Sustainable Supply Chain Management. Case studies in the consumer electronics industry

Table of Contents

1 Introduction

2 Theoretical Foundation
2.1 Sustainability and Supply Chain Management
2.2 Environmental Aspect
2.3 Social Aspect
2.4 Economic Aspect
2.5 Consumer Electronics Industry
2.6 Research Question

3 Methodology

4 Case Selection
4.1 Single Case Review
4.1.1 Dell
4.1.2 Philips
4.1.3 Samsung
4.1.4 Sony
4.2 Cross-Case Comparison

5 Pattern Finding
5.1 Entering the Field
5.2 Crafting Instruments
5.3 Data Analysis and Theory Building
5.3.1 Sustainability Achievement Process
5.4 Refining the Model
5.4.1 Acknowledgement
5.4.2 Vision and Strategy
5.4.3 Communication
5.4.4 Assessment
5.4.5 Goal Setting
5.4.6 Goal Achievement
5.4.7 Expanding the Reach
5.4.8 Maintaining the Success
5.5 Comparison with other Literature
5.6 Discussion

6 Conclusions and Outlook

References

List of Abbreviations

Table of Figures & Tables

Abstract

The purpose of this thesis is to examine the application of Sustainable Supply Chain Management (SSCM) in the growing industry of consumer electronics. The research intends to look for patterns in respect to the implementation of SSCM programs within selected consumer electronics focused businesses using a case study analysis. The aim of this paper is to investigate which concepts of implementation and design of SSCM are available in the consumer electronics industry and to analyze how they can be classified. The primary sources for the main analysis of this paper are the sustainability reports from the four companies: Dell, Philips, Samsung and Sony. These companies were selected based on their location, size and ranking within the industry and the method of selection is explained herein. Following a first look at the data, a process-oriented approach was chosen for the study, and a careful analysis leads to the formation of a model describing the process of achieving supply chain sustainability in the consumer electronics industry: The ‘Sustainability Achievement Process’ comprises eight phases: (1) Acknowledgement, (2) Vision and Strategy, (3) Communication, (4) Assessment, (5) Goal Setting, (6) Goal Achievement, (7) Expanding the Reach and (8) Maintaining the Success. The model is refined and substantiated in the subsequent cross-case analysis by illustrating the distinctive features of each phase within each company. Furthermore, the author identifies indicators and keywords for every phase which permit the unambiguous association of statements to levels of sustainability achievement for easy classification. Critical cases are recognized, examined and solved during the research in order to provide a framework for a real world application. Overall, the derived model provides the foundation for the evaluation of a corporation’s progress concerning different aspects of sustainability. The thesis concludes by proposing a series of approaches for future research to increase the verification of the model and advance it, potentially extending the applicability of the model to SSCM in general.

Keywords: Supply chain management, sustainability, case study research, consumer electronics industry, holistic approach, theory building

1 Introduction

Along with the enormous economic growth worldwide during the recent decades international trade and transport intensity have significantly increased (Christopher 2011: 245). In addition, new markets have constantly been opened while resources were exploited in remote areas of the world. At the same time little attention has been paid to the impact on climate change due to increasing consumption of fossil fuels and emissions of greenhouse gases and other pollutants (Christopher 2011: 244). This issue is particularly prevalent in the consumer electronics industry where most products are made up of a variety of different raw materials. As a consequence, global sourcing has become an important and integral determinant of the supply chains in this ever-growing industry (Mentzer et. al 2007: 3f). Supply chains in the consumer electronics industry are characterized by their high complexity and are often not managed and controlled as such by the leading multinational enterprises (MNEs) from the point of resource extraction to the final customer (Cetinkaya et al 2011). However, the extended media coverage on the environmental consequences of current and forecasted consumer behavior as well as the depletion of naturally occurring resources has led to a greater environmental awareness in society (Nikbakhst 2009: 197f). As MNEs in the consumer electronics industry have been manufacturing more frequently in low-wage countries, social aspects, such as working conditions, child labor and human rights violations across the whole supply chain have become another major concern (Abele 2008: 30f). These and other factors have led the ever conscious consumers and in turn, businesses to an intensified focus on the application of sustainable practices in all sectors of the economy (Christopher 2011: 241). Applying the concept of sustainability to supply chain management (SCM) led to the emergence of sustainable supply chain management (SSCM) and has rapidly developed as a popular topic in academic literature and business-related publications (Seuring et al. 2008b: 2f). The ongoing growth as well as the unique characteristics of the consumer electronics industry constitute the great relevance of research in this field regarding the implementation of more sustainable practices in SCM.

The aim of this thesis is to investigate which concepts of implementation and design of SSCM are available in the consumer electronics industry and to analyze how they can be classified.

First, the theoretical foundation for the subsequent research is laid by predefining the basic terminology and reviewing the major aspects of sustainability and its implementation with SCM. Prior to the explanation of the case selection the methodology of this thesis will be determined in order to guide the research. The developed procedures for the data analysis and construction of a theory will provide the scientific framework. The within-case analysis of each sustainability report will involve the identification and distinction of different phases regarding the process of achieving sustainability which will lead to the proposition of a model. In the next step, the model named the Sustainability Achievement Process will be refined and further substantiated using a cross-case analysis. The author’s intent is to provide a framework not only for scientific application but for practical use in the evaluations of companies’ progress in achieving sustainability concerning particular sustainability issues. Finally, the findings will be compared to related literature and discussed regarding their implications, limitations and further development in ensuing research.

2 Theoretical Foundation

2.1 Sustainability and Supply Chain Management

The idea of sustainable development was conceived and formalized for the first time at the beginning of the 18th century by Hans Carl von Carlowitz, a German accountant and mining administrator, in the context of forestry (Bader 2008). However, the term did not become popular and widely used until 250 years later. In 1987, the World Commission on Environment and Development (also referred to as the Brundtland Commission) published their report, defining sustainable development as a “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.” In 1992, at the first United Nations Conference on Environment and Development, sustainability became a formal political principle and it was further substantiated augmenting the environmental protection aspect by economic and social considerations. With the intention of highlighting the strong interrelatedness of the three fields of sustainability in 1997 the EU developed the ‘three-pillar model of sustainability’ (Bader 2008). Elkington (1997) introduced a similar idea for the implementation of sustainability in the business world suggesting the concept of the ‘triple-bottom line’, which is also referred to as the 3Ps: profit, people and planet. The intention of this model is to measure and furthermore control the financial, social and environmental performance of organizations as a part of a balanced scorecard, in order to achieve sustainably responsible behavior (Savitz 2006). Due to the relationship between the three pillars being rather controversial (Bader 2008) the weighting across the dimensions as well as the configuration and setting of priorities within the company remains up to the management and stakeholders of corporations and supply chains. Consequently there is a stringent necessity for understanding the conflicting and supporting relationships between the different objectives and linking them to “the overall corporate goals and vision, regardless of possible specific trade-offs” (Cetinkaya 2011: 31). Adhering to non-materialistic values and managing environmental and social issues can have a great impact on the economic performance of a company. Several cases have shown that it is not only crucial to a company’s economic success but to its well-being and very existence (Schaltegger and Wagner 2006: 2). Particularly on a political level the environmental component is seen more and more as the necessary foundation for economic and social development (Bader 2008). Therefore, the long term benefits of committing to environmental and social projects completely outweighs the short term downfalls, and should be brought to managers’ attention and also be included in company performance measuring (Cetinkaya 2011: 31, 32).

The supply chain is commonly defined as “a set of three or more entities (organizations or individuals) directly involved in the upstream and downstream flows of products, services, finances, and/or information from a source to a customer” (Mentzer et al. 2001: 4). So, as sustainability is of interest for any organization wishing to stay competitive and in public favor the aspects of these management practices should naturally extend into each company’s supply chain. SCM is defined as “the systemic, strategic coordination of the traditional business functions and the tactics across these businesses within the supply chain, for the purpose of improving the long-term performance of the individual companies and the supply chain as a whole” (Mentzer et al. 2001: 18). Therefore, with the supply chain being the framework for efficient and effective business operations it should be the focal point for improving sustainability in all linked companies (Christopher 2011: 242). Over time a combination of external pressures and incentives from governmental authorities, customers and other stakeholders, such as media, Non-Governmental Organization (NGOs), the scientific community or interest groups, and supply chain internal forces lead to the development of SSCM as an established management concept through the synergy of sustainability and SCM (Seuring et al. 2008b: 9). SSCM is defined as “the management of material, information and capital flows as well as cooperation among companies along the supply chain while taking goals from all three dimensions of sustainable development, i.e., economic, environmental and social, into account which are derived from customer and stakeholder requirements” (Seuring & Müller 2008a: 2). Yet, a modern understanding of sustainable entrepreneurship goes beyond the level of compliance and seeks an active engagement in systematically identifying and addressing potential and actual issues in the social, environmental and economic realm of a corporation (Schmidpeter 2014: 131).

2.2 Environmental Aspect

This section aims to outline the main characteristics of the environmental pillar of sustainability, as well as introduce some major concepts for its implementation.

The environmental aspect of sustainability in SCM, also often referred to as Green Supply Chain Management (GrSCM), has been a popular topic in companies as well as in related research since the 1990s (Seuring et. al 2008b: 20). With the rise of environmental protection as a topic in society, managers in companies started to apply the tools of Life Cycle Assessment to evaluate their products’ impacts on the environment. Using an alternative approach managers also looked at optimizing processes throughout the supply chain mainly in order to cut energy consumption and save resources (Nikbakhst 2009: 197f). For concepts facilitating the preservation of the environment two main goals can be derived from the described development. The first main goal is reducing the pollution of the environment, be it harmful gases, liquid toxins or solid wastes. The second major objective is targeting the reduction of energy and resource consumption, foremost fossil fuels and scarce commodities. It is important to note though that for many projects financial or strategic advantages are the primary selling point necessary for them to be implemented in a supply chain.

The above goals are closely linked and interdependent. Therefore, the following comprehensive overview of major concepts roughly follows the product life cycle instead of categorizing them at this point. The Supply Chain Operations Reference -model (SCOR-model) provides a SCM framework commonly used to understand and optimize environmental factors throughout the product life cycle starting with the design, next the processes of sourcing, making and delivering the products and ultimately aspects of return logistics (Nikbakhst 2009: 210ff).

Enhancing the efficiency of processes is generally a starting point for decreasing the environmental impacts within the supply chain because these measures additionally generate short term, economic benefits without changing existing structures and are thus easy to implement (Nikbakhst 2009: 39). However, looking at the design of products has major impact on the supply chain because small alterations can have quite a big influence on the amount of packaging material and transport volume needed (Cetinkaya 2011: 214ff). With the implementation of the European Union Emission Trading System (EU ETS) in 2005 policy makers in Europe intended to combat climate change by creating incentives to reduce industrial greenhouse gas emissions cost-effectively using the ‘cap and trade’ principle (European Union 2013: 2). Consequently, addressing the negative effects of greenhouse gases such as carbon dioxide, methane, nitrous oxide and several fluorocarbons became a cornerstone of environmental protection concepts. Most companies summarize them under the term “carbon footprint” (Christopher 2011: 243). The reduction of ‘transport intensity’, which can be measured at a company level by the number of kilometers travelled per unit sold, is closely linked to this topic due to its high correlation to carbon emissions (Christopher 2011: 245f). Especially for supply chains with high transport intensity considering different configurations of intermodal transport can unlock potential for reducing greenhouse gas emissions (Cetinkaya 2011: 223ff). With the intention of improving the utilization of truck capacities and reducing ‘empty miles’ managers of supply chains have joined projects where different companies – manufacturers, retailers, haulage firms, even competitors – have made efforts to share transport arrangements (Christopher 2011: 246). Besides efforts to save energy many companies have been shifting towards green operations by solely utilizing renewable energies (Savitz 2006: 27f). Analogous to the ‘carbon footprint’ companies have started to capture and reduce their ‘water footprint’, defined as “the volume of freshwater appropriated to produce the product, taking into account the volumes of water consumed and polluted in the different steps of the supply chain”(Hoekstra 2011: 194ff). The application of the above mentioned Life Cycle Assessment, standardized in ISO 14040:2006, has also led to new forms of waste management aiming at the minimization and eco-friendly handling of solid wastes generated during production and business operation (Nikbakhst 2009: 197f). The storage, transport, treatment and disposal of these wastes is incorporated in these concepts. Looking at supply chains from an environmental perspective means that you regard them as closed loops rather than a chain of processes starting with resource extraction and ending at the final customer (Christopher 2011: 250). In their definition of ‘reverse logistics’ Rogers and Tibben-Lembke highlight the recapturing of value or alternatively the proper disposal as the main purpose for “the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin.” (Rogers 1998: 2) The effectiveness of reverse logistics can be greatly facilitated by using a Cradle-to-Cradle manufacturing design that focusses on the “reduce, reuse and recycle”-aspects right from the beginning of the product life cycle requiring an effective bidirectional information flow in the supply chain (McDonough 2010). Designing products for SSCM and thus avoiding costly design changes means using environmental, economic and social aspects to analyze the sourcing process, the production, the packaging, transportation, redistribution, recycling and disposal of products (Cetinkaya 2011: 91f).

Another group of concepts aims at fulfilling the above goals in a more indirect way such as the financial support of environmental organizations in sourcing countries or educational programs. Training people across the supply chain, has been found to be a key success factor for sustainability in supply chains (Cetinkaya 2011: 185).

2.3 Social Aspect

The social aspect of supply chain management is a multifaceted pillar of sustainability which is usually summarized under the term ‘Corporate Social Responsibility’ (CSR) (Dubielzig & Schaltegger 2005: 240f). Schwartz and Carroll (2003) suggested three main domains, economic, legal and ethical domains, with their respective overlapping areas in order to thematically categorize concepts and measures in this pillar of sustainability. CSR aims at accepting and shaping a corporation’s social responsibility towards its stakeholders in all these dimensions (Dubielzig & Schaltegger 2005: 240). The social responsibility of the economic domain is met if a company offers desired products and services at fair prices (ibid). Furthermore, by successfully operating their businesses companies secure jobs and contribute to the prosperity of society at large. Fulfilling the social responsibility towards the employees includes ensuring the well-being in the workplace and to some extent also in their private lives (Savitz 2006: 154f). Consequently, the following aspects belong to this responsibility: workplace safety and labor conditions, work-life-balance, health insurance, pension plans, welfare, professional training and family friendliness (Savitz 2006: 154f). Over time the range of this responsibility has extended in a way that it is not limited to individuals such as managers and employees or the corporation as an entity anymore but across the whole supply chain (Dubielzig & Schaltegger 2005: 241). Moreover, companies usually support the local communities where their plants are located and employees live (Dubielzig & Schaltegger 2005: 241). In developing countries this means for example to support educational programs, schools and projects run by local NGOs. In order to ensure that a company’s sustainability efforts exceed the required level of corporate social performance social audit tools have been found to be a useful means (Goddard 2006: 65).

Another keyword in the economic area is ‘Corporate Governance’ which describes “the framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community).” (BusinessDictionary.com, n.y.) The legal responsibility of corporations requires compliance with laws, regulations and norms (Dubielzig & Schaltegger 2005: 240). These norms, which are determined by society, also enforce ethical behavior. This generally means that corporations cannot tolerate any violations of human rights in their supply chains and are obligated to actively fight child labor and corruption (Dubielzig & Schaltegger 2005:241). Finally, also ecological aspects are often addressed under the term CSR. Some companies even use CSR synonymously with sustainable business operation. Overall, the majority of activities performed under CSR are voluntary because the legal requirements regarding the social component are not nearly as prevalent as environmental laws and regulations (Lefevre, Suder 2009, 122). In conclusion, companies engage in various activities to shape their commitment to social responsibility because it provides a competitive advantage if it goes beyond the level of compliance (Goddard 2006: 65).

2.4 Economic Aspect

Sustainability management is often described solely focusing on environmental and social aspects excluding the economic pillar (Schaltegger and Wagner 2006: 3). In fact, sustainability on a company level means not only contributing to the well-being of society but assuring continued existence, long-term competitiveness and economic success of the company (Christopher 2011: 242). Consequently, it is crucial for companies to focus on the very core competencies that define their business activities (Schaltegger and Wagner 2006: 3f). Meeting customer demands, remaining competitive and economically successful is equally important as fulfilling environmental and social criteria (Seuring et al. 2008b: 5). Yet, it is important to ensure that environmental and social management adhere to economic principles encompassed by the terms eco/socio-efficiency and eco/socio-effectiveness and their integration (Schaltegger et al. 2011: 8ff). For sustainability management it is therefore important to link the outcomes of environmental and social projects on the one hand and the [negative] effects of business operations on people and planet on the other hand to the economic performance and express them in specific indicators and financial figures whenever possible (Schaltegger and Wagner 2006: 4f, 11ff). Establishing and integrating environmental accounting and reporting procedures into the central business management processes and systems is one of the major challenges for organizations further integrating sustainability into decision making and daily operations (Schaltegger et al. 2011: 14). At the same time, commitment to sustainability must be communicated to customers on the one hand in order to promote individual products and on the other hand to augment the entire brand value and thus improve sales in general (Schmidt et al 2011: 83). The Global Reporting Initiative (GRI), an international non-profit organization, provides and continuously further develops guidelines for corporate sustainability reporting with the intention of making sustainability efforts of organizations around the world more transparent and comparable. (Bader 2008).

Given the amount of information MNEs disclose in these annual sustainability reports about their efforts of gaining more sustainability within their companies and in their supply chains they are going to be the primary source for the main analysis of this paper.

2.5 Consumer Electronics Industry

Increasingly, consumer electronics such as cellphones, tablet PCs, media players, laptops and home entertainment systems play an important role in people’s lives across the globe. At the same time, extended media coverage on the environmental consequences of current and forecasted consumer behavior as well as the depletion of naturally occurring resources has led to a greater environmental awareness in society. The ongoing growth of global networking has provided consumers with an enhanced knowledge of the social aspects of global production and working conditions in all areas of the supply chain. The linkage of those developments has led the consumer to demand more sustainability regarding consumer electronics. But unlike other consumer industries the electronics industry faces unique challenges in their path towards more sustainability. Most products in the electronics industry are made up of a variety of different raw materials so ‘global sourcing’ has become an important and integral determinant of the supply chains (Mentzer et. al 2007: 3f). As a result, many raw materials used in electronics products, such as tantalum and tin, are sourced in conflicted regions of the world. Supply chains in the consumer electronics industry are also characterized by their high complexity and often not managed as such from the resource extraction to market-ready product or disposal.

Globalization has meant that in the consumer electronics industry, large companies have been manufacturing more frequently in low-wage countries (Abele 2008: 30f). Consequently, in the European Union, supply chain activities, transport routes and -volumes have developed to a greater extent than the economy itself in the last 20 years (Cetinkaya et al. 2011: 5-8). This growth has led to increasing consumption of fossil fuels and emissions of greenhouse gases and other pollutants.

Frequently, examples of exploitation of people in low-wage countries, insights on working conditions and the circumstances of their lives not being comparable to western standards have been denounced in the media. MNEs in the consumer electronics industry and other industry have been held liable by consumers for these issues. As a consequence, this has led to changes in consumer demand, which meant a significant financial disadvantage for the companies concerned (Savitz 2006: 87f).

On top of that, in 2003 the European Community enacted the Waste Electrical and Electronic Equipment Directive¹ which also shifted the responsibility for the disposal of electronic products towards the manufacturing companies. This legislation forced companies that had not sufficiently considered ‘reverse logistics’ in their supply chains to carry out major changes and implement it.

Because of the ever continuing growth of the consumer electronics industry, an investigation of sustainable practices in the industry and in the field of supply chain management in particular is definitely of long term interest.

2.6 Research Question

The determination of the research question contributes greatly to focusing the research and shaping the initial design in the process of theory-building (Eisenhardt 1989: 536). At the same time, formulating the research question in an open way provides the flexibility necessary to encourage the evolving of new ideas in case study research (ibid).

In the preceding chapters the necessity for understanding the conflicting and supporting relationships between different aspects of sustainability was identified. Given the undeniable importance of all areas of sustainability in modern entrepreneurship resulting from the inherent competitive advantages the three pillars of sustainability are the key lens to look at the data. Furthermore, as the supply chain has been identified as the relevant perspective for efficiently and effectively implementing and improving sustainability in all linked companies it will be the scope of this investigation. As described, incorporating environmental, economic and social aspects and adapting a supply chain perspective as early as in the conception of new products can make a huge difference in the conditions and costs of increasing sustainability. Given the importance of ‘global sourcing’ for the consumer electronics industry an analysis of SSCM in this area is particularly relevant. In addition, by analyzing and categorizing concepts to implementation and design of SSCM the efforts of measuring and controlling the financial, social and environmental performance of organizations can be supported. On top of that, conducting this examination in a way that it leads to the development of an integrating theory could significantly contribute to the recommended active engagement of managers regarding SSCM.

The consideration of the above aspects led to the formulation of the following research question:

Which concepts of implementation and design of sustainable supply chain management (SSCM) are available in the consumer electronics industry and how can they be classified?

3 Methodology

Case study research is conducted in order to gain understanding of complex social phenomena. That’s why among other areas of application it is being used to investigate organizational and managerial processes (Yin 2003: 1f). In contrast for example to laboratory research it provides the opportunity to analyze processes within their context and learn about their interdependence (Hartley 2004: 323). Furthermore it has also been found to be useful when dealing with large amounts of data which generally occur when analyzing organizational processes and their context in detail (Hartley 2004: 323). A case study should be seen as a research strategy rather than a research method comprising the design of the theoretical framework, the data collection techniques and specific approaches to data analysis (Yin 2003: 14). Hartley notes accordingly:

Although a case study may begin with only rudimentary theory or a primitive framework, the researcher needs to develop theoretical frameworks during the course of the research which inform and make sense of the data and which can be systematically examined during the case study for plausibility. The theory needs to provide not only a sense of the particular circumstances of the case but also what is of more general relevance and interest. (Hartley 2004: 324)

While the research question is not specified with respect to a particular theory in advance, the methodology is meant to be well thought out and predetermined. As a consequence, the theoretical foundation as well as the determination of techniques for achieving theoretical integration are outlined in this thesis as well. The methodology and structure of this thesis is based on the recommendations of Eisenhardt (1989: 532-550) on the construction of scientific papers by using case studies.

Following the introduction, the second chapter laid the theoretical foundation regarding the different pillars of sustainability and its integration with SCM. The definition of the research question is the starting point for the subsequent research. Determining the research question early in the research process helps to focus the research and avoid getting overwhelmed by the volume of data (Eisenhardt 1989: 536). The research question is formulated in an open manner under the ideal of ‘no theory under consideration’ because “preordained theoretical perspectives or propositions may bias and limit the findings” (Eisenhardt 1989: 536)

In chapter 4 the rationale behind the selection of cases to be examined is explained. In addition, the companies are going to be briefly introduced and compared using uniform parameters. Theoretical sampling will be used to choose the cases for this thesis because it facilitates the process of discovering and refining emergent theory in previously unchartered areas (Glaser, Strauss 1970: 145ff). This concept driven sampling approach does not require the random selection of cases nor is it preferable (Eisenhardt 1989: 537).

The main chapter is divided into several sub-chapters. First an overview of the data is given in order to decide on a suitable method of data collection and analysis. This will provide a rough pre-orientation in terms of patterns, similarities and differences. As Eisenhardt notes, this approach allows the best possible use of the advantages of the case study research.

Overlapping data analysis with data collection not only gives the researcher a head start in analysis but, more importantly, allows researchers to take advantage of flexible data collection. Indeed, a key feature of theory-building case research is the freedom to make adjustments during the data collection process. (Eisenhardt 1989: 539)

Despite the liberties in empirically investigating a topic and conducting case study research it needs to follow a set of predefined procedures in order to ensure the validity of its outcomes (Yin 2003: 15). Given the described room for maneuver that results from the tentative character of this type of research (Eisenhardt 1989: 536) the order of suggested steps has been changed to start with the initial overview of the data and then conduct the crafting of instrument for the subsequent research. In order to derive a theory from the sustainability reports the Grounded Theory Strategy, originally developed by Glaser and Strauss (1967), will be used. This systematic approach of comparing small units of data with the gradually constructed system of categories (Langley 1999: 699f) will be applied to this research and further detailed. The main traits of the Grounded Theory Strategy led to its application during this research. The Grounded Theory Strategy allows the author to build theory rather than testing predefined hypotheses which is helpful in generating new ideas (Strauss, Corbin 1998: 13). In addition, it provides tools for processing and making sense of large amounts of data preventing the analyst from getting lost in it (Strauss, Corbin 1998: 13). Another advantage is, that it provides the necessary objectivity through a systematic approach while at the same time encouraging creativity and leaving the freedom for inductive theory building (Glaser, Strauss 1970: 32ff). The Grounded Theory Strategy encourages an iterative theory building process which will be used to generate, develop and verify a concept regarding sustainable supply chain management (Glaser, Strauss 1970: 57). The following guidelines for the conceptualization of research will be used as foundation for the main analysis.

One derives concepts from the first piece of data. These same concepts are compared for similarities and differences against the next set of data – either expanding concepts by adding new properties and dimensions, or, if there are new ideas in the data, adding new concepts to the list of concepts. Or, there is still a third option of revising previous concepts if after looking at the new data it appears that another term would be more suitable. (Glaser, Strauss 1970: 57)

During this process categories are successively identified, developed and interrelated in order to build a theory. The described process leads to a point where saturation is reached (Glaser, Strauss 1970: 146). In chapter 0, Crafting instruments, the method for data analysis and the subsequent research techniques will be transferred to the current research case and further described regarding their specific application. The crafting of research instruments permits the combination of different methods and close fitting with the available data. This procedure contributes to a stronger substantiation of the model and reinforces the grounding of theory by triangulating evidence (Eisenhardt 1989: 538).

In the following sections the production and gathering of data takes place as well as the analysis leading to the process of building and refining theory. The actual investigation is performed in two phases. First, the analysis of within-case data using the previously designed methods is going to facilitate building theory and lead to the construction of a model. Secondly, in chapter 5.4, the model will be further substantiated through an in depth cross-case analysis. In order to refine the model it will be checked for gaps in the logic and further detailed by elaborating properties of the phases and highlighting relations between them, as suggested by Glaser and Strauss (1970: 270ff). This strategy, referred to as ‘shaping hypotheses’, contributes to a close fit of the theory with the data and yields the validity of the model (Eisenhardt 1989: 541). Furthermore, in a real world application a company’s progress in achieving sustainability can be determined more accurately. This is particularly important if the derived model of the Sustainability Achievement Process is used as a valuation standard for companies.

In chapter 0 a comparison with related literature addressing contradictions and similarities to other studies will be conducted. The purpose of discussing conflicting literature is to increase confidence in the findings and provide an even deeper insight into the emerging theory (Eisenhardt 1989: 544). The comparison with similar findings allows to tie together underlying similarities in phenomena which are normally not associated with each other (ibid). The results of it are then being discussed along with other critical aspects of the finding. Chapter 0 closes by assessing the results and offering an outlook in terms of starting points for further scientific studies.

As a summary of this chapter the following table illustrates the scientific methodology of this thesis.

Table 1: Applied concept for the design of case study research by Eisenhardt

Abbildung in dieser Leseprobe nicht enthalten.

4 Case Selection

As theoretical sampling was determined as the method for case selection the reasoning leading to the choice of Dell, Philips, Samsung and Sony will be illustrated. In line with the nature of a case study, the overarching goal was to keep the sample size as small as possible but as large as necessary.

The first step was to decide on the size and ranking of the companies to be examined. While the extent to which MNEs are the source or the solution to environmental pollution is highly controversial, MNEs generally possess better management practices and newer and cleaner technologies than other companies in their supply chains. (Abdul-Gafaru 2009: 50f) In contrast to smaller companies they typically have a larger variety of different sustainability practices in place (ibid). Furthermore, due to their size they are more present in the media and thus exposed to a greater pressure to address emerging sustainability issues as soon as possible. They also have the capacity to try out innovative technologies and are thus more likely to implement them at least in part. As the first part of the investigation is to capture the majority of sustainability practices available in the industry choosing large corporations is preferable because it decreases the necessary sample size.

Presumably, leading companies have reached their top placements inter alia because they have gained competitive advantages from implementing more sustainable practices which have allowed them to thrive and to grow. A first look at the sustainability reports indicated that high ranking companies have reached higher levels of sustainability achievement - in many cases they act as examples and promoters of these practices in their supply chains and beyond. The likelihood of capturing the whole range of concepts regarding the level of progress with as few cases as possible is increased when choosing the leading companies in the industry.

Combining the first two arguments led to the conclusion to choose leading MNEs in the consumer electronics industry. In addition, the supply chain aspect of the research topic also contributed to choosing these companies because they generally have larger and more complex supply chains and the influence to enforce sustainable practices in them (Ivanaj, McIntyre 2009: 4).

Another aspect which was considered in the process of case selection was the location of the companies’ headquarters. Due to the global character of the consumer electronics industry it was assumed that increasing the variation regarding the location and covering all big markets would increase the validity of the findings. As a consequence, Philips was selected because it was the only European company placed in the Top 20 of a global ranking of consumer electronics manufacturers based on reported annual revenues (Business Insights 2010).

In the next step the following ranking of companies connected either directly or indirectly to the information technology industry were grouped by country.

²

Abbildung in dieser Leseprobe nicht enthalten.

Table 2: The top ten consumer electronics companies in the world.

The evaluation of Table 2 led to the selection of Samsung Electronics as the only Korean company. Hon Hai Precision Industry (Foxconn) was disregarded because it only produces components for the products of other leading companies in the consumer electronics industry such as Apple’s iPhone, Sony’s Playstation or Dell’s Computers (Dean 2007). Initially Samsung Electronics was intended to be the only manufacturer from the Asian market. Nevertheless, after having built the model of the sustainability achievement process Sony was selected because it was the only company not applying GRI reporting standards. The reasoning was to increase the variance and avoid errors in the construction of the theory that might result from the properties of the GRI-reporting framework. Finally Dell was chosen from the list of American companies after a look at their profiles. Due to its rapid growth despite its comparably short history in existence the question regarding the role of sustainability was considered of particular interest.

4.1 Single Case Review

Having explained how the four cases have been selected for this thesis the intention of this chapter is to present brief profiles of the companies. An overview of each company’s history, its organization, product fields, achievements and sustainability strategy will be provided.

4.1.1 Dell

In 1984 the 19 year old Michael Dell founded a computer business called PC’s Limited. In 1985 the company designed and built its first computer system, the ‘Turbo PC’. From the beginning on, the company underwent a quick expansion and achieved annual growth rates of up to 80 percent. Pursuing this path the company went public in 1988 and renamed to Dell Computer Corporation. Dell got listed on the Fortune 500 for the first time in 1992 and Michael Dell became the youngest Chief Executive Officer (CEO) to ever achieve this. In subsequent years, the company continued its course of expansion in the European, Asian and American market. By the year 2000 Dell became the number one computer systems manufacturer in the world. The same year Internet sales on dell.com reached $40 million per day, making it one of the highest-volume ecommerce sites in the world. In 2003 Dell entered the consumer electronics market by expanding their product portfolio to printers. In order to implement and improve sustainable practices throughout the entire supply chain Dell partnered with other companies in the industry on the Electronics Industry Code of Conduct. In addition, Dell launched carbon-neutral programs for consumers and corporate customers and joined the Carbon Disclosure Project Supply Chain Leadership. Dell’s efforts receive public recognition by the nomination as the greenest company in America in Newsweek in 2010. (Dell n.y.)

Dells operations and product categories are summarized in the following statement:

“Dell designs, develops, manufactures, markets, sells, and supports a wide range of computer systems that are customized to customer requirements. These include enterprise systems (servers, storage, networking products, and workstations), client systems (notebook and desktop computer systems), printing and imaging systems, and software and peripherals.” (CSIMarket n.y.)

This year Michael Dell and the private equity firm Silver Lake Partners bought back Dell from public shareholders to “accelerate its long-term growth strategy and focus with a single-minded purpose on customers.” (Dell n.y.) Celebrating its 40th anniversary, Dell names the following goals for the company: ‘More Learning’, ‘Greener Planet’, ‘More Treatments’ referring to the support of the medical sector with technology, ‘More Discoveries’, ‘Helping More People’ and ‘More Security’ (Dell 2014). These goals are embedded with Dell’s wide-ranging sustainability strategy substantiated and detailed in the “Dell 2020 Legacy of Good Plan” (Dell 2013).

4.1.2 Philips

Philips was founded in 1891 by Gerard Philips and his father Frederik Philips in the Dutch city Eindhoven and started out by making carbon-filament light bulbs. In 1895, Gerard's brother Anton Philips joint them and significantly contributed to the company becoming the largest producer of light bulbs within a few years by developing new lighting technologies and expanding the business. (Philips n.y.) “Stimulated by the Industrial Revolution in Europe, Philips’ first research laboratory was established in 1914 and the company started introducing its first innovations in the x-ray and radio technology.” (Philips n.y.) The participation in the first experiments in televisions in 1925, the production of radios since 1927 and the launch of the Philips electrical shaver in 1939 and the introduction of the Compact Audio Cassette in 1963 were technical milestones for the company. Philips was instrumental in the invention and introduction of CD and later DVD. (Philips n.y.) The company has divided its business in three main sectors: Healthcare, Lighting and Consumer Lifestyle. Philips products in the consumer electronics sector range from televisions, projectors, audio equipment, Blu-ray players, computer accessories and small domestic appliances to products for personal car such as shavers and electric tooth brushes. (Philips 2013) The keywords of Philips’ sustainability strategy of “Making the world healthier and more sustainable through innovation” are ‘Going Green’, ‘Innovation in Action’, ‘Curbing the Carbon Footprint’ and ‘Transitioning to Circular Economy’. (Philips 2013a)

4.1.3 Samsung

Samsung Electronics was founded in 1969 in Daegu, a large South Korean city, initially producing black-and-white televisions. Because of the early successes, in the following years Samsung expanded into other electronics categories such as refrigerators, air conditioners, washing machines, fans and electric stoves. (Samsung 2012b) Today Samsung Electronics offers an even wider range of solutions for consumer and business electronics. As of 2013 the company comprises of three main business sectors: Consumer Electronics, IT & Mobile Communications and Device Solutions. The ‘Consumer Electronics’ business area includes the following subdivisions ‘Visual Displays’, ‘Digital Appliances’, ‘Printing Solutions’ and ‘Health & Medical Equipment’. The second branch comprises of ‘Mobile Communications’, ‘Network’, ‘Digital Imaging’ and ‘Media Solutions’. The sector ‘Device Solutions’ mainly focusses on memory components, large-scale integrated circuits and LEDs. (Samsung 2013: 16) Samsung Electronics is part of the Samsung Group a multinational conglomerate company.³ In 2009, on its 40th anniversary, Samsung Electronics was ranked number 1 for sales among global IT companies for the first time. Samsung Electronics has been one of the leading manufacturers of the DRAM semiconductor for more than 20 years. “Thanks to growth in the smartphone and tablet PC markets, Samsung Electronics also experienced tremendous growth in its non-memory semiconductor business.” (Samsung 2012: 4) The introduction of the Galaxy S smartphones series in June 2010 has been the foundation of the corporation’s leadership role in the global smartphone market. Samsung Electronics has received numerous innovation, design and sustainability awards. (Samsung 2012: 4) The corporation’s sustainability strategy is summarized under the slogan ‘Global Harmony with people, society & environment’ aiming at a holistic approach in which the focus on stakeholders and the supply chain plays a central role. (Samsung 2009) Under the headline ‘Vision 2020’ the company outlines several detailed targets such as “achieving sales of USD 400 billion, becoming one of the top five global brands and one of the ten most admired companies in the world.” (Samsung 2012: 6)

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¹ Directive 2002/96/EC

² (CNNMoney 2013)

³ In this thesis the names ‘Samsung’ and ‘Samsung Electronics’ are going to be used interchangeably referring to the latter. Some of the statements might as well be applicable to the ‘Samsung Group’.