Making Sustainability Sustainable

Frank L. Montabon, Mark Pagell, and Zhaohui Wu

Article Information:Frank L. Montabon, Mark Pagell, and Zhaohui Wu (2016), “Making Sustainability Sustainable,” Journal of Supply Chain Management, Vol. 52 No. 2.

Abstract

The vast majority of research and practice regarding sustainable supply chains has followed an instrumental logic, which has led firms and supply chain managers to place economic interests ahead of environmental and social interests. Evidence that firms are attempting to become less unsustainable is mounting, but compensating practices such as offsetting a supply chain’s negative impact on the environment and society do not create truly sustainable supply chains. This conceptual paper seeks to move the field from the question of how can firms merely diminish environmental or social problems to how supply chains can become truly sustainable. To that end, we review the major weaknesses in previous logics and develop an Ecologically Dominant logic where environment and social interests supersede economic interests. To encourage a wider adoption of our perspective, the paper illustrates how the Ecologically Dominant logic can advance practice and research. We do this by providing examples drawn from practice and our previous research and by offering propositions to encourage future research.

Keywords: sustainability; environmental issues; social responsibility; human judgment and decision making

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INTRODUCTION

Previous research on sustainable supply chains has generally been framed using an instrumental

logic that asks how can a supply chain benefit from addressing environmental or social issues

(Gao & Bansal, 2013; Garriga & Melé, 2004) as compared to how can a supply chain become

sustainable. This can be observed in the multiple literature reviews on the link between being

more sustainable and economic performance (Barnett & Salomon, 2012; Golicic & Smith, 2013;

Orlitzky, Schmidt, & Rynes, 2003). The relationships of interest in these reviews are explicit

tests of an instrumental logic where one construct, becoming more environmentally or socially

sustainable, influences another, such as profits or some other type of economic performance. For

example, Klassen and Whybark’s (1999) seminal article explores how environmental

technologies impact manufacturing performance. Gao and Bansal (2013) defined the

instrumental logic as treating the social and environmental aspects discretely and sequentially “as

if such issues are emerging distractions” (p. 241) and they explain that this logic has its

foundations in stakeholder theory, which places the firm in the center of a stakeholder network

and views these stakeholders as either enablers or inhibitors of the firm’s primary goal of

creating wealth. The key to the instrumental logic is that economic performance is the goal, not

sustainability.

This emphasis on finding shared value, win-win outcomes or determining when it pays to be

green has certainly moved the field forward and our intent is not to dismiss the progress that has

been made in the last 30 years. However, previous research has noted that an instrumental logic

dominated by economics, especially as manifested as profit, is antithetical to humanity’s well-

being (e.g., Shrivastava, 1995). In this paper, we offer an alternative logic, which we call

Ecologically Dominant (ED), that we argue can lead to truly sustainable supply chains. This

paper is aimed primarily at researchers with the idea that if the logic that guides research

changes, then changes in practice will follow.

The instrumental logic has two significant weaknesses and motivates this paper to offer an

alternative. First, this logic is backwards looking in that it studies existing unsustainable supply

chains to determine what they are doing to become less unsustainable (Pagell & Shevchenko,

2014). In extant research, sustainability is mainly addressed from the perspective of what can

existing firms do to reduce their harm while maintaining or increasing their profits. Research of

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this nature cannot lead to truly sustainable supply chains because it addresses trade-offs by

prioritizing the profits of existing firms over other sustainability outcomes including the survival

of society and the environment. Second, while sustainable supply chain research is ostensibly

aimed at the entire chain and all of its stakeholders, the reality is that it is usually conducted from

the perspective of a focal firm. This means that research to date has mainly investigated

sustainability related performance measures of the focal firm while generally overlooking other

members of the chain and the communities in which the supply chain operates.

The Ecologically Dominant logic presented in this paper is explicit in its priorities when trade-

offs are encountered and is aimed at creating a truly sustainable supply chain, not at reducing the

harm from a single focal firm. This logic is illustrated in Figure 1, which shows that economic

and social issues are nested inside environmental issues. When trade-offs are inevitably

encountered the priority is to protect the environment, then society and only then to consider

profits.

***Insert Figure 1 here***

This paper prescribes a new logic for conducting research because using the current

sustainability logic will lead to the same, unsustainable results. The dominance of economic

measures is a norm that drives not only the vast majority of practice, but also the preponderance

of research, which in turn guides the development of theory (Matthews, Power, Touboulic, &

Marques, in press). Changing that norm is a critical step towards sustainability.

Davis (2015) argues that the primary constituency for organizational research has been

managers, but should now shift to society. Similarly, the primary constituency for the current

instrumental logic is the individual firm in an existing supply chain, whereas the primary

constituency for our new logic is future society at large, though we recognize that supply chains

will be implementing our logic. Managers have a fiduciary responsibility to protect their firm’s

survival and maximize profits. Supply chain researchers do not. One of our motivations for this

paper is to change the nature of research on sustainable supply chains. Such research may lead

to regulatory policies and firm decisions that cause some firms to go out of business to be

replaced by sustainable new entrants, that profits are redistributed among chain members, or that

other stakeholders beyond a focal firm in a supply chain need to be given priority. If this were to

occur, it would understandably be unsettling for the manager of an existing unsustainable

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business. However, we offer the Ecologically Dominant logic not to attack such firms but to

encourage research on true sustainability.

To recap, we see significant weaknesses in current sustainable supply chain research, namely

that it is focused on a focal firm’s profits now rather than the entire supply chain’s future impact

on the environmental and society. We offer an alternative Ecologically Dominant logic, which

by being very explicit in its tradeoffs overcomes these weaknesses. This is a normative or

prescriptive logic that describes what should happen to create truly sustainable supply chains.

The Ecologically Dominant logic is developed based on by the principals of Whetten (1989),

Sutton and Shaw (1995) and Weick (1995). We theorize by building on previous concepts and

making use of previous findings to first explain why existing logics do not lead to sustainability.

From there the new logic is developed by combining conceptual theorizing with rich narratives

to develop propositions embedded in the Ecologically Dominant logic and supported by

empirical data from cases.1 The elements of sustainability (what) do not change in this new logic,

but how they are interrelated and the resulting decision making do, resulting in different

outcomes. The Ecologically Dominant logic is a significant change from current logics, so in

order to explain these changes and encourage theory and practice development, the research

propositions explain why the new logic could lead to different outcomes. This new logic fits well

with Ketchen and Hult’s (2011) “G-A-S” criteria. We believe it to be very generalizable (“G”)

and it is simple (“S”) to explain. Whether or not it will be shown to be accurate (“A”) will be

left to future research. The value proposition for this paper is to offer a new way of thinking that

is aimed at achieving truly sustainable supply chains.

THE NEED FOR A NEW LOGIC

To build a new way of thinking, we must consider culture, logic, and cognition. Culture is

typically viewed as an organization’s or society’s values, beliefs and ideology (DiMaggio, 1997).

Culture is built on the deeper level of logics or cognitions (Bourdieu, 1977; Friedland & Alford,

1991; Swidler, 1986), which are often preconscious and complex combinations of problem

solving routines and cognitive elements such as assumptions and decision making rubrics

(DiMaggio, 1997; Thorton & Ocasio, 2008). Logic occurs at the institutional level of analysis

while cognitions are typically firm or individual level; institutional logics drive organizational

1 For details on data collection please see Pagell and Wu (2009) and Wu and Pagell (2011).

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and individual cognitions and decisions. In this paper logic refers to the framework(s) that guide

research and practice in sustainable supply chain management. Cognitions are driven by the logic

but occur at the individual, firm or supply chain level and reflect how decisions are made within

the supply chain. We have chosen the term “cognition” rather than “paradigm” (Kuhn, 2012)

because the former connotes a process that is more internal to an individual, while the latter can

be seen as more external.

Our primary thesis follows Gao and Bansal (2013) in that we maintain that the instrumental logic

that underpins the current understanding of the TBL has limited progress toward sustainability.

Therefore, we suggest the Ecologically Dominant logic as a means of achieving sustainability.

We argue that the Ecologically Dominant logic will engender different cognitions, decisions and

outcomes.

The following reviews how sustainability has been operationalized in the supply chain

management literature using some of the representative concepts in the literature. We use the

term “concepts” so that we can be a bit broader in our review. This is not an exhaustive review

of the literature, but rather shows how these concepts have more in common than might be

discerned from their progenitors. In particular, while many claim to be integrative, their

implementations have shown them to be instrumental, which we argue hinders the development

of true sustainability.

Sustainability as a (Potentially) Integrated Logic

The Triple Bottom Line (TBL) has been a dominant concept in sustainability research. The

Economist magazine (Anonymous, 2009) credits Elkington with coining the term “Triple Bottom

Line” in 1994. This term received wider recognition upon publication of Elkington’s book in

1998 (Elkington, 1998). A common definition of the TBL is “an accounting framework that

incorporates three dimensions of performance: social, environmental and financial” (Slaper &

Hall, 2011).

The TBL aspires to treat each of its three aspects with equal importance (Coffman & Umemoto,

2010; Gończ, Skirke, Kleizen, & Barber, 2007). It is thus not surprising that some researchers

use TBL as a synonym for sustainability. For example, Golicic and Smith (2013) felt the need to

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explain in a footnote that when their article used “sustainability”, they were in fact using the

TBL sense of the term. Moreover, Winter and Knemeyer (2013) used the TBL as their

classification scheme for their literature review of sustainable supply chain management. While

this synonymity is a sign of the TBL’s dominance in research, it also problematic as a significant

amount of research uses the term “sustainability” when only the economic and environmental

aspects are being examined. For example, one review found that the majority of sustainable

supply chain management research from 2002 to 2014 did not address the social aspect (Walker,

Seuring, Sarkis, & Klassen, 2014).

Sustainability is inherently integrative. Using the TBL as a means of capturing a chain’s

performance is, conceptually, integrative in that the TBL includes all of a supply chain’s

impacts. Thus the TBL seems to align well with stakeholder theory (Donaldson & Preston, 1995;

Freeman, 1984) since capturing all of a chain’s impacts implies capturing how a chain affects all

of its stakeholders. However, as Clarkson (1995) discussed, there is typically not agreement

between stakeholder issues and societal issues, so the TBL may not be as inclusive of all

stakeholders as previous research has presented it. This is because stakeholder theory places the

supply chain in the center of the stakeholder network and asks how the supply chain should

respond to stakeholder demands. But for the supply chain to act sustainability, properly aligned

incentives must be in place. van Bueren et al. (2014) note that there is a lack of incentives for

individual actors to change their behavior. They attribute this to Beck’s (1992) concept of

organized irresponsibility, which explains that while society has always faced risks such as

hurricanes, some risks are now man-made such as acid rain. The problem Beck describes is that

though modern society is capable of producing significant, life-threatening risks, we lack the

institutions to control or limit them. This gives firms and supply chains an “out” with regard to

sustainability. For instance, firms in a supply chain can argue that it is not their fault that

customers do not buy more sustainable products. Thus, it is not surprising that firms choose to

emphasize the economic nature of the TBL over the other two aspects as there are no institutions

that can ensure that all three aspects of the TBL are given equal treatment and thus supply chains

can shift blame to customers.

The Natural Resource Based View (NRBV), which is an integrative theory of sustainability with

the natural environment as a key constraint, was proposed in 1995 by Hart (1995). Yet Hart’s

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follow-up (Hart & Dowell, 2011) noted that research was still too focused on short term

economic gains from being green. Hart and Dowell identify a problem noted by others (Gao &

Bansal, 2013; Pagell & Shevchenko, 2014) that sustainability research and practice has mainly

been done in an instrumental fashion focusing on a single firm or single supply chain becoming

less unsustainable.

Sustainability should be addressed and measured in an integrative fashion to account for the

impacts on all stakeholders and both the TBL and NRBV are conceptually integrative. However,

there is little research and even less practice that occurs in this manner. Some of the literature

attempts to deal with this issue by finding “wins” for all aspects of sustainability.

Win-Win Perspectives

Win-win is a recurring theme in sustainability research. Porter’s explanation of win-win was

perhaps the first sustainability concept to get wide notice in the business research literature. In

one of his earliest writings on the topic of environmental management (1991), he said that “The

conflict between environmental protection and economic competitiveness is a false dichotomy. It

stems from a narrow view of the sources of prosperity and a static view of competition.” In

other words, firms and supply chains can be environmentally friendly and make a profit.

Porter’s argument was a narrow one that stated that “properly constructed regulatory standards”

would encourage innovation and that this innovation would help supply chains stay competitive.

This win-win perspective has been very influential in research, especially research on the “does

it pay to be green” question (Golicic & Smith, 2013; Klassen & Whybark, 1999; Russo & Fouts,

1997).

Later, Porter and van der Linde (1995) described the quality “revolution” of the 1980s as being

very similar to the change in perspective they were advocating regarding pollution. They argued

that pollution elimination could use many of the same principles embodied in quality

management, especially using inputs more efficiently, eliminating hazardous materials, and

eliminating unneeded process steps to reduce pollution while increasing profits. A specific

example of this argument in the supply chain management literature is the extension of total

quality management into total quality environmental management (TQEM) (Rao, 2004).

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A newer form of the win-win perspective can be found in Porter and Kramer’s (2006, 2011)

concept of creating shared value (CSV) which they define as “policies and operating practices

that enhance the competitiveness of a company while simultaneously advancing the economic

and social conditions in the communities in which it operates” (Porter & Kramer, 2011, p. 66).

This concept, similar to the TBL, attempts to give the three aspects of sustainability equal

importance; unfortunately, practice has shown the limitations of this concept.

Crane et al. (2014) provide a critique of CSV and by extension all win-win perspectives. One of

their criticisms is particularly salient to this paper. They note the complexity of social and

environmental issues and that given this complexity, CSV might be seen as a way to implement

developed forms of greenwashing. They give particular examples of firms that engage in

successful CSV projects, but whose operating philosophy (i.e., business model) seems at odds

with the idea that all three aspects of sustainability are treated equally. Firms isolate and

publicize their “sustainability” efforts, while in fact keeping their primary focus on generating

economic value. For instance, the makers of single use disposable coffee pods publicize their

efforts to recycle a small number of their pods, but do nothing to address the issue of their

business model’s reliance on a single use disposable pod in the first place (Hamblin, 2015).

Win-win is attractive in that it suggests that the demands on supply chains to be socially and

environmentally responsible are actually opportunities to increase profits. However, while there

are certainly win-win opportunities, creating truly sustainable supply chains will involve both

changes that have win-win outcomes and changes that will force trade-offs that are inevitable

given the complex nature of sustainability (Hahn, Figge, Pinkse, & Preuss, 2010). As Hahn et al.

state, “By following the win–win paradigm sustainability issues are ultimately judged through

the lens of profit maximization rather than being treated as ends in themselves” (p. 219). To date,

the economic aspect of sustainability has won out over the social and environmental aspects.

This result is because the reward structures for the three areas are clearly different and for the

most part, firms are beholden to the economic aspect of the TBL (Epstein & Yuthas, 2010; Gray

& Milne, 2004), which indicates a mismatch between rewards and expectations. Wood and

Jones (1995) discussed this in their review of the corporate social performance (CSP) literature,

arguing that the literature suffered from a mismatch between the “expectations, effects, and

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evaluations” and the stakeholders involved. “Mismatching of variables in CSP studies reflects

our general scholarly confusion about what companies are about and who should be evaluating

them” (p. 258). For the TBL to be effective, we agree with Pagell and Shevchenko (2014, p. 47),

who stated “Future research will have to explicitly recognize the claims of stakeholders without

an economic stake in the chain, treat these claims as equally valid to economic claims, and start

to focus on ways to deal with situations where synergies cannot be created.”

Thus, the TBL and win-win are fine in theory, but not in practice. The former in practice is not

treating each of the three elements equally and the latter does not resolve trade-offs in a

sustainable way. Since research following current logics does not appear to be creating

sustainable supply chains our conclusion is that a new logic is needed.

DEVELOPMENT OF A NEW LOGIC

The Bruntland Commission’s definition of sustainability as “Development that meets the needs

of the present without compromising the ability of future generations to meet their own needs”

(World Commission on Environment and Development, 1987) is a good starting point for

developing a new logic as this definition gives greater emphasis to social and environmental

impacts and recognizes longer time frames than current instrumental logics. In a similar way,

Griggs et al. (2013) suggest a re-ordering of the TBL that recognizes a new prioritization,

specifically suggesting that, “The global economy services society, which lies within Earth’s

life-support system” (p. 306). In other words, the economic aspect of the TBL is subservient to

the social aspect, which is itself subservient to the environmental aspect. Milne and Gray (2013,

p. 16) argued “Defining sustainability as the progressive maintenance of the life-supporting

capacities of the planet’s ecosystems requires the subordination of traditional economic criteria

to criteria based on social and ecological values”. The argument here is simple. If economic-

based actions destroy the environment, mankind itself becomes unsustainable. Griggs et al.

(2013, p. 306) thus suggest updating the Brundtland Commission definition to “development that

meets the needs of the present while safeguarding Earth’s life-support system, on which the

welfare of current and future generations depends”.

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Adler (2015) addresses the issue of protecting future generations by clearly articulating the

primary threats that existing supply chain practices pose to the environment and hence human

survival.

“…humanity is currently using the earth’s resources 50 percent faster than they

can be replenished. In the United States, that rate is nearly 600 percent. And the

best evidence suggests that we have only years, not decades, to restore the balance

before we tip the planet’s natural systems into irreversible cycles that will wreak

havoc on vast swathes of nature and on the lives of billions of people around the

world.” (p. NP13).

Thus the environment is the central constraint of our proposed Ecologically Dominant logic

(Adler, 2015; Griggs et al., 2013; Hart, 1995; Milne & Gray, 2013). A functioning ecosystem is

necessary for mankind’s survival. Though reducing harm may slow the rate of decline,

recognizing the importance of a functioning ecosystem explicitly acknowledges that society must

move beyond slowing unsustainability to becoming sustainable.

We next turn to the social aspect of sustainability, which is our second constraint after the

environment. For people to thrive, social systems for employment, health, housing, and overall

quality of life will need to be supported by the environment. All environmental issues have social

consequences, but not all social issues are environmental issues. For instance, basic human rights

issues such as slave labor and access to education can be divorced from the environment. The

social system is dependent on the environmental system, hence it is subservient to it in the

Ecologically Dominant logic.

Similarly, the economic system is subservient to the social system. A functioning economic

system should contribute to higher quality of life. The Ecologically Dominant logic is clear

however, that the protection of social systems and increasing quality of life are the real goals.

Increased profits for members of a supply chain or increased GDP for an economy are a means,

but not the only means, of protecting or improving society, and economic gains that harm society

are not sustainable economic gains.

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We recognize that there are significant political and public policy implications of our argument.

While public policy is not the focus of this paper, we offer a few brief comments about how our

logic could be implemented without suffering the same fate as existing logics. In doing so, we

further recognize that change will be difficult because the economic aspect of the TBL presently

dominates political and public policy discussions. One example of this is the “unassailable

sway” of the measure gross domestic product, which rewards economic growth no matter how it

is achieved (Gertner, 2010). Another example are tax policies that favor consumption over

savings, though some have called for a change to this (Albrecht, 2006).

Two possible paths to implementation seem likely. The first would be driven by changing

regulation and enforcement, which is a change that may already have started. Currently most of

the reporting required of firms is economically based, although firms are required to report their

risks, including risks from climate change which may have been done in a perfunctory manner in

the past. However, prosecutors in the United States have suggested that some firms have

willingly misstated these risks in an attempt to continue profiting from unsustainable activities

(Goldenberg, 2015), while the bank of England has warned that many firms are seriously

underestimating the risk of changing environmental regulation (“Carney’s warning on carbon’s

financial risks,” 2015). Future regulation is likely to require much more transparency in firs

reporting and to inhibit many activities that are presently allowed.

The second path will likely come from supply chains themselves. For instance in the automotive

industry, Toyota is planning to have a combustion engine-free supply chain by 2050 (Crothers,

2015). This is a laudable goal, but it accepts continued environmental degradation for 35 years

more years at a time when new entrants to the industry, such as Tesla, are combustion engine

free today. Previous research has shown tangible benefits to firms adopting sustainability-related

strategies that are beyond what the current law requires (Judge & Douglas, 1998; Klassen &

McLaughlin, 1996; Zailani, Eltayeb, Chin-Chun, & Tan, 2012). Anecdotally, some of the

companies we have investigated in previous research have indicated that they believe there is a

tangible advantage in going beyond what is required with regard to environmental and social

regulation because they believe they can influence future regulation by their behavior in the

present. In other words the likes of Tesla are likely to push for regulation that forces automakers

such as Toyota to radically alter their supply chains long before 2050.

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Table 1 summarizes the differences between the current sustainability logic and the proposed

Ecologically Dominant logic. The Ecologically Dominant logic is a significant departure from

Gao and Bansal (2013) who propose an “integrative logic” and note that “The integrative logic

no longer treats business and society as a trade-off between two competing variables or a zero-

sum game, but rather speaks to the natural connection between the variables and suggests the

presence of potential synergies” (p. 251). Certainly there are natural connections between

ecological, social and economic systems and there are times when synergies exist between them.

Yet synergies will not always exist and trade-offs do sometimes have to be made.

***Insert Table 1 here***

Our proposed logic diverges from Gao and Bansal in that it is explicit in recognizing tradeoffs

and prioritizing them in a truly sustainable way. In this, we are more in agreement with Griggs

et al. (2013), who give a clear hierarchy of which system should be given preference when trade-

offs are encountered. When synergies exist, the current instrumental logic, Gao and Bansal’s

integrated logic, and our proposed Ecologically Dominant logic would all align. However, when

trade-offs exist the logics diverge. The Ecologically Dominant logic is explicit in its hierarchy,

with environmental systems being of the highest priority, followed by social and then economic

systems.

Another way in which the Ecologically Dominant logic diverges from Gao and Bansal (2013) is

that they propose an integrative logic that does not emphasize one performance outcome over

another. It is possible that they were trying to explicate that profits should not dominate, but this

is not clear. We are clear and follow Griggs et al. (2013) in stating that economic performance

outcomes are nested under, rather than being equally important to, environmental and social

outcomes. However, we also recognize that to some extent this is temporal and that managers

whose cognitions and decisions are driven by the Ecologically Dominant logic may make short

term trade-offs that favor economic outcomes over environmental or social outcomes as long as

the long term impacts are mitigated (Wu & Pagell, 2011). The Ecologically Dominant logic is an

alternative logic based on a series of constraints and in essence means that social and ecological

embeddedness become requirements of managerial cognitions to create sustainability.

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Table 1 also briefly describes the roles of various stakeholders under the two logics. For

instance, there has been much recent interest in the role of non-governmental organizations

(NGOs) in supply chains (see Markman et al. (2015) for a full discussion). But most of this

research has been from the perspective of the focal firm and treated the NGO as a non-traditional

path for the firm to maximize its unsustainable profits. Present instrumental research tends to

view the firm’s suppliers as a source of risk to be minimized. Codes of conduct, supplier

development and the like are done in conjunction with NGOs so that the firm can ensure the

chain is in compliance with regulation or stakeholder demands so that profits are maximized.

NGOs often represent the environment or society and in the Ecologically Dominant logic would

not be viewed as a means to meeting the firm’s needs. Rather, the perspective would be reversed.

In the Ecologically Dominant logic the NGO, as the representative for the environment, becomes

focal and the supply chain becomes a means to the NGO’s end. The firm or even an entire supply

chain are then part of the larger network and judged not by their ability to maximize their own

gains, but rather by the harm they create and the value they provide to others.

In summary, sustainability is not conceptually instrumental, but it is generally researched and

implemented in an instrumental manner that gives primacy to profits over environmental and

social outcomes. This then creates a feedback loop where becoming less unsustainable is

conflated with becoming sustainable, effectively enabling organizational irresponsibility any

time there is a trade-off between profits and other outcomes. The Ecologically Dominant logic

explicitly places profits in a subservient position to the environment and society. Adopting the

Ecologically Dominant logic will likely lead to significant creative destruction, starting with the

instrumental logic that has led to unsustainable supply chains. The new logic should drive

research in new directions. Table 1 summarizes the types of research questions asked under the

instrumental and Ecologically Dominant logics.

RESEARCH PROPOSITIONS

The instrumental logic and firm centric nature of most extant sustainability research in supply

chain management has impeded the development of sustainable supply chains (Pagell &

Shevchenko, 2014). We argue that that the instrumental and Ecologically Dominant logics are

very different and lead to researchers asking different questions and addressing different

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stakeholders with distinctive views on what is sustainable, both of which will engender different

outcomes. This divergence allows for predictions, which we use to develop a new framework of

Ecologically Dominant sustainable supply chain management. The framework is comprised of

six propositions, which are depicted in Figure 2.

***Insert Figure 2 here***

Propositions one to three concern the Ecologically Dominant logic. As a next step in the

development of sustainable supply chains these propositions underline how the new logic leads

to new questions and accounts for a wider range of stakeholders. Propositions four to six posit

how the Ecologically Dominant logic will impact managerial cognitions and why supply chain

outcomes will change.

The case examples used below are from supply chains that are working to lessen their

unsustainability, but whose managerial cognitions are more in line with the Ecologically

Dominant logic than the instrumental logic. All of the examples are of managers giving priority

to something other than profits and in every example the managers were aware that they had a

long way to go before the chain would be sustainable. The fact that these supply chains are

simultaneously outliers or exemplars and unsustainable is another indication of the need for

change.

Changing from the instrumental logic to the Ecologically Dominant logic is a change in the

relative importance of various stakeholders. Concepts like shared value have a foundation in

stakeholder theory where the demands of various stakeholders are considered from the

perspective of how will they help (or harm) the firm’s pursuit of profits (Gao & Bansal, 2013).

The Ecologically Dominant logic in essence says make as much money as possible after you

have satisfied ecological and societal stakeholders. The instrumental logic is an inside-out logic

where “Is it good for the firm?” is asked prior to asking about the impacts on other stakeholders,

while the Ecologically Dominant logic is an outside-in logic where “Does it harm the

environment or society?” is asked before asking about the impact on economic stakeholders.

Markman et al. (2015) describe a number of examples of the differences in these two competing

value systems.

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The goals of the various stakeholders often overlap. For instance, waste reduction is likely to

improve the environment’s ability to sustain life and increase a supply chain’s profits while an

oil spill is likely to harm the environment, the health of people in the local community and the

profitability both of the supply chain directly involved in the spill and of other firms in the

community. Where these overlaps exist, win/win (or lose/lose) outcomes likely exist and the

choice of logic will not matter. The logics diverge when trade-offs do arise.

Proposition 1: When trade-offs exist the instrumental logic favors supply chain economic outcomes while the Ecologically Dominant logic favors ecology first, society next and supply chain economic outcomes last.

The use of profits as the primary dependent variable in business research is a value or norm and

one which has seriously impacted the way research on sustainability is conducted (Matthews et

al., in press), especially the search for win-win outcomes and the acceptance of an instrumental

logic that puts profits first. In practice this translates into a tacit acceptance of organized

irresponsibility in that research is supporting managers who only pursue social or environmental

improvements in their supply chains when it is profitable to do so. Reframing the discussion

around the Ecologically Dominant logic is an explicit attempt to shift norms and values to

change the institutional logic of managers and researchers. This will manifest itself in the range

of stakeholders considered. Thus, Proposition 1 is quite explicit in highlighting two different

competing value systems.

For instance, food supply chains have a clear societal role in sustaining human life. Food supply

chains are also significant consumers of resources, especially water. Workers in food supply

chains are often illegal immigrants, poorly paid and/or exposed to significant safety and health

risks (Allen, 2004). However, supply chain research rarely recognizes these stakeholders; when

it does it is from the perspective of how these stakeholders are related to the focal firm’s profits.

Researchers in other fields understand these same food supply chains from very different

perspectives. For example, Burch et al. (2013) studied how global food sourcing impacted

development in rural areas while Maertens and Swinnen (2009) studied supplier certification

from the perspective of certification’s impact on poverty in developing countries. These

examples are somewhat aligned with the Ecologically Dominant perspective but overlook the

chain’s economic viability. The Ecologically Dominant framework does not overlook the

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economic viability of the chain; instead it looks at economic viability after environmental and

societal impacts are assessed.

Proposition 2: The Ecologically Dominant logic will account for a wider range of stakeholders and outcomes than the instrumental logic of sustainability.

The adoption of the Ecologically Dominant logic’s outside-in logic and the consideration of a

wider range of stakeholders will be associated with no longer satisfying unsustainable customer

demands. There is a voluminous literature on willingness to pay for sustainable products (e.g.,

Essoussi & Linton, 2010; Griskevicius, Tybur, & Van den Bergh, 2010; Spash, 2006; The

Nielsen Company, 2014; Thilmany, Umberger, & Ziehl, 2006), whose results often allow supply

chain managers to claim that they cannot sell sustainable products because customers will not

buy them. This is a form of organized irresponsibility where no supply chain creates a

sustainable option while placing blame on the marketplace. This is where shared value can be so

pernicious, in that it allows for incremental improvements in an unsustainable model, effectively

delaying the introduction of a sustainable model.

It is rational for managers to engage in organized irresponsibility to protect their existing

business. But when researchers implicitly follow the instrumental logic they hinder the

development of truly sustainable supply chains. The Ecologically Dominant logic addresses this

issue head-on by being explicit that sustainable supply chains do not supply goods or services

that harm the environment or society regardless of customer demand. Some supply chains have

already started down this path. For example, a restaurant chain we researched endeavored to use

only seasonal and local ingredients. Customer requests for pineapple on a pizza in Oregon or

tomatoes in the winter were met with a discussion on why such behavior was against the firm’s

ethos because it was unsustainable and would undermine the reason the customer had chosen the

restaurant in the first place, which was for the highest quality local and fresh ingredients.

Proposition 3: The instrumental logic emphasizes satisfying customers’ demands while doing the minimal amount of harm. The Ecologically Dominant logic emphasizes first satisfying environmental and social constraints and then attempting to meet customer demands.

Accepting that the economic aspect of sustainability is subservient to the social, which is in turn

subservient to the environmental will result in new cognitions among supply chain managers. In

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other words, the Ecologically Dominant logic will drive different cognitions and decisions than

the instrumental logic. These differences in cognitions will have significant implications for the

management of supply chains. For instance, managerial commitment has repeatedly been shown

to be important for efforts to create more sustainable chains (Cantor, Morrow, & Montabon,

2012; Ramus & Steger, 2000; Robertson & Barling, 2013). Managers who are committed to

sustainability following the instrumental logic will mainly try to create shared value and will

only pursue sustainability initiatives that are economically sustainable now via incremental

processes that make the existing chain less unsustainable because they prioritize the economic

aspect of sustainability. Managers who are committed to sustainability following the

Ecologically Dominant logic consider profit after protecting environmental or social systems and

are more likely to pursue radical innovation to find ways to meet the environmental and social

constraints.

For instance, a lighting fixture manufacture we researched used a number of basic metal

stampings in their products. These stampings were not strategic, did not have extremely tight

tolerances, and could be produced by low skilled workers using relatively simple equipment

anywhere in the world. Thus, these inputs could be bought at very low prices from the

developing world, yet the company chose to make them in a high wage setting in the United

State because they were unwilling to risk the products being made in a manner that had a greater

environmental impact than their own production. They thus constrained their profits to better

protect the environment.

Similarly, the combined impact of changing regulation such as the Waste Electrical and

Electronic Equipment directive in Europe and reduced access to non-renewable raw materials

has led many manufacturers to consider various end-of-life product management strategies.

Many firms have followed an instrumental logic and tried to find the least expensive way to

comply with the regulation, which is treated mainly as a cost to be minimized. However, some

organizations have followed a different, often more expensive and risky path and created

alternative and in some cases radically different supply chains that attempt to create closed loops.

One of the best examples is Interface Inc., which completely redesigned its supply chain to

provide a closed loop supply chain for carpeting (Kinkead, 1999).

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The instrumental and Ecologically Dominant logics impact other supply chain decisions. For

example, most discussions of supplier selection and development in an instrumental

sustainability context are framed from the standpoint of selecting suppliers based on traditional

attributes (cost, quality, speed, and delivery) and then developing the supplier’s sustainability

capabilities. In comparison, in the Ecologically Dominant context managers select suppliers

with sustainability capabilities and then develop their other capabilities (Pagell & Wu, 2009).

When Starbucks set out to develop recyclable disposable coffee cups they initially partnered with

a small firm, Mississippi River Pulp, rather than one of their existing large suppliers of cups

made from virgin material (Anonymous, 2010). Similarly, an information technology (IT)

equipment provider we researched who was attempting to introduce recycled material into their

supply chain partnered with a small provider who specialized in recycled material, not with one

of their existing large providers of virgin materials.

As a domain the discourse on how to manage a supply chain has always been very practice

focused from discussions of management systems such as TQEM and ISO 14000 to operational

practices like supplier selection. The switch in logics need not change the practices that are

conducted, but it will change how they are done and how their effectiveness is measured.

Proposition 4: Supply chain managers using the instrumental logic focus their practices on profit maximization and are only willingly make decisions that improve environmental or social outcomes if they at worst have no impact on profits. Supply chain managers using the Ecologically Dominant logic focus their practices on harm elimination and are only willingly make decisions that increase profits if they at worst cause no harm to environmental or social systems.

Similar patterns occur across all supply chain decision areas and influence how continuous

improvements in supply chain performance are made. For instance, in the TQEM perspective,

environmental or social issues are added to an existing model of quality management that

pursues incremental change in the existing operations without addressing the business model

(Boons & Lüdeke-Freund, 2013). Linking lean and green (e.g., King & Lenox, 2001) is similar.

The instrumental logic adds social and environmental dimensions to economically driven

decisions such as supplier selection, but continues to search for answers in the same space, which

allows existing unsustainable chains to become less so, but does not develop sustainable supply

chains. Rather than, for example, exploring how to make cars less unsustainable, the

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Ecologically Dominant logic would be aligned with supply chains that are exploring

fundamentally different means of transport such as driverless cars that, especially when

combined with car sharing, have the potential to not only change how transport is accomplished

but to reduce the number of cars sold and fundamentally alter the supply chain that produces

these cars (Mui, 2014).

The Ecologically Dominant logic also pushes managers to think about time differently. Supply

chain managers have long known that prevention is better, for profits, than fixing something after

the fact regardless if it is preventing defects or preventing pollution (e.g., Klassen & Whybark,

1999). Yet the instrumental logic is essentially focused on fixing it after the fact. Harm is created

in pursuit of profits and then supply chains work backwards to reduce it. The instrumental logic

says make money now and figure out how to be sustainable later. The Ecologically Dominant

logic is focused on preventing the harm in the first place. Managers and politicians have long

argued that economic development needs to come first and then the supply chain can worry

about the environment and society later (Herbert & Moneypenny, 2015; Zhang, 2007). The

Ecologically Dominant logic sets a different order, one where the path to harm-free profits is part

of all decision making, not something to be determined after making some money.

The time horizon of the Ecologically Dominant logic is longer than that of the instrumental logic.

Sustainability is supposed to be long term, yet in practice short term economic considerations

have dominated the discussion with a focus on finding shared value and win-win outcomes

(Hahn, Preuss, Pinkse, & Figge, 2014; Hart, Milstein, & Caggiano, 2003; Milne & Gray, 2013).

The Ecologically Dominant logic is long term; environmental harm cannot be measured on a

quarterly basis and creating benefits for society may take generations. For instance, a forest

products company we researched set their level of production based not on demand, but rather on

the growth rate of their timber, which is a measure of capacity in their supply chain. This meant

that during the boom of the early and middle 2000’s they were unable to satisfy all of the

available demand for their products. It also meant that when the bust of 2006 came they did not

find themselves with excess capacity or the need to close plants or lay-off workers, unlike many

other providers of “sustainably” grown forest products.

Proposition 5: Supply chain managers using the instrumental logic will make decisions with a relatively short time horizon that creates harm today to be partially addressed in

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some unknown future. Supply chain managers using the Ecologically Dominant logic will make decisions with a long time horizon that prevents the harm from occurring.

The instrumental logic that has directed the TBL paradigm has led to the pursuit of shared value

and win/win outcomes resulting in supply chains that are not sustainable and organized

irresponsibility. A switch to the Ecologically Dominant logic would allow the creation of

sustainable supply chains.

Proposition 6: The adoption of the Ecologically Dominant logic will be fundamental to the creation of sustainable supply chains.

DISCUSSION

Our previous research suggests that there are likely few if any truly sustainable supply chains in

existence today. This conclusion is reinforced by many sustainability rankings. For instance, the

Global 100 for 2015 lists numerous inherently unsustainable firms, including multiple resource

extraction firms, among the world’s most sustainable (Corporate Knights Inc., n.d.). However,

these rankings and previous research focused on the focal firm, not the entire supply chain,

which limits researchers’ ability to determine if a supply chain is truly sustainable. This lack of

visibility into the entire chain is part of our motivation for offering the research propositions.

The framework is offered to spur future research aimed at creating truly sustainable supply

chains. The propositions suggest that this will require significant measurement development as

well as new research questions.

Our first proposition presents the research challenge of measuring and identifying supply chains

that use the Ecologically Dominant logic. We have argued throughout the paper that current

logics are not sustainable, but typically make unsustainable supply chains less unsustainable.

Attempting to identify supply chains using the Ecologically Dominant logic will require

researchers to operationalize “true” sustainability. Though there are many definitions of

sustainability available, operationalizing sustainability is challenging. In fact, during the creation

of this paper, the authors struggled with whether or not to refer to “true sustainability” as if it

represented something different from current research conceptions of “sustainability”. We

realized that our discussion of the semantics of sustainability was not a reflection of a

disagreement as to the need for researchers and firms to understand sustainability so much as a

dissatisfaction over the current implementations of sustainability.

20

Sustainability’s complexity makes it particularly difficult to identify supply chains using the

Ecologically Dominant logic as compared to the “win-win” logic. However, the example firms

that we have discussed offer some ideas for measuring sustainability and identifying supply

chains using the Ecologically Dominant logic. Examining and categorizing a firm’s decision

criteria and processes offer one possible route. The name we have given to our proposed logic,

Ecologically Dominant, implies that a firm using this logic will rank environmental issues ahead

of economic issues when making decisions. Developing objective measurements will be

challenging as researchers will likely have to exercise some judgment. Clearly, though, the

development of such measurements offers a rich vein of research possibilities.

Our second research proposition asks about the relative importance of various stakeholders in

supply chain decisions. Stakeholder theory has long been a discussion point for sustainability

researchers, so developing measurements and research hypotheses related to our first proposition

should be realistic and lead to useful insights. We note that our second proposition mirrors some

of the language found in firms’ sustainability reports. This proposition provides a path for

researchers to determine if such language is a true reflection of firms’ actions.

Our third research proposition asks researchers to consider if a supply chain considers customer

demand in conjunction (or not) with environmental and social concerns. As an example of

“not”, supply chains selling tobacco products would have a difficult time being classified as

sustainable using the Ecologically Dominant logic given the social harm in the form of health

outcomes that their product causes.

Propositions four and five offer additional guidance for creating measurements. A change in

cognition might be indicated by a change in programs or techniques used by firms in their supply

chains as indicated by Proposition four. For instance, a firm may move towards or away from

the use of TQEM. Proposition Five offers the use of the decision time horizon as a possible

measurement (Davis, Le, & Coy, 2011; Wu & Pagell, 2011).

Our last proposition gets to the heart of the matter, which is achieving sustainable supply chains,

as opposed to making unsustainable supply chains less unsustainable. In addition to creating an

objective measurement of sustainability, another research challenge is to think in terms of supply

chain (interfirm) rather than single firm (intrafirm) measurements. Intrafirm measurements have

21

many years head start on interfirm measurements, some of which is due to government reporting

requirements. Now however, some governments are requiring such interfirm measurements,

such as the California Transparency in Supply Chains Act of 2010 (Pickles & Zhu, 2013). Firms

themselves have realized for various reasons the importance of interfirm measurement (Stank,

Crum, & Arango, 1999) and have been active in developing them. For example, the popular

Supply Chain Operations Reference model was updated to include sustainability issues

(Blanchard, 2008). Clearly, challenges remain, as even Wal-Mart with all their resources has

faced hurdles in creating and implementing its sustainability index (Keegan, Dawsey, &

Feldman, 2011).

In addition to measurement challenges, the framework also suggests numerous future research

questions. At the most basic level, changing to the Ecologically Dominant logic will require a

reexamination of existing findings. Conclusions as to the efficacy of various practices will need

to be tested using the Ecologically Dominant logic as opposed to the instrumental logic. Looking

toward our own work we would hope our conclusions about supplier continuity (Pagell, Wu, &

Wasserman, 2010) would hold when taking a chain-wide perspective and using the Ecologically

Dominant logic. However, we worry that our conclusion that traditional best practices in supply

chain management can form a foundation for sustainable supply chain management (Pagell &

Wu, 2009) may not hold using this new logic. Future research needs to explore these questions as

part of a general reexamination of what we deem best practice. This work could start now, even

though truly sustainable chains are rare at best, by examining existing practices to determine if

they are harm reducing or harm preventing. And as we move forward the practices of truly

sustainable chains should be studied as they develop (Pagell & Shevchenko, 2014).

At the system level the Ecologically Dominant logic opens numerous possibilities, often in

spaces that supply chain researchers are just beginning to enter. Supply chain research has

generally not addressed system wide change. Yet a change in logic, even if it is imposed from

the outside, would require changes in managerial cognitions in terms of how to manage supply

chains as well as changes in technology. Recent research in behavioral supply chain management

(Siemsen, 2011), a better understanding of rare ‘black swan’ events (Carter, Rogers, & Choi,

2015), and the fact that supply chain management has always sat at the interface of social and

technical systems all suggest that supply chain researchers have the needed foundations to

22

explore what simultaneous system wide change to both managerial cognitions and supply chain

practices would entail.

Finally, one of the premises of this research is that as supply chain management researchers our

role is to help build truly sustainable supply chains, not to make existing chains less

unsustainable. We hope that by changing the logic of research that practice will follow, but we

know this is not guaranteed. In this article we have suggested that change is likely to be driven

by the first chains to become truly sustainable, and by regulators. We can aid that process in our

role as educators by being sure to have students explore situations where firms face trade-offs

rather than just presenting the win-win elements of sustainability. Similarly, we need to push

students to explain the ramifications of their decisions from a chain, societal, and environmental

perspective so they understand that optimizing their operations is not the same thing as an

optimal, truly sustainable solution. We cannot ask supply chain managers to challenge their

assumptions without challenging our own.

CONCLUSION

Collectively the propositions provide a new framework of ecologically dominated sustainable

supply chain management. The fundamental argument we make is that:

The Ecologically Dominant logic can lead to the development of sustainable supply chains; the

instrumental logic cannot.

The propositions and Figure 2 explain the how and why of this prediction. In the instrumental

logic sustainability is approached from the standpoint of “Is it good for the firm?” This inside-

out logic limits the stakeholders and impacts that the firm considers and pushes the supply chain

to focus on win-win opportunities in the guise of TQEM, shared value and the like. These

decisions tend to focus on incremental changes to the supply chain that are done with relatively

short time horizons. The end result is organized irresponsibility where the improvements made

lead to being less unsustainable but cannot lead to sustainability because the trade-offs inherent

in sustainability are never fully addressed.

In the Ecologically Dominant logic supply chain managers start by assessing the impact of their

economic activity on the environment and society. This outside-in logic leads to the

23

consideration of a wide range of stakeholders and outcomes and forces the supply chain to focus

on doing no harm. In order to survive economically a supply chain functioning under this logic

will have to significantly alter both what they do and how they do it. In so doing they will also

likely identify opportunities to refocus existing practices toward harm elimination instead of

profit maximization. These changes require a long time horizon and a willingness to take

responsibility for the organization, even when that means not satisfying certain customer

demands. Following this trajectory can lead to solutions to the complex problems of

sustainability and does not lead to organized irresponsibility; rather, it leads to sustainable supply

chains.

This paper’s primary contribution is the normative Ecologically Dominant logic, which provides

a clear nested hierarchy for the elements of the TBL. The instrumental logic has made addressing

trade-offs that negatively influenced an existing supply chain’s profits off-limits and resulted

mainly in research that was interested in the economic implications of sustainability. Following

this logic has made supply chains significantly less unsustainable over the last 30 years, but we

argue it is time to take the next step. The Ecologically Dominant logic’s explicit hierarchy allows

researchers to directly approach trade-offs, which should provide the foundation for future

research, theorizing and practice. The Ecologically Dominant logic suggests that the role of

supply chain scholars moving forward will be to work with our stakeholders to determine how to

create a supply chain that can meet the needs of future generations, including future generations

of supply chain managers.

24

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TABLE 1Comparison of Current Sustainability and Ecologically Dominant Logics

Current sustainability logic Ecologically Dominant

Relationship among environmental,

social, and economic

All are equal – efforts that create shared value or which are less unsustainable are acceptable

The three are nested. Need to satisfy environmental, then social prior to economic.

Time horizon Short Long term

Practical reality Satisfies customers’ expectations while doing least amount of harm.

Does no harm while satisfying customers’ expectations.

Outcome Organized irresponsibility / tragedy of the commons Integrated sustainable supply chains

Cognition – managers “If it’s not profitable you don’t do it.” “If it harms the environment or society

you don’t do it.”

Cognition – researchers

Does it pay to be green? Looking for win / win outcomes. Efficiency (gross domestic

product)

How to be profitable while doing no harm.

Conservation. Well-being (gross domestic

happiness)

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TABLE 2Stakeholder Roles under Instrumental and Proposed Logics

Instrumental logic: The focal firm in the center of a stakeholder network where stakeholders are either enablers or inhibitors of the firm’s primary goal of creating wealth.

ED logic: The eco-system in the center of a stakeholder network where stakeholders are either enablers or inhibitors of the eco-system’s primary goal of sustaining life.

External to the Chain

Communities where the chain operates: Environmental systems

Role: Source of raw materialsQuestion: How to provide an uninterrupted flow of material to satisfy customer needs while minimizing pollution and maximizing resource efficiency?

Role: CentralQuestion: How to provide the chain’s value while doing no harm to the environment’s ability to sustain life?

Communities where the chain operates: Social systems

Role: Mostly absent, except for place to do businessQuestions: Where to locate to maximize supply chain economic performance while minimizing costs of labor, regulatory compliance, and disruptions?

Role: CentralQuestion: How to provide the chain’s value while at a minimum doing no harm to quality of life?

RegulatorsRole: Set constraints on behavior that need to be metQuestions: How to respond to regulation in the most profitable manner? Is self-regulation more effective?

Role: Set constraints on behavior that need to be metQuestions: How to construct regulation that sustains life and maximized the quality of life? How to partner with for profit entities to meet regulatory goals?

Non-governmental organizations (NGOs)

Role: Non-traditional suppliers, source of knowledge for focal firm Questions: How to manage or mitigate stakeholder pressure? How to partner with NGOs and other non-traditional supply chain members to maximize profits and while meeting some of the NGO’s goals?

Role: Representative for environment and communities Questions: How to partner with for profit entities to meet NGO’s goals? What role do for-profit firms’ supply chains play in an NGO’s supply chain?

Within the Supply Chain

The focal firmRole: Central, profit maximizationQuestion: How can the focal firm in a supply chain benefit from addressing environmental or social issues?

Role: Coordinator of chain Question: How to provide the supply chain’s value in a sustainable manner?

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Does it pay to be green?

Suppliers

Role: Source of risk or negative impacts to be managed to protect firm reputation and profitsQuestion: How can supplier development, certification, codes of conduct and the like insure that suppliers meet the firm’s expectations?

Role: Potential source of harm and opportunity, especially when creating jobs in developing worldQuestions: How to insure supplier continuity? How to build an economy without first doing environmental or social harm?

Customers

Role: Excuse for organized irresponsibility; source of demands otherwise mostly absent Question: How to maximize profits by meeting or exceeding all expectations, including environmental and social expectations?

Role: Source of demandQuestion: how to provide the supply chain’s value in a sustainable manner?

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FIGURE 1Ecologically Dominant Logic

Note: Adapted from Griggs et al. (2013)

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FIGURE 2 Comparison of Propositions

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