Sustainable Supply Chain Design in Social Businesses: Advancing the Theory of Supply Chain
| Published date | 01 March 2018 |
| DOI | http://doi.org/10.1111/jbl.12172 |
| Date | 01 March 2018 |
Sustainable Supply Chain Design in Social Businesses: Advancing
the Theory of Supply Chain
Lydia Bals
1,2
and Wendy L. Tate
3
1
University of Applied Sciences Mainz
2
Copenhagen Business School (CBS)
3
University of Tennessee
Asignificant conceptual and practical challenge for companies is how to integrate triple bottom line (TBL) sustainability into their global
supply chains. In supply chain research, the classic economic perspective—the business of business is to be profitable—still dominates,
followed by coverage of the environmental dimension; the social dimension is underrepresented. Stakeholders, however, are calling for a TBL
perspective that simultaneously includes environmental, social, and economic gains. While there have been recent theoretical advances on how
to characterize supply chains in terms of their structure, how to connect these insights into supply chain design for TBL sustainability has not
been studied. Therefore, the purpose of this research was to move the theory of supply chain forward into the sustainable supply chain manage-
ment (SSCM) research agenda. Toward that purpose, the paper analyzes the sustainable supply chain design (SSCD) at social businesses, incor-
porating the physical chain and the information and financial support chains. Four social businesses located in Haiti are used as cases of
innovative supply chain structures for TBL sustainability. By analyzing the supply chain structures and boundaries of these social businesses,
three supply chain configurations combining physical and support chains are presented.
Keywords: sustainability; environmental issues; ethics; social responsibility; supply chain management; triple bottom line; case–study research
INTRODUCTION
A significant conceptual and practical challenge is how to inte-
grate sustainability into global supply chains. Many highly publi-
cized issues fall outside the realm of the profit and loss statement
but are critical for the survival of the firm and the survival of
populations. Consider, for example, that, according to the United
Nations, the availability of clean water is lacking and negatively
impacts about 783 million people around the globe (UN Water
2013). Another telling example of the global sustainability chal-
lenge is that of consistently rising temperatures due to climate
change where countries signed the Paris Treaty committing to a
global action plan that puts the world on track to avoid danger-
ous climate change (European Commission 2015). These two
examples illustrate that the time for academics and practitioners
to consciously rethink supply chains (or reshape value chains)
has come (Howard-Grenville et al. 2014), as unpurposeful design
could have negative environmental, social, and economic impli-
cations (Varsei and Polyakovskiy 2016). Accordingly, questions
regarding how to redesign supply chains to manage risk and
improve sustainability have been moving up the supply chain
management research agenda (Bode and Wagner 2015; Durach
et al. 2015; Wieland et al. 2016).
It is challenging for managers to think about, and even more
so to invest in, long, uncertain payback periods. These managers
may also believe that certain areas of the world are not critical to
business survival, and the issues that relate specifically to those
areas are the problems of governments and nongovernmental
organizations (NGOs; Fawcett and Waller 2015). But businesses
increasingly have to recognize that there are significant trade-offs
inherent in doing business that involve many other stakeholders
and outcomes that focus on triple bottom line (TBL) sustain-
ability objectives (Elkington 1998) rather than profit or cost out-
comes. Governments and NGOs are part of doing business
around the world and are therefore part of the network of stake-
holders that share in TBL success. In contrast to such traditional
economic foci in business, social businesses offer insights into a
laboratory of sustainable supply chain designs (SSCDs). Social
businesses strive to address multiple objectives, economic and
social, and/or environmental simultaneously and pursue impacts
that address stakeholder issues holistically (Lyons 2013) on both
the demand and supply side (Thake and Zadek 1997). Social
business models aim at value creation by addressing economic,
environmental, and social elements, by promoting equitable rela-
tionships among stakeholders, and by adopting a fair revenue
model (Boons and Luedeke-Freund 2013). Social business mod-
els can be deployed by firms of varying sizes and start-ups (e.g.,
Pura Vida Coffee; Wilson and Post 2013) or established firms
(e.g., the Grameen Danone collaboration; Yunus et al. 2010).
The current sustainable supply chain management (SSCM)
research mainly addresses the economic and environmental
dimensions of the TBL, but suggests, “[a] comprehensive analy-
sis of sustainable business operations should consider all three
TBL dimensions simultaneously”(Wu and Pagell 2011, 589).
There is a clear need for further research into the issues of “how
to create [emphasis added] truly sustainable supply chains”(Pag-
ell and Shevchenko 2014, 44–45). Similarly, it has been empha-
sized that as “stewards of knowledge creation and dissemination,
it is necessary to conduct in-depth, nuanced research to help
decision-makers understand how to think, design, and deliver dif-
ferently (Fawcett and Waller 2011)”(Fawcett and Waller 2015,
238). This emphasis on creation/design of sustainable supply
chains highlights the necessity to reconsider how supply chain
design is approached in research and practice. Analyzing social
Corresponding author:
Lydia Bals, Supply Chain & Operations Management, University
of Applied Sciences Mainz, Lucy-Hillebrand-Str. 2, 55128 Mainz,
Germany; E-mail: lydia.bals@hs-mainz.de
Journal of Business Logistics, 2018, 39(1): 57–79 doi: 10.1111/jbl.12172
© Council of Supply Chain Management Professionals
businesses as firm types that have been founded with TBL per-
formance objectives as part of their design, instead of analyzing
cases of retrofitting economically oriented businesses for
improvements in the social and/or environmental dimensions thus
offers a fresh perspective.
When turning toward the question how the designs support
sustainability, it is necessary to define both the design parameters
and the structural elements. Whereas the former was mentioned
above as TBL criteria, the latter have only been subjected to
recent theory development. Specifically, the theory of the supply
chain (Carter et al. 2015) offers supply chain structures and
boundaries that surround supply chain design. However, in
developing this theory, the authors emphasize that there is a
major omission in supply chain conceptualization: The indirect
or more supportive players are largely ignored (Carter et al.
2015). This is a major issue because no pair of firms within a
supply chain network operates in isolation from others (Ford
1990), and previous research on sustainability in supply chains
has emphasized the importance to take stakeholders into account
(Matos and Hall 2007; Matos and Silvestre 2013). Currently, the
theory of supply chain predominantly considers economic stake-
holders (i.e., businesses and financial institutions) and has not
yet incorporated other noneconomic stakeholders.
The specific research objective of this study was to initiate
understanding of the supply chain design for achieving TBL sus-
tainability by elaborating the theory of the supply chain (Carter
et al. 2015) toward a theory of SSCD, and promote additional
research on this phenomenon. To clarify what is considered “the-
ory”in this research, Wacker (1998) is followed, structuring the
discussion along the four main components of theory: (1) defini-
tions of terms or variables; (2) identifying a domain where the
theory applies; (3) determining a set of relationships of variables;
and (4) making specific predictions (factual claims). In this
research, the theory forming the basis of the conceptual develop-
ment is the theory of the supply chain, which was relatively
recently put forward by Carter et al. (2015). The first research
question relates to the first theory component (variables) and the
second component (domain). The second question extends the
scope to components three and four (relationships and predic-
tions). The research questions being addressed are as follows: (1)
How are supply chain structures of sustainable businesses
designed to deliver on TBL objectives? The first research ques-
tion refers to the stakeholders in scope, the design parameters,
and the structural elements of the supply. (2) How do the differ-
ent configurations support sustainability? The second research
question refers to a more detailed view on the design parameters
and how they are operationalized as TBL outputs versus out-
comes. For-profit social businesses in Haiti are used to discuss
supply chain configurations, or design models, of TBL sustain-
able chains. Despite having “social”in the title, these businesses
pursue economic, social, and environmental objectives. From the
inception of these sustainable, social businesses, the mission-dri-
ven entrepreneur focuses on building TBL sustainability into the
supply chain to design a sustainable social business model and
convince Social Investors of the return on investment in all three
pillars of sustainability.
The research questions are addressed by first summarizing
supply chain design parameters which are usually centered on
physical supply chain outputs and their direct (economic and
environmental) consequences, such as carbon dioxide (CO
2
)
emissions from the transport of goods. Sustainable business mod-
els and outputs versus outcomes are then defined by highlighting
the idea of looking beyond physical material flows (and their
outputs)tooutcomes of physical, information, and financial sup-
port chains (Carter et al. 2015). The theory elaboration method-
ology is described next, followed by the translation of TBL
design parameters into three supply chain configurations, with
the results summarized into an elaborated theoretical model to
spur further research into SSCD.
THEORETICAL BACKGROUND
The initial theoretical framework is based on the theory of the
supply chain (Carter et al. 2015), and a review of the supply
chain design literature is summarized in Figure 1, which high-
lights the current research focus on the economic and environ-
mental dimensions first, and then subsequently on outputs and
the physical chain. The respective theory components 1 (vari-
ables, i.e., design parameters and elements) and 2 (i.e., domain)
are discussed in the sections below.
Design parameters and elements in current supply chain
design: focused on economic and environmental design
criteria and the physical chain
In the current literature, the search for TBL performance of sup-
ply chains usually is centered on how to improve environmental
performance in established supply chains (e.g., Handfield et al.
1997; Christmann 2000; Melnyk et al. 2003; Zhu and Sarkis
2004; Wu and Pagell 2011), and not on the design phase of sus-
tainable supply chains. This research is interested in how supply
chains are created structurally to achieve TBL objectives from
inception rather than how established chains try to reduce nega-
tive TBL outcomes later (or retrofit the supply chain to meet dif-
ferent stakeholders needs); hence, the focus is on the design
phase.
In supply chain design (or supply chain network design),
1
the
more traditional metrics of economic performance are applied,
leading to a rather narrow scope of delivery from a TBL per-
spective. The majority of the literature on supply chain modeling
during the 1990s focused on costs. This included cost minimiza-
tion (e.g., Tzafestas and Kapsiotis 1994; Lee et al. 1997; Vidal
and Goetschalckx 1997), minimization of average inventory
levels (e.g., Towill and del Vecchio 1994), minimization of
obsolete inventory (e.g., Ishii et al. 1988), and maximization of
profits (e.g., Cohen and Lee 1989). Other focus areas are cus-
tomer responsiveness, flexibility, and combinations of cost (Bea-
mon 1998). Typically, supply chain design centers on the
physical chain, for example, facility locations, supplier locations,
1
The definitions of what supply chain network design com-
prises again highlight a clear focus on the physical material flows
in current research, as it is centered on decisions about number,
location, and capacity of facilities such as production plants, dis-
tributions centers, and supplier selections (Eskandarpour et al.
2015; Varsei and Polyakovskiy 2016).
58 L. Bals and W. L. Tate
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