Supply Chain Integrity: A Key to Sustainable Supply Chain Management

AuthorHamparsum Bozdogan,Vincent E. Castillo,Diane A. Mollenkopf,John E. Bell
Date01 March 2018
Publication Date01 March 2018
DOIhttp://doi.org/10.1111/jbl.12176
Supply Chain Integrity: A Key to Sustainable Supply Chain
Management
Vincent E. Castillo, Diane A. Mollenkopf, John E. Bell, and Hamparsum Bozdogan
The University of Tennessee
As stakeholders continue to increasingly hold rms accountable for environmental and social performance in their supply chains, the impor-
tance of understanding how rms can be more sustainable becomes more prescient. Based on the underlying premise of stakeholder the-
ory that business and ethics decisions are intertwined, the current research introduces the concept of supply chain integrity (SCI) to explore
how the interdependence of business and ethics decisions can lead to improvements in sustainable supply chain management (SSCM) practices.
Exploratory analysis employing secondary data sources in an elastic net (EN) logistic regression provides support for the proposed construct, by
providing preliminary empirical evidence that SCI, measured through two subdimensions of structural and moral SCI, can be linked to rm sus-
tainability. The research contributes to the supply chain management literature by: (1) introducing the concept of SCI; (2) performing an
exploratory econometric analysis to provide initial validity of the SCI construct; and (3) providing a research agenda to guide further research
on the concept of SCI and its role in SSCM.
Keywords: supply chain management; sustainability; social responsibility; strategy; integrity
INTRODUCTION
Sustainable supply chain management (SSCM) has become a
focus for business practitioners and supply chain researchers.
Issues of climate change, geopolitics, labor conditions in emerg-
ing economies, and pressure from stakeholders and supply chain
partners all play a role in shifting corporate focus toward the tri-
ple bottom line (TBL), the simultaneous achievement of environ-
mental, social, and nancial performance (Elkington 1998, 2004;
Orlitzky et al. 2003; Carter and Rogers 2008; Golicic and Smith
2013; Waller et al. 2015). The focus on SSCM is particularly
important as the millennial generation comes of age. Millennials
are value-driven consumers, expecting good corporate citizenship
from the companies with whom they interact (Solomon 2014).
Not only is the millennial generation the largest in history, but
this group of consumers is still growing worldwide. Millennials
also seem to wield signicant inuence over other generations
attitudes and consumption patterns (Solomon 2014), suggesting
that value-based consumption attitudes and behaviors will
become increasingly widespread. As market pressures continue
to evolve, supply chain managers will increasingly assume
responsibility for improving their rmsSSCM performance, due
to the boundary spanning nature of their roles across functional
and organizational boundaries (Carter and Jennings 2004).
As sustainability gained traction in the supply chain literature,
initial attention focused on whether sustainability leads to
enhanced rm (nancial) performance (see, e.g., Porter and van
der Linde 1995; Kleindorfer et al. 2005; Pagell and Wu 2009;
Reuter et al. 2010; Golicic and Smith 2013; Thornton et al.
2013). More recently, SSCM researchers have noted that the
question of whether sustainability pays is no longer the most
salient; rather, it has been surpassed by the question of how rms
can be more environmentally sustainable and socially responsible
(Pagell et al. 2013). Current SSCM thought emphasizes TBL
performance as an outcome of various sustainability activities
that span four facets of the rmstrategy, risk management,
organizational culture, and transparency (Carter and Rogers
2008; Carter and Easton 2011). But, while much supply chain
research has focused on the TBL as an outcome since it was rst
introduced (Elkington 1998), less emphasis has been placed on
the four facets related to sustainability as introduced in Carter
and colleaguesSSCM framework with respect to how they
relate to each other in enabling SSCM across the economic,
social, and environmental arenas.
Such understanding is important as the value-based millennial
consumers become increasingly inuential in the marketplace.
Firms will need to develop strategy, risk management, trans-
parency, and organizational cultures that readily demonstrate
integrity-laden approaches to supply chain management. While
integrity is most commonly thought of as an individual-level con-
struct relating to ones virtue and character (Paine 1994; Audi and
Murphy 2006; Brown 2006; Palanski and Yammarino 2007; Maak
2008; Maurer 2009), the notion of rm-level corporate integrity is
well established in the business ethics literature (Gowans 1984;
Guerrette 1986; Solomon 1992b; Paine 1994; Koehn 2005; Audi
and Murphy 2006; Brown 2006; Maak 2008; Becker 2009; Mau-
rer 2009; Li et al. 2016). Corporate integrity provides a foundation
for value-based decisions that companies make. Interestingly,
Maak (2008, 361) introduced the notion of supply chain integrity
(SCI) as a major challenge for the corporationto ensure its own
corporate integrity when dealing with external organizations. How-
ever, the SCI construct has yet to be conceptually developed or
introduced to the supply chain literature.
Therefore, the purpose of this study is to develop the logic
and denition of SCI as a construct useful to SSCM researchers
and practitioners. We develop the SCI construct within the
framework provided by Carter and Rogers (2008), as a means to
further understand how rms can be more sustainable through
Corresponding author:
John E. Bell, Department of Marketing & Supply Chain Manage-
ment, The University of Tennessee, 310 Stokely Management Cen-
ter, Knoxville, TN 37996-0530, USA; E-mail: bell@utk.edu
Journal of Business Logistics, 2018, 39(1): 3856 doi: 10.1111/jbl.12176
© Council of Supply Chain Management Professionals
their supply chain management practices. Following the concep-
tual development of SCI, we conduct an exploratory analysis as
arst step toward construct validation, trying to assess the con-
ceptual merit of the proposed construct. In essence, the explora-
tory analysis provides preliminary empirical evidence for
answering the research question as to whether SCI can help dif-
ferentiate between sustainable and nonsustainable rms, a ques-
tion that is important as rms continue to consider how to be
more sustainable. Specically, we use secondary data sources to
explore whether the nascent SCI construct can differentiate
between organizations and their designations as sustainable com-
panies (or not). We conduct a set of analyses across manufactur-
ers and retailers as a means of assessing the robustness of the
proposed construct across supply chain echelons, thus setting the
stage for future research to more fully develop the SCI concept
and a more explicit framework for supply chain managers to
build the sustainable supply chains increasingly required by cus-
tomers and other stakeholders.
This research effort makes three contributions to the logistics
and supply chain literature. First, the introduction of SCI adds
depth to the SSCM framework (Carter and Rogers 2008; Carter
and Easton 2011) by bringing concepts found in the business
ethics literature into the SSCM literature base to explore the
interdependence between business and ethics decisions as
related to sustainability (Maak 2008). Using a stakeholder the-
ory perspective, we conceptually develop the SCI construct
within the framework of SSCM presented by Carter and Rogers
(2008). Second, we perform an exploratory analysis using EN
logistic regression evaluated with the Information Complexity
(ICOMP) criterion, to empirically assess the merit of the pro-
posed SCI construct by examining how well the proposed con-
struct can differentiate between rms with respect to
sustainability (Zou and Hastie 2005; Bozdogan and Pamukcu
2016). Finally, an agenda is developed to guide scholars in pur-
suing future research within the SSCM domain that can help
rms to understand how being sustainable is affected by differ-
ent contexts and mechanisms.
The article is structured as follows. A review of the literature
on sustainability thought in supply chain management research
lays the groundwork for developing the new concept of SCI. The
methodology section contains an explanation of the use of sec-
ondary data in a logistic regression to explore whether the pro-
posed SCI construct can differentiate between rms with regard
to sustainability. Finally, the ndings are discussed and a
research agenda to guide future inquiry is presented.
SUSTAINABILITY THOUGHT IN SUPPLY CHAIN
RESEARCH
Scholarly interest in sustainability began to emerge based on the
seminal work of Bowen (1953) and Carroll (1979, 1991), who
rened the notion of corporate social responsibility (CSR). CSR
focuses on the pyramid of corporate responsibilities: the eco-
nomic, legal, ethical, and philanthropic activities of the rm
(Carter and Jennings 2004). In its original conceptualization, the
economic and legal responsibilities of a rm were considered
mandatory, while ethical and philanthropic responsibilities were
considered to be of lower importance (Richter 2010).
Supply chain scholars continue to adapt CSR into sustainabil-
ity discussions, often using the terms CSRand sustainability
interchangeably. Yet, in the supply chain literature, the concept
of sustainability invokes a TBL approach toward performance,
based on the work of Elkington (1998, 2004). SSCM, as dened
by Carter and Rogers (2008), is the strategic, transparent inte-
gration and achievement of an organizations social, environmen-
tal, and economic goals in the systemic coordination of key
interorganizational business processes for improving the long-
term economic performance of the individual company and its
supply chains(p. 368). Such SSCM theorizing shifts the con-
versation from social/environmental responsibilityto one of
business strategy by which a rm can prosper over the long term
(Carter and Easton 2011).
Of particular relevance to the current research is the TBL logic
found in the SSCM framework (Carter and Rogers 2008; Carter
and Easton 2011). The TBL becomes the focal lens for supply
chain managers by which to make decisions that affect both the
natural environment and society, but which also result in long-
term economic benets and competitive advantage for the rm
(Carter and Rogers 2008, 365). Within the SSCM framework,
four supporting facets of SSCM are identied: risk management,
transparency, strategy, and corporate culture. Each of these four
facets is actively addressed within the supply chain literature and
increasingly being tied to TBL performance. Yet the underlying
role of these four facets within the SSCM framework remains
underexplored.
SSCM research has also consistently been linked to stake-
holder theory as a rationale for why rms should care about
environmental or social sustainability (Carter and Jennings 2002;
Sarkis et al. 2010; Hofer et al. 2012; Swanson and Smith 2013).
Stakeholder theory has diverged into three distinct approaches
descriptive, normative, and instrumental (Brenner 1992; Donald-
son and Preston 1995; Jones and Wicks 1999). However,
Freeman (1999) takes exception to this divergence, arguing that
a divorce has resulted between business and ethics in both
research and practice. He articulates that the original focus on
stakeholders vis-
a-vis shareholders was explicitly meant to imply
a value-laden approach to management (Freeman 1994, 1999).
Thus, the discourse of business should not be separated from the
discourse of ethics. Indeed, the original stakeholder approach
was built on instrumental premises that inherently include
descriptive and normative considerations, clearly suggesting the
interrelated nature of business and ethics (Freeman 1984).
The focus of stakeholder theory is built primarily on the
notion that consequences count, which is important when consid-
ering the evolution of SSCM to include a TBL approach. Stake-
holder theory posits that rms need to consider the larger group
of stakeholders in their decision-making frameworks. Not only
do a rms actions have consequences for stakeholders, but also
stakeholdersactions can have consequences for the rm. Those
consequences are extended beyond the economic realm to also
include environmental and social consequences. This becomes
especially important when considering the challenges of manag-
ing global supply chains. Stakeholder theory is becoming
increasingly sensitized to the complexities and uncertainties
involved in managing multinational networks due to several fac-
tors: the liberalization of markets and political institutions, the
emergence of environmentalism and social values, and the
Supply Chain Integrity 39

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