Environmental Engineering Reference
In-Depth Information
organizational processes, firm attributes, organi-
zational processes, firm attributes, information,
and knowledge.” According to Barney (1991), the
firm resources that hold the potential advantage
of sustained competitive advantage must have the
following characteristics:
tiveness may revoke these customary commerce
habits. The vertical-integration-level analysis for
SFCs contributes to both the vertical integration
and sustainability literatures, which is mainly
related to answering the following question: “Do
the sustainability-focused companies have a higher
vertical integration level than their counterparts
which are not pursuing a sustainability-focused
strategy?” A tremendous amount of research has
been accomplished about the connection between
firm strategies and the vertical integration level.
Unfortunately, none of the scholars examined the
vertical integration level of sustainability-focused
companies with any developed vertical integra-
tion measures.
There is literature that discusses the benefits of
integration, particularly for sustainability-focused
companies. Hart (1995) makes natural-resource-
based view arguments for vertical integration
and proposes that corporate environmental man-
agement is a strategic resource that can produce
competitive advantage and progress towards more
sustainable production which takes place in three
phases: pollution prevention, product steward-
ship, and sustainable development. These three
phases are interconnected and support each other.
Especially, the firms that demonstrate capability
in tacit skills (e.g. TQM), socially complex skills
(e.g. cross-functional management), and rare skills
(e.g. shared vision) will be successful in pollution
prevention, product stewardship, and sustainable
development respectively. The natural resources
that contribute to the competitive advantage are
assumed to be difficult to replicate because they
are rare and/or specific to a given firm (Reed and
Defillippi, 1990; Barney, 1991), tacit (causally
ambiguous) or socially complex (Teece, 1982;
Winter, 1987). Carter and Rogers (2008) concluded
in their literature review study that the product of
SFCs may be more difficult to imitate. From a
resource-based view perspective, these arguments
point toward vertical integration.
The natural-resource-based view arguments of
•
Valuable:
the resources must enable firms
to develop strategies to improve its effi-
ciency and promote opportunities
•
Rare:
the resources must be rare to be ad-
vantageous in the competitive environment
•
Inimitable:
if the resources are duplicated
by the competitors, firms cannot maintain
the competitive advantage
•
Non-substitutable:
using different re-
sources, the competitors should not be able
to implement the same strategies, but in a
different way
These attributes are the requirements for a firm
resource to be a source of sustained competitive
advantage. In his empirical study, Gulbrandsen
et al. (2009) found positive relation with a firm's
knowledge and skills, which are present and
necessary for integrating suppliers' activities
into its own activities (i.e. RBV theory), and the
vertical integration decision of companies. The
resource-based view provides insights on both
organizational and strategic side of the firm.
Within the field of sustainability studies, natural-
resource-based-view researchers categorize the
resources and capabilities that yield competitive
advantage will be discussed in the next section.
Natural-Resource-Based View
It is usually expected that companies buy an input
if its price is higher than its in-house production
cost. However, the make-buy decisions can be
more difficult under some conditions. One of
these conditions is having a vertically-integrated
corporate strategy. Concerns of Sustainability Fo-
cused Companies (SFCs) about strategic competi-
