Taking Sustainability to the Operational Level: Purchasing within the MNC

Abstract

Sustainability, including environmental, social, and economic aspects, has become increasingly important to multinational corporations (MNCs). Environmental and social sustainability are no longer mere voluntary initiatives, but are becoming essential to international operations. Despite its importance for the functioning of MNCs, only little attention has been paid to the facilitators of sustainability on an operational level. This thesis addresses this gap by focusing on the purchasing function and addressing the question: "What influences sustainability in the MNC purchasing function?". This question is further divided into four research questions, which are individually addressed in the essays. The introductory part of this thesis builds a theoretical framework explaining sustainability in MNCs' purchasing through various theoretical lenses. These are applied in the essays using quantitative (structural equation modeling on 305 companies) and qualitative (case study of two MNCs) methods. New insights have emerged through three critical aspects: the operational level examination, different theoretical lenses, and mixed methodology. First, Essay 1 reviews extant research on sustainability in MNCs' purchasing and finds that studies draw upon a limited set of theories, where operational sustainability comprises of the sustainability focus, industry, and location. The following two essays build on this finding in applying two different theoretical lenses and viewing MNCs in comparison to other companies, non-MNCs. Second, in studying the relationship between institutional pressures and triple bottom line sustainability performance, Essay 2 finds that institutional pressures affect environmental and social sustainability, but not economic performance. Third, in examining the impact of absorptive capacities on environmental and social sustainability practices and economic performance, Essay 3 finds that only realized absorptive capacities affect social sustainability practices in MNCs. These essays find clear differences between external factors influencing sustainability (institutional pressures) and internal factors (absorptive capacities) in MNCs and non-MNCs. Finally, Essay 4 examines mechanisms of and reasons for the adoption of sustainability policies and practices by purchasing function actors. It finds the process to be headquarter driven; further, distance, in terms of geography and role, mainly influences differences in the sustainability policy and practice adoption. This thesis contributes to international business research in several ways. It finds differences between sustainability on an operational level in MNCs, as opposed to other companies. Sustainability within MNCs is externally driven and its performance is impacted by institutional pressures. Absorptive capacities do not affect all aspects of MNCs' operational sustainability, which is in contrast to the pivotal role of individual actors within MNCs' purchasing.