., 2010). Therefore, it is important to consider the level of integration when analyzing a dyad within a supply chain on its integration and performance.

These articles show that there exists a connection between SCI, NPD as well as environmental performance to some extent; nonetheless no research has been conducted yet in order to proof a positive or negative impact of SCI of the NPD process on the environmental performance of a manufacturer. As mentioned before, the focus of this thesis is set on the integration of 1^st-tier suppliers.

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19 1.3 Research Questions

1. How do German car manufacturers measure the environmental performance in the product development process of 1st-tier suppliers?

2. How do German car manufacturers integrate their 1^st-tier suppliers into the product development process?

3. How does 1^st-tier supplier integration of the product development process affect the environmental performance of German car manufacturers?

1.4 Purpose

The purpose of this paper is, first, to identify how German car manufacturers can assess their 1^st-tier suppliers in terms of environmental performance. In addition, the empirical data gathered shall help identifying how German car manufacturers integrate their 1st-tier suppliers into the product development process. Finally, the investigation aims on the affect green 1^st-tier supplier integration of the product development process has on the environmental performance of German car manufacturers. The interviews conducted and their analysis shall support theory by identifying a positive and/or negative connection between SCI of the product development process and the environmental performance of OEMs in the German automotive industry. In addition, evidence from a pioneer industry – such as the automotive industry – will be gathered in order to see whether an example can be built for other industries about the environmental effect of 1st-tier supplier integration.

1.5 Structure

In order to have an overview of this paper, I briefly want to outline the structure.

Following this introduction, the methodology of the research is being outlined, explained and motivated. Then the theory chapter delivers expertise on the selected topics in consequence of the stated research questions. Afterwards, the findings from interviews are being exposed in the way of three case studies leading to empirical data which subsequently is compared and analyzed in order to answer the research questions. Finally, conclusions are being drawn answering the research questions.

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2 Methodology

The following chapters describe and explain the methodology applied in this study. This includes the research philosophy, strategies, approach and design. In addition, it elaborates on sampling, data collection and data analysis methods. Finally, the quality of the research will be discussed. For each part, sub-chapters first describe the theory;

afterwards the decision regarding this study will be made and justified.

2.1 Research Philosophy

Saunders et al. (2009) describe research as a process by which specifically defined phenomena are investigated in a structured way. The aim is to understand and increase knowledge on a specific issue. To do so, it is necessary to define the research philosophy in the beginning. Therefore, Bryman and Bell (2015) highlight the two positions of positivism and interpretivism which will be defined and discussed within this chapter.

2.1.1 Positivism

Bryman and Bell (2015) as well as May (1997) agree on the fact that positivism as an epistemological research philosophy applies the same methods of natural research to the field of social studies. May (1997) further explains that positivistic research implies an objective view on the phenomena studied, which means that the researcher’s task is to describe and analyze the phenomena based on empirical data gathered via observation, surveys, interview or similar. Bryman and Bell (2015) support this with their statement: “Science must (and can) be conducted in a way that is value free (that is, objective)” (Bryman & Bell, 2015, p. 28).

2.1.2 Interpretivism

As an alternative to positivism Bryman and Bell (2015) offer the interpretivist research philosophy. In contrast to positivism, interpretivism underlines the necessity of considering and grasping subjective meanings in the phenomena studied. Main issue identified by interpretivists is the difference between natural science – which is more about things – and social science which involves human beings and organizations.

However, it is quite challenging to understand and analyze gained knowledge and perspectives of subjective individuals (Saunders, et al., 2009).

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21 2.1.3 Decision Motivation

In this thesis I decide on following a positivistic research philosophy; only by doing this relevant knowledge can be added to existing theory which is a central aspect of this study. A positivistic research ensures that subjective perspectives and information is filtered out and new theory can be developed. As semi-structured interviews with various companies are conducted, the subjective perspectives of different car manufacturers within the automotive industry are captured. Due to the variety of interviews, it is possible to filter subjectivity and obtain objective data.

2.2 Research Strategies

As mentioned before, research is conducted in order to increase knowledge on a specific issue. Therefore, it is crucially important to gather information which supports answering the stated research questions (Ghauri & Gronhaug, 2005). According to Bryman and Bell (2015) there exist two different research strategies being applied frequently: qualitative and quantitative research. Both can be applied in order to collect, analyze and interpret data (Cresswell, 2014). Even though there are authors highlighting that both strategies can be applied together (Cresswell, 2014), Bryman and Bell (2015) emphasize on the difficulties of integrating both. This chapter defines and discusses both strategies in order to come to a decision on which to utilize for this study.

2.2.1 Quantitative Strategy

Bryman and Bell (2015, p. 37) define quantitative research as “a research strategy that emphasizes quantification in the collection and analysis of data”. Hence, focus of this research strategy is on numeric inputs from the sample in order to test theories.

Moreover, Cresswell (2014) highlights that these theories need to be able to be tested objectively and the variables able to be set in relationship. Then statistical procedures can be utilized to analyze the data (Cresswell, 2014; Bryman & Bell, 2015). The data being analyzed can be collected through surveys, experiments or already existing statistics (Bryman & Bell, 2015). Furthermore, Saunders et al. (2009) mention the structured interview as another possibility to gather data due to the fact that it consists of closed questions and the interviewees’ answers can be easily compared.

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22 2.2.2 Qualitative Strategy

In contrast to quantitative research, the qualitative strategy is described as a method which investigates behavior, opinions, and attitudes of the objects studied (Krishnaswamy & Satyaprasad, 2010). In addition, this strategy focuses more on words than numeric inputs (Bryman & Bell, 2015). That is why Bryman and Bell (2015) also see a difference in qualitative research as the studied objects focus more on what is important and significant to them than in quantitative research. This is due to a less strict and static framework when utilizing a qualitative strategy. Furthermore, the importance of meaning, understanding and subjective, rich, and deep data is highlighted by the authors for this strategy. The qualitative strategy is in general connected with interviews which are usually not structured or semi-structured.

However, quantitative material provided by the companies within the sample can be added and qualitatively analyzed (Yin, 2014).

2.2.3 Decision Motivation

Both research strategies show their advantages and disadvantages; however, for this study the qualitative research strategy is applied. This is due to the fact that qualitative research is more appropriate to be applied when it comes to a small amount of individuals – or in this case small number of companies – being studied (Ghauri &

Gronhaug, 2005). In the present case a small number of German car manufacturers have been interviewed in order to collect deep, valuable data.

Furthermore, as already described previously, there is only few theory existing on the research topics in question. Therefore, a qualitative strategy with interviews allows broadening the view on the topics and offering a wider area of information which can influence the analysis and outcome of the study. Especially hidden information, which was not mentioned in literature before, might surface.

Moreover, a qualitative method allows me as researcher to be more flexible as this kind of research has not such a strict framework compared to a quantitative research method. This flexibility supports the identification of environmental requirements, supplier development methods as well as outcomes of integrating the NPD process within the dyad in question for each organization being interviewed.

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23 2.3 Research Approach

Within this chapter the research approach that is utilized in the study will be discussed.

Authors distinguish between the inductive and deductive approach which, in general, decide how the researcher perceives the reality (captured through research) and the results from analysis of gathered information (Bryman & Bell, 2015; Ghauri &

Gronhaug, 2005).

2.3.1 Inductive Approach

The inductive approach is applied in order to build theory (Hyde, 2000; Ghauri &

Gronhaug, 2005; Bryman & Bell, 2015). To do so, a phenomenon is observed and analyzed; based on the data and information gathered generalizations are being established which are meant to build new theory.

Observations / Findings Theory

(Bryman & Bell, 2015, p. 25)

For that to happen, it is crucial to collect data through observations or personal interviews. Based on these findings hypotheses are created and further explored in order to build new theory within the area investigated (Trochim & Donnelly, 2001).

As mainly interviews and observations are utilized for data collection, Bryman and Bell (2015) associate the inductive approach with a qualitative strategy. In addition, Saunders et al. (2009) argue that induction produces less reliable and valid data in comparison with deduction as the analysis of the information is usually more interpretative.

2.3.2 Deductive Approach

Other than an inductive study, the deductive approach first builds hypotheses based on theory which are tested by conducting a study (Bryman & Bell, 2015). Moreover, it is the most common view of the relationship between theory and research (Bryman &

Bell, 2015).

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Figure 4: The process of deduction (Based on Bryman & Bell, 2015, p. 23)

While Bryman and Bell (2015) see a distinct connection between a quantitative research strategy and deduction as well as between a qualitative study and induction due to past research, Saunders et al. (2009, p. 124) think that “such labeling is potentially misleading and of no real practical value”. The following table visualizes the main differences between the two approaches:

Table 1: Major differences between deductive and inductive approaches to research

Deduction emphasizes Induction emphasizes

 Scientific principles

 Moving from theory to data

 The need to explain causal relationships between variables

 The collection of quantitative data

 The application of controls to ensure validity of data

 The operationalization of concepts to ensure clarity of definition

 A highly structured approach

 Researcher independence of what is being researched

 The necessity to select samples of sufficient size in order to generalize conclusions

 Gaining an understanding of the meanings humans attach to events

 A close understanding of the research context

 The collection of qualitative data

 A more flexible structure to permit changes of research emphasis as the research progresses

 A realization that the researcher is part of the research process

 Less concern with the need to generalize

Source: Saunders et al. (2009, p. 127)

The research at hand is following a deductive research approach. This means that existing theory is identified, discussed and analyzed in order to gain as much background knowledge on the topics as possible. Even though qualitative research is usually directly associated with an inductive research approach (Bryman & Bell, 2015), deduction is more suitable in this case as theory on SCI of the NPD process exists, however not much evidence can be gathered on the specific industry of car manufacturers. This is in line with Bryman and Bell (2015, p. 38) who state that “there

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are examples of studies in which qualitative research has been employed to test rather than to generate theories”. The interviews being conducted are meant to not only test and verify existing theory but also build new theory. However, the inductive approach was not chosen due to that fact that there is existing literature on the topics and this literature was identified, structured and analyzed in Chapter 3.

2.4 Research Design

In general, a “research design provides a framework for the collection and analysis of data.” (Bryman & Bell, 2015, p. 49) According to Bryman and Bell (2015) there are various research designs that are relevant and applied regularly by researchers:

experimental, cross-sectional, longitudinal, case study, and comparative design.

Experimental Design

According to Bryman and Bell (2015) experiments are rarely been applied in business research due to the lack of control over the situation. In an experiment a so-called treatment group that is manipulated, is being compared against a control group which did not receive the manipulation. The different reactions are then compared by the researcher in order to identify how the treatment influences groups or organizations.

Cross-Sectional Design

Bryman and Bell (2015) describe a cross-sectional design as a design that means to collect data from various cases at a single point in time. It is mainly applied in quantitative research as it gathers quantitative and quantifiable data based on which patterns can be detected.

Longitudinal Design

With regards to Bryman and Bell (2015) a longitudinal design is applied to detect change in a business research over time which can be based on surveys or interviews.

Therefore, it is a very time consuming and costly research design and, hence, only rarely used in business research.

Case Study Design

A case study intensively examines and analyses a single case which can be a single organization, person, location or event (Bryman & Bell, 2015). It implies the observation

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of a case in all its complexity and peculiarity. The authors highlight the popularity of the case study in business research.

Comparative Design

The idea of a comparative design is to compare several cases which are contrasting to each other (Bryman & Bell, 2015). Mainly it is being used to examine social phenomena; hence, this implies that cross-cultural or cross-national researches are the best fields of application.

For this research the case study design is chosen in order to get deep and rich information from only few companies being contacted in the car manufacturing industry – in this case the car manufacturers. This way, data which is more related to real life can be gathered. Furthermore, a cross-sectional case study gives the opportunity to gather data from various cases and produce general findings (Bryman & Bell, 2015) which is in line with the purpose of this study as it states that the idea is to generate knowledge based on the automotive industry which can be transferred to other business areas. In contrast to a multiple case study where different cases are seen individually and been compared, a cross-sectional case study is aiming for general findings based on a sample of cases (Bryman & Bell, 2015). Yin (2009, p. 18) describe that a case study “investigates a contemporary phenomenon in depth and within its real-life context”.

2.5 Research Method

In addition, this chapter also includes the decision on the research method being applied for this study. “A research method is simply a technique for collecting data.”

(Bryman & Bell, 2015, p. 49) Bryman and Bell (2015) offer different instruments that can be utilized: self-completion questionnaire, interview, and participant observation. In terms of interviews, the authors distinguish between the unstructured interview and the semi-structured interview. These types of interview can clearly be dedicated to a qualitative strategy as they reveal a greater interest in the interviewees’ point of view.

Hence, a qualitative interview gives the interviewer the chance to capture not only the interviewee’s subjective opinion but also the opportunity to learn additional points about the topics in question as the interviewee leads the conversation highlighting issues that theory did not show. (Bryman & Bell, 2015)

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For the study at hand the decision was made to undertake semi-structured interviews.

This means that not only the research questions identified in Chapter 1.3 are part of the interview but a loose interview guide is created that captures additional questions leading throughout the interview. Bryman and Bell (2015) describe that the advantage of applying the semi-structured interview is the guideline that it gives to the interview in order to keep the area in question as well as the limitations that were set for the research. This is important in order to not drift away from the main topics of the research which are the product development process itself, supply chain integration, and environmental and economic performance. However, the semi-structured interview still offers the opportunity of flexibility that structured interviews or questionnaires do not provide.

2.6 Sampling

In order to answer the research questions stated in Chapter 1 relevant data must be collected and analyzed. So that data is relevant to the research topic, people with sufficient knowledge within that area need to be questioned. However, especially in a multiple case study it is not possible to include every person being able to add relevant information to the research as time and cost are limited for this thesis. Therefore, Bryman and Bell (2015) as well as Yin (2014) and Hair et al. (2003) identify sampling as the main tool to isolate a small part of the population that is representative for the whole group. Based on this sample conclusions about the population can be drawn.

2.6.1 Probability versus Non-Probability Sampling

When it comes to sampling Bryman and Bell (2015) discriminate between probability and non-probability sampling. They define a probability sample as “a sample that has been selected using random sampling and in which each unit in the population has a known probability of being selected.” (Bryman & Bell, 2015, p. 727) This means that every unit in the population has the same chance to be selected for being investigated further. In contrast to that non-probability sampling implies that not all units in the population have the same likelihood to be chosen for further analysis (Bryman & Bell, 2015). Non-probability sampling involves the researcher making a judgement while selecting the units of the sample being investigated in detail.

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For this research non-probability sampling was seen as the more fruitful alternative due to the difficulty of contacting the right people within the car manufacturing companies.

With probability sampling every supply chain, supplier, product development or public relations manager of the different German car manufacturers should have been contacted; however, it is not possible to gather contact details such as email or phone numbers in such a short time frame as a master thesis implies.

2.6.2 Non-Probability Sampling Methods

Throughout their book Bryman and Bell (2015) differ between three types of non- probability sampling methods: Convenience, quota, and purposive sampling.

“A convenience sample is one that is simply available to the researcher by virtue of its accessibility.” (Bryman & Bell, 2015, p. 200) This can mean that researcher has a group of people that are part of the population at hand and easily accessible – i.e.

friends, co-workers etc. Lucas (2014), however, sees that this might end in a biased situation as other possible respondents are avoided on purpose.

Bryman and Bell (2015) state that quota sampling is mainly used in commercial and political research where the aim is “to produce a sample that reflects a population in terms of relative proportions of people on different categories, such as gender, ethnicity, age groups, social economic groups, and region of residence, and in combinations of these categories.” (Bryman & Bell, 2015, p. 202) However, the researcher themselves still select the people being part of the sample with the only condition in mind that the quota is met.

In the case of purposive sampling the researcher does not choose participants to being part of the sample randomly but in a strategic way (Bryman & Bell, 2015). This is done in order to ensure a good variety of the sample so that key characteristics relevant to the research questions are represented in the best way possible. According to Bryman and Bell (2015) purposive sampling in qualitative research can be done in three different ways: theoretical sampling, snowball sampling, and case study.

Bryman and Bell’s (2015) definition of theoretical sampling is based on Glaser and Strauss (1967) and basically says that data collection is a process for generating theory which means that data is collected and analyzed and based on that further information is gathered. This is done in order to develop the theory further and further during the process of data collection. In order to make this clearer Bryman and Bell add