Economics, Management, and Financial Markets 11(1)

2016, pp. 224230, ISSN 1842-3191, eISSN 1938-212X

MANAGING SUSTAINABILITY THROUGHOUT

SUPPORTING ACTIVITIES
ROXANA MIHAELA PIVODA
roxana_pivoda@yahoo.com
Spiru Haret University
ABSTRACT. Nowadays, a company has to face a lot of challenges coming from
both the market and the customers in order to be successful. On one hand,
companies were forced to become more competitive due to the saturation, scarce
resources, rapidness of information exchange and constant technology innovation.
On the other hand, customers expect from the products they buy a good relationship
between quality and price, as well as conformity with the environmental standards.
Therefore, taking into account the globalization trend that influences the business
environment, the sustainability of a company became a prerequisite for its
competitive advantage.
JEL codes: Q56
Keywords: sustainability; risky procedure; responsible practices

1. Introduction
The term sustainability appeared in the academic and business world in the
1970s, at the same time when companies received one of the first wake-up
calls in form of oil shocks. These caused major problems even to long-lived
enterprises. According to a study done by Shell after this disastrous event, an
average life expectancy of a multinational company was around 40 to 50
years. For example, from the 12 companies that created the Dow Jones Index
in 1900 until now, only one survived GE (Visser et al. 2007).
The implementation of sustainability in the value chain can prove to be a
very difficult process. Even though there is a lot of theoretical background,
one can use it to create the basic concept for a company; the application
itself is bound to the characteristics of each company. According to many
studies, the companies fail to implement the necessary changes while

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suffering from losses or even erosion of their image (Tan/Zailani 2010;

Rahardjo et al. 2013; Balkau/Sonnemann 2010; Vurro et al. 2009).
In this paper I will identify the challenges and risks in the supporting and
primary activities in the value chain.
2. Managing Sustainability in Firm Infrastructure
Building a sustainable value chain requires the implementation of
environmental standards in each department, for all primary and secondary
activities along it (Epstein 2008: 90). Thus, each activity influences the
others and it should not be regarded as independent, but linked to the others
throughout the whole value chain.
Typically, infrastructure consists of buildings, roads and water and
energy supplies. However, it is a big challenge to sustainably manage the
infrastructure of a firm because it directly impacts the environment and also
other activities along the value chain. For example, the infrastructure of a
building may reflect the working conditions and the workers job satisfaction
(Klaas-Wissing&Tyssen 2011: 98), therefore influencing the human
resource management practices. Moreover, the location and the soil and land
usage is related to warehousing activities and proximity to suppliers and
clients, consequently affecting some primary activities of the value chain
like logistics and operations.
According to Epstein, legal requirements and the product life cycle also
influence the infrastructure managing practices. Complying with different
government laws and regulations and other ecological standards represents a
challenge for the infrastructure design and maintenance (KlaasWissing&Tyssen 2011: 101). Besides, life cycle assessment implies the
incorporation of new, corresponding structures for manufacturing, logistics,
etc. that meet the product specifications (Nikbakhs 2009: 203).
3. Managing Sustainability in Human Resource Management
In any structure, the business unit staff has a very important role in seeing
that sustainability strategies have positive results (Epstein 2008: 92).
Therefore, people are crucial in a companys activity and it is very
challenging to motivate and inspire them to identify themselves with the
common values of a company for the creation of a sustainable image.
According to Zauggs Diamond Model for sustainable personnel
management practices (2009: 71-73), trust is placed as a central, core value
to link the companys strategy with its culture. Hence, establishing trust
between parties in a supply chain is perhaps the greatest challenge
(Farahani et al. 2009: 8).
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Moreover, the image of a company extends itself, not only to its

employees, but also to its suppliers, consequently influencing the purchasing
practices. It is important for the suppliers to share the companys values and
to be trained in this direction. This is particularly necessary due to the high
knowledge complexity and disparity, which makes knowledge management
a challenge for a sustainable human resource management along the value
chain (Klaas-Wissing&Tyssen 2011: 93).
Furthermore, studies show that best-practice companies associate
sustainability with their image. They transfer the know-how and the
corporate culture through their employees and then, they assess their supply
chain partners according to their value system (Cetinkaya 2011:28).
However, other studies imply that [t]raining is a waste of time and money
(Ewer 2011: 164) because once trained, the employees will look for better
paid jobs and consequently, the risk of knowledge spill-over increases.
4. Managing Sustainability in Technology Development
Technologies assure standardization, automation and integration to make the
value chain operations sustainable. According to Porter (1985: 164): of all
the things that can change the rules of competitions, technological change is
among the most prominent. Technologies can infiltrate into every business
production sphere and set out the linkage between different activities within
the value chain, which turns them into the greatest competitive factor.
Technological capabilities are very complex and can be categorized
according to the functions they fulfill. Lall (1992) divides technological
capabilities into investment, production and linkage capabilities. The
focus is on production capabilities, because therere the most challenging
and risky within the whole value chain. Production capabilities range from
basic skills such as quality control, operation, and maintenance, to more
advanced ones such as adaptation, improvement or equipment stretching,
to the most demanding ones of research, design, and innovation (Lall, 1992:
168).
Furthermore, production capabilities concentrate on sourcing, because of
the increased acuteness of environment problems. It is very challenging for
the companies to optimize the natural resources they use because the world
is locked in a constant cycle of production and consumption-and the
environment can no longer keep up. Water, fossil fuels, metals, arable land:
nearly every natural resource is now at risk (Greden&Masero 2012: 4).
Thereon, technological sustainability starts with the reduction of greenhouse
gas (GHG) emissions, which is one of the biggest risks for the technological
value chain (Greden&Masero, 2012).

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Moreover, it is necessary to understand the technological profile of every

component involved in the value chain in order to make the production
process more sustainable and reduce risk. We need to optimize each
component of it, discover possible risks and create a solution. Furthermore,
the permanent innovation and optimization processes can be perceived as a
challenge when creating a sustainable value chain, which is not only about
production of environment friendly products. More important is to
concentrate on the efficiency of technologies that are used by the company,
including those used for development, design and production. Therefore, the
economic aspect of sustainability is addressed, at the first glance, only for
the company. But on the second glance, due to technological improvements,
there are also advantages for the customer, such as less energy consumption.
The value of information is also extremely important for managers, value
deriving from the changes in the decisional behaviour caused by the
information availability. In appreciating the value of the information, one
has to consider the cost of its production as well. Therefore, data purchasing,
handling, recording, processing, irrespective of the means used, do not
produce value but suppose only costs. Value appears only when data is
communicated and understood by the recipient being thus transformed into
information (Ciobnic, 2009: 515).
5. Managing Sustainability in Procurement
For a long time, procurement has been considered a support activity in
Porters value chain, but due to its increasing importance, some studies argue
that it should actually be considered a primary activity. Lately, procurement
has been commonly called supply management, due to the high influence
that sourcing options have on a firms profitability (Presutti&Mawhinney,
2013: 3). In addition, some researchers consider procurement to have
slowly risen from the status of support activity in the business to a strategic
competitive advantage (Drake, 2011: 54), while others argue that global
sourcing strategies are driven by the potential savings in purchasing,
manufacturing and/or labour costs (Cuthbertson, 2011: 4).
Considering the importance that procurement has gained in the value
chain, the importance of sourcing has also increased. Consequently, buying
from responsible suppliers and persuading them towards sustainability has
become a huge challenge for creating a sustainable value chain. In literature,
this is defined as green procurement and it focuses on diminishing the
effects that the purchased products and materials have over the environment
and also, reducing pollution and building sustainable relations with the
suppliers (Nikbakhsh, 2011: 208; Emmet&Sood, 2010: 60).

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Managing sustainability in procurement involve transparency as a basic

requirement. Transparency is the manifestation of the principle of
governance that you of the responsibility of civil society designated/assigned
a State administration in order to increase revenue and undertake expenses
on behalf of/or interest.
Transparency requires that decisions and their implementation is in
accordance with existing rules and regulations, entailing the free circulation
of information and its availability to those who are targeted in the case of
decisions and implementation (Ciobnic, 2014: 98).
Furthermore, many challenges of the value chain are solved by green
procurement. For example, the infrastructure of a company could be better
sustained by using energy and water-efficient equipments and recycled
products and materials, which save costs and also comply with the
environmental regulations. Moreover, in terms of human resource
management, employees motivation increases due to lower health and
accidents risks and increased safety. However, even green procurement has
some challenges like the unclear definition of sustainability and the lack of
similar knowledge and common values towards this activity (Emmet&Sood
2010: 64-69).
The internationalization of firms activities and the expansion of their
operations worldwide represent a challenge for the sustainability of the
procurement activities, due to the high availability of various resources. The
transition to global sourcing has accentuated the trend of purchasing from
low cost markets, which consequently increases the risk of poorer quality
products. Additionally, the physical and cultural distance between the buyers
and suppliers can lead to a faulty communication, extended lead times and
lower visibility (Sajadieh, 2009: 52-53). Under these assumptions,
environmental concerned companies have to choose very carefully their
suppliers, because otherwise their reputation is in stake (Epstein, 2008: 213).
6. Conclusion, Limitations and Future Research
Sustainability runs throughout the whole value chain and holds all its parts
together. A misunderstanding of the concept or an incorrect implementation
in any of the value chain activities may lead to dysfunction and problems.
This would not affect only the department where the issue appeared, but it
could also pose a risk over the other parts of the value chain leading to its
destabilization and therefore, disturbing its sustainability.
The challenges and risks originate from the outside environment,
competition, costumers, etc. as well as from the inside a lot of
incompatibilities between different companies activities, such as logistics,
marketing & sales, production, personnel, etc. Taking into consideration the
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companys external and internal environment and finding a common ground

between both aspects should be the most important step towards
implementing a successful sustainable strategy.
To quantify improvements of sustainability, it is important to make it
measurable. Logistics promise the most obvious approaches, because of
many measurable facts like costs of transport, consumption of energy or
emissions caused. Additionally, the improved sustainability could be
monetary measured, which would be reflected over the cost of ownership.
This seems to be more important than ever in times of globalized value
chains and unbroken trends towards customized products and production.
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