Mitigating External Barriers to Implementing Green Supply Chain Management: A Grounded Theory Investigation of Green‐Tech Companies' Rare Earth Metals Supply Chains

• Author: Lutz Kaufmann,Johan Rauer
• DOI: http://doi.org/10.1111/jscm.12063
• Date: 01 April 2015
• Published date: 01 April 2015

MITIGATING EXTERNAL BARRIERS TO IMPLEMENTING

GREEN SUPPLY CHAIN MANAGEMENT: A GROUNDED

THEORY INVESTIGATION OF GREEN-TECH COMPANIES’

RARE EARTH METALS SUPPLY CHAINS

JOHAN RAUER AND LUTZ KAUFMANN

WHU –Otto Beisheim School of Management

The supply chain management literature has investigated myriad barriers

to implementing green supply chain management (GSCM). However, little

research has analyzed the role of capabilities to mitigate such barriers, a

research gap we address in this study using an inductive research

approach. Following a Straussian approach to grounded theory, the study

analyzes data generated from ten Western green-tech companies sourcing

technically indispensable rare earth metals from Chinese suppliers. Our

interpretive research findings show that these companies face two catego-

ries of salient, external barriers to GSCM–supply chain structure-related

and environmental standards-related implementation barriers. To cope

with these barriers, we argue that firms require three categories of

dynamic capabilities: sensing capabilities, alignment capabilities, and

resilience capabilities. By connecting our research findings with the

dynamic capabilities literature, we derive theoretical propositions to guide

further research on studying the role of dynamic capabilities in the

implementation of GSCM.

Keywords: green supply chain management; implementation barriers; capabilities;

green-tech; rare earth metals; dynamic capabilities; grounded theory; sustainability

INTRODUCTION

In today’s globally extended supply chain networks,

buying firms are not only responsible for minimizing

their own environmental burden, but also extending

their environmental stewardship in cooperation

with their supply chain partners. In particular, stake-

holder pressures (Kirchhoff, Koch & Nichols, 2011;

Vachon & Klassen, 2006) such as rising public concerns

about climate change—and institutional forces (Linton,

Klassen & Jayaraman, 2007; Zhu, Sarkis & Lai, 2013)—

such as rising environmental regulation—have forced

buying firms to put green supply chain management

(GSCM) practices high on their agendas. “As part of

[the] transition from ‘does it pay?’ to ‘how to be sustain-

able?’” (Pagell & Shevchenko, 2014: p. 16), SCM

research needs to address the critical question of how

firms can make their supply chains truly sustainable in

light of the myriad challenges faced when trying to

implement sustainable practices suchas GSCM.

Scholars have identified various internal and exter-

nal barriers to firms’ successful implementation of

GSCM. Among the most prominent internal barriers

are the high costs associated with GSCM (Min &

Galle, 2001; Walker, Sisto & McBain, 2008) and

limited top management support (Berns et al., 2009;

Giunipero, Hooker & Denslow, 2012). Major external

barriers to GSCM comprise resistant suppliers (Walker

et al., 2008; Wycherley, 1999) and differences in

countries’ regulation (Giunipero et al., 2012; Walker

et al., 2008).

Little research, though, has explored how buying

firms can cope with such barriers or investigated the

role of dynamic capabilities (DCs) in mitigating

them. We address this gap using a grounded theory

approach—following the Straussian school of

thought—as implementing GSCM can be considered

a phenomenon with complex behavioral dimensions

(Mello & Flint, 2009). In following Strauss (1987),

we enter the field (1) with the predefined research

question of how buying firms cope with (external)

barriers to implementing GSCM, (2) the initial idea

that these firms require specific capabilities to do so,

and (3) the goal of developing a theoretical model

of GSCM implementation barrier mitigation.

April 2015 65

Our investigation comprises 27 in-depth interviews

with managers from five Western green-tech product

manufacturers, including manufacturers of electrical/

hybrid vehicles and wind turbines, as well as inter-

views with five Western green-tech components sup-

pliers. The suppliers we interviewed supply batteries,

catalysts, glass and ceramics, luminaries, and magnets

to the manufacturers in our sample while also selling

energy-efficient, green-tech products such as lithium

ion batteries, automotive/industrial catalysts, photo-

voltaic panels, and energy-efficient luminaries to direct

end customers. We examine the barriers to GSCM

experienced by these companies and their coping

mechanisms because companies with a “green” prod-

uct portfolio can be considered particularly sensitive

to the process of “greening” their supply chains in

accordance with their corporate and products’ green

image and reputation (Pullman & Dillard, 2010). Fur-

thermore, green-tech companies’ GSCM practices have

repeatedly been challenged in public (e.g., Dabelko,

Herzer, Null, Parker & Sticklor, 2013; Guardian

Weekly, 2012; Parry & Douglas, 2011), due to signifi-

cant environmental risks that have materialized along

the upstream supply chain of rare earth metals.

1

Rare

earth metals are mandatory inputs to all green-tech

product applications and involve several environmen-

tal hazards, such as the radioactive and toxic

by-products or chemically contaminated waste water

from the mining and refining processes in China

(Humphries, 2012; U.S. Department of Energy, 2011;

W€

ubbeke, 2013). The rare earth metals context also

seems highly suitable for researching GSCM imple-

mentations for the following reasons: While many

buying firms in their general quest to implement

GSCM depend on their suppliers and many of their

supply chains are multitiered and extend across bor-

ders—implying heterogeneous environmental stan-

dards and political influences—these factors are all

very pronounced in the case of rare earth metals sup-

ply chains, where Western green-tech companies

highly depend on the heavily state-influenced Chinese

mining and refining industry located several tiers

upstream in their supply chains.

We make three contributions with this article. First,

we identify two broad categories of salient, external

barriers to buying firms’ successful implementation

of GSCM: supply chain structure-related barriers, and

environmental standards-related barriers. We then

identify three categories of specific mitigation capa-

bilities: sensing capabilities, alignment capabilities,

and resilience capabilities. Dynamic mitigation capa-

bilities emerge as the “main theme” or core category

according to the Straussian school of thought on

grounded theory (Strauss, 1987). Second, in linking

our empirical findings and the literature on DCs, we

derive theoretical propositions to guide GSCM

research to further explore implementation barriers

and firms’ potential mitigation approaches. That is,

we reach the causal depth required for revealing the

working of mechanisms in GSCM through a constant

alternation between concrete and abstract reasoning

(Aastrup & Halld

orsson, 2008). Third, we stimulate

dialogue between research and practice in a com-

bined sustainability and SCM context (Fawcett &

Waller, 2011, 2013). Although research has identified

various driving forces and benefits related to firms’

environmental sustainability (Pullman, Maloni &

Carter, 2009) and recommended that firms imple-

ment GSCM practices accordingly, practitioners still

contend with myriad challenges to establish truly

sustainable supply chains (Pagell & Shevchenko,

2014) and face various (as yet scarcely investigated)

barriers to implementing GSCM (Giunipero et al.,

2012; Walker et al., 2008).

We begin by outlining the research context of this

study, including a definition of GSCM, an overview of

studies on barriers to implementing GSCM, and out-

lining the theoretical rationale of investigating DCs as

underlying coping mechanisms to barriers to imple-

menting GSCM—the “initial idea” for our study

(Strauss & Corbin, 1998). Then, we present the meth-

odology and the qualitative case examples investi-

gated. Next, we synthesize our findings and derive our

research propositions. Last, we discuss the results and

research implications.

RESEARCH CONTEXT

Green Supply Chain Management

Prior research has investigated the key role of firms’

SCM functions in greening their international supply

chains (Handfield, Sroufe & Walton, 2005; Linton

et al., 2007), and environmental “sustainability has

moved from the fringes of supply chain management

research to ... an area of significant research activity”

(Pagell & Shevchenko, 2014: p. 1). As such, various

terminologies around the concept of GSCM have

emerged, including environmental purchasing

(Zsidisin & Siferd, 2001), environmental logistics

(Gonz

alez-Benito & Gonz

alez-Benito, 2006), supply

chain environmental management (Sharfman, Shaft &

Anex, 2009), and sustainable supply chain manage-

ment (Carter & Easton, 2011).

1

Rare earth metals are a group of 17 elements: europium, gado-

linium, terbium, dysprosium, holmium, erbium, thulium, ytter-

bium, lutetium, scandium, yttrium, lanthanum, cerium,

praseodymium, neodymium, promethium, and samarium. Many

green-tech product applications require these elements as man-

datory inputs because of their physical properties, such as strong

magnetic effects or high thermal resistance, without which

green-tech product applications cannot achieve their desired

product properties.

Volume 51, Number 2

Journal of Supply Chain Management

66