Supply chain learning of sustainability in China: What role does MNCs’ leadership play?

Abstract

Sustainable Supply Chain Management (SSCM) has increasingly been considered important by both industry and academia, organizations around the world seek to extend or disseminate their sustainable practices to their multi-tier supply chains in order to make the whole chain sustainable.

Among the main streams of SSCM research, it is surprising that, with a few exceptions, the leadership role of multinational corporations (MNCs) in their supply chains in an emerging economy has been ignored by researchers. Little is known on how MNCs, assuming leadership in their supply chain, have been able to facilitate their supply chain members to learn sustainability practice in an emerging economy context i.e. the mechanisms.

To address this gap in the literature, a multiple-case study is designed. Multi-tier supply chains of three MNCs were selected to investigate their proactive sustainability projects in China. They are: Tetra Pak creating a recycling chain in China; Nestlé modernising China’s dairy industry; and IKEA’s sustainable cotton initiative.

By adopting Resource Orchestration Theory (ROT), findings related to supply chain leadership, supply chain learning, multi-tier SSCM are presented. A number of testable propositions are advanced. The main findings of the research are that rather than focusing on the ‘low hanging fruits’ of sustainability, MNCs implement proactive sustainable initiatives requiring a strategic thinking and long term significant investment by engaging their multi-tier suppliers and non-traditional supply chain members. They tend to play a leadership role in the implementation process enabled by transformational and transactional leadership styles. These MNCs applied different leadership styles and governance mechanisms on different tiers of suppliers, which render different supply chain structures in the process of supply chain learning, which includes three stages of set up, operating and sustaining.

This research contributes to SSCM research in the following ways: first, it may be the first attempt that investigates multi-tier SSCM through supply chain learning and supply chain leadership angles adopting a ROT perspective. This help to explain how MNCs implement sustainable initiatives in China; second, it contributes to supply chain learning literature by differentiating supply chain learning stages and learning content in terms of focal company knowledge resources and supplier learning complexity to explain the implementation of SSCM initiatives; third, leadership at an individual level is well researched and understood but it is not the case for organisational level leadership. This research enriches our understanding of the role of organisational leadership in MNCs’ SSCM; fourth, the research contributes to multi-tier SSCM with a focus on both supply chain governance mechanisms and supply chain structure; fifth, this research extend ROT from within an organization context to supply chains and include three aspects: breadth (resource orchestration across the scope of the supply chain including both internal and external breadth); depth (resource orchestration across multi-tiers of the supply chain); and project lifecycle (resource orchestration at various stages of supply chain learning stages); finally, a complete theoretical framework is developed to tie together the constructs of supply chain learning, supply chain leadership, multi-tier SSCM with ROT.

Practically, a step by step methodology, integrating the key factors affecting the implementation of SSCM initiatives including supply chain learning, supply chain leadership, multi-tier supply chain governance and supply chain structure, is proposed. The ‘best practices’ of the researched MNCs provide a feasible roadmap for these organizations to learn from.