Reverse logistics, stakeholders' influence, organizational slack, and managers' posture

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Abstract

Reverse logistics (RL) has strategic importance. However, little is known concerning what motivates firms to adopt RL systems. Drawing on stakeholder theory formulations, organizational slack, and the manager's strategic stance concept, this article develops a model that proposes external, internal, and individual factors that affect the implementation of RL programs. Our framework considers three major explicative variables: the attributes of the stakeholder (power, legitimacy and urgency), organizational slack for RL programs, and the manager's strategic posture. The study draws on a sample of 118 Spanish companies and uses a probit model to determine the influence of these factors on the probability of firms to implement RL systems. The study finds that customers, employees, and the government salience in terms of RL activities and manager's progressive posture have a significant influence on the final decision of implanting RL programs. Conversely, the study finds that shareholder salience negatively impacts the decision.

Introduction

Many studies in logistics assume that the supply chain flow begins with the incorporation of raw materials into the transformation process, and ends with the delivery of the product to the final consumer. However, Ginter and Starling (1978) report that a reverse channel of distribution could be central in business activities. Some studies confirm this assertion. The protagonistic role of the consumer (Homburg et al., 2000), the increasing public consciousness and regulations on environmental issues (Henriques and Sadorsky, 1996), and the change in the strategic focus of firms (Madsen and Ulhoi, 2001) considerably encourage activities such as the return, recondition, refurbish and recycle of products and packaging. All these activities constitute the most common procedures of Reverse Logistics (RL) (Rogers and Tibben-Lembke, 1999, Stock, 1992).

RL gains importance in economic terms. For instance, the value of returned products to the retail sector of the Unites States exceeded 100 billion US dollars in recent years (Stock et al., 2002). From a strategic point of view, many firms have begun to consider these programs as potential to gain and maintain competitive advantage, leading to proactive initiatives (Marien, 1998). However, the determinants of these initiatives remain largely unexplored by the academic community. Drawing on diverse but complimentary theoretical formulations, we propose that RL programs result from a combination of external, organizational, and individual factors. Because the activities of RL involve multiple relationships between different stakeholders (e.g. suppliers, customers) and the firm, we emphasize the role different stakeholders have on the RL systems implementation. Furthermore, we analyze both the role of organizational slack and the executive's strategic stance as potential determinants of RL programs. Empirically we assess the impact of these factors on the probability of firms to adopt RL systems. The results suggest that stakeholder pressures and a proactive stance of managers increase the odds that companies will implement RL programs. However, the weight and the significance of different measures of organizational slack were not always found to be a relevant factor in this decision.

Research and analysis provide three important contributions to the existing literature. First, the study empirically examines the determinants of implementation by providing clarification of the RL decision making process. Second, the chosen approach combines stakeholder theory with the concepts of organizational slack and manager's strategic posture by offering a solid theoretical framework on which future research can be developed. Finally, the article offers a European perspective on RL in extending the existing empirical research.

To illustrate the study the discussion begins by examining the concept of RL through a review of previous research and by presenting general motivation for RL. In support the article outlines a model and proposes three working hypotheses, which a study tests on a sample of 118 Spanish firms from the automotive component industry. The article concludes with a discussion of the theoretical and practical significance of the study, its limitations, and a proposed agenda for future research.

Section snippets

The concept

Perhaps because of its rapid trajectory of significance the concept of RL has not been homogenously defined (Fernandez, 2003). We can identify definitions that exclusively consider economic or environmental aspects of RL; and other explanations that capture both aspects simultaneously (Kroon and Vrijens, 1995; Rogers et al., 1999; Thierry et al., 1995). There are also definitions that stress specific traits of the processes of RL; such as related activities, the materials involved, and points

Theoretical framework and hypotheses

In this section the article argues that the interaction of external, organizational, and individual factors determine the RL implementation. External forces stem from the varying degrees of pressure by stakeholders, and the strength of their claims' depends on their salience. The study also considers the availability of resources as the key organizational factor which determines activities of RL. Finally, the article analyzes how the strategic preferences of managers impact the final decisions

Sample and data

The research analyses firms from the auxiliary automobile industry in Spain. A deep study of the industrial activities classified in the SIC codes (Appendix A shows the final list of selected activities) was carried out to determinate firms that belong to auxiliary automobile industry. Previous research related to supply chain management in general and RL in particular provides evidence that the sector is well-suited for this analysis. For instance, Benton and Maloni (2005) show that, within

Results

Table 1 reports reliability and shows Cronbach's alpha coefficients for the measures of stakeholder salience and PROACTIVITY.

Table 1 shows that in every case the coefficient alpha is higher than its correlation with the rest of the scales. In addition, relating to reliability, the alpha coefficients fluctuate from 0.65 to 0.82. These reliability coefficients can be considered acceptable given the early stage of research with some of these constructs (Nunnally, 1978, Smith et al., 1991). Table 1

Discussion and conclusion

This article has investigated the antecedents of RL implementation. Based on stakeholder theory, the concepts of manager's strategic stance and organizational slack, the study suggests that the probability of firms implanting RL systems depends on the stakeholder salience, the availability of resources of the firm, and a progressive strategic posture of the manager. Overall, the study validates the theoretical contention. Customers, employees, and the government salience in terms of RL

Acknowledgements

Authors wish to thank Fundación BBVA and the project “Estrategias en las empresas europeas internacionales y medioambiente: análisis de recursos humanos, producción y negocio” for supporting this research. They also acknowledge the help of Prof. Dr. Carlos Larrinaga in providing access to financial statements. They are indebted as well to the Spanish Minister of Education and Science and the Comunidad Autónoma de Madrid which have provided financial support under the research projects entitled

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