1 Introduction
2 Theoretical background
2.1 Sustainability: a multidimensional construct
2.2 Corporate sustainability
2.3 Stages of development and maturity
3 Structuring the field of action
3.1 Identification and systematization of starting points for the transformation towards sustainability
Primary activities (manufacturing industry) | ||||
---|---|---|---|---|
Activity | Description of activity | Exemplary starting points for transformation toward sustainability | ||
Social dimension | Ecological dimension | Economic dimension | ||
Inbound logistics | Inbound logistics include the procurement of raw materials, their warehousing, inventory control, vehicle scheduling, and returns to suppliers | • Labor practices and decent work, human rights: fair working conditions (e.g., part-time model) | • Transport: improve vehicle scheduling to reduce CO2-emissions (e.g., algorithmic optimization of routes) | • Economic performance: improve warehousing time (e.g., Kanban System) |
Operations | Operations include all activities that are associated with the transformation of inputs into the final product form. Exemplary activities are machining, packaging, assembly, equipment maintenance, and testing | • Labor practices and decent work, human rights: fair working conditions (e.g., no child labor in textile industry) | • Energy: usage of modern machines with a good energy balance and efficiency • Materials: Recyclable packaging materials | • Economic performance: usage of modern machines with a good energy balance and efficiency |
Outbound logistics | Outbound logistics include activities that are associated with collecting, storing, and physically distributing the end product to customers. Examples are warehousing, material handling, delivery vehicle operation, order processing, and scheduling | • Labor practices and decent work, human rights: fair working conditions (e.g., working hours) | • Transport: improve vehicle scheduling to reduce CO2− emissions (e.g., managed order cycles (economies of scale), degree of capacity utilization in shipping) | • Economic performance: improve warehousing time (e.g., just-in-time production) |
Marketing and sales | Marketing and sales include all activities that are associated with providing a reason by which customers want to purchase the product and tempt them to do so. Exemplary activities are advertising, promotion, sales force, quoting, channel selection, channel relations, and pricing | • Human rights: promotion or image campaigns can propagate the companies’ sustainable products, services or manufacturing processes | • Materials, effluents and waste: by using less print and focusing more on online marketing, firms can reduce material input | • Economic performance: by using less print and focusing more on online marketing, firms can reduce material input |
Service | Service includes all activities that are associated with providing the service to enhance or maintain a products’ value, such as installation, repair, training, parts supply, and product adjustment | • Materials: long life guarantees • Society: free service guarantees in case of damage within a certain period of time after the buy | • Materials, effluents and waste: ensure long lifetime of products | • Economic performance: free service guarantees |
Support activities (manufacturing industry) | ||||
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Procurement | The procurement deals with purchasing inputs, such as materials, supplies and equipment | • Human rights: fair trade | • Materials: choice of resources (e.g., recyclable materials, avoiding or reducing the usage of scarce resources) | • Economic performance: choice of material |
Infrastructure | The infrastructure of a firm includes for example the general management, planning, finance, accounting, legal, government affairs, quality management, organizational structure, control systems as well as the company culture | • Labor practices and decent work: volunteering projects like mentoring programs as a part of a companies’ daily life | • Energy: proper communication systems improve virtual meetings and reduces necessity to travel • Energy: intelligent housing reduces energy consumption | • Economic performance: proper information systems can lead to competitive advantages, Intelligent Housing |
Human resources | The human resource management includes all activities associated to recruiting, hiring, training, development, and compensation of all types of personnel | • Labor practices and decent work: a responsible treatment of employees, e.g., healthy work environment • Labor practices and decent work: company kindergarten • Labor practices and decent work: employee training | • Materials, effluents and waste: by using less print and focusing more on online recruiting, firms can reduce material input | • Economic performance: sustainable process in hiring, can reduce costs due to effective choices of the right and fitting personnel |
Technology development | The technology development, which includes for example activities like component design, feature design, field-testing, process engineering, and technology selection, sums up technologies that support the value-creating activities | • Labor practices and decent work: Fair working conditions (e.g., home office to combine work and family life) | • Energy: implementing measures of Green IS • Energy: improve communication (reduce travel times) | • Economic performance: use IT as enabler (e.g., improve communication and reduce travel times, intelligent housing) |
3.2 The sustainability maturity cube
4 Decision model
4.1 Assumptions of the decision model
4.2 Formulation of the decision model
5 Operationalization of the approach
5.1 Data collection
5.2 Identification of sustainability actions and corresponding starting points
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Regarding the ecological commitment, constant improvement of the products with a view to reducing the consumption of power, water and all resources that are involved in the use and production of the products is most important (starting point is corporate activity “operations” and ecological dimension).
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Social commitment is achieved by acting responsibly towards employees which means an appropriate work-life balance and direct participation of employees in the success of the company (starting point is corporate activity “outbound logistics” and social dimension).
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Further social commitment is achieved by actively supporting social and cultural activities in the region (starting point is corporate activity “infrastructure” and social dimension).
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Considering the economic dimension, the following findings were deduced from the interviews: for the regarded company sustainable and long-term economic activity is more important than achieving short-termed profits. This is reflected in a high customer satisfaction, which ultimately results in the continuous growth of sales and profits, and in a high employee satisfaction.
5.3 Determination of the economically optimal increase of the sustainability maturity levels
i
| Investment
\( I_{i}^{\text{cur}} (g(\mathop {\varDelta m_{i} }\limits^{ \rightharpoonup } )) \)
| Cash outflows of operational business \( O_{i}^{\text{cur}} (g(\mathop {\varDelta m_{i} }\limits^{ \rightharpoonup } )) \) | Savings \( S_{i}^{\text{cur}} (g(\mathop {\varDelta m_{i} }\limits^{ \rightharpoonup })) \) | Cash inflow
\( E^{\text{cur}} (f(\mathop {\varDelta m)}\limits^{ \rightharpoonup } ) \)
|
---|---|---|---|---|
1 | 9 · Δm
1
2
+ 2 · Δm1 | 5 · Δm
1
2
+ 4 · Δm1 | 7 · Δm
1
0.5
|
\( 185\,\cdot\,\sqrt {(f(\mathop {\varDelta m)}\limits^{ \rightharpoonup } )} \)
|
2 | 7 · Δm
2
2
+ 5 · Δm2 | 3 · Δm
2
2
+ 7 · Δm2 | 10 · Δm
2
0.5
| |
3 | 4 · Δm
3
2
+ 8 · Δm3 | 2 · Δm
3
2
+ 9 · Δm3 | 8 · Δm
3
0.5
|
5.4 Analysis of the decision model behavior conducting a sensitivity analysis
Input parameter: original value | Modified values (±10 %, ±1) | Investments | Cash outflows of operational business | Savings | Cash inflows | Resulting total additional payment surplus | Relative change in total additional payment surplus (%) |
---|---|---|---|---|---|---|---|
a:9 | 9.9 | 40.63 | 26.91 | 9.96 | 73.69 | 16.10 | −5 |
8.1 | 41.76 | 28.83 | 10.53 | 77.89 | 17.84 | 6 | |
10 | 40.56 | 26.82 | 9.93 | 73.48 | 16.03 | −5 | |
8 | 41.80 | 28.96 | 10.56 | 78.16 | 17.96 | 6 | |
b:2 | 2.2 | 41.21 | 27.70 | 10.20 | 75.50 | 16.79 | 0 |
1.8 | 41.28 | 27.85 | 10.25 | 75.83 | 16.95 | 0 | |
3 | 41.06 | 27.40 | 10.11 | 74.83 | 16.49 | −2 | |
1 | 41.40 | 28.16 | 10.34 | 76.50 | 17.28 | 2 | |
j:5 | 5.5 | 40.50 | 27.69 | 10.07 | 74.54 | 16.42 | −3 |
4.5 | 42.09 | 27.79 | 10.39 | 76.87 | 17.38 | 3 | |
6 | 39.83 | 27.55 | 9.93 | 73.48 | 16.03 | −5 | |
4 | 43.04 | 27.72 | 10.56 | 78.16 | 17.96 | 6 | |
k:4 | 4.4 | 41.02 | 27.78 | 10.18 | 75.33 | 16.71 | −1 |
3.6 | 41.48 | 27.76 | 10.27 | 76.00 | 17.03 | 1 | |
5 | 40.69 | 27.77 | 10.11 | 74.83 | 16.49 | −2 | |
3 | 41.83 | 27.73 | 10.34 | 76.50 | 17.28 | 2 | |
r:7 | 7.7 | 41.66 | 28.04 | 10.59 | 76.26 | 17.16 | 2 |
6.3 | 40.84 | 27.51 | 9.86 | 75.07 | 16.58 | −2 | |
8 | 41.83 | 28.15 | 10.75 | 76.51 | 17.28 | 2 | |
6 | 40.67 | 27.39 | 9.71 | 74.82 | 16.46 | −2 | |
s:185 | 203.5 | 52.16 | 34.87 | 12.28 | 99.96 | 25.20 | 49 |
166.5 | 30.66 | 20.78 | 8.03 | 53.51 | 10.10 | −40 | |
186 | 41.83 | 28.15 | 10.34 | 76.93 | 17.28 | 2 | |
184 | 40.67 | 27.39 | 10.11 | 74.41 | 16.46 | −2 |
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The direction of the changes of the total additional payment surplus is as expected from an analytical point of view: an increase (decrease) of the cash outflows leads to a decrease (increase) of the total additional payment surplus and vice versa for the cash inflows. Here, increased (decreased) savings or increased (decreased) cash inflows lead to an increased (decreased) total additional payment surplus.
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Furthermore, the result of our decision model is quite robust for our real-world example: The relative change in the total additional payment surplus is generally small and considerably lower than the 10 % variation of the respective input parameter except for the case of the expected cash inflows. Here, the variation of s by ±10 % results in a 49 % (−40 %) increase (decrease) of the total additional payment surplus. This can be explained by the high absolute value of the input parameter s compared to all other input parameters. One reason might be the fact, that in contrast to all other input parameters, the cash inflows are the only component in our example that depends on the aggregated total sustainability maturity level (aggregation function \( f(\mathop {\varDelta m}\limits^{ \rightharpoonup } )) \) over all corporate activities, whereas the other input parameters only contain the effects of just one corporate activity (aggregation function \( g( \mathop {\varDelta m_{i} }\limits^{ \rightharpoonup } ) \)). Another reason to justify this comparably high value of the cash inflows is the fact that the customer equity which is the main building block of this cash flow component is a future-oriented figure that includes long-term effects.
Base case (original input parameters) | Investments | Cash outflows of operational business | Savings | Cash inflows | Resulting total additional payment surplus | Relative change in total additional payment surplus | |||||
---|---|---|---|---|---|---|---|---|---|---|---|
9 | 2 | 5 | 4 | 7 | 185 | ||||||
7 | 5 | 3 | 7 | 10 | 185 | 41.25 | 27.77 | 10.23 | 75.67 | 16.87 | |
4 | 8 | 2 | 9 | 8 | 185 | ||||||
Optimistic case (underestimation of cash outflows, overestimation of cash inflows) | |||||||||||
8.1 | 1.8 | 4.5 | 3.6 | 7.7 | 203.5 | ||||||
6.3 | 4.5 | 2.7 | 6.3 | 11 | 203.5 | 62.42 | 41.29 | 16.71 | 123.63 | 36.63 | 117 % |
3.6 | 7.2 | 1.8 | 8.1 | 8.8 | 203.5 | ||||||
Pessimistic case (overestimation of cash outflows, underestimation of cash inflows) | |||||||||||
9.9 | 2.2 | 5.5 | 4.4 | 6.3 | 166.5 | ||||||
7.7 | 5.5 | 3.3 | 7.7 | 9 | 166.5 | 21.74 | 14.81 | 4.97 | 36.80 | 5.23 | −69 % |
4.4 | 8.8 | 2.2 | 9.9 | 7.2 | 166.5 |
6 Contribution, limitations, and conclusion
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The difficulties regarding a clear definition, understanding and operationalization of (corporate) sustainability show that sustainable development is a complex and multidimensional issue. Hence, a clear and unambiguous managerial advice cannot be given. The understanding of corporate sustainability in this paper is based on the belief that the economic perspective is of particular importance in a business context and can be seen as ambiguous. On the one hand, it is one of the three sustainability dimensions, but at the same time—in conformity with the paradigm of value-based management emerges as an additional organizational incentive when engaging in sustainability transformation. This explains the understanding of corporate sustainability for this work; however, future research needs to further dispute this controversy.
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The empirical evidence of whether all customers care about sustainability issues and express their concerns through purchasing behavior and thus price sensitivity is debatable. Even those customers, who say they care about sustainability, do not necessarily reflect their attitude in their purchasing habit (Bonini and Oppenheim 2008; Bellows et al. 2008; Fisher 1993; Pickett-Baker and Ozaki 2008). As a consequence, sustainable practices may directly and negatively affect profitability, and organizations may refrain from diving into adopting sustainable practices.
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Determining the concrete monetary values of the consequences of sustainability actions is not straightforward as there does not always exist a metric that can be estimated: in some cases one of the numerous frameworks of sustainability assessment can provide assistance in determining such sustainability metrics but this may not be always reliable. Hence, some of the values depend on the estimation of subject matter experts. An objectification is desirable, but would require further research.
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There are several issues that have to be considered when instantiating a concrete sustainability maturity model, such as the determination of current and targeted sustainability maturity levels, the formulation of concrete development paths from initial to desired maturity levels, confounding effects (e.g., when implementing several actions at the same time) and situations when it makes sense to invest in a particular action or not. We addressed some of these aspects in the operationalization of the approach; however, further research needs to focus on guidelines for the operationalization of the Sustainability Maturity Cube.
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Future research should also focus on a more extensive evaluation of the proposed approach as we only used an illustrative case for the operationalization. Even though this case allows for an initial instantiation of the Sustainability Maturity Cube, the findings are not aimed at making generalizations.