No retailer is an island in the sea of CSR
A multiple case study of how buyers and suppliers co-create CSR in the retail supply chain.
Bachelor Thesis
Author: Annie Bäckstrand & Filippa Sjögren Supervisor: MaxMikael Wilde Björling Examiner: Clarinda Rodrigues
Date: 2020-05-22
Subject: Business Administration III – Degree
Abstract
In recent years, the concept of sustainability has increased of importance and customers today are more aware of the implications of not being sustainable. As of the increased awareness, customers are demanding more sustainable practices from retailers, which leads to them communicating this further down the supply chain. Therefore, the purpose of this thesis has been to examine and understand how retailers together with their suppliers in the furniture and interior retail industry co-create a more sustainable supply chain through the Corporate Social Responsibility framework, and to identify what kind of facilitators and barriers that appear in co-creation of CSR between buyers and
suppliers.
The empirical findings were obtained using a qualitative multiple case study of seven furniture and interior retailers originated from Sweden through semi-structured
interviews. The findings were then analyzed and discussed with the presented literature to identify how they were similar or different.
The conclusion of this thesis shows that buyers somewhat are engaged in co-creation with their suppliers, although there is no unified answer for how, as the level of
involvement, why involved and in which function they are involved are highly different among the cases. A common theme throughout the findings indicated that the more responsible the company is, the more developed they are in their buyer-supplier relationships. Although, the co-creation level of a relationship was found to be ambiguous due to its unexplored nature of the B2B market. Furthermore, the thesis identified both some general and more specific facilitators and barriers that could be used as a guide for future co-creating activities for the implementation of CSR in the retail supply chain.
Keywords
Corporate Social Responsibility, Sustainability, Buyer-Supplier Relationships, Co-creation, Collaboration, Retail Supply Chain, Facilitators and Barriers
Acknowledgements
We would like to send our warmest thanks to all those who in one way or another have contributed to our bachelor thesis. First and foremost, we would like to express our deepest gratitude and appreciation to our participants for dedicating their time during the current circumstances and providing us with valuable knowledge that have contributed to our bachelor thesis.
Furthermore, we would like to thank our supervisor, MaxMikael Wilde Björling, for his guidance and support with valuable feedback throughout the process. We would also like to thank our examiner Clarinda Rodrigues as well as our opponents for their constructive criticism during the seminaries that has resulted in development and improving the quality of the bachelor thesis.
Linnéuniversitetet Kalmar, 22 May 2020
_______________ _______________
Annie Bäckstrand Filippa Sjögren
Table of Content
1 Introduction _________________________________________________________ 1 Background ______________________________________________________ 1 Problem Discussion _______________________________________________ 4 1.2.1 Theoretical Problematization ____________________________________ 4 1.2.2 Managerial Problematization ____________________________________ 6 1.2.3 The Research Gap _____________________________________________ 8 Research Questions________________________________________________ 9 Purpose _________________________________________________________ 9 Delimitations ____________________________________________________ 9 2 Literature Review ___________________________________________________ 10 Corporate Social Responsibility _____________________________________ 10 CSR in Retail Supply Chain Management _____________________________ 12 CSR in Buyer-Supplier Relationships ________________________________ 15 Co-creation of CSR ______________________________________________ 17 2.4.1 Facilitators for Co-creation ____________________________________ 19 2.4.2 Barriers for Co-creation _______________________________________ 21 Summary _______________________________________________________ 22 Conceptual Framework____________________________________________ 22 3 Methodology ________________________________________________________ 24 Research Approach _______________________________________________ 24 Research Strategy ________________________________________________ 25 Research Design _________________________________________________ 26 3.3.1 Multiple Case Study Design ____________________________________ 26 Type of Data ____________________________________________________ 27 Research Method ________________________________________________ 27 3.5.1 Semi-structured interviews _____________________________________ 27 3.5.2 Collection of Data ____________________________________________ 28 Operationalization _______________________________________________ 28 Selection of Cases ________________________________________________ 29 3.7.1 Purposive sampling ___________________________________________ 29 3.7.2 Company Criteria ____________________________________________ 30 3.7.3 Table of Cases _______________________________________________ 30 Data Analysis ___________________________________________________ 31 3.8.1 Thematic analysis ____________________________________________ 31 Quality of Research ______________________________________________ 31 3.9.1 Reliability in qualitative research ________________________________ 32 3.9.2 Validity in qualitative research __________________________________ 32 Ethical Considerations ___________________________________________ 33 Sustainable Considerations ________________________________________ 34 4 Empirical Findings __________________________________________________ 35 Cases __________________________________________________________ 35
4.1.1 Rusta ______________________________________________________ 35 4.1.2 Granit______________________________________________________ 35 4.1.3 Company A _________________________________________________ 36 4.1.4 Clas Ohlson _________________________________________________ 36 4.1.5 ÖoB (Runsvengruppen) ________________________________________ 36 4.1.6 Company B _________________________________________________ 37 4.1.7 IKEA Components ____________________________________________ 37 Corporate Social Responsibility _____________________________________ 37 CSR in Buyer-Supplier Relationships ________________________________ 40 Co-creation of CSR ______________________________________________ 42 Facilitators for Co-creation _________________________________________ 44 Barriers for Co-creation ___________________________________________ 46 5 Analysis ____________________________________________________________ 49 Corporate Social Responsibility _____________________________________ 49 CSR in Buyer-Supplier Relationships ________________________________ 50 Co-creation of CSR ______________________________________________ 52 Facilitators for Co-creation _________________________________________ 54 Barriers for Co-creation ___________________________________________ 55 6 Conclusion _________________________________________________________ 57 Answering the Research Questions __________________________________ 57 6.1.1 Which are the facilitators for co-creating CSR in the retail supply chain? 57 6.1.2 Which are the barriers for co-creating CSR in the retail supply chain? __ 58 6.1.3 How do buyers and suppliers co-create CSR in the retail supply chain? __ 58 Theoretical Implications ___________________________________________ 59 Managerial Implications ___________________________________________ 61 Social, Ethical and Sustainable Implications ___________________________ 61 Limitations _____________________________________________________ 61 Suggestions for Future Research ____________________________________ 62 References ____________________________________________________________ i Appendices ___________________________________________________________ x Appendix A - Operationalization ________________________________________ x Appendix B - Interview guide - English version ____________________________ xi Appendix C - Interview guide - Swedish version___________________________ xiii Appendix D - Authors Individual Contribution - Filippa Sjögren ______________ xv Appendix E - Authors Individual Contribution - Annie Bäckstrand ____________ xvi
List of Tables
Table 1: Spectrum of Definitions of Collaboration (Fyall & Garrod, 2005; Himmelman, 1996). ______________________________________________________________ 15 Table 2: Interview Information. __________________________________________ 30
List of Figures
Figure 1: Carroll’s (1991) Corporate Social Responsibility Pyramid (Authors design).
___________________________________________________________________ 10 Figure 2: The Retail Supply Chain Process (Authors interpretation & design based on Sohel et al., 2014; Stock & Boyer, 2009, pp.706; Ayers & Odegaard, 2018; Ge et al., 2019). ______________________________________________________________ 13 Figure 3: Interactions for Co-creation of Value (Prahalad & Ramaswamy, 2004). __ 18 Figure 4: Conceptual Framework. ________________________________________ 23 Figure 5: Updated Conceptual Framework. _________________________________ 60
1 Introduction
In this introductory chapter, the authors introduce the main topics that are going to be covered in this thesis. After the background, the chapter will continue with a problem discussion of how these topics are relevant to both researchers and managers as well as presenting the identified research gap. The chapter will conclude with presenting the research questions, the purpose of this thesis as well as the delimitations.
Background
A topic that is frequently covered in the majority of our day-to-day life through
regulations, media and businesses is sustainability. It is also a topic that has gotten more frequent interest among researchers, as research about sustainability or similar concept is growing about twice the pace of research in other topics (Elsevier, 2015a).
Sustainability is defined by the United Nations (UN) in the Brundtland Commission report (1987, p.16) as it “meets the needs of the present without compromising the ability of future generations to meet their own needs”, which indicates that companies in all industries should try to work towards sustainable development within their operations. There are countless of definitions describing sustainability since 1987, however they are all in some way connected to the UN’s definition. One example is Ehrenfeld (2005, p.24), who define sustainability as “the possibility that all forms of life will flourish forever”, which opens up to a broader view for interpretation of what working to sustain a possible future is.
In recent years, a related concept to sustainability that has received worldwide attention and importance among companies is Corporate Social Responsibility (CSR). CSR has developed from a legal requirement into a competitive advantage to further be one of the basic needs for businesses in order to continue to stay competitive on the business market (Financier Worldwide, 2015). What is seen as one of the first definitions and frameworks of CSR is Carroll's four-level pyramid (Carroll, 1979;1991). The pyramid contains of four responsibilities; Economic, Legal, Ethical and Discretionary, and as Dahlsrud (2008) discuss, the environmental dimension is badly represented in Carroll (1979) definition, as well as many other definitions that came afterwards. Although, environment is still seen as an element of CSR, even though it is not included in many of the earlier definitions (Dahlsrud, 2008). According to the European Commission (2011), companies should implement environmental, social and economic concerns into their core business operations and strategy to be able to create value towards their stakeholders and society. This is confirmed by Jamali and Mirshak (2006, p.224) who describes that the fundamental idea of CSR is that “Business corporations have an obligation to work towards meeting the needs of a wider array of stakeholders”. Since there is no unified concept, many companies and organizations define their own version of CSR. For example, United Nations Industrial Development Organisation (UNIDO) (2020) defines their aspect of CSR as: “a management concept whereby companies integrate social and environmental concerns in their business operations and
interactions with their stakeholders”, which is one of the definitions where the environmental aspect has been included.
When companies use correct practices, CSR can contribute to a more sustainable environment by for example reducing direct and indirect greenhouse gas emissions, providing good working conditions and worker rights as well as reducing waste management. For this reason, UN has also established a blueprint with 17 sustainable development goals to guide the society and the business world how to work towards a better and a more sustainable future (United Nations Development Programme, 2015).
The sustainable development goals are created to be interconnected, meaning that they are all related so that none of the goals are left behind while others a growing rapidly.
The concept of CSR is closely related to sustainability as it is interconnected with another concept, the Triple Bottom Line (TBL). This concept contains three pillars;
environmental, economic and social (UNIDO, 2020). CSR is seen as a method to achieve balance with the three pillars of TBL while working to fulfil the expectations of the company’s stakeholders. Furthermore, CSR contributes to sustainable development, it is only a matter of how the companies work and wants to work with CSR and
sustainability that affects the outcome (Moon, 2007). One example of the interrelation of CSR and sustainability is Sweden, that have experienced success working with CSR, as sustainability is seen as integrated in the culture of the country and is therefore in the frontline (Green Future, 2011).
A sector that stands in front of a lot of challenges when it comes to CSR is retail. What distinguish retailing on the Swedish market is first of all that the country is a role model in terms of CSR as well as sustainability (Green Future, 2011). Secondly, that the Swedish households’ consumption rate is one of the highest in Europe (Invest
Stockholm, 2019). Although, it seems to be a global trend that the individual consumer spending is increasingly higher and that a larger share of the households’ economy is being spent on consumer goods (Bové & Swartz, 2016). At the at the same time, consumers are becoming more and more conscious about what products they actually purchase which indicates an increased demand for sustainable produced and labelled products (Youn et al., 2016). When going beyond what the customer sees in the store, it is not only important to know about the production, but rather everything that has happened from cradle to cradle. Even so, retailing from a customer perspective might at first seem like relatively easy business to manage. Although, when looking behind the scenes, there are more processes going on in the retail supply chain than what can be seen from a customer eye (Supply Chain Game Changer, 2020).
As many retailers sell products with a different country of origin than the country of the retailers’ business, the supply chain operations are becoming a more important area to be able to follow the management of CSR within (Lindgreen et al., 2009). According to Sohel et al. (2014), a generic structure of a retail supply chain includes Suppliers, Distribution Centers, Retailers and Customers, with transportation involved between the different stages for products to move from one stage to another. What is special with supply chains in the retail sector is that retailers are usually not only selling one type of
product, which means that these steps might differ depending on the type of business as different products generate slightly different chains (ibid). In addition, in retailers purchasing practices, there are two different strategies that companies can use; a centralized strategy or a decentralized (Donnellan, 2013). The former means that all stores have a common buying function which is arranged from the company’s head office, while the latter means that each individual store is responsible for its own buying function (ibid). Incorporating CSR into these processes, it therefore not an easily
managed task. What makes retailing even more complex is that customers demand for products are varying frequently, but also how they prefer to buy and collect their products which leads to new challenges for implementing CSR into supply chain processes (Supply Chain Game Changer, 2020). By starting to apply the CSR criteria into company strategies, practitioners realized that there was a connection between CSR and benefits such as competitive advantages among many others (Porter & Kramer, 2006). Although, what is problematic is that many companies first realized how important it is after either their own or other companies is being exposed to negative public relations (PR) because of issues in their respective supply chains. As a
consequence, a company's environmental, social and economic impact are of highly importance, and a major possibility for companies to improve these dimensions of sustainability are in their supply chains (Bové & Swartz, 2016). Due the global and very complex supply chain setups nowadays, a possibility for achieving this is through collaboration with suppliers. Moreover, the challenge that retailers meet today is not only within their direct supplier relationships, it is also through their indirect
relationships as a result of subcontracting (ibid).
When moving the focus to business relationships, research imply that this context also has changed over the years. Wilkinson and Young (1993) argues that the relationships that exists between firms today should not be seen as the traditional view of marriages or affairs, instead they should be viewed as a dance, indicating that there are several variations of relationships and depending on the firms involved, no relationship is or will be the same. This implies as well, that not all relationships need to be strong and long-term to function, and a balance between short-term and long-term relationships are best practice. Based on Wilkinson and Young’s (1993) article, Holmlund and Törnroos (1997, p.305) defines business relationships in their research as “an interdependent process of continuous interaction and exchange between two actors in a business network context”. Regarding more specific relationships, Murfield and Tate (2017) states that the relationship between a buyer and supplier is crucial when implementing CSR and environmental practices in the supply chain, as long-term success need to be managed together. Therefore, collaboration is important since the buyer is relaying on the supplier to implement the practices, as buyers in the end will stand responsible for the actions that the suppliers make (ibid).
One way to build and create CSR into the supply chain is through co-creation between the buyer and the supplier (Kambil et al., 1999). Co-creation is a concept mainly used in the Business-to-Consumer (B2C) market as it describes how customers are co-
et al. (1999) describes how co-creation adds a new value to the retailer-customer relationship by, as previously mentioned, engaging customers in the design and
production of the value chain. When inviting the end-customers into the value chain and its processes, it is important to understand the risk and challenges that can follow. Some of these are; legal, effort, which are required form both parties equally, and goal
divergence, which might differ as companies wants to earn a profit while customers want to pay less for more (Kambil et al., 1999). The authors conclude that the
effectiveness of co-creation will depend on how much each party contribute and how much value are created in the process. By incorporating co-creation into the Business- to-Business (B2B) context, it could provide benefits for the buyer-supplier relationships as well and in the end provide value for the end-consumers in the original process of B2C at an earlier stage. Additionally, Biggemann et al. (2014) explains that
stakeholders are important and as a result needs to be included when managing sustainable strategies. Therefore, instead of managing CSR and stakeholders as two separated topics, these should be integrated and understood in a unified manner
(Hultman & Elg, 2018). It is further suggested that a way to develop a company’s CSR practices is through their buyer-supplier relationships (ibid).
Throughout this section, the concepts of sustainability and CSR have been presented, and how they are important for companies. More specific, it has been discussed how this applies to the retail sector and in the retail supply chain. As companies have many stakeholders that are needed to be taken into consideration, the key stakeholders for buyers are presented to be their suppliers (Murfield & Tate, 2017). Therefore, it is further discussed how the concept of co-creation could be used in order to apply CSR into the retail supply chain.
Problem Discussion
1.2.1 Theoretical Problematization
Over the years, there are tremendous amount of research in defining CSR, applying CSR into businesses and within buyer-supplier relationships. In regard to CSR,
Amaeshi et al. (2008) emphasizes that each individual company are accountable for its own actions and that their responsibility as powerful actors are to influence other companies by serving as role models. It has also been observed that retailers transfer consumer demands for a more sustainable retail practices down to the supply chain by applying environmental efforts to buyer-supplier relationships and sourcing practices (Ytterhus, 1999). Furthermore, Weise et al. (2012) explains how each retailer has a crucial role for implementing a more sustainable supply chain in their businesses while at the same time being the sector with the lowest considerations about sustainability within their supply chain. Their research also indicates that the retail sector is inefficient in working with external resources in their supply chain, such as collaborating with suppliers.
However, it is argued by Lund-Thomasen and Lindgreen (2014) that retailers and other business participants are aware of the limitations of CSR in the global value chains.
Theoretically, this could lead to rewarding multinational companies that voluntarily engage in these practices while other companies in turn might be punished for not following the same approach, while in practice their actions have led to only slight improvements. Another implication is the established power relations, where it might complicate for suppliers to improve labor standards as an example, since they might risk companies finding a new cheaper supplier for doing their job. Therefore, Lund-
Thomasen and Lindgreen (2014) suggest to revising sourcing practices, both the
working procedures and what is rewarded or punished when making decisions covering all aspects of CSR. The authors continue to argue that there is lack of research regarding what is more important when it comes to buyer-supplier relationships, whether it is the price or the sustainable performance (ibid).
Accordingly, Teller et al. (2016) argues that supply chain management is not successful without a good buyer-supplier relationship as the quality between the retailers and their supplier determine the outcome. Also, without high-involvement relationships with key suppliers, it will be difficult to establish quality in the supply chain (ibid). This provides a boomerang effect towards the retailers, since if the supply chain is not sustainable and is not providing value for its end-consumers, the crucial role that Wiese et al. (2012) acknowledged that retailers have, will not be accomplished. More recently, Hultman and Elg (2018) also concluded that stakeholder relationships, especially between retailers and suppliers in the supply chain, seems to have a very important role when it concerns transforming to more sustainable supply chain operations. The authors explain the connection between the retail stakeholders and CSR by “Retail firms are not
independent islands, and this is also true in the development of CSR” (Hultman & Elg, 2018, p.354).
In addition, research by Hollos et al. (2012) has shown that working together with suppliers within strategic purchasing could help improving operations both when it comes to environmental and social operations, although they did not find support for the economic performance. The main reasons for this are not only that buyers can get access to resources needed for sustainable practices, but also to be able to work together within these practices since it can lead to gaining a competitive advantage. Furthermore, Hollos et al. (2012) imply that more research is needed in the field of buyers working together with suppliers concerning sustainability practices. As mentioned previously, this could also include CSR practices as they are interrelated with sustainability (World Business of Council for Sustainable Development, 2002). Also, if a collaborative rather than a more transactional relationship is more likely than the other to improve the Triple Bottom Line performance (Hollos et al., 2012). Another reason for integrating CSR in the companies’ operations according to Leppelt et al. (2013), is that it insists for a consistent image of the business, especially in activities between buyers and suppliers.
One way to implement CSR into the retail supply chain could be through co-creation in buyer-supplier relationships. Co-creation in branding and B2C is an emerging field, where customers are becoming more involved in the brand together with the companies to provide value for both (Sarkar & Banerjee, 2019). However, this has also been applied to B2B, although to a lesser extent. According to Dentoni et al. (2016) co- creation among stakeholders covers four abilities. Firstly, it covers the ability of sensing stakeholders which means to identify them and to see what their resources and needs are in order to find possibilities for collaboration. Secondly, it covers the ability to interact with stakeholders, which starts with the initiating of interaction to strengthening existing connections with stakeholders to reach both short- and long-term goals.
Thirdly, learning from stakeholders, is the ability to attain knowledge with help from stakeholders that could be useful to implement into the organization and its processes.
Fourth and finally, it contains the ability of changing based of stakeholders, meaning that by accessing this knowledge through co-creation, it can lead to opportunities such as new capabilities, structures and innovations (ibid).
As for now, there is a lack of research concerning co-creation in the B2B market that is intertwined with either CSR or retail supply chain as well as there is little research in how buyer-supplier relationships can be or are affected by the implementation of CSR through co-creation.
1.2.2 Managerial Problematization
Within the recent years, the possibility to share information over internet and social media has rapidly increased consumer awareness about the retailers’ business practices throughout their operations and their supply chains. This has generated in a higher demand for more sustainable products and services as well as more sustainable practices both internally and externally throughout the companies supply chain, and an increased consumer interest in traceability (Economic Journal, 2019). There is a tremendous amount of actions that retailers can take to contribute to a sustainable future when it comes to what products to produce and sell, both regarding what resources to use, their impact on the environment and how that product can be taken care of in the end of its lifecycle (Center for Retail Compliance, 2018). To give an idea of how much of
Sweden’s gross domestic products that belongs to the retail sector, it has been measured at its highest value in 15 years 2016 at 8,6% (Handelsrådet, 2018).
Between 2008-2018, the furniture and interior industry together with household goods were responsible for an increase of 41% in consumption rate (Roos, 2019). In 2015, the Swedish population bought furniture and interior for over 47 million SEK, and the reason for this raise can be seen because the view of the home was becoming more commercialized and therefore changing values, mainly due to media and advertising (Roos, 2016). In addition, due to the development of the furniture industry, furniture is no longer necessarily bought to last which means that more efforts are needed from both consumers and producers to take responsibility when it comes to sustainable products (Lauren, 2019). Whether voluntarily or not, the result of companies engaging in CSR is
frequently seen today among the retailer’s shelves where plastic products among others are replaced by more environmentally friendly materials. Except from the customers impact of choosing good products in the stores, by tracing the product backwards in the supply chains these products are a result of what is happening before they reach the stores in the supply chain (Handelsrådet, 2015). As the supply chain is far from
managed by one single company, there is a need for cooperating with other stakeholders in the supply chain to manage these topics (Center for Retail Compliance, 2018).
The World Business Council for Sustainable Development (2002) connects CSR to sustainability as businesses dedication to CSR is to evolve and contribute to the sustainable development through the three pillars of TBL and sustainability, all from a business perspective. Therefore, CSR are to describe how companies are working with sustainability instead of implying what is needed to be done (ibid). Although, the many definition of CSR makes this process difficult. The implementation of CSR in the retail supply chain is complex as well, especially since more and more companies seek to lower their production cost by moving the production to a developing country or seeking to continue outsourcing to companies in these countries where the cost of production is tremendously lower (Lindgreen et al., 2009). The negative impact of these actions is that companies have lower control of the production as they have less
overview of what is actually occurring. Therefore, companies might neglect the importance of the environmental and social factors and position profitability alone as the main criteria. Although, the responsibility of understanding what practices that are occurring in the supply chain is highly important, as up to 80% of the companies cost of sold goods is outsourced (Murfield & Tate, 2017). This shows the importance of the relationships between buyers and suppliers for implementing CSR in the supply chain.
The retailers’ supplier network today is commonly both very large and global, which generates a need for collaboration among business partners (Sohel et al. 2014).
According to RILA’s Retail Sustainability Management Leadership Model, a key part of improving corporate sustainability performance is to manage suppliers and together with them develop sustainable sourcing practices (Retail Industry Leaders Association, 2017).
To manage its global and complex supply chains, companies are developing code of conducts for their partners in the supply chain to follow. One example of this is IKEA who has their IKEA Way of Purchasing products, materials and services (IWAY) which should be followed by both their suppliers and its sub-suppliers (IKEA, 2008). Many retailers are also connected to larger networks of common compliance initiatives such as The Business Social Compliance Initiative (BSCI) in order for companies to secure responsible sourced products from its suppliers (Amfori, 2019). Although, it is not explained how they can together with the suppliers can co-create in designing a sustainable supply chain from the end-to-end. Implementing co-creation and
sustainability concepts early on can provide advantages for the companies in both their products and their services. Arnold (2017) state that there is a lack of integrating sustainability co-creation and relationship management concepts in businesses. Even
between companies in the retail field, some co-created actions within food-retailing have been observed, which means the possibility of implementation in other sectors seems to be achievable (Svensk Dagligvaruhandel, n.d.). It is also confirmed by Janteng et al. (2017) that value co-creation has positive implications for companies, in a way that new and innovative ideas can be developed, which can improve its performance in different operations and increase the company’s competitive position. Moreover, the majority of the discussion about co-creation in retail concerns the B2C market as mentioned earlier, and from the increase popularity of the concept it can be concluded that co-creation could be valuable if implemented earlier in companies’ processes. This is aligned with Bettiga et al. (2019) that believes co-creation among buyers and
suppliers in the retail supply chain can have both efficient and effective results, as well as transferring of knowledge and the establishment of long-term relationships. As Bettiga et al. (2019) conducted research on both end-customers and business customers, it shows that the value of co-creation between the company and their customers are not limited to either the B2C or B2B field.
As mentioned previous, Sweden’s retail reached its highest value in 2016, with furniture and interior design among the top categories (Handelsrådet, 2018; Roos, 2016).
Therefore, retailers need to understand the demand that comes from the consumers, especially the younger generations. These are needed to be taking into considerations in businesses as consumers are becoming increasingly aware of the environmental,
economic and social issues that exists (Sustainability Knowledge Group, 2020). This is important as the younger consumers seek to purchase products that have sustainability as a key focus during the whole product life cycle and to be able to trace back to its origin (Erez, 2019). One example is Generation Z, as they are more willing to act and take responsibility in comparison to the previous generations and this can be presented through their power in the digital media, which could have an impact on the companies that is not following their demand through boycotting (Sustainability Knowledge Group, 2020). In addition, from January 2017 it is mandatory for large companies to declare its responsible actions when it comes to sustainability, which indicates that companies need to have full control of its operations (Global reporting, n.d). All things considered, it is highly relevant for businesses to use its current or future supply chain partners for co-creating more sustainable processes in order to provide customers with products that follow the many requirements to stay competitive in the future.
1.2.3 The Research Gap
Based on previous problem discussion, the identified knowledge gap is that there is a lack of research for how buyers and suppliers co-create CSR in the retail supply chain.
This thesis will therefore investigate the concepts of CSR and co-creation, and how they are used together in the furniture and interior retail supply chain. This thesis will also investigate which are facilitators and which are the barriers for buyers and suppliers for co-creating CSR in the retail supply chain.
Research Questions
From the previous presented research and the identification of the research gap, this have been summarized into the following research questions:
• How do buyers and suppliers co-create CSR in the retail supply chain?
o Which are the facilitators for co-creating CSR in the retail supply chain?
o Which are the barriers for co-creating CSR in the retail supply chain?
Purpose
The purpose of this study is to examine and understand how retailers (buyers) together with their suppliers in the furniture and interior retail industry co-create a more
sustainable supply chain through the CSR framework. Through this study, the aim is to identify which kind of facilitators and barriers that appears in the co-creation of CSR between buyers and suppliers.
Delimitations
This thesis is limited to companies originating from Sweden within the furniture and interior retail industry. Even if some of these have expanded internationally or have a wider assortment outside of furniture and interior, this was not taken into consideration for the purpose of this thesis. This thesis is conducted towards the B2B market and is written from the perspective of a buyer (retailer) and how they together with their suppliers co-create CSR. Therefore, it does not include or take into consideration the perspective of a supplier. Throughout this study when referring to buyers, it implies to the retail companies that are the buyers of the suppliers.
Further, an end-customer perspective is not implemented or taken into consideration.
Within this research, the concept of CSR is only provided in a wider perspective and each of the dimensions will not be discussed in-depth further than the explanation in the literature review to create a perception of the concept as well as presenting the
companies perspective of the concept. The participating companies in this thesis are not chosen depending on how they conduct their business. Therefore, the distinction if the companies have online stores, physical stores or both is not important for the purpose of this research.
2 Literature Review
In this chapter, the authors present the literature review on which this thesis is based on. The chapter begins with explaining the main concept of Corporate Social
Responsibility followed by the other concepts involved in the thesis, as well as how CSR is present within those concepts. The chapter is concluded with a summary of the literature review and how it relates to the identified knowledge gap. The chapter is finalized with a conceptual framework, this to provide the reader with visualization of how the theories in the thesis are interrelated to each other.
Corporate Social Responsibility
Carroll (1979, p.500) defines Corporate Social Responsibility as: “The social responsibility of business encompasses the economic, legal and ethical and
discretionary expectations that society has of organizations at a given point in time”.
This definition is carried out through Carroll’s four-part framework, which are describing the different layers of CSR and what companies should participate in to correctly implement CSR into their business. Previously, businesses were only focusing on the economic and legal as they needed to be, and it is still relevant today, which is why they are the main levels of the CSR pyramid. However, Carroll (1991) states that not only economic and legal responsibility are important and make up CSR, companies today need to do more than to be profitable and follow regulations, which is why the next two levels of the pyramid were created. The pyramid’s purpose is to define the aspects of CSR and describe the categories that defines it and each of the categories are designed to address different stakeholders (Carroll, 1991;2016). These categories that builds up this definition of CSR was portrayed so they would cover the whole range of business responsibilities and be interpreted by a business professional.
Figure 1: Carroll’s (1991) Corporate Social Responsibility Pyramid (Authors design).
The Economic Responsibility is according to Carroll (2016) a fundamental requirement for any business to be able to operate and to practice sustainability in the companies’
operations. Without the economic responsibility it will be hard for any business to implement and be successful with the other responsibilities (Carroll, 1991;2016).
Before, economic was the primary focus of any business, to be profitable by providing products and service to consumers. Nowadays it is more about being profitable by providing consumer value together with the product and service. Legal Responsibility is a requirement from the external environment as businesses needs to follow laws and regulations set by governments and as well as being codified ethics in the eyes of society, which is to fulfil the social contract and be a fair business (Carroll, 2016). The legal responsibility co-exists with the economic responsibility as a fundamental
requirement and is therefore the first two layers of Carroll’s pyramid.
The Ethical Responsibility are seen as a requirement by the society and are essential for the companies to include in their operations. The ethical responsibility contains norms, standards, activities among others (Carroll, 1991;2016). Moreover, ethical
responsibilities are heavily debated in the public, both in the past and in the present and companies should follow to be able to avoid causing harm in the society which can lead to harm in their business. Ethical works closely to both economic and legal
responsibilities even if it stands on its own as well. Discretionary Responsibility, which is also referred to as Philanthropic, is according to Carroll (1991) the component that describes how the company could and should act as a good citizen towards the society.
Carroll (1991) states that the difference between ethical and philanthropic
responsibilities is that philanthropic is not expected in a moral/ethical sense and are more voluntarily activities that companies can take part in to give back. Donations and employee volunteerism are activities that companies can practice giving back to the community in which they operate (Carroll, 2016).
Even though, Carroll’s pyramid has been highly praised and presented in many textbooks about CSR, Baden (2016) argues that the pyramid is out of date and need to be reconstructed to be able reflect the changes and the increased power. Specifically, the problems occurring with Carroll’s pyramid is that the order of the responsibilities are incorrect and therefore has infected the definitions and the practice of CSR as the companies follows them in the written order. Baden (2016) discuss how it is irrelevant that the economic responsibility comes before both the legal and the ethical since the aspect of a socially responsible company is not portrayed from the economic view. With this argument, the author describes how it can reflect in a wrongful business focus and the interpretation of CSR in business. The reconstructed pyramid should focus on the ethical responsibilities first, followed by legal, economic and lastly philanthropic since companies should always consider and work with ethical and legal practices first, whether it is an economic benefit or not.
Furthermore, Dahlsrud (2008) analyses and develop five dimensions through which he believes CSR should be defined. The five dimensions are; Environmental, Social, Economic, Stakeholder and Voluntariness, all whom is similar to the four levels in Carroll’s (1991) pyramid of CSR. Dahlsrud (2008) stated that all of the 37 definitions that were analyzed for the purpose of the research correspond to each other even though they are all stating an individual definition of CSR. A difficult and problematic
how to manage CSR or how to work with the associated challenges. The primary challenge for companies is how to implement CSR into their business operations correctly and making CSR a part of their strategy. One of the definitions stated in Dahlsrud (2008) is a definition provided by Hopkins (2003, p.1) which follows: “CSR is concerned with treating the stakeholders of the firm ethically or in a responsible manner”. Hopkins (2003, p.1) continues by explaining more in-depth about his version of CSR: “Ethically or responsible’ means treating stakeholders in a manner deemed acceptable in civilized societies. Social includes economic responsibility. Stakeholders exist both within a firm and outside. The wider aim of social responsibility is to create higher and higher standards of living, while preserving the profitability of the
corporation, for peoples both within and outside the corporation”.
According to Hopkins (2003) many researchers believe that social needs to be excluded from CSR and only be known as Corporate Responsibility (CR) as they argue that CSR can be confusing for companies in how they should interpret the concept. Although, many also interpret CR as being responsible within the firm and forget to look to external resources that the companies use as well as only focusing on the economic perspective. Therefore, Hopkins (2003) argues that social is important as it provides a different view of not only providing profit but also makes the companies look at how their social responsibility is towards their many and different stakeholders. It provides an overview of what they should do to make it better, instead of only focusing on those relevant to the economic perspective, for example their shareholders. Furthermore, Moratis (2016) argues for that even the global ISO 26000 standard definition of CSR, lacks all of the common dimensions of CSR since it lacks both the economic and the philanthropic perspective. The definition is also further argued to miss the perspective of what companies gain for engaging in CSR, and more importantly how to integrate CSR into management (ibid).
When incorporating sustainability concepts within business practices Abbasi and Nilsson (2012) argues that these are commonly mentioned as a separate idea that is added to another, as for example Sustainable Retail Management. However, the authors states that in order for sustainability practices to be equally important to other business parameters, it should be naturally incorporated into the business practices from the beginning and not be worked with as an own concept.
CSR in Retail Supply Chain Management
Leppelt et al. (2013, p.146) state that “CSR awareness is considered simply an order qualifier and not an order winner”, meaning that it is a required characteristic for the product or service to possess if the end-consumer should even consider purchasing it. In addition, the authors extend that CSR is not only a characteristic that is required for the end-consumer, it should also be considered as a service in the B2B context. Applying CSR in Retail Supply Chain Management contains both of how the firm itself work internally with CSR practices and how the firm contributes externally towards their
supply chain, meaning how the supplier and subcontractors work and integrate the CSR requirements of the retail firm (Lindgreen et al., 2009).
After conducting research on many different definitions of supply chain management, Stock and Boyer (2009, p.706) defined the concept as following: “The management of a network of relationships within a firm and between interdependent organizations and business units consisting of material suppliers, purchasing, production facilities, logistics, marketing, and related systems that facilitate the forward and reverse flow of materials, services, finances and information from the original producer to final customer with the benefits of adding value, maximizing profitability through
efficiencies, and achieving customer satisfaction”.When applying retail to the concept, Ayers and Odegaard (2018) describe the retail supply chain as more than just a store, as it is a continuum that starts at one end with sourcing of the raw materials and ends on the other side of the continuum with the end-consumers. Different retail supply chains also involve one or more intermediaries such as distributors. The authors continue by referring the retail supply chain to the iceberg concept, where the end-consumers only see the final part of the whole process of the retail supply chain, while it there is a longer process underneath (ibid).
According to Ge et al. (2019) the retail supply chain has changed over the years. The traditional retail supply chain consisted of the following steps: Wholesalers,
Distribution Center, Stores and Customers where manufacturers and suppliers have been excluded since they are seen as outside retailer’s relevant range. However, the more up-to-date version of the retail supply chain contains more dimensions of
distribution centers as the amount of options for providing customers with products has increased through the rise of new distribution channels, such as directly from suppliers to customers. For the previous mentioned reasons, that is also due to development of technology, new areas of joint strategies between retailers and its suppliers emerged (ibid). To summarize the different presented perspectives of a retail supply chain, the following steps have been identified; raw material, supplier, sourcing, transport, warehouse, retailer and customer (Sohel et al., 2014; Stock & Boyer, 2009; Ayers &
Odegaard, 2018; Ge et al., 2019).
Figure 2: The Retail Supply Chain Process (Authors interpretation & design based on Sohel et al., 2014;
Stock & Boyer, 2009, pp.706; Ayers & Odegaard, 2018; Ge et al., 2019).
Furthermore, Lindgreen et al. (2009) argue that supply chain management has moved from an operational to a strategic perspective since the increase in outsourcing, which indicates that the companies focus more on the long-term establishment of relationships rather than just the products attributes and quality. Therefore, it is important that the retail supply chain and sourcing practices are analyzed from a CSR-quality perspective and not only from an environmental perspective (Schramm-Klein et al., 2015).
activities, there will be a large positive impact on the market performance associated with financial performance and the end-consumer satisfaction. As found by Elkady et al.
(2014) collaboration in the retail supply chain can reduce both the risk and cost among other factors and is also useful to reach the demand of the end-consumer, whether it be in the B2C or in B2B. According to Utgård (2018) the retail chains who expresses their CSR practices and performances the most are those who are selling private and foreign brands, which can indicate that when outsourcing, companies tend to try to even out the fact that their production process is not closer to country of origin with the good CSR practices.
From previous research by Fransen et al. (2019) it has been observed that some multinational firms are moving from their previous CSR standards and instead incorporate these into their supply chain practices. In order to manage this, they are focusing on building development programs for their suppliers so that they can be able to change their processes to become more sustainable advanced. This helps the supply chain in a direction to use more of a proactive approach instead of a reactive when CSR standards are not followed. Another reason for using a proactive approach is to
minimize the risks and to increase their credibility to be able to state what CSR
practices the companies are actually performing and how it contributes to a sustainable earth (ibid). Accordingly, Lindgreen et al. (2009) describe how supplier willingness to adopt to the companies’ code of conduct and CSR practices need to be more analyzed and how far back in the supply chain the CSR requirements are going to be stretched with suppliers and subcontractors. Also, if the supplier will deliver on the code of conduct and CSR practices to the subcontractor, in order to guarantee the company a sustainable retail supply chain (ibid). When incorporating the concepts of sustainability and supply chain management, Pagell and Wu (2009, p.38) defines the concept of sustainable supply chain as followed: “To be truly sustainable a supply chain would at worst do no net harm to natural or social systems while still producing a profit over an extended period of time; a truly sustainable supply chain could, customers willing, continue to do business forever”. As sustainability can be adapted into the supply chain through CSR frameworks, the phrasing of sustainability might appear more often (Moon, 2007). What is presented as problematic with applying sustainability into business practices is that there is no unified concept that can be applied though all organizations according to Giunipero et al. (2012). However, the authors definition of sustainability is based on the environmental, social and economic perspective, which is common throughout the majority of research.
One activity that is important in order to implement sustainability in retail practices is sourcing (Schneider & Wallenburg, 2012). To engage in sustainable sourcing, one of the first things that needs to be done is to identify important stakeholders, since sourcing functions do not operate in isolation but rather with many other both business functions and stakeholders. Therefore, there is a need of learning about other stakeholders’
interests and importance when it comes to implementing more sustainable approach within sourcing (ibid). In addition, Ambekar (2019) emphasize that one reason for companies to engage in sustainable sourcing is to obtain a competitive advantage.
Although, the incentives can vary among different industries and depending on where they operate. One of the key findings for the companies’ possibilities of developing a sustainable retail supply chain have been found to be their relationships with suppliers, more particularly their level of engagement and what their expectations are when working with sustainability (Hultman & Elg, 2018). Therefore, it is preferable for companies to use some measurement be able to evaluate the existing sustainability efforts in order to find room for improvements that could be managed through collaboration with supply chain stakeholders (Schneider & Wallenburg, 2012).
CSR in Buyer-Supplier Relationships
As previously mentioned, the relationships between buyers and suppliers are a key aspect when implementing CSR (Hultman & Elg, 2018). One way to facilitate the implementation of CSR into the retail supply chain is through collaboration. Fyall and Garrod (2005) present four different definitions and levels of collaboration based on Himmelman (1996). The first level, networking, is when the parties benefit from sharing information. This is followed by the second level, co-ordination, when not only information is shared but also with help from others, activities are developed to the better such as implementing better working procedures. The third dimension,
cooperation, adds the aspect of also sharing resources in order to reach mutual benefit among the parties. The fourth and final dimension are collaboration, which involves all of the previous mentioned levels as well as strengthen the other parties’ capacity to reaching a mutual purpose.
Table 1: Spectrum of Definitions of Collaboration (Fyall & Garrod, 2005; Himmelman, 1996).
The last three levels of collaboration by Fyall and Garrod (2006) can be connected to Håkanssons and Snehota’s (1995) three elements of business relationships; activity links, resource ties and actor bonds. Firstly, a company's operations consist of many different activities that can be performed either totally by the company itself, of it could be linked with another company's activities that could be related to the co-coordination level. The number, type and quality of activity links between two companies are an important part in evaluating its business relationships, when it comes to CSR this could for example be joint actions that two companies are engaging within together. Secondly, another important part that businesses consist of is resources. As well as activities, resources can be shared among businesses, partly in order to use resources more effectively or even more important to get access to more particular resources. An
example of this is key resources that are needed to manage CSR in the supply chain. By sharing resources, companies are tied together and build resource ties. These resources ties could therefore be connected to the cooperation level. Finally, the actor bonds are what is keeping the business actors tied together, depending on their mutual interest with one another, which could be referred to as collaboration. However, according to Håkanssons and Snehota (1995), these three elements do not necessarily work in isolation, instead they are developed together.
However, when it comes to business networks, there are three paradoxes presented by Håkansson and Ford (2002) that businesses should be aware of when building business relationships. The first network paradox imply that companies are not working in
isolation, and that companies is understood first in the context of its relationships. These have been developed through the exchange of experience and resources from the times working together and through each individual company’s investment in the relationship.
The implications from engaging in business relationships is that companies can benefit from lots of opportunities, although it might also restrict them due to its developed position in the network. The second network paradox concern that a company’s
relationships are a result of the history that has happened within the parties, which then will determine the outcome. Within these relationships, this means that a company can affect another company in many ways. Although, it means that the company itself can also by affected in numerous ways by other companies. What Håkansson and Ford (2002) also imply here is that the party that has the least power are the one that is most committed to the relationship. The foundation of the third and final network paradox is that as key interest in business relationships is that one party wants to be in control.
However, a network is based on all participants contribution, and by one controlling the network, the less beneficial will it be. Instead of trying the managing the network, companies should instead aim to “manage in that network” (Håkansson & Ford, 2002, p.138). This is supported by Rocca and Snehota (2013), who emphasize that there a connection between new business relationships and the formation of networks to achieve innovation and development within businesses, which agrees with Håkanson and Ford’s (2002) development of the third network paradox.
A challenge in today’s buyer-supplier relationships are the increased demand of transparency through the companies’ processes, especially when it comes to how to manage CSR (Hultman & Elg, 2018). Through a study in China about how sustainable supplier management are affected by buyer-supplier relationships, Yang and Zhang (2017) discovered that sustainable supplier development and collaboration have a considerable positive impact on buyer-supplier relationships. From the buyer’s perspective they gain competitive advantage by implementing sustainable supplier management practices, which provide evidence that the buyer-supplier relationship can be affected positively. However, the question still remains if there will be the same affect or if there will be different outcomes since view of sustainability and these practices might change depending on the country perspective. Recent research conducted by Chen and Chen (2019) on the buyer-supplier relationship and how sustainability can impact positive or negative has been conducted where the
performance of the supplier is in focus. Their research shows that pressure from buyers by using a strategy of punishment and reward can be an effective strategy for
sustainable supplier management. Although, further research is needed on how both parties are affected by incorporating CSR into their supply chain as with more focus on the buyer’s perspective.
Furthermore, Hultman and Elg (2018) argues that for the buying firm to gain
competitive advantage, suppliers have a crucial part. Even though this is clearly stated, research need to be established to see how suppliers and other primary and secondary stakeholders are influencing the implementation and process of CSR in retail buyer- supplier relationships. Additionally, Schramm-Klein et al. (2015) states that the
relationship between the supplier and the retailer’s activities need to be further analyzed as there might be mutual thoughts that can provide benefits for the retailer.
Implementing CSR practices and execute them correctly can lead the company to be portrayed as a CSR leader which could provide the company with high recognition from their respective buyers and suppliers (Leppelt et al., 2013).
Co-creation of CSR
In the early 90’s Czeptiel (1990) presented an idea that companies involving consumers in the businesses processes could lead to more value. During the 21th century, a concept evolved of how companies together with their customers can create value, called Co- creation (Prahalad & Ramaswamy, 2004). Before, companies were all about delivering the best products and services to customers, while adopting the co-creation concept imply that the best products and services should be co-created together with customers.
From this concept, Prahalad and Ramaswamy (2004) developed a framework containing of four elements for companies’ interaction with consumers; Dialog, Access, Risk- benefits and Transparency (Figure 3). Dialog is the conversation between the customer and the company, which is vital for co-creation. In order to engage in useful dialogues, companies and customers need to be perceived as equal parties and the problem they are having a dialogue about, should be of interest for both. In order for engage in a
meaningful conversation, the parties also need to have access to equal information in order for the co-creation to be valuable. This is also the case for transparency between companies and customers, to be able to gain the benefits of co-creation. Using co- creation, might lead to both risks and benefits for the company but also for the consumer. Although, this needs to be understood by the parties individually. As for now, this framework applies mainly to the B2C context.
Figure 3: Interactions for Co-creation of Value (Prahalad & Ramaswamy, 2004).
In all companies, stakeholders are vital parts of the organization and sustainable strategies needs to be conducted to be inclusive to all (Biggemann et al., 2014). Rocca and Snehota (2013) further implies that collaborative relationships is a key aspect of businesses which although very often is overlooked. According to Biggemann et al.
(2014) sustainable strategies needs to be adapted to the knowledge that all stakeholders are different and therefore will influence differently as well as their expectations of the companies will be different from one another. As relationships will be affected
differently, the outcome of co-creation between companies can be for the better or for the worse (ibid). However, Ramaswamy and Ozcan (2014, p.282) developed co-creation further to the B2B market, and state that it is based on an “win more-win more”
outcome among the co-creating stakeholder parties, as value is created together. The authors further describe co-creation as it “goes beyond bringing pieces together as many cooperative (i.e., “co”-operating) or even collaborative (i.e., “co”-laboring) efforts tend to be” (Ramaswamy & Ozcan, 2014, p.16). This suggest that co-creation is a concept unifying other ‘co’ concepts such as in Fyall and Garrod (2005) to a meaning that extends further from their individual interpretation. In order to understand how companies’, co-create with one another within the context of CSR and retail supply chain management, a framework incorporating co-creation needs to be provided.
Further on, Hultman and Elg (2018) state that within a buyer-supplier relationship there is not one passive and one active party when developing CSR within the supply chain, instead an interaction will be in place. This indicates a support for Prahalad and
Ramaswamy (2004) and Ramaswamy and Ozcan’s (2014) idea that value is best created by the use of co-creation within relationships. When there is a limited type of
collaboration between the buyer and supplier there will be difficult to change and provide a more sustainable supply chain as well as measuring how sustainable the supply chain is (Touboulic & Walker, 2015). To be able to collaborate more efficient, it is important for the managers to understand which degree is the applicable for which specific relationship, for example, a collaborative relationship is destined to be more of a partnership. Although, co-creation is not only limited to parties that are not in
competition with the company. What is found by Bengtsson and Kock (2000) is that relationships simultaneously could consist of companies working together while they at
the same time are competitors. The reason for this is to getting access to each other’s resources, as it could lead to competitive advantages for both parties. This opens up for the possibility for new partnerships that have not been considered before, when it comes to the co-creation of CSR in the retail supply chain.
Moreover, Ngugi et al. (2010) discovered in their study of how relational capabilities affects SMEs with larger customers in the B2B context. From Håkansson and Ford (2002) “How should companies interact in business networks”, Ngugi et al. (2010, p.
262) summarized and defined the concept of relationship capabilities as it; “explain what firms in relationships can do for each other, the function they will conduct, the width and importance of these functions”. In line with Ngugi et al. (2010), Ramaswamy and Ozcan (2014) present co-creation as an ecosystem of capabilities, where business communities are seen as one source, by providing an example of how to work with stakeholders across the supply chain to develop sustainable capabilities and value for all parties involved. To have a continuous partnership and collaboration that benefits both parties in a B2B market, it is important with innovation in the relationship, which can be determined as co-creation of value (Ngugi et al., 2010). Relational capabilities and innovations impact on co-creation needs to be more developed and targeted from different perspectives, such as the perspective of the buyers/customers in the B2B sector. In order to achieve value from co-creation there is a need for strategic adjustments of the capabilities and practices of all members of the B2B network by identifying what capabilities could be useful and how these can be shared and combined across the network (Marcos-Cuevas et al., 2016). This makes co-creation rarely being developed by one organization in isolation but is rather the result of the party’s engagement over time.
Arnold (2017) suggest five aspects for companies to work with and implement in their business processes to foster sustainability. Firstly, relationship management and co- creation needs to be integrated in praxis to be able to establish and sustain partnerships and strengthen the firm’s sustainability process. Secondly, co-creation should be highlighted in the whole value chain of the company and there for integrated with the various stakeholders, this will minimize negative social and environmental impacts. For this to be successful their needs to be a clear outline as different stakeholders are faced with different challenges. Thirdly, sustainability measures need to be supported by the management. Fourthly, sustainability challenges and impact assessment need to be directly faced when it comes to relationship management and co-creation processes as it needs help to develop. Lastly, the tools used can have an influence on the process and the outcomes concerning the sustainability impact. All of these aspects are manageable;
however, challenges are to arise when this theory is put into practice, therefore companies need to be aware and be ready to handle these (ibid).
2.4.1 Facilitators for Co-creation
In regard to buyers and suppliers working together, there are several factors that can facilitate the co-creation process. One characteristic that is commonly mentioned which
can be seen as a facilitator for CSR practices is power. Regarding power structures within buyer-supplier relationships, it is shown by Hultman and Elg (2018) that it does not have to be one party that has more power while the other is more dependent when it comes to business relationships. According to Dentoni et al. (2016) there are some other factors influencing on companies’ possibilities for co-creation. First of all, there could be individual factors, for example how the company is led. Secondly, there could be organizational factors such as the internal culture of the company. Finally, there could be inter-organizational factors such as the power among the parties and company’s geographical location as two examples.
When adding the concept of sustainability to the context, research by Touboulic et al.
(2014) have shown that there is a connection between powerful businesses and
sustainability efforts in the supply chain. From a buyer’s perspective, power can lead to forcing suppliers to more sustainable actions, which then also can evolve further to their network of suppliers. However, if there are suppliers that are not emphasizing
sustainability and benefitting from power structures, the result of sustainable supply chain management is negatively affected. In addition, power structures within
relationships is shown to be able to change over time when focusing on sustainability, which means that even though a buyer is the one with power in the beginning, this might change when the buyer is getting dependent on the suppliers’ resources since these are needed in order to make the supply chain sustainable. It is further suggested by Touboulic et al. (2014) to not forget about the power structures in buyer-supplier
relationships and how these are developed in order to be able to manage them well to further use them as a facilitator for sustainable supply chain practices for all three perspectives; environmental, social and economic.
Furthermore, Ekinci and Baykasoglu (2016) analyzed the impact on performance when it comes to structures in the retail supply chain according to a centralized versus a decentralized approach, which are somewhat aligned with Dentoni et al. (2016) findings. A centralized approach means that resources such as historical sales and forecasts are shared within relevant stakeholders in the supply chain, while a
decentralized approach means more or less that retailers and suppliers are working more in isolation (Ekinci & Baykasoglu, 2016). As a centralized approach emphasize the parties working more closely together, it can contribute to many benefits for suppliers as they for example could get access to data, which suggests that it might be more beneficial at least for suppliers to work more closely together with retailers.
What might be the reason for supply chain partners to not engaging in making
operations more sustainable is lack of knowledge. In order to manage this issue, what is found by Berning and Venter (2015) to be used as a facilitator for creating engagement for implementing sustainability in the supply chain is education, both regarding what sustainability is and how it could be applied into business operations to find new and better ways of working. As partners in the supply chain could be one source of knowledge, co-creation itself might be a source to education (Dentoni et al., 2016).
