Supply Chain Integrity: A Key to Sustainable Supply Chain Management

• Author: Hamparsum Bozdogan,Vincent E. Castillo,Diane A. Mollenkopf,John E. Bell
• Date: 01 March 2018
• Published date: 01 March 2018
• DOI: http://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 firms accountable for environmental and social performance in their supply chains, the impor-

tance of understanding how firms 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 firm 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 financial 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 significant influence 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 firms’SSCM 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 firm (financial) 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 firms

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 firm—strategy, 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 first

introduced (Elkington 1998), less emphasis has been placed on

the four facets related to sustainability as introduced in Carter

and colleagues’SSCM 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 influential 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 one’s virtue and character (Paine 1994; Audi and

Murphy 2006; Brown 2006; Palanski and Yammarino 2007; Maak

2008; Maurer 2009), the notion of firm-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 corporation”to 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 definition 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 firms 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): 38–56 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

afirst 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 firms, a ques-

tion that is important as firms continue to consider how to be

more sustainable. Specifically, 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 firms 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

firms 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 firms with regard

to sustainability. Finally, the findings 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

refined 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 firm

(Carter and Jennings 2004). In its original conceptualization, the

economic and legal responsibilities of a firm 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 “CSR”and “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 defined

by Carter and Rogers (2008), is “the strategic, transparent inte-

gration and achievement of an organization’s 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 “responsibility”to one of

business strategy by which a firm 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 benefits and competitive advantage for the firm”

(Carter and Rogers 2008, 365). Within the SSCM framework,

four supporting facets of SSCM are identified: 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 firms 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 firms need to consider the larger group

of stakeholders in their decision-making frameworks. Not only

do a firm’s actions have consequences for stakeholders, but also

stakeholders’actions can have consequences for the firm. 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