Review of Literature

Abstract

This chapter carries out a comprehensive review of the background literature pertaining to social sustainability and the ways in which social sustainability in the supply chain has been perceived and practised. The review will act as one of the vital prerequisites for conducting the structural research. A detailed review of the prior research in the related fields not only assists in identifying the research gaps, but also helps in formulating the hypotheses and identifying the independent and dependent variables related to them.

Full text

Chapter 2
Review of Literature
2.1 Introduction
This chapter carries out a comprehensive review of the background literature per-
taining to social sustainability and the ways in which social sustainability in the
supply chain has been perceived and practised. The review will act as one of the
vital prerequisites for conducting the structural research. A detailed review of
the prior research in the related fields not only assists in identifying the research
gaps, but also helps in formulating the hypotheses and identifying the independent
and dependent variables related to them. The chapter comprises:
•a detailed discussion on the research trends in the field of social sustainability
and available models;
•a discussion on the ways in which social sustainability in the supply chain has
been perceived and practised;
•identification of the potential areas of research pertaining to social sustainability;
and development of research questions based on the gaps identified.
2.2 Methodology of the Literature Review
The literature review has been carried out through an extensive use of the electronic
databases, such as Scopus, Science Direct, EBSCO Business Source Premier,
Emerald, ProQuest, Taylor and Francis, Springer and Inderscience, using keywords
such as social sustainability, sustainability, supply chain sustainability, sustain-
ability in the supply chain, social responsibility, corporate social responsibility,
corporate social responsibility and supply chain, sustainability and supply chain,
and social sustainability and manufacturing. The literature surveyed pertains to the
period 1950–2013 as the concept of sustainability was first proposed in the 1950s.
©Springer Nature Singapore Pte Ltd. 2019
V. Mani and C. Delgado, Supply Chain Social Sustainability for Manufacturing,
India Studies in Business and Economics, https://doi.org/10.1007/978-981-13-1241-0_2
11

However, social sustainability gained importance only after the publication of the
Brundtland Commission (1987) report, followed by the release of Agenda 21 of the
Rio Conference (1992).
Overall, the search yielded 523 articles which were carefully screened for
duplication, as there were chances of the same articles appearing more than once in
different databases. Finally, 154 articles were selected for the review after a thor-
ough screening of their headings, abstracts and methodologies. These articles were
considered significant as they dealt directly with social sustainability and social
sustainability in the supply chain. The methodology followed for the literature
review has been illustrated in the flow chart in Fig. 2.1.
To begin with literature review, the next section discusses the term social sus-
tainability and various definitions associated with it.
2.3 Social Sustainability—A Background
The sustainability framework can be traced back in the literature from the seminal
works of Carroll (1979) that describes four responsibilities of corporate entities,
including ethical, legal and discretionary or voluntary responsibilities. In an earlier
research, scholars advocate social obligations and responsibilities of corporates that
include some voluntary social responsibilities by introducing taxonomy (Sethi
1975). However, scholars could not arrive at conclusive definition of sustainability,
due to ambiguity nature of the sustainability construct and this led to a variety of
definitions of social sustainability (Bansal 2005). Nonetheless, sustainability defi-
nition is mainly drawn from world commission on environment and development
(WCED) popularly known as Brundtland Commission report that refers to as
“development that meets the needs of the present without compromising the ability
of the future generation’s needs”(Brundtland 1987).
Review of Literature
Social
sustainability
Background
Literature
Defining
social
sustainability
Supply chain
management
Background
Literature
Evolution of
SCM
Definitions
and models
Supply chain
Performance
metrics
Social
sustainability and
supply chain
management
Background
and
development
Antecedents
Impediments
Social
sustainability
dimensions
in the supply
chain
Social
sustainability
and supply
chain
performance
Supplier
performance
Background
Literature
Supplier
performance
metrics
Operational
performance
Background
Literature
Operational
Performance
metrics
Customer
performance
Background
Literature
Customer
performance
metrics
Cost
reduction(Fo
cal company)
Backgroun
d Literature
Cost
reduction
measures
Fig. 2.1 Flow chart of literature review
12 2 Review of Literature

The Brundtland Commission’sdefinitions have an enormous appeal as it
embraces both people needs and biophysical environmental goals through eco-
nomic development. It also encapsulates the principle of much larger construct that
attempts to address both less tangible and tangible requirements of life which fully
depends on revitalisation of growth: changing the quality of growth in terms of
energy, food, water and sanitation; meeting job needs; enhancing and conserving
the resource base; reorienting technology and managing risks; ensuring sustainable
level of population growth; and integration of environment and economics with the
decision-making process.
However, scholars are critique on Brundtland Commissions report as it lays
emphasis only on natural resource management, but not on the people, culture and
society (Chatterjee and Finger 1994). Later studies, on the other hand, propose three
important dimensions of sustainability including economic, long-term focus on
environment, and equity (Pearce et al. 1989). Sustainability often means the three E’s
in urban-planning circles: Economy, Environment and Equity, without giving much
thought to whether equity alone is central to social sustainability. For instance, Elkin
et al. (1991) argue, “sustainable development also embraces the need for equity”.
According to Gladwin et al. (1995), for an enterprise to be sustainable, firm
needs to grow and maintain capital stocks, internalisation of social cost, fostering
democracy and enlarge people choices. United Nations Counsel for Sustainable
Development in its Agenda 21 proposes three important sections for sustainability,
i.e., economic dimension—promotion of economic growth; social dimensions—
equality and creation of productive employment; environmental dimension—pro-
tection of natural environment and resources. Thus setting an agenda for social
development while actively considering, the inter-relationship between social
requirements and environment.
Further scholars have asserted the importance of addressing basic human needs
and argue that if the basic human needs are not met, it is very difficult to address the
environmental sustainability goals, because in developing countries, people most
likely to harm the natural resources to meet their basic needs (Crabtree 2005). There
were number of studies conducted exploring social sustainability; notably, Sach
(1999) and Godschalk (2004) titled “social sustainability and whole development”
discuss number of essential elements of social sustainability that include social
homogeneity and services, equitable income, access to goods and employment.
Additionally, Sach (1999) proposes the importance of “cultural sustainability that
entails balancing the externally imposed changes with continuity and development
from within and of political sustainability based on human rights, democracy, and
effective institutional control”.
Enriching these elements, Sharma and Ruud (2003)define social sustainability
as “an ethical code of conduct for human survival and outgrowth that needs to be
accomplished in a mutually inclusive and prudent way”. In 2001, the United
Nations Division for Sustainable Development (UNDSD 2001) identified and
proposed several indicators to measure the progress towards sustainability.
Subsequently, the UNDSD established framework of themes and sub-themes,
classifying the indicators first by primary dimension of sustainability, i.e. social,
2.3 Social Sustainability—A Background 13

environmental and economic, then by theme (e.g. education), and finally by
sub-theme (e.g. literacy). The themes related to the social dimension of sustainable
development are equity, education, health, housing, security, population, etc., and
each sub-theme consists of a minimum of three quantifiable indicators associated
with it, as specified in Table 2.1. Others suggest four emergent principles of sus-
tainability including equality, democratic society, democratic government, and
human well-being (Magis and Shinn (cited in Dillard et al. 2008)). These four
principles form a self-reinforcing virtuous cycle that expedites progress towards
even environmental sustainability.
Dyllick and Hockerts (2002) have also discussed the importance of the rela-
tionship among the sustainability dimensions and coined the term “socio-efficiency”
and “eco-efficiency”for a sustainable society. Other scholars describe various other
elements of social sustainability, such as the objective basic needs and subjective
basic needs, objective social resources and subjective social resources, cultural
Table 2.1 List of criteria, sub-criteria and indicators proposed by UNDSD (2001)
Measures Sub-dimensions Dimensions
“Percentage of population living below
poverty level
Unemployment rate”
“Gini index of income inequality”
“Percentage ratio of average female wage
versus male wage
The practice of granting or denying rights of
privileges based on gender”
“Poverty”
“Gender equality”
“Gender discrimination”
“Equity”
“Children nutritional status
Mortality rate under 5 years old
Population who have adequate sewage
facilities (%)
Access to safe drinking water
Access to primary health care facilities
Safety measures undertaken by the company
to protect the employees”
“Nutritional status
Mortality
Sanitation
Drinking water
Healthcare delivery
Safety measures
provided by corporates”
“Health and
safety”
“Standard of wages against man-hours spent”“Wage standard”“Wages”
“Adult literacy ratio
Access to primary education up to 5th STD”
“Literacy level
Education level”
“Education”
“How human rights are protected (right to
associate, speak)”
“Human rights
environment”
“Human rights”
“The percentage of child labour employed
Percentage of bonded labour employed”
“Child labour
Bonded labour”
“Child and
bonded labour”
“Human and floor ratio
Hygienic conditions”
“Living conditions”“Housing”
“Population growth rate
Population of urban formal and informal
settlements”
“Population change”“Population”
Source Hutchins and Sutherland (2008)
14 2 Review of Literature

diversity, and justice (Omann and Spangenberg 2002). According to Littig and
Griebler (2005), “social sustainability is a quality of societies that signifies the
nature–society relationships, mediated by work as well as relationships within the
society. Social sustainability is given, if work within a society and the related
institutional arrangements satisfy an extended set of human needs and are shaped in
a way that nature and its reproductive capabilities are preserved over a long period
of time and normative claims of social justice, human dignity and participation are
fulfilled’.
Littig and Griebler (2005) point out three core indicators of social sustainability.
The first deals with the satisfaction of basic needs and quality of life. Others pertain
to poverty, income distribution and unemployment, education, training, housing
conditions and health (private and workplace), security and income, and the rest are
related to social justice and social coherence. In addition, scholars also describe
social equity is an essential component of social sustainability and state that
everyone in the society should have equal access to the resources and opportunities
(Bansal 2005). Extending social equity, Krause et al. (2009) describe as “fair and
equitable treatment of employees”.
In the same vain, social sustainability is often equated with social capital, social
inclusion and social cohesion (Bramley and Power 2009). This also accentuates the
importance of focusing on the higher order needs, such as basic societal develop-
ment and access to necessary goods and services. Social sustainability studies in the
literature, further emphasises providing employment, intra and inter-generational
equity, access to influential decision-making fora and justice (Mitlin and
Satterthwaite 1996;Källström and Ljung 2005; Redclift 2005; Bramley and Power
2009).
The Organisation for Economic and Social Cooperation and Development
(OECD) views social sustainability from two different perspectives, social and
human (OECD 2008). The social dimension comprises actions that are beneficial to
the society while the human dimension refers to knowledge, skills, ability and talent
that determine the individual performance in the labour market (OECD 2008;
Hobbs 2000; Milward 2003). Moreover, according to some scholars, social sus-
tainability is concerned with the management of social resources that include
people’s skills and abilities, relationships and social values (Sarkis et al. 2010).
More recently, the research titled “what is social sustainability”opens up
threefold literature schema involving development sustainability: addressing basic
needs and creation of social capital; maintenance sustainability: social and cultural
characteristics—peoples resistance or embrace to change; bridge sustainability:
behavioural changes in human being that directs to achieve biophysical environ-
mental goals.
Based on the discussions, it can be said that social sustainability refers to social
issues and the ways in which they are, or can be addressed, leading to the long-term
well-being of the people in different societies (Mani 2018a, b, c).
Taking the discussion further, the next section considers various definitions of
social sustainability.
2.3 Social Sustainability—A Background 15

2.4 Defining Social Sustainability
To begin with, the section examines the issues involved in defining social sus-
tainability for the purpose of creating a common research agenda. A working
definition of social sustainability has been provided at the end of this section.
However, since arriving at a single useful definition proved an onerous task, the
section, instead, suggests various useful approaches that have evolved over time. As
seen above, social sustainability is all about the people and members of a particular
society. Although social sustainability can have a bigger, universal agenda, it is
bound to differ in terms of “what”and “where”because of the different social issues
evolved in different societies over time. These issues are highly contextual. For
example, the social issues in the Western countries and the developing nations vary
greatly. To elaborate further, issues such as juvenile arrests, living wages and
recreation are hardly relevant to the developing nations where issues like poverty,
health, safety, hygiene and sanitation and bonded and child labour are far more
important. Thus, although the issues look relevant under the bigger umbrella of
social sustainability irrespective of the society, their contextual nature makes the
priorities different.
Generally, there has been a strong focus on defining sustainability as a condition
and measuring it with a series of indicators. Social sustainability is recognised as a
life enhancement feature within the communities, and includes the practices that
can achieve life enrichment. Thus, possible indicators to social sustainability are
safety and health, equity in accessing the key services, education, housing, transport
and recreation; and equity between generations: refers to the future generations that
should not be disadvantaged due to the activities of the present generation. The
social dimensions and indicators are elaborated in detail under the section “social
dimensions”. Here, various definitions of social sustainability proposed by scholars
based on their studies can be found in Table 2.2.
Thus, having discussed social sustainability as touching upon various issues that
fall under the ambit of “humanness”, we can arrive at a working definition of social
sustainability as follows:
Social sustainability is all about addressing the social issues in today’s societies, facilitating
a sustainable future for the future generations.
Moreover, since this study focuses on the issues associated to the supply chain,
we further limit our focus to the extent possible to social aspects that are specifically
related to the supply chain and have been discussed under the section on “social
sustainability and supply chain”. Therefore, the next section will discuss the liter-
ature on supply chain management and its evolvement over time. In addition, it will
also explore the supply chain performance metrics.
16 2 Review of Literature

Table 2.2 Social sustainability definitions evolved over time
Authors Definitions
Hill (1998)“The preservation of the planet and its ecosystems, society and its
communities, for finest, equitable environmental and human health
and well-being”
IUCN WWF, UNEP
(1991)
“Development that improves the quality of human life while living
within the carrying capacity of supporting ecosystems”
Lafferty and
Langhelle (1999)
“Social sustainability as a human code of conduct which needs to be
achieved in an equitable, inclusive and prudent manner”
Polése and Stren
(1999)
“Social sustainability of a city as: Development and/or growth that is
compatible with the harmonious evolution of civil society, fostering
an environment conducive to the compatible cohabitation of
culturally and socially diverse groups while at the same time
encouraging social integration, with improvements in the quality of
life for all segments of the population”
WBCSD (2000) Social responsibility is defined as ‘‘the continuing obligation by
business to behave ethically and contribute to economic development
while improving the quality of life of the workforce and their families,
local community and society at large”
Hobbs (2000)“Social capital facilitates collective actions that are beneficial to the
society”
WACOSS (2000) According to Western Australian Council of Social Services
(WACOSS 2000), social sustainability occurs when the formal and
informal processes, systems, structures and relationships actively
support the capacity of current and future generations to create
healthy and livable communities. Socially sustainable communities
are equitable, diverse, connected and democratic and provide a good
quality of life
Robert (2001) “Social capital”is an important aspect of social sustainability, just as
environmentalists describe “natural capital”to environmental
sustainability and amenities
Harris and Goodman
(2001)
“A socially sustainable system must achieve fairness in distribution
and opportunity and adequate provision of social services including
health, education and gender equity and political accountability and
participation”
Wackernagel (2001)“Human health aspects are essential for the well-being of a society,
but they should not be confused with environmental sustainability”
Grunwald (2004)“Sustainability is essentially an anthropocentric concept of inter- and
intra-generational justice”
Littig and Griebler
(2005)
“Claiming the right to a dignified life to humans”
Dillard et al. (2008) Dillard et al. (2008) proposed a working definition of social
sustainability developed through workshops and seminars over a
period: that social sustainability should be understood as
(A) The process that generates social well-being and health present
time and in the future and
(B) Social institutions that facilitate environmental and economic
sustainability now and for future
(continued)
2.4 Defining Social Sustainability 17

2.5 Supply Chain Management
The concept of supply chain management is well established in the literature.
Supply chain generally refers to the arrangement of firms that bring products and
services to the market (Lambert et al. 1998a). In laymen’s language, “supply chain”
can be understood as “the process that involves everything to bring products from
the farm to the fork”. The supply chain consists of the manufacturer, supplier,
warehouses, transporters, wholesalers and retailers, and the customers. Any product
traded in the commercial market undergoes a series of successive transactions from
the raw material stage to the finished product stage. A typical supply chain consists
of all the parties involved directly or indirectly in addressing the customer’s request
(Chopra and Meindl 2007, p. 3). In an organisation, many functions are involved in
fulfilling the customer’s request. These functions comprise distribution, marketing
operations, product development, finance, and customer service.
Similarly, others argue that “a typical supply chain is a network of materials,
information and services, linked with the characteristics of demand, supply, and
transformation (Chen and Paulraj 2004a,b). In the same vein, Ayers (2006) calls
the supply chain the “life cycle processes comprising physical, informational,
financial, and knowledge flows, whose purpose is to satisfy the end-user require-
ments with products and services from multiple linked suppliers”. This definition
makes it clear that the “supply chain encompasses the processes of sourcing,
manufacturing, transporting and selling goods and services”. It also gives us to
understand that a supply chain has multiple linked suppliers with a large number of
different configurations. These may vary from a small grocery supply chain to the
large cannery fish supply chains. Before we get into a detailed discussion on the
supply chain management, however, we need to understand how the concept of
supply chain management emerged. Therefore, the next section traces the evolution
of supply chain management in the literature.
Table 2.2 (continued)
Authors Definitions
Tracey and Anne
(2008)
According to Organization for Economic Cooperation and
Development (OECD) assessments, social sustainability is viewed in
two diverse dimensions: social and human—social dimension refers
to man’s skills, abilities knowledge and talents, and human dimension
that determines an individual’s performance in the labour market
(OECD Insights, 2008) cited in Tracey and Anne (2008)
Bilgin (2012) Sustainable development comprises of ecological, social, cultural,
political and economic capitals, may be expressed through
human-related activities in terms of perception and
environment-friendliness on the one hand, their balanced
commitments to action, relationship and locality, on the other
(PEARL)
18 2 Review of Literature

2.5.1 Evolution of Supply Chain Management
Supply chain management was well conceptualised much before the 1950s in the
form of military logistics. The logistics era before 1950 has been termed “dormant”
years, and during these years, logistics was considered a strategic function (Ballou
1978). It was mainly concerned with the functions of procurement, maintenance
and transportation of military facilities and the people. Later, in the 1960s the term
“physical distribution and logistics”emerged (Heskett et al. 1973). With the
transformation in the logistics after the 1950s, the companies started recognising
physical distribution as a separate organisational function (Heskett et al. 1964).
Later, the concept of supply chain management was introduced to the mainstream
by two consultants (Oliver and Webber 1992) and the stream of SCM was quickly
added to the academia (Ellram and Cooper 1990; Jones and Riley 1987). It
advocated the need for looking at SCM as a single entity, and for strategic
decision-making at a higher level to manage the chain in the original form.
SCM, since its introduction in the 1980s, has consistently gained popularity in
the management circles in general (Oliver and Webber 1982; La Londe 1997). Due
to the intense global competition in the 1990s, SCM continued to evolve in leaps
and bounds, and the process is still going on (Handfield et al. 1998). This is
reflected in the enormous academic publications and articles in leading journals in
the area of manufacturing, customer management, distribution, transportation,
marketing, etc. The first book on SCM was published in 1992 (Christopher 1994)
and supply chain management gained a greater importance in the early 1990s in the
automotive industry, retail networks, textiles and electronics. There were other
forces, such as increased competition, the trend of outsourcing, development of IT
and its integration with the business, and logistics service expansion, all of which
contributed to the development of SCM. Thus, the term supply chain management
(SCM) evolved over the years of the 1980s–90s to articulate the need for integration
between the key business processes, beginning with the original supplier to the
customer (Oliver and Webber 1982).
Further, Drucker (1998) points out a paradigm shift in the management literature
affirming that the businesses that successfully incorporate SCM will face a new
kind of competition in the global market, whereby the competition between com-
panies would be less important than the competition for the success of their supply
chains. The objective of supply chain management is, first of all, to meet the
customer demand by way of an efficient use of resources, which includes distri-
bution capacity, labour and inventory. Secondly, it should match the supply with
demand, and with less or minimum inventory. Another important aspect of supply
chain management is to liaise with the suppliers and achieve a balance between the
lowest material cost and transportation, by optimising the manufacturing flow
through just-in-time (JIT) techniques, and identifying optimum location, factories
and warehouses to target the customer markets and locations. To increase the
efficiency, techniques such as vehicle routing analysis, dynamic programming and
optimisation have been applied.
2.5 Supply Chain Management 19

In fact, business management today is in the era of inter-network competition
and the success of a business depends on the management’s ability to effectively
integrate its network of business relationships (Jain et al. 2010). The first research
paper in the field of SCM was on the National Health Service (Fernie and Clive
1995). Later, Sampson (2000), and Kathawala and Khaled (2003) explored the
application of supply chain management in the service industry. Going further,
many other scholars extended the research on SCM to various industries, including
automobile, education, oil, retail (O’Brien and Kenneth 1996; Cigolini et al. 2004;
Lau 2007).
The development of SCM continued through the 1990s as the organisations
extended their best practices to their strategic suppliers and logistics functionaries in
order to manage the corporate resources better (Tan 2001). In today’s competitive
business environment, most of the manufacturers and retailers are finding it
imperative to embrace SCM in order to improve the efficiency and effectiveness of
the supply chain. Morgan and Monczka (1995) even advocate over-exploitation of
the suppliers’technological capabilities by the manufacturers, in order to support
new product development.
However, the separate evolution of supply chain and logistics has led to con-
fusion between these two terminologies in the literature. Larsen and Halldorsson
(2004) argue that the concept of SCM is not well defined. Cooper et al. (1997) also
emphasise the necessity of research to define and expand the boundaries of SCM.
Nevertheless, there still are many satisfactory definitions of SCM given by various
scholars.
Thus, Stock and Lambert (2001)define SCM as “the integration of key business
processes from the end-user through the original suppliers that provide products,
services and information that add value for the customers and other stakeholders”.
Similarly, according to Christopher (1998), SCM is “the management of upstream
and downstream association with the suppliers and customers, in order to deliver
superior customer value at the minimum cost to the supply chain as a whole”. Yet
another view of SCM defines it as “that part of the supply chain process that plans,
implements and controls the efficient, effective flow and storage of goods, services
and related information from the point of origin to the point of consumption, in
order to meet the customers”requirements (Council of Logistics Management
2000). Further, APICS dictionary defines SCM as “design, planning, execution,
monitoring and control of the supply chain activities with the aim of creating
absolute value, building a spirited infrastructure, leveraging worldwide logistics,
synchronising supply with demand and measuring performance globally”.
In the supply chain literature, five important periods in the evolution of SCM can
be noted. These are creation, integration, globalisation, specialisation phase one and
two, and SCM-2 (Lavassani et al. 2008). The first, i.e. the creation era, discusses the
development of SCM, including the requirement of large-scale changes in engi-
neering and cost reduction programmes that resemble the Japanese style of man-
agement. The second era of integration, which coincides with the development of
information technology, is witness to the introduction of electronic data exchange
(EDI) systems which can support SCM, followed by the Enterprise Resource
20 2 Review of Literature

Planning (ERP) systems. Two significant changes took place in this period, i.e.
value addition and cost reduction through integration.
The third period of globalisation is characterised by global supplier relationships
and expanded supply chains across national boundaries and continents. This period
of the development of SCM is attributed mainly to the requirement of enhancing the
competitive advantage through value addition and cost reduction by way of global
sourcing. The fourth period, i.e. specialisation phase one and two, is very crucial in
the evolution of supply chain management as companies began to focus on their
core competencies and started abandoning the non-core operations in this period,
outsourcing these to other companies. This impacted the supply chain models by
expanding the supply chain operations across the specialised supply chain part-
nerships. This is seen as a transition period whereby the companies re-focused and
re-analysed their fundamental perspectives. In this era, multiple supply chains
emerged that were product-, design- and customer-specific in nature.
Finally, during the current period of SCM-2, SCM has seen developments such
as introduction of transportation brokerage, warehouse management and
non-asset-based carriers. The period is dominated by the market forces that require
readiness for change on the part of the suppliers, logistics providers, locations and
customers at any time. To sum up, the supply chain is a very complicated structure
making it imperative for the organisations and companies to have a good under-
standing of its processes and demands, in order to achieve the optimum results. To
understand these complex structures better, many authors have advanced various
definitions, as mentioned in the following section.
2.5.2 Definitions and Models of SCM
As discussed in the previous sections, the supply chain comprises many activities
and processes pertaining to the flow of goods and information from the raw material
stage to the end customer stage. According to Handfield and Nichols (2003), supply
chain is an integration of the activities and processes among the members of the
chain, frequently referred to as supply chain management. Further, according to
Waters (2011), supply chain management or logistics is the function responsible for
the storage and transport of materials on their journey from the original suppliers
through the intermediate operations to the final customer. Russel and Taylor (2008)
aver that the faculty of supply chain management is instinctive to manage the flow
of products, information and services across the network of supply chain partners
and customers.
The field of supply chain management has gone through various changes and
extensions since its introduction in the early 1980s. Many scholars attribute the
foundations of SCM to the historical evolution of logistics. Many authors even
consider SCM and logistics synonymous with each other. However, Hugos (2006)
argues that logistics is responsible for the movement of materials within the
boundaries of a single organisation, whereas the supply chain takes a broader view
2.5 Supply Chain Management 21

of the movement through all the related organisations that are part of the chain. In
addition, the supply chain acknowledges the activities including the traditional
logistics, marketing, new product development, finance and customer service
(Hugos 2006).
In their endeavour to clear the confusion between logistics and supply chain
management, Larson and Halldorsson (2004), in their research, identify four dif-
ferent views. The first, i.e. the traditionalist view, considers SCM as a part of
logistics. On the contrary, the second, i.e. re-labelling, argues that what was
logistics earlier is SCM now. The third, i.e. the unionist view, also sees logistics as
a part of SCM, but limits the logistics function to one of the business processes.
Finally, the fourth, i.e. the intersection view, suggests that SCM should be looked at
in a broader sense. According to this view, SCM is placed at the intersection of the
processes responsible for the strategic and tactical decisions, while logistics covers
the operational decisions.
A similar research conducted by Ballou et al. (2000) suggests three dimensions of
SCM: Intra-functional, i.e. the management of activities within the logistics function
of the company; inter-functional, which refers to the coordination of the functions of
various functional areas of the organisation; and inter-organisational, which includes
the coordination of the activities of different or distinctive companies. Thus, the
literature, as a whole, suggests that the supply chain management consists of many
different entities and functions. It includes companies that exist all along the flow of
the goods and services from the supplier to the end customer, and an effective
management of these activities is considered to be the key element of SCM. Over
three decades, SCM has been explored by various scholars, academicians and
practitioners, who have brought out several different perspectives. We synthesise
these perspectives and trace their evolution in Table 2.3 (Figs. 2.2 and 2.3).
In addition to the above definitions that have evolved over a period of 30 years,
there are a few notable definitions widely accepted in the academic circles. Thus,
according to the Council of Supply Chain Management Professionals (CSCMP),
“supply chain management encompasses the planning and management of all the
activities involved in sourcing and procurement, conversion, and all logistics
management activities”. Similarly, the Association for Operations Management
(APICS) defines it as “the design, planning, execution, control and monitoring of
supply chain activities with the objective of creating net value, building a com-
petitive infrastructure, synchronising supply with demand, and measuring perfor-
mance globally”.
2.5.3 Supply Chain Performance Metrics
The role of performance measurement system (PMS) is vital in business, as it
provides the information required for making decisions and taking actions. As
Kaplan and Norton (1992) assert, “no measures—no improvement”. Moreover,
they emphasise measuring the right things at the right time in the supply chain, so
22 2 Review of Literature

that the necessary action can be taken at the appropriate time. Good performance
measures and metrics help in facilitating a transparent atmosphere for the people
which, in turn, leads to a more congenial work culture and improves the organi-
sational performance. Performance measurement can be defined as the process of
Table 2.3 List of definitions of supply chain management
Oliver and Webber
(1982)
“Supply chain management (SCM) is the process of planning,
implementing, and controlling the operations of the supply chain with
the purpose to satisfy customer requirements as efficiently as possible.
Supply chain management spans all movement and storage of raw
materials, work-in-process inventory, and finished goods from point
of origin to point of consumption”
Lambert et al. (1998,
p. 1)
“Supply chain management is the integration of key business
processes from end-user through original suppliers that provides
products, services and information that add value for customers and
stakeholders”
Tan et al. (1998)“Supply chain management encompasses materials/supply
management from the supply of basic raw materials to final product
(and possible recycling and reuse). Supply chain management focuses
on how firms utilise their suppliers’processes, technology and
capability to enhance competitive advantage”
Bowersox et al.
(2002)
“Supply chain (sometimes called the value chain or demand chain)
management consists of firms collaborating to leverage strategic
positioning and to improve operating efficiency. For each firm
involved, the supply chain relationship reflects strategic choice.
A supply chain strategy is a channel arrangement based on
acknowledged dependency and relationship management. Supply
chain operations require managerial processes that span across
functional areas within individual firms and link trading partners and
customers across organisational boundaries”
Sweeney (2007)“Supply chain management is the systemic, strategic coordination of
the traditional business function and tactics across these business
functions within a particular company and across business within the
supply chain, for the purpose of improving the long-term performance
of the individual companies and the supply chain as a whole”
Krajewski et al.
(2007)
“Supply chain management consists of developing a strategy to
organise, control and motivate the resources involved in the flow of
services and materials within the supply chain”
Bozarth and
Handfield (2008)
“Supply chain management is the active management of supply chain
activities and relationships in order to maximize customer value and
achieve a sustainable competitive advantage”
Simchi-Levi et al.
(2008)
“Supply chain management is a set of approaches utilized to
efficiently integrate suppliers, manufacturers, warehouses, and stores,
so that merchandise is produced and distributed at the right quantity,
to the right locations, and at the right time, in order to minimize
system wide costs while satisfying service-level requirements”
Wisner et al. (2012)“Supply chain management is the integration of trading partners’key
business processes from initial raw material extraction to the final or
end customer, including all intermediate processing, transportation
and storage activities and final sale to the end product customer”
2.5 Supply Chain Management 23

quantifying the effectiveness and efficiency of action (Neely et al. 1995;
Rameshwar et al. 2015). Effectiveness refers to the extent to which the customer
requirements are met, while the efficiency measures how economically a company’s
resources are used to provide a specified level of customer satisfaction. There have
been numerous approaches to performance measurement (Neely et al. 1995) which
include the balance scorecard (Kaplan and Norton 1992), performance measure-
ment questionnaires (Dixon et al. 1990), performance measurement matrix (Keegan
et al. 1989), and some of the computer aided manufacturing approaches.
Internal supply chain
Distribution
Purchasing Production
Suppliers Customers
Fig. 2.2 A typical company’s supply chain. Source Adopted from Lambert et al. (1998), Chen
and Paulraj (2004a)
Supply Chain-Direct
Supplier Company Customer
Supply Chain-Extended
Supplier’s Supplier Company Customer Customer’s
supplier customer
Supply Chain-Ultimate
Third party logistics provider
Ultimate supplier Supplier Company Customer Ultimate customer
Financial provider Market research firm
Fig. 2.3 Types of channel relationships. Source Mentzer et al. (2001)
24 2 Review of Literature

Most of the literature pertaining to performance measurement can be classified
into three categories, i.e. operational, design and strategic (Huang et al. 2004). The
operational studies focus on the improvement of performance of the supply chain
(Smith et al. 2005), whereas the design studies aim at optimising the performance
through supply chain re-design (Wu 2005; Chen et al. 2005). Strategic studies, on
the other hand, dwell on the ways in which the supply chain can be aligned with the
firm’s strategic objectives (Balasubramanian and Tewary 2005). Yet another aspect
of the supply chain measurement emphasises the adoption of a systematic approach
to performance measurement. These can be the modern management approaches,
such as just-in-time, quality management and information technology approaches
(Flynn and Flynn 2005; Green and Inman 2005).
There is a vast amount of research on the supply chain performance measure-
ment metrics and systems, carried out by a large number of scholars. These are Artz
(1999), Maloni and Benton (1997), Beamon (1999), Cachon and Lariviere (1999),
Ramdas and Spekman (2000), Stephens (2001), Van Hoek (2001), Bourne et al.
(2000,2002), Webster (2002), Talluri and Sarkis (2002), Lai et al. (2002),
Dasgupta (2003), Li et al. (2005a,b), Chan (2003), Chan and Qi (2003),
Windischer (2003), Chen and Paulraj (2004a,b), Windischer and Grote (2003),
Gunasekaran et al. (2001,2004), Huang et al. (2004,2005), Fynes et al. (2005a,b),
and Wang et al. (2004,2005). However, although there is an abundance of per-
formance measures in the literature, formal grouping has not been done owing to
the differences among scholars. Although there have been a few attempts made
recently to systematically group the performance measures, there is still a lack of
consensus over the most appropriate way to categorise them. Thus, the literature
does not point to any clear opinion among the researchers over this issue, and so, a
few of the attempts made to categorise these measures are summarised in Table 2.4.
The purpose of performance measurement system is to provide the managers
with adequate information to address the issues, such as the status of finance,
internal customer processes, innovation and improvement (Kaplan and Norton
1992). A widely used measurement system is the balance score card method (BSC),
providing a strategic perspective with clear mission, appropriate metrics and suit-
able targets. Many scholars have suggested various measures for supply chain
performance. For instance, Globerson (1985) advocates that performance criteria
should be primarily based on the company’s core objectives, and they should be
comparable with those of the similar organisations that use similar criteria, and the
data collection and calculation methods should be ratio-based, rather than absolute
number-based.
According to Maskell (1989), there are seven principles of performance mea-
surement systems: (1) the performance measures should be oriented to the firm’s
strategy; (2) adoption of non-financial measures should be encouraged; (3) the
measures should be location specific; (4) they should be flexible and amenable to
change with the circumstances; (5) they should be easy and simple to use; (6) they
should provide feedback; and (7) they should stimulate continuous improvement.
The literature reveals several metrics for performance measurement in the SCM
system (Gunasekaran et al. 2004,2005; Folan and Browne 2005; Fynes et al.
2.5 Supply Chain Management 25

2005a,b; Bendavid et al. 2009; Gunasekaran et al. 2015a,b). However, there have
been few efforts to identify the minimum number of metrics that should be used in
measuring the SCM system. Neeley et al. (1995) suggest various measures of
performance including quality, time, flexibility and cost. Weber (2002) discusses a
model that provides for both the need for agility and an agile organisation by
analysing the sources of variance in the supply chain systems. Others classify the
supply chain metrics into four categories, i.e. cost, time, quality, efficiency and
diagnostic measures, and use them in selected companies to compare their com-
petitiveness (Bagchi 1996).
Further, Kaplan (1990) has grouped many performance measures used by a large
computer supplier into eight items with 3–8 measures for each. Many other
researchers, including Garvin (1987), Stalk (1988) and Schonberger (1990), have
also discussed generic performance measurement terms, such as quality, time, cost
and flexibility. Further, Fizgerald et al. (1991) argue that there are two basic types
of performance measures. The first relates to results and includes competiveness
and financial performance, while the second determines results and comprises
quality, flexibility, resource utilisation and innovation. In yet another study, Stewart
(1995) has developed a causal model pertaining to the use of the best practices
(performance) with four objectives: flexibility, reaction time, cost and quality.
A comprehensive list of performance metrics in the literature available till now has
been given in Table 2.5.
Table 2.4 Performance measures in the supply chain management
S. No. Category of performance measures Relevant literature
1 Balance score card perspective Kaplan and Norton (1992)
2 Identifies under qualitative or quantitative
perspectives
Beamon (1999), Chan (2003)
3 Based on cost and non-cost parameters Gunasekaran et al. (2001), De Toni
and Tonchia (2001)
4 Parameters such as quality, cost, delivery
and flexibility
Schönsleben (2004)
5 Cost, quality, flexibility, trust and
innovativeness, resource utilization and
visibility
Chan (2003)
6 Under resources, outputs and flexibility Beamon (1999)
7 Groups parameters in terms of supply chain
collaboration efficiency, coordination
efficiency and configuration
Hieber (2002); Jain and Dubey
(2005)
8 Input, output and composite measures Chan and Qi (2003)
9 Based on strategic, operational or tactical
focus
Gunasekaran et al. (2001)
10 Based on supply chain-related process Chan and Qi (2003), Huang et al.
(2004), Li et al. (2005b), Stephens
(2001).
26 2 Review of Literature

Table 2.5 Comprehensive list of supply chain performance metrics
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
Plan Sales, profit, return on investment
(ratio of net profits to total assets),
rate of return on investment, net
profit versus productivity ratio,
information carrying cost, variations
against budget, total supply chain
management costs, cost of goods
sold, asset turns, value added
productivity, overhead cost,
intangible cost, incentive cost and
subsides, sensitivity to long-term
costs, percentage sales of new
product compared to whole sales for
a period, expansion capability,
capital tie up costs
Gunasekaran
et al. (2001)
Beamon
(1999)
SCOR level 1
metrics
Chan (2003)
VDI
guidelines
(association
of engineers)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Total supply chain response time
Total supply chain cycle time
Order lead time
Order fulfillment lead time
Customer response time
Product development cycle time
Total cash flow time
Gunasekaran
et al. (2001)
Beamon
(1999)
SCOR level 1
metrics
Chan (2003)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
(continued)
2.5 Supply Chain Management 27

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
Cash to cash cycle time
Horizon of business relationship
Percentage decrease in time to
produce a product
VDI
guidelines
(association
of engineers)
Hieber
(2002)
√
√
√
√
√
Fill rate (target fill rate achievement
and average item fill rate), order
entry methods
Accuracy of forecasting techniques
Autonomy of planning
Perceived effectiveness of
departmental
Relations
Order flexibility
Perfect order fulfillment
Gunasekaran
et al. (2001)
Beamon
(1999)
SCOR level 1
metrics
Chan (2003)
Hieber
(2002)
Ellinger
(2000)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
Mix flexibility
New product flexibility
Beamon
(1999)
Chan (2003)
√
√
√
√
Number of new products launched
Use of new technology
Chan (2003)√
√
√
√
Source Supplier cost-saving initiatives Gunasekaran
et al. (2001)
√
√
√
√
√
√
√√
√
√
√
(continued)
28 2 Review of Literature

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
Percentage of late or wrong supplier
delivery
Supplier lead time against industry
norm
Supplier’s booking in procedures
Purchase order cycle time
Efficiency of purchase order cycle
time
Buyer–supplier partnership level
Level of supplier’s defect-free
deliveries
Supplier rejection rate
Mutual trust, Satisfaction with
knowledge transfer, satisfaction with
supplier relationship, supplier
assistance in solving technical
problems, extent of mutual
planning, cooperation leading to
improved quality, extent of mutual
assistance leading in problem
solving efforts, distribution of
decision competences between
supplier and customer, quality and
frequency of exchange of logistics
information between supplier and
customer, quality of perspective
taking in supply networks,
Gunasekaran
et al. (2001)
Gunasekaran
et al. (2001)
Hieber
(2002)
Sperka
(1997)
Artz (1999)
Graham et al.
(1994)
Maloni and
Benton
(1997)
Windischer
and Grote
(2003)
Parker and
Axtell (2001)
Van der
Vorst and
Beulens
(2001)
Gunasekaran
et al. (2001)
√√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
(continued)
2.5 Supply Chain Management 29

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
information accuracy, information
timeliness, information availability
Supplier ability to respond to quality
problems
Make Total cost of resources,
manufacturing cost, inventory
investment, inventory obsolescence,
work in process, Cost per operation
hour, capacity utilization as
(incoming stock level, work-in
progress, scrap level, finished goods
in transit)
Inventory cost, inventory turnover
ratio, inventory flow rate, inventory
days of supply, economic order
quantity, effectiveness of master
production schedule, number of
items produced, warehouse costs,
stock capacity, inventory utilization,
stock-out probability
Number of backorders, number of
stockout, average backorder level,
percentage of excess/lack of
resource within a period, storage
costs per unit of volume, disposal
costs.
Gunasekaran
et al. (2001)
Beamon
(1999)
Chan (2003)
Schönsleben
(2004)
Gunasekaran
et al. (2001)
Beamon
(1999)
SCOR level 1
metrics
Chan (2003)
Chan and Qi
(2003)
VDI
guidelines
(association
of engineers)
Gunasekaran
et al. (2001)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
(continued)
30 2 Review of Literature

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
planned process cycle time,
manufacturing lead time, time
required to produce
a particular item or set of items, time
required to produce new product
mix,
production flexibility, capacity
flexibility, volume flexibility,
number of tasks worker can
perform, inventory range
inventory accuracy, percentage of
wrong products manufactured
Beamon
(1999)
Chan (2003)
Beamon
(1999)
SCOR level 1
metrics
Chan (2003)
Schӧnsleben
(2004)
Chan (2003)
Chan and Qi
(2003)
Deliver Total logistics costs, distribution
costs, delivery costs, transport cost,
transport costs per unit of volume,
personnel costs per unit of volume
moved, transport productivity,
shipping errors, delivery efficiency,
percentage accuracy of delivery
Delivery lead time, frequency of
delivery, product lateness, average
lateness of orders, average earliness
of orders, per cent of on time
deliveries
Gunasekaran
et al. (2001)
Beamon
(1999)
Chan (2003)
VDI
guidelines
(association
of engineers)
Chan and Qi
(2003)
Gunasekaran
et al. (2001)
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
(continued)
2.5 Supply Chain Management 31

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
Delivery performance, delivery
reliability, number of on time
deliveries
Effectiveness of distribution
planning schedule, effectiveness of
delivery invoice methods, driver
reliability for performance, quality
of delivered goods, quality of
delivery documentation
Achievement of defect-free
deliveries
Delivery flexibility, responsiveness
to urgent
Deliveries, transport flexibility
Beamon
(1999)
VDI
guidelines
(association
of engineers)
Gunasekaran
et al. (2001)
Beamon
(1999)
SCOR level 1
metrics
Chan and Qi
(2003)
Schönsleben
(2004)
Gunasekaran
et al. (2001)
Beamon
(1999)
Chan and Qi
(2003)
Return Warranty or returns processing
costs
SCOR level 1
metrics
√
Customer
Satisfaction
Customer query time
Customer satisfaction (or)
Gunasekaran
et al. (2001)
√√
√
√
√√
√
√
√
√
(continued)
32 2 Review of Literature

Table 2.5 (continued)
Supply
chain
stages
Measures Literature Cost
(C)
Time
(T)
Quality
(Q)
Flexibility
(F)
Innovativeness Quantitative Qualitative
Dissatisfaction, Level of customer
perceived
value of product
Customer complaints, Rate of
complaint
Product quality.
Flexibility of service systems
to meet particular customer needs
Beamon
(1999), Chan
(2003)
Gunasekaran
et al. (2001)
Beamon
(1999), Chan
and Qi
(2003),
Schönsleben
(2004).
Gunasekaran
et al. (2001)
√√
Source Shepherd and Gunter (2006)
2.5 Supply Chain Management 33

Based on the changing enterprise environments, many researchers have pro-
posed new performance measures. However, there is still confusion over their
relative importance and applicability to the SCM systems. For instance, Basu
(2001) discusses five emerging metrics including external, value-based competition,
consumer, network performance and intellectual. Stewart (1995), on the other hand,
suggests that the better performing companies are found to have better qualities in
four key operational areas, i.e. flexibility and responsiveness, logistics costs,
delivery performance and asset management. Similar research identifies six core
processes, including supplier, inbound logistics, outbound logistics, manufacturing,
marketing and sales, end customer, and presents input and output measures for all
these processes (Chan and Qi 2003).
Further, the champions of supply chain operations reference model (SCOR)
suggest that the supply chain performance needs multiple levels of assessment, and
assign them to five different categories of metrics, i.e. reliability, responsiveness,
flexibility, cost and efficiency indicators (Stephens 2001; Huang et al. 2004;
Lockamy and McCormack 2004; Li et al. 2005a,b). The supply chain complexity
makes outlining and collating the performance metrics an onerous task.
Nevertheless, Table 2.5 presents performance metrics outlined according to the
process identified in the SCOR model, i.e. plan, source, make, deliver or return.
These metrics have also been grouped on the basis of whether they measure time,
quality, cost, innovativeness or flexibility, and whether they are qualitative or
quantitative.
The measures identified in Table 2.5 substantiate Beamon’s(1999) argument
that they remain unbalanced, focusing on cost measures (42%), and non-cost
measures, including quality (28%), flexibility (10%), time (19%) and innovative-
ness (1%). Moreover, there are very few measures pertaining to the process of
return or customer satisfaction (5%), when compared to the other aspects of the
supply chain process. Secondly, the majority of the metrics are quantitative rather
than qualitative. A few scholars even observe that these measures are very much
related to the internal logistics performance measures, and do not capture the
performance of the supply chain as a whole (Lambert and Pohlen 2001).
In fact, the performance measurement systems have attracted perhaps the most
wide-ranging criticism in the literature (Neeley et al. 1995). Some of the points
raised are these measures have no relation with strategy (Beamon 1999;
Gunasekaran et al. 2004); less focus on non-cost measures (Beamon 1999; De Toni
and Tonchia 2001); they do not focus on the customers and competitors (Beamon
1999); they encourage local optimisation and loss of the supply chain context, and
they have no system thinking (Chan 2003; Chan and Qi 2003). However, of late,
scholars have attempted to address these limitations by designing a balanced per-
formance measurement system. The most widely accepted and well known of these
is the supply chain operation reference model (SCOR). In 1997, Supply Chain
Council has first developed SCOR and is recognised as a systematic approach for
evaluating and monitoring the supply chain performance (Stephens 2001).
34 2 Review of Literature

Having discussed the performance measures, we now explore social sustain-
ability and the ways in which it has been practised in the supply chain, in the next
section.
2.6 Social Sustainability and Supply Chain
Social sustainability is of paramount importance in the supply chain of manufac-
turing industry because of the increased awareness, on the part of the stakeholders,
of not only “where”the products are made but also “how”and “in what conditions”
they are produced (McCarthy et al. 2010). Though this creates somewhat unde-
sirable situations due to the increased costs for the corporates, the benefits for the
human capital and its importance in terms of the strategic advantages for the firm
have been proved beyond doubt through researches (Barney 1986a,b; Peteraf 1993;
Sushil 2015). Social and environmental problems do not stop at the gates of one
company, but need to be taken into account along all the supply chains as the
materials and information flow across the entities (Seuring and Müller 2008a;
Gunasekaran et al. 2014).
Dao et al. (2011) have created a sustainability framework and demonstrated the
adoption of good human resource measures and its impact on sustainability in the
supply chain. Hence, it can be said that the corporates in the modern times
understand the social issues and attempt to find different ways of integrating the
human and social aspects into the supply chain. In operations and supply chain
management, according to Wood (1991), the socially sustainable practices can be
defined as the product and process aspects that determine human safety, welfare and
wellness (Klassen and Vereecke 2012). To understand the concept better, there is a
need to elaborate how these human and social issues are managed in the supply
chain, affecting the sustainability of the firm. According to Wood (1991), Mani
et al. (2015b), we need to explore three fundamental questions in this regard:
(1) Whom to target? (2) What issues to address? (3) And how these issues can be
addressed?
Stakeholder’s theory provides answers to the first question that propose to
address issues of all the stakeholders in the supply chain, including employees,
suppliers, customers, society and NGOs (Freeman 1984; Stieb 2009; Campbell
2007; Sushil 2014). Similarly, Clarkson (1995), and Waddock and Bodwell (2004)
view social responsibility as an organisations ability to manage its stakeholders. As
for the second question, scholars have indicated many issues related to people in the
manufacturing supply chain. For instance, Emmelhainz and Adams (1999) dis-
cusses working conditions and human rights of the labourers. Further studies in the
USA also emphasises safety and health, human rights, diversity, philanthropy and
ethics in the supply chain (Carter and Jennings 2002a,b,2004). However, Carter
and Jenning’s research proved ethics could not be used as social sustainability
dimension in operations and supply chain management.
2.5 Supply Chain Management 35

Nevertheless, a later study by Lu et al. (2012) emphasises ethics as one of the
important social dimensions of corporate sustainability. Tsuda and Takaoka (2006)
propose a comprehensive “gross social feel good”(GSF) index for sustainability.
The GSF index consists of six components, namely safety, health, environment,
comfort and health. Others insist on diversity, safety, child and bonded labour,
health, poverty and working conditions, in the supply chain (Whooley 2004; Carter
2005; Maloni and Brown 2006; Kortelainen 2008a,b; Vachon and Mao 2008;
Andersen and Skjoett-Larsen 2009). Moreover, Pagell and Wu (2009) have iden-
tified the criteria for fair and equitable treatment, like child and forced labour,
employment and wages, human rights and training as issues in the supply chain
(Pagell and Wu 2009).
Dreyer et al. (2005) assess the impact of products and services on the people,
specifically in terms of health, human dignity and basic needs fulfilment, using the
life cycle assessment method (Husbands and Dey 2002; Dey 2005; Barki and
Aguiar 2013). Ciliberti et al. (2008), using the logistics social responsibility
(LSR) taxonomy, also identify and list various issues pertaining to the supply chain,
including diversity, human rights, safety and philanthropy. In addition to the above
research, Hutchins and Sutherland (2008), through their life cycle analysis, identify
equity, health care, safety, philanthropy and their relationship with the country’s
financial performance. Similarly, Vachon and Mao (2008) investigate the potential
links between the supply chain characteristics and sustainable development at the
country level and prove how the strengthening of the supply chain characteristics
(social and economic) can enhance the GDP of the country.
The research on the Brazilian and Chinese retailers by Gunasekaran and
Spalanzani (2012), Delai and Takahashi (2013) and Kolk et al. (2010) has yielded
various social parameters and revealed their importance in achieving social sus-
tainability (Sebastiani et al. 2014; Irani et al. 2015). In Canada, Morali and Searcy
(2013) identify ethics, health and human rights as the social sustainability indicators
in the supply chain. Similarly, other qualitative researches under various domains
conducted by Andersen and Larsen (2009), Gopalakrishnan et al. (2012), and Mani
et al. (2015a,b) discuss various social dimensions, such as equity, safety, health,
philanthropy, housing, education, wages and their relationship with the social
sustainability of the organisation.
Thirdly, as far as the question of addressing social issues is concerned, many
scholars have discussed various ways and means to tackle the supplier side social
issues. Some of them argue that the incorporation of the social issues in the supplier
selection and development process can help reach social sustainability in the
upstream supply chain (Krause et al. 2007,2009; Bai and Sarkis 2010; Mani et al.
2014). Similarly, Gold et al. (2010) assert that the partner-focused supply man-
agement capabilities develop the corporate core competencies, as competition shifts
from an inter-firm level to an inter-supply chain level. The “collaborative paradigm”
in the supply chain management regards the strategic collaboration as a crucial
source of competitive advantage (Fosso Wamba 2012). Yet another view is that
socially responsible organisational buying can help achieve sustainability, and
socially responsible organisational buying can be possible only through skilful
36 2 Review of Literature

policy entrepreneurship in a favourable organisational climate (Drumwright 1996;
Carter et al. 1999; Maignan and Ralston 2002).
However, some writers suggest that fair trade principles and their adoption can
lead to social sustainability in an organisation. For example, Goworek (2011),
through a case study, demonstrates how the adoption of fair trade principles can
lead to sustainability in the clothing industry. In the operation and supply chain
management literature, many CSR theories suggest the adoption of various meth-
ods, including: (1) corporate citizenship (Maignan et al. 1999); (2) meeting cus-
tomer needs through CSR (Luo and Bhattacharya 2006); (3) corporate social
responsibility activities (McWilliams and Siegal 2000); and flexible human
resource practices, to achieve sustainability in manufacturing.
Dyllick and Hockerts (2002), by defining corporate sustainability as “meeting
the needs of a firm’s direct and indirect stakeholders (such as shareholders,
employees, clients, pressure groups, communities, etc.), without compromising its
ability to meet the needs of the future stakeholders as well”, imply that corporate
sustainability can be achieved by addressing the needs of all the stakeholders. They
further emphasise the importance of the social and human capital in achieving
social sustainability for a firm. According to Labuschagne et al. (2005) practices
related to human rights, poverty alleviation, administering justice and welfare of all
the employees in the supply chain as essential elements to social sustainability.
Leire and Mont (2010) also enumerate social issues, such as protecting employees’
health and safety, preventing social exclusion, ensuring equal treatment and
reduction in unemployment, and explain how these dimensions can be allied and
incorporated into the supply chain. Hutchins and Sutherland (2008), on the other
hand, discuss issues, such as health care, equity, safety and philanthropy, through
their life cycle analysis and assert that there is a significant relationship between
social sustainability and the country’s economic performance (USA).
In conclusion, various studies have discussed the question of how social issues
can be addressed in the supply chain. One way is to incorporate these parameters in
the buying process, known as socially responsible organisational buying (SRB).
SRB refers to the integration of social issues in buying decisions by the organi-
sational stakeholders (McWilliams and Siegel 2001). Similarly, Carter and Jennings
(2002a,b,2004) and Ciliberti et al. (2008) introduced a term purchasing social
responsibility (PSR) that describe the role of purchasing managers in the area of
social responsibility within the supply chain and show how the enactment of these
roles could lead to improved trust and supplier commitment.
A later research indicates how the social criteria could be used to monitor the
suppliers and ensure their compliance (Leire and Mont 2010). Bai and Sarkis
(2010) as well as Mani et al. (2014) have demonstrated the use of social parameters
in supplier selection. This means that incorporating social parameters in the
selection and evaluation process of suppliers can lead to social sustainability of the
organisation. Goworek (2011) emphasises environmentally sustainable and socially
responsible sourcing practices, and describes how they could be applied to the
clothing industry. Lu et al. (2012) in their research conducted in China have
established socially responsible supplier development (SRSD) and its importance in
2.6 Social Sustainability and Supply Chain 37

measuring the buyers’sustainability as well as the relationship between social
sustainability and supplier development efforts. Klassen and Vereecke (2012) point
out the importance of practices like collaboration, monitoring and innovation in the
supply chain and demonstrate how they help in achieving social sustainability.
Yet some other studies argue for the use of sustainability measures at customer
locations and their relationship with the overall performance of the organisation
(Gunasekaran and Spalanzani 2012). In addition to these, many scholars, in their
studies, have explored and proposed different forces enabling social sustainability.
Notably, Clarkson (1995), Strong (1997), McWilliams and Siegel (2001), Campbell
(2007) and Ehrgott et al. (2011) advocate, through empirical research, parameters
like customer requirements, stakeholder requirements, employee requirements,
skilful policy entrepreneurship, and economic status of the organisation for an
effective incorporation of social sustainability. On the other hand, Tate et al. (2010)
identify institutional pressure as a major driving force for the companies to behave
in a socially responsible manner. Thus, on the whole, the literature on the subject
suggests that social sustainability in the supply chain is concerned with how
organisations manage social issues, such as equity, philanthropy, labour rights,
safety, health, wages, employment, housing and ethics in the supply chain.
To summarise, studies on supply chain social sustainability were rather limited
till recently, compared to the other dimensions of sustainability. Seuring and Muller
(2008b), in their literature review comprising 191 research papers published
between 1991 and 2007, point out that most of these studies focused on the
environmental/green aspects while research on social aspects were rare. Yet another
literature review carried out by Carter and Easton (2011)affirms the scantiness of
the studies related to social sustainability in the supply chain literature and proposes
a sustainability framework consisting of the environmental performance, economic
performance and social performance, insisting on the adoption of sustainable
practices for the long-term survival and profitability of firms. This view is again
supported by a systematic review, conducted by Ashby et al. (2012), of the liter-
ature pertaining to the period 1983–2012. This review found only 27 research
papers focusing on social sustainability, and the majority of them were either
conceptual or case-based. In addition, it also pointed out that most of these studies
were conducted in the developed, Western countries, and were scant in the
developing countries, such as India and other countries of Asia.
Therefore, it should be remembered here that the social issues identified in the
discussions above have all been the result of research conducted in the Western
countries. However, social issues vary from one geographic location to the other,
based on the societal values which develop over a period of time. Similarly, the
enabling factors (antecedents) too vary based on the country’s social dynamics and
are highly contextual in nature. Therefore, the next section will discuss the ante-
cedents and impediments to the adoption of social sustainability in the developing
countries.
38 2 Review of Literature

2.6.1 Impediments and Antecedents to Social Sustainability
Over a decade, there has been considerable debate with relate to what factors enable
the adoption of social sustainability. Especially in emerging economies, this has been
a case of concern, due to absence of relevant literature. However, in the recent past,
scholars have shown interest and suggested the ways and means of integrating the
social parameters into the supply chain. For example, Drumwright (1994) emphasises
on socially responsible organisational buying and asserts that such buying process
mainly depends on two organisational factors: first, the skilful policy entrepreneurs
who establish new policies with zeal for social wellness in their policy decisions, and
second, the context of the organisation in which the decisions are made.
There were many studies focusing on how social sustainability can be achieved
if the corporates act responsibly in their roles. Several researchers argue that various
parameters, such as employee requirements, economic status of the corporates,
skilful policy entrepreneur, customer requirements, stakeholder requirements and
regulations of both public and private influence the adoption of social sustainability
(Table 2.6) (Drumwright 1994; Clarkson 1995; Strong 1997; McWilliams and
Siegel 2001). In emerging economies, Campbell (2007) along with Ehrgott et al.
(2011), Mani et al. (2015a) has established many new enablers for social sustain-
ability adoption in the emerging economies, which include pressure from employee
unions, awareness of social sustainability, social organisations’pressure, financial
status of the company and investors’pressure.
With the help of Table 2.6, many enablers as well as barriers which can lead to
social sustainability adoption in the manufacturing supply chain, or hinder it are
explained.
2.6.2 Social Sustainability Enablers Identified in the Supply
Chain
(a) Competitive pressure
The social measures adopted by the competitors may force other companies to follow
similar measures for sustainability (Lamming and Hampson 1996; Sarkis 2003; Zhu
and Sarkis 2006; Carter et al. 2000; Rao and Holt 2005). In the modern economy,
firms are always conscious of their competitors’actions, and if competitors found to
be having good practices (social resources), others follow the suit that invariably
strengthen their capabilities. Based on resource-based view, creating and nurturing of
resources and capabilities that cannot be easily imitated by competitors, gives the
firms to gain competitive advantage. Firms are driven by such pressures to quickly
follow the competitor’s practices. Scholars found positive relationship between
sustainable measures and competitive advantage (Rao and Holt 2005).
2.6 Social Sustainability and Supply Chain 39

(b) Awareness of social sustainability
For social sustainability adoption and enactment, companies must have awareness
of social practices (what and how) and such awareness can accelerate social sus-
tainability (Maloutas 2003; Haugh and Talwar 2010). Firm-level awareness of
social sustainability parameters and their relevance to the social capital develop-
ment may enhance social sustainability adoption in the supply chain.
(c) People-oriented organisational culture
Organisational culture refers to as beliefs, set of values, assumptions and ways of
thinking shared by the organisation’s members, and transferred to the new members
of the organisation (Barney 1986b; Chapman and Jehn 1994; Wiener 1988). This
means that the organisational culture influences the work behaviour. Similarly,
research has established the linkage between organisational culture and success.
Table 2.6 Enablers of social sustainability adoption
S. no Literature Enablers
1 Carter and Jennings (2000,2002b), Miao et al.
(2012)
“People-oriented organisation
culture”
2 Drumwright (1994), Carter and Jennings (2000,
2002b), Ehrgott et al. (2011), Mani et al. (2015a),
Dubey et al. (2015b)
“Skilful policy entrepreneur or
top management leadership”
3 Carter and Jennings (2000,2002b), Campbell
(2007), Aguilera et al. (2007), Ehrgott et al.
(2011), Miao et al. (2012), Mani et al. (2015a)
“Regulation of the
government”
4 Carter and Jennings (2000,2002b), Ehrgott et al.
(2011), Miao et al. (2012), Mani et al. (2015a),
Dubey et al. (2015b)
“Customer pressures”
5 Carter and Jennings (2000,2002b)“Individual values”
6 Aguilera et al. (2007), Campbell (2007), Mani
et al. (2015a)
“Employee union’s pressure”
7 Mani et al. (2015a)“Incentives”
8 Mani et al. (2015a)“Social sustainability
awareness”
9 Campbell (2007), Aguilera et al. (2007), Mani
et al. (2015a), Miao et al. (2012)
“Pressure from stakeholders”
10 Campbell (2007), Mani et al. (2015a)“Competitive pressures”
11 Mani et al. (2015a)“Social concerns”
12 Mani et al. (2015a)“International certifications”
13 Mani et al. (2015a)“Pressure from shareholders”
14 Bansal (2005), Campbell (2007), Mani et al.
(2015a)
“Financial status (ability to
spend)”
15 Bansal (2005), Campbell (2007), Mani et al.
(2015a)
“Pressure from social
organisations”
Source Adopted from Mani et al. (2015a,b)
40 2 Review of Literature

Carter and Jennings (2000) have studied this aspect and proved that culture plays a
significant role in social sustainability adoption.
(d) Customer requirements
In the value chain, firms are expected to conform to the requirements of customers
because of their inter-dependence and transaction relationship. Several studies have
proved the customer’s positive role as a catalyst for social sustainability compli-
ance. Many organisations either they incorporate in their supplier selection process,
or buying process because of the potential buyers risk, reputation and performance.
(Drumwright 1994; Sen and Bhattacharya 2001; Carter and Dresner 2001;
Klassen and Vachon 2003; Sarkis 2003; Zhu and Sarkis 2006; Christmann 2004;
Lu and Lee 2012).
(e) Direct and indirect incentives
There are incentives provided by the governments in direct and indirect forms
including low taxes, less levies, subsidies and preferential land allotments that may
also help drive the social sustainability (Hilson and Nayee 2002; Cerin and Karlson
2002; Ostrom et al. 1993). For example, Cerin and Karlson’s(2002) found that
“extending property rights”acted as an incentive for the firms to practise sustain-
able measures. Other forms of incentives, such as price ecosystem services, terri-
torial rights, permitting individual harvest, and coupled with public research and
monitoring, have been found to promote sustainability in the fisheries (Campbell
2007).
(f) Financial status of corporations
Socially responsible behaviour is determined by the economic health of the
organisation and the company’s economic health and the level of competition it
faces also determine the probability of sustainability adoption. Research has proved
that small firms initially focus on economic sustainability and, as they move up the
ladder, extend their focus to social sustainability (Campbell 2007; Alkhidir and
Zailani 2009; Luthra et al. 2011).
(g) International Certifications
Influence of international certifications including 26,000, ILO, OHSAS 18001, AA
1000 and ISEA 1999 was found to be successful to enact or facilitate corporations
to behave socially sustainable or ensure social standards. This also exerts pressure
on the firms for social compliance as certification, or absence of it, has a direct
impact on the company’s image and operational performance (Viscusi 1986;
Handfield et al. 2002; Zuckerman 2000; Gonzalez et al. 2008). For example, in
coffee industry, voluntary certifications and labelling have helped in achieving
social sustainability (Raynolds et al. 2007).
2.6 Social Sustainability and Supply Chain 41

(h) Investors’Pressure
The investor and shareholder’s actions also influence the social sustainability
adoption in the organisation (Buchholz and Rosenthal 2005; Laplume et al. 2008;
Tagesson et al. 2009). Many case studies have reported the investors’positive role
in ensuring sustainability reporting (Tagesson et al. 2009).
(i) Resistance to change
The top executive’s“resistance to change”attitude acts as a barrier to the adoption
of social sustainability. On the contrary, a positive attitude to accept the change may
speed up social responsiveness in the organisation (Shrivastava 1995).
(j) Pressure from employee unions
In large-scale enterprises, employee unions act as catalysts in negotiation and
demand for better social standards. This could be in the form of better wages,
working hours, safety measures and health facilities. With their bargaining power,
these unions can exert effective pressure on the top management to incorporate
minimum social standards and propose the corrective measures with top priority
(Sen and Bhattacharya 2001; Hansson et al. 2003).
(k) Regulatory compliance
The government or regulatory authorities, as part of the external stakeholder group,
certify the corporations as regulated and streamlined for social measures. To
safeguard and protect the society, the government formulates policies to standardise
and orient the companies to be socially responsive (Green et al. 1996; Beamon
1999; Gonzalez et al. 2008; Raynolds et al. 2007). In this vain scholars, also assert
that there is a positive relationship between government regulations and social
sustainability adoption (Carter and Jennings 2000; Ehrgott et al. 2011).
(l) Skilful policy entrepreneurship
Many studies have established the top executive’s role in social sustainability
adoption. According to Drumwright (1994), the policy entrepreneurs who invest to
institute their policies can drive social sustainability (Banerjee 2003; Buckholz,
1991). Similarly, Carter et al. (2007) map the social network within an organisation
to demonstrate the effective role of low-level manager who champion and drive a
safety-related supplier management project.
(m) Social concern
The organisation’s social concern and responsible behaviour can have a positive
role in the adoption of supply chain social sustainability. Many organisations,
through several reporting standards, display their social concern (Laufer 2003;
Walker and Preuss 2008).
42 2 Review of Literature

(n) Social organisations’pressure
Social groups encourage the companies to implement social sustainability prac-
tices. Walker and Preuss (2008) have identified the importance of social groups for
corporate performance. Such social groups include non-governmental organisations
(NGOs) that work against child and bonded labour, and to improve the living
conditions, promote gender equity, and ensure health and hygiene. In India, a few
of these popular social organisations are Samhita, Ruchika, Sulabh International,
Sambhav and the Parikrama Foundation.
(o) Stakeholders’pressure (others)
Other than the internal stakeholders, the external stakeholders, for example, the
media influences the organisations to adopt social sustainability measures (Jones,
1995; Post et al. 2002a,b; Maignan and Ralston 2002; Sharma and Vredenburg
1998; Sarkis et al. 2010). A research conducted by Jones (2005) on 18 top cor-
porations shows how these companies practise social sustainability due to the
stakeholders’pressure to get their ratings featured in the Dow Jones Sustainability
Index (DJSI)
2.6.3 Impediments to Social Sustainability Adoption
in the Supply Chain
Many scholars have identified various aspects that lead to non-adoption and act as
barriers to social sustainability. According to Dillard et al. (2008), there are four
factors that contribute to a relative neglect of social sustainability by organisations.
Firstly, the organisation’s economic aims, commonly perceived as increasing the
wealth of the shareholders. Secondly, many of the social issues have their modern
origins in the issues of environmental sustainability. Thus, social sustainability is
sometimes seen as related to the developing world issues, such as access to water,
education and health care. Thirdly, the social issues are often seen to be the
responsibility of the state or the society. Finally, social sustainability appears to
bring in more severe challenges in terms of understanding and communication than
other forms of sustainability. Further, research on social sustainability has estab-
lished many other barriers as described in Table 2.7
(a) Lack of awareness
Many studies suggest that non-awareness of social sustainability measures may
hinder adoption of sustainability in the supply chain. On the other hand, social
sustainability awareness and relevant social activities can accelerate social sus-
tainability (Haugh and Talwar 2010). Maloutas (2003) emphasises the need for
creating awareness of social sustainability, as the lack of cognisance in adopting
social measures impedes the movement in the direction of social sustainability.
2.6 Social Sustainability and Supply Chain 43

(b) Lack of competitive pressure
A moderate level of competition among companies encourages them to behave in
socially responsible ways, although both high and low competitions tend to make
them socially less responsible (Campbell 2007). As some organisations utilise their
socially sustainable image for overall strategic advantage, other organisations are
compelled to adopt socially sustainable practices to stay competitive. In a global
environment, competitive pressure plays a vital role in the supply chain. As far as
social sustainability is concerned, companies must build and own the capabilities and
resources that cannot be easily copied by their competitors who, therefore, will be
obligatory to own and maintain such resources of their own, helping the cause of
long-term sustainability (Lamming and Hampson 1996; Carter et al. 2000; Rao and
Holt 2005). In the literature, scholars have established linkages between sustainability
measures and competitive advantage through financial performance of the firm.
(c) Lack of customer requirements
The customers are known to exert a strong pressure on firms to adopt social
sustainability measures through CSR, if their requirements necessitate such mea-
sures (Aguilera et al. 2007). In fact, the customers’requirements with regard to the
Table 2.7 Impediments to social sustainability
S. No. References Barriers
1 Maloutas (2003), Haugh and Talwar (2010) Lack of awareness
2 Lamming and Hampson (1996), Carter et al.
(2000), Rao and Holt, (2005), Campbell (2007)
Lack of competitive pressure
3 Drumwright (1994), Sen and Bhattacharya
(2001), Carter and Dresner (2001), Klassen and
Vachon(2003), Sarkis(2003), Christmann
(2004), Zhu and Sarkis (2006), Ehrgott et al.
(2011)
Lack of customers’requirements
4 Tagesson et al. (2009) Lack of investor pressure
5 Bhattacharya et al. (2014), Hansson et al.
(2003), Haugh and Talwar (2010) Campbell
(2007), Aguilera et al. (2007)
Lack of pressure from employee
unions
6 Campbell (2007), Green et al. (1996), Gonzalez
et al. (2008), Beamon(1999), Raynolds et al
(2007)
Lack of pressure from regulatory
authorities (Government
regulation)
7 Buckholz (1991), Banerjee (2003), Ehrgott et al.
(2011)
Lack of interest from skilful policy
entrepreneur
8 Laufer (2003), Walker and Preuss (2008) Lack of social concern
9 Bartley (2003), Walker and Preuss (2008),
Campbell (2007)
Lack of pressure from social
organisations
10 Jones (1995), Sharma and Vredenburg (1998),
Post et al, (2002a;b), Maignan and Ralston
(2002), Laplume et al. (2008)
Lack of stakeholder’s pressure
44 2 Review of Literature

social dimensions may go a long way in achieving social sustainability. These
demands not only mandate the suppliers to adopt sustainable practices in the short
term but also guarantee long-term sustainability in the supply chain. Scholars in
majority have discussed the necessary requirement of socially responsible supplier
base and its potential implications on the company’s image and financial operations
(Drumwright 1994; Sen and Bhattacharya 2001; Carter and Dresner 2001; Klassen
and Vachon 2003; Sarkis 2003; Zhu and Sarkis 2006; Ehrgott et al. 2011;
Christmann 2004).
(d) Lack of investor pressure
Majority of case studies have discussed the role of investor pressure in social
sustainability reporting. They suggest that privately owned companies do not dis-
close as much social information as the state-owned organisations (Tagesson et al.
2009) when it comes to social sustainability. Investors being custodian of corpo-
rates play a vital role in directing the organisation towards better management of
social responsibility.
(e) Lack of pressure from employee unions
Internal stakeholders especially employee unions involved in persuading firms to
act socially responsible way through dialogue and negotiations (Campbell 2007).
Aguilera et al. (2007) assert that employee unions have an important role in
compelling companies to be more socially sustainable. They play the role of cat-
alyst in successfully bargaining for social measures (Hansson et al. 2003;
Bhattacharya et al. 2014; Haugh and Talwar 2010).
(f) Lack of pressure from regulatory authorities (government regulations)
Government and law enforcement agencies through law enactment and law
enforcement address the non-compliance of social standards. Lack of interest from
enforcement authorities may jeopardise social standards (Aguilera et al. 2007). In
developing countries, the government, as part of the external stakeholder group,
monitors companies for their social sustainability measures (Campbell 2007; Green
et al. 1996; Gonzalez et al. 2008; Beamon 1999; Raynolds et al. 2007). Ehrgott
et al.’s(2011) research confirms that there is a positive relationship between
government regulations and social sustainability implementation.
(g) Lack of interest of skilful policy entrepreneurs
Socially responsible buying (SRB) takes place due to two factors: Entrepreneur
with vision and foresight (Skilful policy entrepreneur) who institute policies and the
organisational climate in which these policies operate (Drumwright 1994; Banerjee
2003; Buckholz 1991). Others have mapped the social network within a particular
organisation to show how even a handler at the lower ranks can effectively
champion and drive a safety-related supplier management project (Ehrgott et al.
2011).
2.6 Social Sustainability and Supply Chain 45

(h) Lack of social concern
Corporate’s social concerns can have a positive impact on the social sustainability
measures (Laufer 2003; Walker and Preuss 2008). Organisations increasingly dis-
play their social practices by adopting several reporting standards to show their
social concern in order to garner the stakeholders’legitimacy. Lack of social
concern may hinder the adoption of social sustainability by them.
(i) Lack of pressure from social organisations
The non-government social organisations (NGO) that monitor the corporations for
socially responsible behaviour may act as a driving force to social sustainability
(Campbell 2007; Bartley 2003). These external stakeholders play a significant role
in reporting corporate’s unethical and wrong doings through protests and prose-
cutions. Moreover, socially responsible corporate behaviour tends to overlap with
the extent to which the firms belonging to the industrial and corporate systems are
amenable to dialogue. The NGOs, through multi-party dialogues, boycotts, cam-
paigns and can influence the corporates to adopt socially responsible practices
(Aguilera et al. 2007). Walker and Preuss (2008), give emphasis to the importance
of the social groups’pressure on corporate performance. In fact, the presence of
active social groups warrants the adoption of social sustainability practices.
(j) Lack of stakeholder pressure
There are two kinds of stakeholders in the organisation including internal and
external and they play a critical role in social sustainability adoption. While external
stakeholders through exercising their collective voice, the internal stakeholders
through their strategic decisions can influence the acceptance of socially sustainable
practices in the corporations (Aguilera et al. 2007). On the other hand, scholars
have demonstrated as to how media stakeholders can also influence the organisa-
tions to adopt social sustainability criteria (Jones 1995; Sharma and Vredenburg
1998; Post et al. 2002a,b; Maignan and Ralston 2002; Laplume et al. 2008).
A research conducted by Jones (2005) in 18 top corporations reveals how com-
panies had adopted social sustainability measures compelled primarily by the
stakeholder’s pressure, in addition to their attempt to increase their ratings in the
DJSI to be specifically recognised for social sustainability.
2.7 Social Sustainability Dimensions
One of the important questions that must be answered, if we are to move forward to
understand the social sustainability in supply chain management, i.e., what are
the social sustainability dimensions and how these dimensions can be measured in
the supply chain? A consensus on social sustainability measurement still eludes the
researchers because of its contextual nature. Another fact is that the sustainability
indicators have largely been developed by consultancy firms which extend services
46 2 Review of Literature

to large companies by helping them to arrive at an indicator system for their
sustainability reporting (such as Elkington’s own company). Social sustainability is
hard to quantify than economic and environmental impact and, as such, it is the
most ignored part of the triple bottom line reporting. Majority of the indicators to
social sustainability are too general to be useful and specific indicators still need to
be developed for particular states and industries, down to the company level. This
means that the usefulness of the existing social indicators to the practitioner per-
spective in the particular context of social sustainability is questionable (McKinsey
2004).
United Nations Division for Sustainable Development (UNDSD 2001) has first
proposed social sustainability dimensions and widely accepted by the academicians,
researchers and practitioners. This framework defines sub-themes and themes, and
further indicators under each sub-themes. The proposed UNDSD framework
measures social sustainability through these indicators that are mapped to
Millennium Development Goals. Based on this framework, the sustainability
indicators are classified into social, environmental and economic dimensions, then
by their theme (e.g. education) and by the sub-themes (e.g. literacy). For instance,
social dimensions themes: health, equity, education, security, population and
housing. Each sub-theme has one to three quantifiable indicators associated with it.
These indicators were considered useful in many countries (UNDSD 2001).
United Nations Environment Programme (UNEP) in association with the
Coalition for Environmentally Responsible Economics (CERES) has constituted a
framework named as “The sustainability Reporting guidelines”developed in col-
laboration with many stakeholders such as business houses, non-profit organisation,
trade unions and investors organisation. This framework although looks similar to
UNDSD, it still differ in many areas. In particular, it differentiates the “additional
indicators”with the “core indicators”. The core indicators are more relevant to the
reporting organisations and stakeholders. However, the majority of these indicators
are qualitative and subjective. In the “sustainable reporting guidelines”, many of
these indicators are informative, yet it is very challenging to incorporate such
qualitative guidelines in the corporate decision-making tools. Trying to overcome
these limitations, In the USA, Carter and Jennings (2000,2004), through their
research have proposed many social dimensions, including safety, human rights,
diversity and philanthropy with measurable quantitative indicators in the manu-
facturing industry.
Others have contributed greatly to the development of the sustainability
framework by proposing additional indicators which incorporates number of cri-
teria’s from key frameworks, namely global reporting initiative, United Nations
Commission on Sustainable Development, Wuppertal Sustainability Indicators and
Sustainability Metrics of Institution of Chemical Engineers (Labuschagne et al.
2005). They also conclude that the existing indicators in these frameworks are not
adequate. Thus, eight supplementary guidelines have been proposed to identify
additional indicators. At the same time, Supply Chain Council has proposed the
framework (SCORE people) through supply chain operations reference model.
2.7 Social Sustainability Dimensions 47

However, the framework proposed by Global Reporting Initiative (GRI) is widely
accepted in the corporate circles.
As discussed earlier, there are many measures and dimensions for social sus-
tainability identified in the manufacturing industries. However, these cannot be
generalised because of social evolvement in the society that happens over a period
and further social issues are contextual. For instance, the social issues in the
developed economies are different from developing countries. Many researchers
have identified social sustainability specific dimensions that can be used as a
measurement tool in manufacturing industries.
Many authors have adopted different dimensions to measure social sustainability
pertinent to the supply chain, as mentioned in Table 2.8. For instance, in New York
City, Sachs (1999) identifies access to goods, human rights, employment and
cultural sustainability as social sustainability indicators. Similarly, Carter and
Jennings (2000,2004), and Emmelhanz and Adams (1999) identify diversity,
philanthropy, health and safety, and human rights in their study conducted in the
USA. Further, Whooley (2004) discusses safety, health, diversity and poverty as the
social sustainability dimensions in Europe. A similar study has been carried out at
Nike Corporation, again in the USA, in which the labour practices were used as
social parameters (Zedek 2004).
Bansal (2005) has also identified similar social dimensions, including safety,
equity and poverty in the Canadian oil firms. Further, in the USA, social sustain-
ability research has been extended to the food industry, and the results imply the
adoption of sustainability dimensions such as human rights, labour practices, health
and safety. One such study, conducted by Hutchins and Sutherland, identifies
equity, safety, philanthropy and health as the social dimensions in the supply chain
through life cycle analysis. Kortelainen (2008a,b) in Europe and Vachon and Mao
(2008) in the Canadian World Economic Forum reports discuss equity, labour
practices and human rights for social sustainability. In Asia, Gupta (2007) has
identified human rights and labour standards in the Indian manufacturing industry.
A few case studies and qualitative approaches by Andersen and Larsen (2009)in
Denmark, Gopalakrishnan et al. (2012) in the UK, and Tate et al. (2010) and Hens
and Nath (2005) with global corporations, have identified diversity, safety, human
rights and health as the social dimensions. Others have identified ethics as an
important social dimension in the supply chain of China (Lu et al. 2012) and India
(Krishna et al. 2011a,b; Dubey et al. 2015b). Similarly, Yusuf et al. (2013) vouch
for the importance of labour practices for social sustainability in the UK oil firms. In
India, safety, wages and labour practices have been discussed as the social sus-
tainability dimensions (Kumar et al. 2014). Similarly, a comparative case analysis
by Mani et al. (2015b), in the Indian manufacturing sector, has identified various
supply chain social dimensions that include safety, health, philanthropy, wages,
education, housing, and child and bonded labour.
Thus, although there are many studies on social sustainability and its mea-
surement, as mentioned above, these have been carried out in different countries
with different contexts. As we know, social sustainability dimensions vary from
country to country and are highly contextual in nature. Some even say that it is very
48 2 Review of Literature

Table 2.8 List of social sustainability dimensions identified in different countries
Country Industry References Housing Diversity Philanthropy Safety Equity Human
Rights
Employment
USA (Maryland) Conceptual paper Poist (1989)√√ √ √
USA Manufacturing Carter et al.
(1999)
USA Apparel industry Emmelhainz
and Adams
(1999)
√
USA Consumer products Carter and
Jennings (2000)
√√ √ √
United Nations Division for
Sustainable Development
United Nations
Guidelines
UNDSD (2001)√√ √ √√√√
USA Consumer products Carter and
Jennings
(2002a,2004)
√√ √ √
Europe Manufacturing
industry
Whooley (2004)√√√
United States Manufacturing
industry
Carter (2005)√√ √√
The world summit of
sustainable development
based on Johannesburg
Conference, South Africa
Book Hens and Nath
(2005)
√
USA Nike corporation Zadek (2004)
Canada Canadian oil firms Bansal (2005)√√
USA Food industry Maloni and
Brown (2006)
√√
(continued)
2.7 Social Sustainability Dimensions 49

Table 2.8 (continued)
Country Industry References Housing Diversity Philanthropy Safety Equity Human
Rights
Employment
Europe Analytical research
conducted on the
data of 20 European
union countries
Kortelainen
(2008b)
√
USA (Michigan) Manufacturing
supply chains
Hutchins and
Sutherland
(2008)
√√√
Canada World economic
forum reports
Vachon and
Mao (2008)
√
Denmark IKEA Corporation Andersen and
Larsen (2009)
√√
USA and Canada 10 global
corporations
Pagell and Wu
(2009)
√
Hong Kong Construction industry Wong et al.
(2010)
√√
Europe (Sweden) Manufacturing Leire and Mont
(2010)
√√ √
Global corporations Based on
sustainability reports
Tate et al.
(2010)
√
UK UK’s food industry Yakovleva et al.
(2012)
√√
Germany H&M and Verner
Frang
Kogg and Mont
(2012)
√
UK British aerospace
systems
Gopalakrishnan
et al. (2012)
√√√
(continued)
50 2 Review of Literature

Table 2.8 (continued)
Country Industry References Housing Diversity Philanthropy Safety Equity Human
Rights
Employment
China Manufacturing Lu and Lee
(2012)
UK Oil and gas supply
chains
Yahaya et al.
(2013)
India Electrical and
Cement
manufacturing
Mani et al.
(2014)
√√ √√√√
India Fireworks Industry Kumar et al.
(2014)
√
India Cement and
Pharmaceutical
Mani et al.
(2015a,b)
√√ √√√√
Country Wages Labour
practices
Poverty Health
and
hygiene
Hunger Ethics Child and
bonded
labour
Procurement
from minority
suppliers
Education
USA (Maryland) √√ √
USA √
USA √
USA √
United Nations Division for Sustainable
Development
√√√√ √
USA
Europe √
United States
The world summit of sustainable development
based on Johannesburg Conference, South
Africa
√√
(continued)
2.7 Social Sustainability Dimensions 51

Table 2.8 (continued)
Country Wages Labour
practices
Poverty Health
and
hygiene
Hunger Ethics Child and
bonded
labour
Procurement
from minority
suppliers
Education
USA √
Canada √
USA √√
Europe √√
USA (Michigan) √
Canada √√
Denmark √√√√
USA and Canada √
Hong Kong √√
Europe (Sweden) √
Global corporations √
UK √
Germany √√
UK √√
China √
UK √
India √√ √ √√ √
India √√
India √√ √ √√ √
52 2 Review of Literature

complex to understand and measure them, as they vary from place to place (Gugler
and Shi 2009). In addition, most of these social sustainability studies have been
supplier oriented, rather than case study or mathematical modelling based. A few
studies, for example, those of Carter and Jennings (2000,2004), have developed a
scale of measure towards social sustainability in the supply chain. However, even
these are too much oriented towards socially responsible purchasing decisions and
skewed towards the supplier side CSR activities. A similar study by Lu et al. (2012)
has also developed a scale to measure social sustainability, but this scale focuses
only on the ethical dimension and its relationship with the corporate performance.
As this discussion reveals, there have been numerous studies on social sus-
tainability conducted in the developed countries (Table 2.8), and various dimen-
sions and measures have been identified specific to the geographical locations of the
studies because of the highly contextual nature of these dimensions. Hence, the
researchers in India have virtually no idea of the social measures and dimensions
specifically suitable to the Indian manufacturing industries. Based on this literature
gap, our first research question is as follows:
RQ-1 What are the social sustainability measures and dimensions specificto
the Indian manufacturing supply chain?
The next section discusses the literature related to the supply chain social sus-
tainability and its relationship with the performance of the supply chain.
2.8 Social Sustainability and Supply Chain Performance
In recent times, in addition to the traditional parameters, supply chains have also
been measured with sustainability parameters, and the incorporation of sustain-
ability measures in the supply chain has gathered pace because of the stakeholders’
awareness and pressure (Bai and Sarkis 2010).
There is an enormous amount of literature available to prove the relationship
between social sustainability and supply chain performance. For example, Seuring
(2008)affirms the importance of adopting social sustainability measures across the
supply chain, as the materials and information flow into different entities (Seuring
and Gold 2013). Many other scholars have also demonstrated this through their
research in different domains. Notably, Carter and Jennings (2000) have introduced
the term “purchasing social responsibility”and advocate the adoption of social
measures in the upstream supply chain to improve the performance of the supply
chain entities. However, they could not establish a direct relationship between
social responsibility and supply chain performance. On the other hand, Ciliberti
et al. (2008) have proposed a logistical social responsibility framework (LSR) with
31 sustainability measures in the supply chain and demonstrated the importance of
adopting sustainable measures and their performance in Italian companies.
2.7 Social Sustainability Dimensions 53

Hutchins and Sutherland (2008), in their research based on the life cycle anal-
ysis, emphasise social issues and demonstrate how, by addressing these issues the
corporate sector can improve not only the performance of the supply chain but also
the financial performance of the country. Further, Andersen and Larsen (2009),
through their case study, demonstrate the relation between social sustainability
measures and supply chain performance. Similarly, Dao et al. (2011) demonstrate
the impact of the adoption of human resource measures on the supply chain sus-
tainability through their framework. In the same vein, Klassen and Vereecke (2012)
discuss various social issues and their impact on the supply chain performance.
The Supply Chain Council views social sustainability as an important dimension
in the supply chain for achieving an optimum performance and proposes the
“SCOR People”framework through the Supply Chain Operation Reference
(SCOR) model (SCOR Framework). Yet, another global, non-profit organisation
suggests various social measures to be followed by companies through its Global
Reporting Initiative Framework (GRI) which is widely accepted in the corporate
circles. Chin and Tat (2015) have also established social measures, such as gender
diversity and their relationship with the supply chain performance. More recently,
Husgafvel et al. (2015) have identified social performance measures and demon-
strated their relationship with the supply chain and company performance. Thus, as
suggested by the literature under various domains, there is a positive relationship
between social sustainability measures and the supply chain performance. In
keeping with this, our next research question is as follows.
RQ-2 In Indian manufacturing industries, is there a relationship between
social sustainability and the supply chain performance?
As many scholars suggest, social sustainability measures should be accounted
for by not only one stage of the supply chain but also other entities in the linkage
(Seuring 2008). Therefore, in the next section, we discuss the literature on various
other entities, including supplier performance, manufacturers’operational perfor-
mance and customer performance.
2.9 Supplier Performance
Supply chain consists of many players or partners from the point of raw material
entry in the system to the final exit point. These players include the suppliers,
manufacturers, distributors and other channel partners in various forms (franchisees,
dealers) and customers (distributors, dealers, end consumers) (Mentzer et al. 2001;
Chen and Paulraj 2004a,b; Chopra and Meindl 2007). Research suggests that the
performance of the supply chain depends on the performance and actions of the
individual supply chain entities. Therefore, it is essential for each entity in the
system to perform better, so that it can enhance the performance of the whole
supply chain. Supplier performance is very crucial in the upstream supply chain and
54 2 Review of Literature

sometimes determines the performance of the buying firm. Hence, many organi-
sations engage in supplier selection, as well as supplier development and nurturing
activities to not only ensure the smooth flow of the materials but also increase the
overall efficiency in the system (Krause et al. 2007).
There is an abundant literature on the supplier performance metrics. We attempt
to review all the metrics mentioned therein to understand the importance and rel-
evance of the supplier performance metrics for our study. The literature, taken
together, suggests that quality and cost are the dominant factors along with flexi-
bility and on-time delivery. The literature in the 1970s and early 1980s gave much
emphasis to the cost factor, while the cycle time and customer responsiveness were
added in the late 1990s. Later, researchers also realised the importance of flexibility
and, more recently, the environmental safety issues have been the key factors in the
industrialised nations.
There have been numerous studies identifying the supplier performance metrics.
For example, Roa and Kiser (1980) give a comprehensive list of 60 supplier per-
formance metrics, Dickson (1966) gives 23, Ellram (1990) 19 and Stamm and
Golhar (1993) 13. According to Beamon (1999), these metrics should satisfy four
different properties: (1) inclusiveness, i.e. measurement of all pertinent aspects;
(2) universality, i.e. easy comparability under various operating conditions;
(3) measurability; and (4) consistency with the organisational goals.
In general, delivery reliability, lead time length, on-time delivery and inventory
service levels are the common performance variables used for measuring supplier
performance (Stock and Lambert 2001). Shin et al. (2000) advocate taking help of
the supply management orientation (SMO) phenomenon and demonstrate its effect
on the supplier performance through several variables, including supplier cost,
supplier lead time, on-time delivery, reliability and quality. Gunasekharan et al.
(2001) group the essential parameters for measuring the suppliers’performance into
three broad levels, i.e. strategic, tactical and operational. At the strategic level, there
are measures such as lead time, quality level, cost-saving initiatives and supplier
pricing against market; the tactical level measures include efficiency of the purchase
order cycle time, booking-in procedures, cash flow, quality assurance and capacity
flexibility, while the operational level measures comprise ability in the day-to-day
technical representation, adherence to the developed schedule, ability to avoid
complaints and achievement of defect-free deliveries, etc.
Similarly, Huang and Keskar (2007) identify three categories of metrics for
supplier performance. These are product-related (reliability, responsiveness, flexi-
bility), supplier-related (cost, financial assets, infrastructure), and society-related
(safety, environment) as described in Table 2.9.
However, Choffray and Lilien (1978) point out that the performance criteria for
the suppliers vary from industry to industry and product to product. For example,
some scholars identify the quality of the product, price, delivery time/order fulfilment
and service as the performance criteria in the electronics components’industry
(Bharadwaj 2004). On the other hand, Amin and Razmi (2009) propose two
important criteria for supplier performance. The supplier-related criteria are acces-
sibility, reliability, security and speed, while the service-related criteria include
2.9 Supplier Performance 55

effective marketing and promotion, experience, financial strength, management
stability, strategic alliances and supporting resources in the service industry. Cho
et al. (2012) propose various performance metrics pertinent to the suppliers in the
service industries, including service flexibility, service delivery cost, range of ser-
vices, customer query time, post-process services, and service capacity.
Amin and Zhang (2012), in their research on supplier selection, use three broad
categories of supplier performance metrics, including quality, delivery and cost
reduction. Another study conducted by Modi and Mabert (2007) operationalises a
construct of supplier performance, involving items such as (1) the number of
incoming defects; (2) percentage of on-time deliveries; (3) percentage of orders
delivered completely; (4) time from order placement to final receipt of order;
(5) procured product cost. In two other such studies, Carter and Jennings (2004,
2005) suggest the use of a supplier performance construct with such items as product
quality, lead time and efficiency (Silver and Jain 1994; Humphreys et al. 2004).
Overall, the literature suggests quality, cost, reliability, time and flexibility as the
most widely accepted performance metrics for the suppliers. In addition to the tra-
ditional parameters, these social sustainability parameters are used to measure the
supplier performance (Bai and Sarkis 2010; Mani et al. 2014). Further, the suppliers’
ethical behaviour has been considered one of the judging parameters for performance
by Lu et al. (2012). Socially responsible supplier nurturing and development prac-
tices help to improve the buying firm’s operational performance and the suppliers’
social performance (Sancha et al. 2015b). In order to improve the suppliers’sus-
tainability performance, firms need to manage their supply chains (Andersen and
Larsen 2009; Beske and Seuring 2014). To address this, many firms rely on supplier
development as well as assessment and collaboration with the suppliers (Gualandris
et al. 2014; Klassen and Vachon 2003; Vachon and Klassen 2006).
Table 2.9 Supplier performance metrics
S. No Category Definitions
1 Responsiveness Related to the speed at which a supplier provides products to the
customer
2 Reliability Related to the performance of a supplier in delivering the
ordered components to the right place, at the right time, in the
required condition and packaging, and desired quantity
3 Flexibility Criteria pertaining to the agility of a supplier in responding to
OEM demand changes
4 Assets and
Infrastructure
Effectiveness of supplier in managing assets to support OEM
demand
5 Cost and
Financial
This criteria related to cost and financial aspects of procuring
from supplier
6 Environment Supplier’s effort in pursuing environmentally conscious
production
7 Safety Supplier’s readiness for occupational safety in the facility
Source Huang and Keskar (2007)
56 2 Review of Literature

However, till now, the literature on social sustainability practices and supplier
performance has been scant and studies have focused more on the environmental
aspects than supplier performance (Akamp and Muller 2013; Seuring and Müller
2008b). The scarcity of literature on social aspects and supplier performance has
also been acknowledged by Gimenez and Tachizawa (2012), Hoejmose and
Adrien-Kirby (2012), Moxham and Kauppi (2014), and Seuring and Muller
(2008b). To fulfil this research void, we frame our third and fourth research
questions as follows.
RQ-3: Can social sustainability practices lead to a better supplier
performance?
RQ-4: Is there a relationship between supplier social performance and the
supply chain performance?
Studies suggest that the supply chain entities need to coordinate and collaborate
to achieve a better performance for the whole supply chain system (Vachon and
Klassen 2008; Krause et al. 2007). Many authors even argue that the individual
performance of each entity in the supply chain may have an impact on the other
entities. For example, the performance of the suppliers may affect the operational
performance of the firm (Gimenez et al. 2012; Sancha et al. 2015a, b). In the next
section, we explore the literature on the firms’operational performance and their
metrics.
2.10 Manufacturers’Operational Performance
Operational performance of the manufacturer plays a vital role in the supply chain
operations. The performance of manufacturers in the “in-house operations”is
mainly dependent on the performance of the other entities in the system, since they
are placed ideally “in-between”the suppliers and the customers. The operational
performance can be described as the capability of the manufacturing plant to more
efficiently produce and deliver products to the customers (Zhu et al. 2008a). There
is an abundant literature on operational performance, in which the scholars have
used various independent variables to measure it. For example, an adaptation of the
TQM practices in the supply chain and the way it affects the operational perfor-
mance has been established by Samson and Terziovski (1999). Further, Shin et al.
(2000) have demonstrated the supply management orientation (SMO) phenomenon
and the effect of such supply chain management orientations on the operational
performance construct, with the items including quality, delivery, flexibility and
cost. Similarly, Ahmad and Schroeder (2003) have shown the firms’HRM practices
and their effect on operational performance. In this research, the construct “oper-
ational performance”has been measured through the parameters of cost, quality,
delivery and flexibility, as specified in Table 2.10.
2.9 Supplier Performance 57

Devaraj et al. (2007), in their research on e-business, show how the imple-
mentation of e-applications helps in enhancing the operational performance of the
manufacturing firm. Table 2.11 describes various items that can be used to measure
the operational performance of a firm and the details of the studies conducted by
various authors against each measure.
More recently, research on supply chain integration at various levels in an
organisation clearly shows an enhancement in organisational performance (Wong
et al. 2011). Wong also demonstrates the construct “operational performance”with
the measurement items, such as production cost, delivery, product quality and
production flexibility. As the literature shows, the measurement of operational
performance has been conceptualised and proposed by many scholars in their
research. For example, Zhu et al. (2008a,b) demonstrate the use of operational
performance construct with a six timescale, including increase in the amount of
goods delivered on time, decrease in inventory levels, decrease in scrap rate,
increase in product quality, increase in product line and improved capacity
utilisation.
Table 2.10 Operational performance measures
Measures What it means
Cost Cost of manufacturing/unit
Quality How well the product meets the expected quality norms
Delivery Delivery performance—on time
Flexibility Flexibility to change volume
Speed Pace of the new product introduction
Source Ahmad and Schroeder (2003)
Table 2.11 Operational performance measures
S.No Measures Literature support
1 Percentage of
returns
Rosenzweig et al. (2003), Frohlich and Westbrook (2001), and
Poirier and Quinn (2003)
2 Per cent of
defects
Rosenzweig et al. (2003), Frohlich and Westbrook (2001)
3 Delivery speed Frohlich and Westbrook (2001,2002), Chen and Paulraj (2004a,b)
4 Delivery
reliability
Poirier and Quinn (2003), Rosenzweig et al. (2003), Chen and
Paulraj (2004a,b)
5 Production
costs
Frohlich and Westbrook (2001,2002), Zhu and Kraemer (2002),
Rosenzweig et al. (2003), Poirier and Quinn (2003), Chen and
Paulraj (2004a,b).
6 Production
lead time
Frohlich and Westbrook (2001), Rosenzweig et al. (2003),
Ranganathan et al. (2004), Hailemariam and Jain(2015).
7 Inventory
turns
Zhu and Kraemer (2002), Ranganathan et al. (2004)
8 Flexibility Rosenzweig et al. (2003), Chen and Paulraj (2004a,b)
Source Devaraj et al. (2007)
58 2 Review of Literature

In a subsequent research, Green et al. (2012) operationalise all the items pro-
posed by Zhu et al. (2008a,b) to measure the operational performance. As dis-
cussed earlier, and also suggested by the literature, the operational performance can
be measured with clearly defined and proven parameters, such as delivery, cost,
lead time, quality, flexibility and reliability. Table 2.11 describes the various
operational measures adopted by different authors under various domains. More
recently, it has been evident in the literature that the sustainability measures adopted
by the firms in their supply chains lead to an enhanced operational performance
(Chang and Kuo 2008). Yet, as pointed out by several scholars, research on social
sustainability and the firms’operational performance remains one of the least
explored areas (Akamp and Muller 2013; Gallear et al. 2012; Gimenez et al. 2012;
Hollos et al. 2012; Klassen and Vereecke 2012).
On the contrary, a few scholars argue that the implementation of social sus-
tainability practices through supplier management does not result in an improve-
ment in the supplier performance or the firms’operational performance (Akamp and
Müller 2013). Another contradictory result has emerged from the research con-
ducted by Hollos et al. (2012) who say that the buying firms’efforts to push socially
responsible behaviour at the supplier locations do not help them in cost reduction
and operational performance enhancement. On the other hand, Gallear et al. (2012)
demonstrate how monitoring and sharing of the best social sustainability practices
affects the suppliers’and the firms’financial performance. Sancha et al. (2015b)
also demonstrate the social sustainability practices and their impact on the sup-
pliers’and the firms’operational performance.
Thus, the literature gives mixed results for sustainability practices and their
relationship to the suppliers and the firms’operational performance. Hence, our fifth
and sixth research questions are as follows.
RQ-5: Can the adoption of social sustainability practices lead to a better
operational performance of the firm?
RQ-6: Is there a relationship between supplier performance and the opera-
tional performance?
2.11 Customer Performance
The customer–supplier linkage and their relationship management form a critical
aspect of a manufacturing supply chain. The supply chain’s overall performance is
determined by the combined improvement in the profitability of all its members.
The customer is one of the critical partners whose performance is reflected directly
on the supply chain. The integration of all three members and their linkages in
terms of coordination leads to an overall performance improvement in the supply
chain (Won Lee et al. 2007).
Figure 2.4 describes the essential elements of the supply chain and the rela-
tionships among them. As seen in the figure, the customers’practices and actions
2.10 Manufacturers’Operational Performance 59

are crucial in determining the overall performance of the supply chain (Lambert
2008). In a modern business environment, the customer (distributor, retailer) must
be able to deal with the increased competition, both domestically and globally. Over
the years, the changing customer expectations and regulatory demands have all
driven the efforts to deliver improved performance and better customer service
(Bruno and Barki 2014). In a modern retail environment, the retailers need to be
equipped with the tools to deal with the increased demand. As a result, the retailers
look far beyond their organisational boundaries to integrate and evaluate adequate
resources and capabilities, thereby creating superior value and competitive
advantage which would give them sustenance over a period of time.
Measuring the customer performance and its importance to the business per-
formance has been well documented by Gupta and Zeithaml (2006). Their research
discusses and proposes both observable (behaviour) and unobservable (customer
satisfaction) metrics, pertinent to the business performance. Further, Petersen et al.
(2009) identify various customer performance metrics and categorise them into
brand-value metrics, customer-value metrics, referral-value metrics, acquisition and
retention metrics, cross-buying and up-buying metrics, multichannel shopping
metrics and product return metrics.
Hooley et al. (2005), in their marketing research, identify the elements of cus-
tomer performance, including financial performance, and group them into three
categories: overall profit-level achievement and increased sales; market perfor-
mance, i.e. more sale volumes compared to the competitors; and customer per-
formance, i.e. the customers’increased loyalty.
Recently, the stakeholders’awareness of the corporate social responsibility
perceptions has had a profound impact on the image of the firms and led to a
tendency of the consumers to buy specific brands and patronise certain retailers,
thus improving their financial performance (Luo and Bhattacharya 2006). For
example, America’s Star Bucks coffee brand gained popularity among the cus-
tomers for its socially responsible ways of sourcing and servicing, which has sig-
nificantly enhanced the retailer’s image (Argenti 2004).
Supplier linkage (+)
Supply chain
strategy
SCM performance
Internal linkage (+)
Customer Linkage
(+)
Fig. 2.4 Elements of supply chain and their collaboration. Source Conceptual model developed
by Lee et al. (2007)
60 2 Review of Literature

Increasingly, the changing business scenarios have forced many customers
(retailers) to adopt socially sustainable practices. Delai and Takahashi (2013), in
their research, posit the importance of social sustainability practices adopted by the
Brazilian retailers and show how they affect the performance of the supply chain.
Similarly, Sebastiani et al. (2014) advocate adopting social sustainability practices,
particularly by the customers (i.e. the franchisees), and their relationship with the
corporate performance.
Thus, the literature affirms the importance of the customer performance for
achieving an overall performance improvement in the supply chain. In addition, it
also suggests various metrics, such as customer loyalty, sale volumes, customer
image, customer profit and sustainable practices, for better performance. Still, it is
clear that there have been relatively few studies focusing on the customer perfor-
mance and its relationship with the supply chain performance. Though the literature
on customer performance is abundant in the marketing literature, the studies that
can establish the relationship between the adoption of social practices and the
supply chain performance are scant. Hence, our next research questions are as
follows.
RQ-7 Is there a relationship between social sustainability and the customer
performance?
RQ-8 Do the customer social sustainability practices lead to improved supply
chain performance?
2.12 Cost Reduction
During the 1980s, the manufacturers were in the race to quickly adopt just-in-time
(JIT) and total quality management (TQM) practices to improve their efficiency
(Dong et al. 2001). Today, the need for mass customisation and flexibility is
growing, as the customers prefer more specialised and customised products to meet
their needs. Many manufacturers, who once engaged in mass production of items,
are now exploring the modified manufacturing processes to achieve reduced lead
time, make to order, assemble to order, etc. As a result, low cost, high quality and
efficient small batch production, as well as greater flexibility have become a reality.
To align with these developments, companies are upgrading their purchasing
function to be an integral part of the corporate strategic management process. For
example, companies are increasingly adopting the route of integration and strategic
alliance for better performance, customer service and cost reduction. This inte-
gration has many formats in the literature, such as supplier integration, buyer
supplier partnerships, integrated purchasing strategy, supply base management,
strategic supplier alliances, supply chain synchronisation. In other words, compa-
nies are in a constant endeavour to find better processes to not only meet the
customers’increased aspirations but also achieve reduction in the cost of service.
2.11 Customer Performance 61

Tan et al. (1999) advocate supplier integration and tracking practices and show
how these practices could have a positive impact on reducing the supplier base and
improving the corporate performance. This research also posits the supplier inte-
gration practices and their relationship with the firms’return on investment, cost of
production, product quality, supplier performance and competitive position.
Shin et al. (2000) have demonstrated reduction in production cost through
supply management orientation (SMO) and shown how the SMO orientation leads
to a better supplier as well as buyer performance. Similarly, Scannell et al. (2000)
have proved that integrating practices, such as supplier development, supplier
partnering and JIT in the supply chain, can lead to overall cost reduction. There are
other studies affirming that the improved supplier performance leads to lower costs,
which means that the activities such as supplier integration, knowledge sharing, and
supply management orientation, invariably lead to cost reduction.
Thus, Dong et al. (2001) posit that just-in-time (JIT) purchasing results in
reduced order sizes, low lead times and adoption of quality control measures that
lead to a significant reduction in the logistics cost, including the cost of purchase for
the buying firms. Others argue that the improvements in scrap rates, defect rates and
improved quality practices lead to increased profits and decreased product cost
(Adams et al. 1997; Fyenes and Voss 2002). In this way, the literature asserts that
the adoption of better social sustainability practices can lead to low lead times,
reduced order sizes, improved quality, improved scrap rate and reduced defect rates,
resulting in reduction in the cost of production.
In recent times, there has been an upsurge of awareness of the sustainability
related aspects among the consumers. As a result, companies are adopting more
sustainable measures in their supply chains to become accountable to the consumers
and gain a strategic advantage. There has been an enormous amount of research
carried out by the academicians and practitioners to establish the “green benefit”for
the companies. Rao and Holt (2005) have demonstrated the companies’com-
petiveness through the adoption of green practices and their cost reduction in
inbound and outbound supply chain. A similar study by Carter (2005) using the
purchasing social responsibility (PSR) phenomenon proves the relationship
between social responsibility measures and the supplier performance, leading to
cost reduction for the buying companies.
Cost reduction can be maximised through various approaches in the supply chain.
For example, Danese and Romano (2011) demonstrate how the supplier integration
and customer integration efforts yield the cost reduction objectives of the firms.
Similarly, a study carried out in China supports the contention that supply chain
integration leads to competitiveness and cost reduction (Huo et al. 2014). Dey et al.
(2015), in their case study of the UK manufacturing organisations, find that constant
supplier evaluation measures can lead to competitive performance and cost reduction
for the organisation. Other scholars have also discussed the cost reduction benefits
gained through the environmental sustainability measures. For example, Sarkis
(2001) and Rothenberg (2012) have established the relationship between environ-
mental sustainability and cost reduction and shown how the adoption of environ-
mental sustainability measures can benefit the firms in their cost reduction efforts.
62 2 Review of Literature

However, by and large, the studies have been concentrated on environmental
sustainability, except that of Carter (2005) who provides the evidence of cost
reduction due to the managers’efforts to project the companies’socially responsible
purchasing behaviour. Therefore, our last research question is as follows.
RQ-9 Is there a relationship between social sustainability practices in the
supply chain and cost reduction?
Based the literature review and discussions, we summarise all the research
questions as follows.
2.13 Research Questions
•RQ-1 What are the social sustainability dimensions and measures specific to the
Indian manufacturing supply chain?
•RQ-2 In the Indian manufacturing industries, is there a relationship between
social sustainability and supply chain performance?
•RQ-3 Can social sustainability practices lead to better supplier performance?
•RQ-4 Is there a relationship between the suppliers’social performance and the
supply chain performance?
•RQ-5 Can the adoption of social sustainability practices lead to better opera-
tional performance of the firm?
•RQ-6 Is there a relationship between the supplier performance and the opera-
tional performance?
•RQ-7 Is there a relationship between social sustainability and the customers’
social performance?
•RQ-8 Do the customers’social sustainability practices lead to improved supply
chain performance?
•RQ-9 Do the social sustainability practices in the supply chain lead to cost
reduction of the firms?
2.14 Theoretical Background
Resource-based view (RBV)
Social sustainability in the supply chain mainly deals with the social aspects of the
employees. Human resources are considered to be an invaluable and intangible
resource of the organisation. The relationship between employees and firm’s
competitiveness was established as early as 1959 through resource-based view
(Penrose 1959). The resource-based view (RBV) emphasises on accumulation of
2.12 Cost Reduction 63

valuable, rare, inimitable and non-substitutable (VRIN) resources is the basis for
enterprise competitiveness (Dierickx and Cool 1989; Barney 1986a,b; Peteraf
1993).
Wernerfelt (1984) initially introduced resource-based view (RBV), which sug-
gests “the firm as a bundle of combined resources and capabilities that develop
competencies”. The organisation capabilities are redefined as the capacity of a
group of resources to perform some job or activity (Grant 1991), and as a conse-
quence, they became recognised as the source of sustainable competitive advantage
because they are harder to copy or buy than the resources on which they are based
(Collis and Montgomery 1995). In production process, resources are redefined as
the inputs to production, which includes capital equipment, skills of individual
employees, finance. There has been extensive research to test this relationship
between capabilities, resources and competitive advantage (Wang and Ahmed
2007). Subsequent developments in the resource-based view (RBV) have proposed
that organisational knowledge as crucial capability (Grant 1996; Eisenhardt and
Santos 2002) because it provides the underpinnings for vibrant capabilities and
prosperity in unstable, competitive environments (Teece et al. 1997; Wu 2010).
These capabilities and resources are basis for the formation of sustainable com-
petitive advantage. Resources can be classified further as “physical capital resources
(including finance, plants and equipment), organisational capital resources (e.g.
organisational structure, human resources systems, control systems,) and human
capital resources”(skills, judgment and intelligence of employees) (Barney 1991).
In organisations, capabilities can be defined as the skills of a firm which needs to
take full benefit of its assets, without such capabilities, assets are of little or no
value. Athey (1999) defines “competencies as a set of observable performance
dimensions, including individual knowledge, attitudes, skills and behaviours, as
well as collective team, process and organisational capabilities that are linked to
high performance, and provide the organisation with sustainable competitive
advantage”. Some of these competencies can be either easily acquired or imitated
by competitors for example plant and machinery, etc., whereas core competencies
or unique competencies that are hard to be obtained or copied easily.
Research in the literature on strategic human resource management explains the
importance of human resources in firms; in a way, they can lead to the creation of
sustainable competitive advantage (Barney 1998, 2001). Barney also discusses
about the corporate’sdefinite competitive advantage, when it displays a competitive
superiority, based on some distinctive and desirable competence or capability,
which rivals cannot possess or imitate (Barney 1997). More recently, people are
perceived to be an indispensable part of a company, an element which requires
proper management, in order to include a profitable investment and to offer com-
petitive advantage. Resource-based view is based on four basic beliefs, which
constitute the VRIO model: value (V), rareness (R), inimitability (I), organisation
support (O) (Barney 1991).
This core competency depends significantly on the quality level of team spirit
creation, reward, other human resources management practices, and firm’s general
strategic policies. Therefore, firms should look for tracking and exploiting their
64 2 Review of Literature

human resource’s valuable and rare characteristics and try to align the company’s
aims with the employee’s personal needs and expectations. For example, all sea-
farers may not hold imitativeness, creativity, seamanship and even if they do, these
characteristics cannot be demonstrated and become fully valuable, unless the
working environment motivate them. Both of these valuable and rare characteristics
contribute to short-term competitiveness, because eventually, they can be imitated
by competitors. However, what is important for a company is to seek and develop
other such characteristics in its own human resources, which could not easily be
copied by the competitors. Corporate’s should be in a position to develop systems
that will foster human resource characteristics to reap the fruit of their potential
advantage (Barney and Wright 1998). “The existence of effective human resource
management systems makes the firm not only sustainable but helps in achieving
competitive advantage”(Wright et al. 2001), while some practices are easily imi-
tated by competitors, consistent systems are not. As a result, the firm should put in
efforts in maintaining its structures, systems and relationships with its employees,
because changes may endanger the feeling of employment security, jeopardize the
people’s trust and loyalty. It may lead to loss of the valuable and rare human
resource characteristics. Hence, sustainable competitive advantage comes out, not
from general skills, but from firm-specific skills, not from individuals but from
teams; not from single practices but from human resource systems (Barney 1998).
Wu et al. (2006) have identified relationship between IT capabilities and supply
chain performance through resource-based view in Chinese manufacturing indus-
tries. Wu describes how the IT resources acquired over a period of time cannot be
easily imitable by others and bestow competitive advantage to the firms.
Zhang (2009) establishes the relation between adoption of appropriate tech-
nologies internally, for operations such as purchase order processing, logistics
planning, invoicing, supplier selection and demand management and in B2B
transactions for its external use with partners in supply networks, and operational
performance. Gavronski et al. (2011) finds that intangible resources such as external
knowledge exchange play a vital role in development of manufacturing capabilities
which will lead to greenness in the supply chain, while they find that tangible
resources such as environmental investments are not considerably related to RBV.
Thus, our research building on resource-based view principles explores the
social sustainability phenomenon in the supply chain of Indian manufacturing
industry and its possible linkages to performance outcomes.
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