Introduction
Globalisation, technological advancement, market competition and policy regulations are increasingly compelling industries or firms to look for new possibilities in order to compete and evolve further. The depletion of the natural resources through increased consumption, industrialisation and globalisation are also pushing firms to reassess their internal and external activities in short and long term. Specifically, organisations should concern about adding value to their product or service by manipulation of their global value chains or more accurately their global supply networks. Taking into consideration that industries are trying to find alternatives to the diminishing environmental risks originated from their activities, eco-innovation, and environmental sustainability can play the important role and both should be deeply integrated into company’s structure or network and management. Moreover, the environmental issues are one of the main drivers of change, especially when the impacts of sustainability challenges have a substantial impact on a company’s image and cost-effectiveness. For example, some of the innovative brands, such as Apple, Nike, Body Shop and Tesco are being involved for sustainability violations from uncleanness in food products to child labour in raw materials production. These facts influence on the firm’s brand and profitability.
The main concentrations of this research paper are eco-innovation and supply chain network because eco-innovation is one of the key empowering instruments acknowledged by the EU for the conversion to resource efficient economy. When companies trying to switch to the sustainable production, they usually consider the end product’s environmental impact or sustainability of production level. However, other parts of product life cycle are remaining behind the curtain. On of these parts is supply chain (suppliers) which serves as initial point of the lifecycle.
Regarding these tendencies and research gap distinguished from the literature review, this research covers how companies should implement supply chain network in order to gain benefits and advantage from the adoption of eco-innovation.
Research paper considers the automotive and transport sector, in order to squeeze the area of investigation and be more detailed and precise. The automotive and transport sector was chosen because of the development of this sector and environmental impacts.
The research paper response to two questions:
- What kind of supply chain structure is used by presented companies;
- How the befitted from the adoption of eco-innovation;
This paper comprises three parts: literature review, methodology and ethical and practical considerations. The literature review will consider the difference between innovation and eco-innovation, factors influencing to the adoption of eco-innovation, and the role of supply chain network. Also, literature review justifies the choice of automotive and transport sector. To further investigation qualitative approach, a particularly case-study methodology was chosen. Practical and ethical concerns of qualitative and case-study approaches were identified.
Literature review
Eco-innovation as a key driver of organization competitive advantage
Organisations should deal with environmental issues in order to avoid damages to nature and companies’ reputation. The complexity of this issues as the innovation complexity will more or less depend on the company’s industry, activities and operation and innovation strategy. Shortage of natural resource and deterioration of environment have an influence on the growth of regulatory pressures (European Commission and the United Nations Environment Programme, 2013) which makes companies deal with challenges and opportunities.
There are several terminologies are widely used to define environmental innovation interchangeably such as “sustainable”, “green” and “eco-innovation”. The Brundtland report (World Commission on Environment and Development, 1987) introduced the term “sustainable innovation”, defining it as “meeting the needs of the present without compromising the ability of future generations to meet their own needs”. While different resources define “eco-innovation” differently and there is no a common definition. One of the definitions is that eco-innovation is the introduction of new product, process or service which decrease the use of raw materials (including materials, energy, water and land) and diminish the emission of negative substances (Eco-Innovation Observatory, 2013). Kemp & Pearson (2007) described eco-innovation as the manufacturing, applying or utilizing of a product, process, service or organisational structure or business model which has novelty for the organisation or customers and which would result in a reduction of negative environmental impact and resources consumption compared to relevant alternatives. Eco-innovations are product, process, marketing and organisational innovations result to “a noticeable reduction in environmental burdens”. Positive environmental impacts can occur through explicit aims of companies or side effects of innovations or customer use of products or services” (Horbacha, et al., 2012) There are other definitions of eco-innovation. However, despite differentiation in words, all definitions cover the environmental issue and represent the two main outcomes of eco-innovation: impact on environmental condition and resources scarcity (Hojnik & Ruzzier, 2015).
There is also ambiguity regarding the term. According to the literate review was done by Hojnik and Ruzzier (2015), researchers use the terms eco-innovation, environmental innovation, green innovation and sustainable innovation. Sustainable innovation assumes a broader concept and covers the social aspects while other terms cover ecological and environmental aspects. In another literature review, the percentage ratio of using these terminologies are discovered. The term “environmental innovation” is coined more often in reviewed works (65%), while eco-innovation in 22% and green innovation in 13% of reviewed papers (Angelo, et al., 2012). Bossle, et al. (2016) represent table which describes how eco-innovation has been conceptualized in a business literature (figure 1).
Figure 1 How eco-innovation has been conceptualized in a business literature (Bossle, et al., 2016).
Hojnik and Ruzzier (2015) underline that the result of diminishing negative environmental pressure is not the main reason for the implementation of eco-innovation. There are other factors that can influence on the implementation of eco-innovation, such as policy, competitive advantage, company reputation, technological capabilities, potential revenue, social responsibility, and supplier participation. García, et al. (2015) share the same point of view with Hojnik and Ruzzier (2015). They state that drivers of eco-innovation can be “external pressures such as governmental regulation and stakeholders” and “the recognition of competitive advantage and improvement of performance through cost reduction.” Moreover, there is evidence that in any financial circumstances eco-innovation does not disrupt the economic performance of company or country (Cainelli, et al., 2011).
The role of supply chain in adoption of eco-innovation
Previous research and articles focused on the terminology eco-innovation and drivers of eco-innovation and adoption of eco-innovation. More than 30% of the research papers in the eco-innovation area focus on the drivers of eco-innovation. These papers accentuate main three drivers of adoption or implementation of eco-innovation such as micro, meso and macro (García, et al., 2015).
Figure 2 Drivers of adoption to eco-innovation (García, et al., 2015).
Most literature on this topic identified factors influencing to the adoption of environmental innovation at the meso level such as financing accessibility, market demand, pressure groups or stakeholders, production characteristics or networking (García, et al., 2015). Networking can be presented as the collaboration of manufacturing, developing or distributing companies and research institutions and this is also crucial for eco-innovation adoption (Cainelli, et al., 2011; García, et al., 2015) because exchange of knowledge has a positive impact on companies’ satisfying environmental requirements (Wong, 2013).
There is the observation that other types of innovation use the network more for assisting the finance and market while eco-innovation use the network for tackling technological problems (Halila & Rundquist, 2011). One of the components of network is supply chain and the process of product innovation development straightforwardly combines ecological issues through different approaches for establishing sustainable or environmental supply chains (Chiappetta Jabbour, et al., 2015):
- Design for Environment approach considers environmentally friendly characteristics of the product such as, recyclability, maintainability or repairing capability as project objectives, not as a limitation (Pujari, 2006).
- Life Cycle Assessment (LCA) approach examines all product or process life cycle stages from the acquisition of raw materials or mining of natural resources to final disposal of product (Pujari, 2006)
Sustainable supply chain management is the management of material and information flows in addition to the collaboration among companies along the supply chain by taking into account the three bottom line of sustainable development: social, economic and environmental and stakeholders and customer requirements (Seuring & Müller, 2008). The complexity of nowadays supply chain networks makes it hard to underline the sustainable implications of product or business.
There are several papers which consider about sustainable supply chains (“Green Supply Chain Management” (Srivastava, 2007), “Sustainable Supply Chain Management” (Lambert , et al., 1998), “Sustainable Operation Management” (Kleindorfer, et al., 2005), and “Sustainability strategies in industrial supply networks” (van Bommel, 2012).
Gaps in existing frameworks
All these researchers argue that innovation is a key driver of sustainability and sustainability should be embedded part of manufacturing and operation process rather than being something “complementary” to the process, but the development of eco-innovations in industrial supply networks is relatively under-researched. Roscoe, et al. (2016) consider how can firms develop eco-innovations in industrial supply networks and develop three routes for elaborating eco-innovations in industrial supply networks.
One of the routes is ‘tight’ collaborations which establish strong ties with strategic suppliers to gain advantages from their knowledge and technology that flow from suppliers to the retailer during the new product development. The next route is ‘loose’ collaboration: establishing multiple weak ties with suppliers. This provides several options for scanning and securing eco-innovations. However, this requires a deep comprehension of the supplier network’s scope and possessing high degree market knowledge by the supplier. The third route is ‘bridging’ collaboration which establishes weak connections with suppliers that “bridge structural holes” in the network to have access to the innovative technologies and ideas which suppliers could possess (Roscoe, et al., 2016).
According to Roscoe, et al. (2016), ‘tight’ collaboration usually involves incremental eco-innovations, while ‘loose’ and ‘bridging’ routes tend to lead to the development of more product and process based radical eco-innovations. To conclude, the combination of three supply network are suitable for building eco-innovations (figure 3).
Figure 3 Relationship between propositions (Roscoe, et al., 2016)
The literature review shows that eco-innovation is the future concern of R&D and the whole company. Increasing alliances between business companies and their suppliers have directed many scholars to search and formalise theories on how inter-organisational relationships may elaborate and improve and finally lead to the formation of organisational competitive advantage. Also, supply chain network plays a crucial role in the development and adoption of eco-innovation. Roscoe, et al. (2016) introduced the three different type of supply chain constructions in order to develop eco-innovation. However, observation from literature review shows that there is the gap in how companies should implement supply chain network in order to gain benefits and advantage from the adoption of eco-innovation. Moreover, this research emphasises on automotive and transport sector because this sector responsible for 20% of global carbon dioxide emissions and is currently one of the fastest-growing suppliers to climate change.
Global automobile ownership is estimated around 1 billion vehicles in 2010. If this trend continues, the number of vehicles could reach 1.5 billion in 2020. These facts raise the concerns about planet’s environmental conditions as well as congestion and traffic accidents (Schipper, 2008). Automobile demand is linked with the population growth and wealth of population, particularly in developing countries. This puts extra pressure on the automotive and transport sector to reduce environmental impacts (Schipper, et al., 2007). OECD (2009) presented case studies of adoption of eco-innovation in the automotive and transport sector such as BMW Group, Toyota, Energy-saving tyres – Michelin and bicycle sharing system in Paris – Vélib’. Eco-innovation in this sector has been implemented through technological progress, typically in the form of adjustment and redesigning of products or processes. As the result, “efficient fuel injection technologies”, advanced power management systems, less energy consumer tyres and optimised painting system are introduced. OECD (2009) research analyse the final point of whole supply network which is end product and its impact on the environment while this paper would consider supply chain structures implemented by automotive and transport companies in order to gain benefits and advantage from the adoption of eco-innovation.
Research Methodology
To address the gap in knowledge about the how companies should implement supply chain network to benefit from adoption of eco-innovation in the automotive and transport sector, a qualitative research strategy based on multiple case studies with automotive and transport sector’s companies have been opted. Automotive and transport sector has been chosen because it is one of the developed industries which faced several industrial revolutions and can influence to other sectors of industry. For example, successful integration of lean management by Toyota accelerate the implementation of the lean idea in other industries such as healthcare (Teich & Faddoul, 2013), airspace (Hansen, 2015), furniture and food industries. Also, lean production has now increased and lean management thinking has been applied to all phases of the supply network (Melton, 2005). In order to fulfil the gap, a qualitative approach through case studies will be conducted. According to Myers (2013), a qualitative approach is suitable when the aim of the study is to achieve a deeper understanding of a particular topic in its specific context when the research is investigative, and when the topic is appearing and there are few publications which researched this topic.
A case study is appropriate for creating theoretical insights and practical empirical observations when a phenomenon is not deeply researched. Additionally, case studies can provide comprehensive information about implementation of supply chain network in companies which successfully developed eco-innovations while in quantitative and top-down analyses, these can be unobserved (Carrillo-Hermosilla, et al., 2010). A qualitative study is most appropriate because the focus of this research is to investigate eco-innovations and the role of suppliers in the creation of eco-innovations (Chiappetta Jabbour, et al., 2015).
As case studies consider the details of particular types of eco-innovation, particularly the key dimensions of the companies supply chain structure, subsequent works on this area can benefit significantly from the results of empirical analyses of cases. Exploring multiple case studies strengthens the analytical result of the research rather than one case study because it emphasizes the comprehensive understanding from the research and attenuate scepticism about the conclusions (Chiappetta Jabbour, et al., 2015; Collis & Hussey, 2014).
Hypotheses about the role of suppliers and structured supply chain in the development and adoption of eco-innovation will be formalised as the case studies proceed and each case study will implement four key research methods: interviews with senior management to clarify an organisational structure and to understand the goals and factors behind the implementation of eco-innovations; detailed interviews with middle management layer and below, to ensure structure and a broad understanding of how eco-innovation developed and the role played by suppliers in this process; individual interviews with representatives of bath sides in order to provide a depth of information and distinguish the meaning of the implementation of eco-innovation to individuals; a range of inquiry groups to come to the mutual understanding of the suppliers role in this process (Collis & Hussey, 2014).
The results of conducted case studies will be analysed through cross-case analysis, which helps to underline any similarities and differences and see any existing patterns among this case studies (Collis & Hussey, 2014). In this situation, how companies implemented supply chain structure or network to financially and socially benefit from the adoption of eco-innovation in the automotive and transport sector.
Practical and Ethical considerations
The originality of this research puts together topics as eco-innovation and drivers of adoption, sustainable supply chain structure and automobile and transportation industry based on case studies of leading companies in this area. Since qualitative approach through case studies are used for conduct this research several ethical and practical considerations were taken into account. Because data collection will be done through interviewing different levels of managers, protecting participant confidentiality issue will be conducted through:
- get approval to deliver personally identifiable material and facts, especially quotations, before using the data;
- provide confirmation to participants of interviews what their permission to information is secure
- get validation to the conclusion which is made from their data and clearly differentiate my views from theirs in writing up form;
- use different names for organisations or people which participated in the research in order to cover their personality and create the unbiased perception to the readers (Myers, 2013).
Research covers just a few case studies which probably will not cover all aspects of the topic and the result of the research will have exceptions and limitation.
Conclusion
To conclude, this paper analyses several aspects of sustainability and management approaches in order to define the gap in the existing literature. As the results of it, research questions, research methodology and some ethical concerns regarding research methodology were formalised. In the literature review, firstly, the description of ‘eco-innovation’ was described, then drivers of eco-innovation were identified and the role of supply network was distinguished. The different sustainable supply chain structures are considered, but the implementation or practical applicability of these structures was not shown in these papers. So, there is the area of further research was underlined. In order to shrink the area of research, the automotive and transport was chosen. As the methodology of research, qualitative approach and case-study method were considered and some ethical and practical activates are taken into account.
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