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Cooperative initiatives with NGOs in socially sustainable supply chains: How is interorganizational fit achieved?
Jorge A. Rodrguez, Cristina Gimnez, Daniel Arenas
PII:
S0959-6526(16)31011-3
DOI:
10.1016/j.jclepro.2016.07.115
Reference:
JCLP 7687
To appear in:
29 May 2016
Please cite this article as: Rodrguez JA, Gimnez C, Arenas D, Cooperative initiatives with NGOs
in socially sustainable supply chains: How is inter-organizational fit achieved?, Journal of Cleaner
Production (2016), doi: 10.1016/j.jclepro.2016.07.115.
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Jorge A. Rodrguez*
Corresponding author
Email: rorodrig@espol.edu.ec
Address: Campus Politcnico Las Peas, Malecn 100 y Loja, 09111 Guayaquil, Ecuador
Tel: 593-42081157 ext. 186
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Abstract
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This research studies how firms and NGOs achieve inter-organizational fit for
implementing practices that create value in socially sustainable supply chains. This paper
presents a theoretical model that identifies the factors that drive and enable firm-NGO
inter-organizational fit. Previous research has adopted an institutional perspective in which
secondary stakeholders put pressure on the firm to implement sustainable practices.
However, anecdotal evidence and latest industry practices suggest that a cooperative
perspective could be more appropriate to understand how value can be created in socially
sustainable supply chains. The proposed theoretical model depicts the achievement of interorganizational fit as a process that entails several alignments along the way: a value logic
alignment, the alignment of an NGOs mission with the profit-oriented behavior of firms,
the alignment of an NGOs objectives with firms strategies, and the adjustment of firms
organizational structures and organizational routines to an NGOs activities. We use a
qualitative nested case study, which involved an NGO-led project that undertook supplier
development programs for poor suppliers in cooperation with several firms.
Recommendations for practitioners and areas of future research are also provided.
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Cooperative initiatives with NGOs in socially sustainable supply chains: how
is inter-organizational fit achieved?
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Abstract
This research studies how firms and NGOs achieve inter-organizational fit for
implementing practices that create value in socially sustainable supply chains. This paper
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presents a theoretical model that identifies the factors that drive and enable firm-NGO interorganizational fit. Previous research has adopted an institutional perspective in which
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organizational fit as a process that entails several alignments along the way: a value logic
alignment, the alignment of an NGOs mission with the profit-oriented behavior of firms, the
alignment of an NGOs objectives with firms strategies, and the adjustment of firms
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for
poor
suppliers
in
cooperation
with
several
firms.
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development
Recommendations for practitioners and areas of future research are also provided.
Keywords: socially sustainable supply chains; inter-organizational relationships; firm-
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The relationships between firms and their secondary stakeholders have evolved from
conflict-based relationships to cooperative-based relationships (Arenas et al., 2013; Argenti,
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2004). For instance, firms like Starbucks, Shell, and Nike that used to have antagonistic
relationships with non-governmental organizations (NGOs), now have cooperative
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relationships with them (Argenti, 2004; Locke et al., 2007; Wei-skillern, 2004). These firms
still feel the pressure from NGOs, but they have embraced a cooperative approach with these
stakeholders. Previous studies suggest that this shift is explained by the realization of
complementary resources between firms and their secondary stakeholders (Selsky and
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(Austin and Seitanidi, 2012a, 2012b). With this in mind, this research addresses how firms
and NGOs achieve inter-organizational fit to deploy their resources in partnerships that create
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on the firm (Ashby et al., 2012; Gimenez and Tachizawa, 2012; Seuring and Gold, 2013),
cross-sector partnerships literature suggests that partnerships with NGOs can enhance
corporate social performance and social sustainability in the supply chain (Koljatic and Silva,
2008; McDonald and Young, 2012; Murphy et al., 2014). Therefore, firm-NGOs
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relationships are critical to better understand socially sustainable supply chains (Pagell and
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cultures, missions, and perspectives about the definition of value (Le Ber and Branzei, 2010).
For instance, NGOs are oriented toward the creation of social value, the pursuit of societal
betterment through the removal of barriers that hinder social inclusion, and the mitigation of
undesirable side effects of economic activity (Austin et al., 2006); whereas firms are oriented
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toward the creation of economic value. Consequently, previous research suggests that the
alignment between strategies, organizational structures, and values of both firms and NGOs
is a major challenge in the undertaking of these partnerships (Austin and Seitanidi, 2012b).
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This paper tries to tackle this challenge, and aims to answer the following research question:
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how do firms and NGOs achieve inter-organizational fit to undertake cooperative initiatives
that create value in socially sustainable supply chains?
To address the research question, we use a nested case study involving a project started
by an NGO in collaboration with six firms. Since our unit of analysis is the firm-NGO
relationship, we have six instances for a cross-case analysis. This paper contributes to the
literature of SSCM by improving our understanding of cooperative relationships between
firms and their secondary stakeholders in socially sustainable supply chains. In particular, we
propose a theoretical model that depicts the achievement of inter-organizational fit as a
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process with several alignments along the way. We call them: value logic alignment, NGO
mission alignment, firm strategy alignment, and firm structure and routines alignment.
Finally, we also identify the factors that enable this process: the NGOs structural social
capital, the NGO representatives boundary spanning capabilities, the firms specialized
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purchasing function, and the firms organizational routines that support collaborative
relationships. In the discussion section, we elaborate on how these findings complement
existing literature. At the same time, the elements identified can also help practitioners to
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manage relationships with stakeholders in order to create value in socially sustainable supply
chains.
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The paper is structured in the following way: first, the literature review section
indicates the research gaps, how our research fills those gaps, and summarizes the arguments
that support our research design; then, we explain how data was collected, and justify why
we chose a case study approach; after that, we describe the theoretical model that emerged
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from our analysis; then, we discuss how our theoretical model contributes to existing
literature; and finally, we offer some conclusions for future research and practitioners.
Literature review
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The literature review contains two parts: in the first part we describe the concept of
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social sustainability within the context of supply chains; then, in the second part we describe
previous studies about inter-organizational relationships in the field of socially sustainable
supply chains.
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Following this definition, a socially sustainable supply chain entails compliance with ethical
values (i.e. human rights, justice, and moral principles), the accountability of the negative
impacts on society, and the undertaking of initiatives that develop local communities, and
integrate vulnerable people (e.g. minorities, poor people, women, etc.) (Gimenez et al., 2012;
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Pullman et al., 2009). Examples of socially sustainable practices include, but are not
restricted to: industry codes of conducts, labor certification and audits of suppliers, supplier
development programs for poor suppliers, fair-trade initiatives, and welfare and safety
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programs for employees (Pagell and Wu, 2009; Tate et al., 2010).
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(Ashby et al., 2012). CSR and social sustainability share the dimensions of value creation,
balance of stakeholder interests, and accountability. While there are overlaps, the concept of
CSR emphasizes more the dimension of accountability, while social sustainability
emphasizes more the dimensions of value creation and balance (Schwartz and Carroll, 2008).
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Furthermore, the concept of CSR is broader: it includes causes that go beyond the supply
chain (e.g. AIDS, work-life balance, etc.) (Carroll, 1999). Additionally, the concept of value
is also a nuanced one in the context of social sustainability. There is value creation in socially
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sustainable supply chains when economic and social value are created (Carter and Rogers,
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2008). Economic value is defined as profit, while social value is defined as the pursuit of
societal betterment through the removal of barriers that hinder social inclusion, the assistance
of those temporarily weakened or lacking a voice, and the mitigation of undesirable side
effects of economic activity (Austin et al., 2006, p. 264). In this regard, we will refer to
value creation as the joint creation of economic and social value.
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2.2 Cooperative inter-organizational relationships in socially sustainable supply
chains
Previous research supports the idea that cooperative inter-organizational relationships
with stakeholders enhance the sustainability of supply chains. Stakeholders provide resources
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(knowledge, social capital, etc.) that allow firms to reach goals that would be impossible
otherwise (Gimenez and Tachizawa, 2012; Vachon and Klassen, 2006). Yet, this cooperative
logic is usually only applied to primary stakeholders. The relationships with secondary
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stakeholders have been studied from an institutional logic that depicts secondary stakeholders
as agents that exert pressure on firms to implement sustainable practices (Parmigiani et al.,
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2011; Shafiq et al., 2014). Furthermore, it is also argued that firms may cooperate with
primary stakeholders because of pressure from secondary stakeholders (Parmigiani et al.,
2011; Tate et al., 2010). For instance, firms are cooperating with their suppliers and
customers to implement industry codes of conduct to enhance labor standards, safety and
al., 2011).
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employees welfare, etc. because of pressure from NGOs and local governments (Ciliberti et
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to create value in socially sustainable supply chains. For instance, Nespresso and Rainforest
Alliance have worked together to develop industry standards to improve the quality of coffee
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harvested by poor farmers in Latin America. As a result of this standard, these farmers have
improved their economic conditions (Alvarez et al., 2010). Unilever has also developed a
cooperative relationship with Rainforest Alliance to improve the quality of the products and
the economic conditions of poor tea farmers in Africa (Lipton, 2015). These experiences
suggest that depicting secondary stakeholders only as antagonistic actors might be inaccurate.
Conceptual work on stakeholder relationships reinforces this anecdotal evidence, suggesting
that cooperative relationships between firms and secondary stakeholders could create new
opportunities for value creation (Freeman et al., 2010).
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The literature on cross-sector partnerships has studied the relationship between firms
and secondary stakeholders for value creation for some time (Selsky and Parker, 2005).
Cross-sector partnerships are defined as voluntary working arrangements between for-profit
and not-for-profit organizations which involve the deliberate exchange, sharing or co-
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development of products, technologies or services that address an unmet need for a specific
segment of society (Le Ber and Branzei, 2010, p. 601). The central idea of cross-sector
partnerships is that firms and secondary stakeholders combine their unique resources to
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create value (Arenas et al., 2013; Murphy et al., 2014; Selsky and Parker, 2005). The
following idea has also been suggested in the SSCM literature: NGOs have distinctive
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resources that can complement firms ability to improve social sustainability (McDonald and
Young, 2012).
To combine their resources, firms and NGOs need to align themselves because they
usually have different organizational characteristics, goals, values, cultures, strategies,
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management styles, and operating approaches (Austin and Seitanidi, 2012b). For example,
NGOs are based more on processes and principles, while firms are focused on products and
profits; firms managers are usually unfamiliar with the politics of a cause, while NGO staff
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might be unfamiliar with how businesses are run (Berger et al., 2004). Consequently, the
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match their structure (i.e. organizational form, technology, and routines) with the
environment have higher performance (Siggelkow, 2001). Organizational scholars from a
system perspective also argue that a firm has a high degree of internal fit when many of their
organizational elements reinforce each other (Siggelkow, 2001). From this point of view, the
degree of congruence between strategy, structure, and technology is an evidence of high fit
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among the elements of an organization (Siggelkow, 2001). The literature of cross-sector
partnerships defines fit within a partnership as the congruence in their respective perceptions,
interests, and strategic direction (Austin and Seitanidi, 2012b). Prior research in cross-sector
partnerships has mainly focused on the fit between the micro-elements (i.e. values, resources,
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etc.) of the partnership (Berger et al., 2004; Le Ber and Branzei, 2010; Murphy et al., 2014).
Considering the system and cross-sector partnerships perspectives, we define fit as a dynamic
process that entails the congruence between strategy, structure, technology, and values; and
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them to converge.
Methods
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study allows us to explore broadly and in depth the contextual factors that foster or inhibit the
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We study an NGO-led international project the objective of which was to improve the
economic situation of poor suppliers through supplier development programs. The project
was implemented in Ecuador, Peru, Guatemala, and El Salvador. Since the focus of the
research was on the NGO-firm level, the research was designed to gather data about the
organizational and inter-organizational factors that enhanced or inhibited the inter8
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organizational fit. Country-level aspects, such as national culture and institutional pressures,
could have distracted us from the inter-organizational nature of the phenomenon, and could
have weakened the internal validity of the findings. Consequently, we only focused on one
country. We chose Ecuador because the participating firms in this country came from
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different industries (i.e. steel and furniture manufacturing, and agribusinesses) and had
different sizes and organizational structures. This situation allowed us to have high variation
in the organizational factors of the phenomenon under study.
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Nine firms participated in the project in Ecuador; seven firms in initiatives where poor
suppliers were integrated through supplier development programs, and the remaining two
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consisted in distribution channel or market oriented initiatives. We focused on the first seven
initiatives, because the integration of poor suppliers was the target of our research. From
these seven firm-NGO initiatives, we could only obtain triangulated data from six instances.
Data collected from the side of the NGO in the seventh instance also suggested that there was
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nothing new to contribute to the analysis. Given that our research has one project with six
supplier development programs, the case study has a nested structure of three levels of
analysis. It has NGO-level organizational factors, which could be seen as a sort of within-
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factors, which could be seen as a sort of cross-case analysis. We were able to contrast
instances of high against low inter-organizational fit, and build a theoretical model about the
factors that facilitate inter-organizational fit in firm-NGO partnerships for value creation.
Data collection started in December 2011 and finished in July 2013. The project
developed between 2007 and 2011, thus the data was gathered retrospectively. To design the
case-study protocol we used social capital theory and the relational view, two main theories
in the literatures of cross-sector partnerships and SSCM (Selsky and Parker, 2005; Touboulic
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and Walker, 2015). This protocol enhanced the reliability of data collection because it
focused the research on specific aspects of the project, such as the NGOs antecedents for
collaboration, the relational aspects between the NGO and the firms, and the transactions
between the firms and their suppliers (Yin, 2013).
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websites. For the interviews one of the authors travelled to Ecuador, and met with the
managers of the firms and the representatives of the NGO. When further information was
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required for clarification or extending an issue about the project, we arranged interviews
through videoconferences and phone calls. Additionally, the people we interviewed were key
agents that made important decisions throughout the life cycle of the project. In total we
interviewed 18 people among CSR directors, purchasing managers, and CEOs from the
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firms side; and directors, project managers, and advisors from the NGO side. Finally, for
each instance we made sure there was data from both the NGO and the firm. Also, to ensure
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the quality of our interpretations, we only analyzed triangulated data (Yin, 2013).
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The NGO is a global organization present in Latin America, Africa, and Asia, which
focuses on projects that aim to improve the income and welfare of poor people. These
projects are funded by governmental agencies, development organizations, and multilateral
banks. Through its projects the NGO engages with poor people, and supports them to
improve their skills and entrepreneurial orientation so they can sell their products in the
market. A few years before the supplier development project started, the NGO shifted its
approach. From working only with people in rural villages, the NGO started to collaborate
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with firms, in order to connect poor suppliers with buyers, and to integrate poor people with
established markets.
In 2007 the NGO initiated the supplier development project, the aim of which was to
develop small suppliers. The project was partly funded by a Latin American multilateral
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bank. The project had to be implemented in cooperation with firms, who had to contribute
60% of the total cost of the supplier development program, while the remaining 40% was
funded by the bank. The NGO had to search for firms which presumably could satisfy their
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long-term sourcing needs through transactions with poor suppliers. The firms that agreed to
participate in the project varied in terms of size, industry of origin, and type of suppliers (see
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Table 1). Although the supplier development programs involved working with different
suppliers, all of them had in common an average income per capita of 5 dollars a day
(adjusted by PPP).
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Two types of data analysis were performed: the within-case and the cross-case analysis
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(Yin, 2013). In the within-case phase we analyzed each NGO-firm interaction independently
using the following process: first, we wrote thick descriptions of the engagement process
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between the NGO and the firm. These included issues related to the antecedents for the
project, communication between members of both the NGO and the firms, and joint efforts to
design and implement the supplier development programs. Second, to make sense of the
sequence of the description we summarized the description of each NGO-firm interaction
into stages conducive toward inter-organizational fit. Third, we analyzed whether the steps of
evolution toward fit were similar across NGO-firms interactions. In this way, we could
observe that the contrasted evolution across instances was the following: the first stage was
the adjustment of the NGOs value logic; next, there was the alignment of the NGOs mission
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to the profit-oriented behavior of firms; the third stage was the alignment of the NGOs
project objective to firms strategies; and, finally there was the inter-organizational fit. Next
we describe briefly each of these four stages towards inter-organizational fit.
Value logic is the organizing principle of an organization that allows its members to
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distinguish between what is valuable and what is not in the institutional setup of a field (Le
Ber and Branzei, 2010). For instance, prior to lean philosophy, inventories were considered
valuable within a production system, now they are perceived as a type of waste. Similarly,
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the value logic alignment is operationalized through the change in the perception that NGOs
have about the role of the private sector in poverty alleviation. Mission alignment refers to
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the alignment of the objectives of both the NGO and firms. It refers to the process through
which the NGO adjusted its poverty alleviation mission to the profit-oriented behavior of the
firms. The alignment of strategies was operationalized as the alignment between the NGOs
project and the sourcing needs of the firm.
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NGO inter-organizational fit through two indicators: 1) the alignment of the activities of the
project with the organizational structure (i.e. centralization, job specialization, chain of
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command, etc.) of the functional department that was assigned to work on the project; and 2)
the alignment of the activities of the project with the organizational routines within the
functional department; for instance, how far the processes that supported the achievement of
the departments goals were compatible with the NGOs project. Consequently, interorganizational fit was high when both indicators were congruent with the project; it was
medium when only one element was achieved (this was not observed in the case); and it was
low when none of the indicators were observed.
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We classified all the data gathered (i.e. interviews transcripts, reports, field notes, etc.)
into the four identified stages. For instance, extracts of an interview about the identification
of critical items and long-term sourcing needs were categorized into the stage of alignment of
the NGOs project objective to the firms strategy. Next, within each stage we coded the
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classified data into drivers or enablers, where drivers are factors that motivate an event to
begin, and enablers are factors that assist or support the development of the process (Lee and
Klassen, 2009). The codes were generated based on a review of the literature of SSCM and
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cross-sector partnerships. The classification of data and coding were performed using the
software NVIVO, which allowed us to have a database of the information gathered.
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Additionally, two researchers coded the data independently, and when there were
disagreements, sense-making meetings were organized. These meetings were led by a third
researcher, and included discussions on the coding until a consensus was reached. Finally, we
analyzed the patterns between the drivers, enablers and stages across the instances of NGO-
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firms and as a result we built a network of links between drivers, enablers and stages.
Table 2 provides a list of the concepts that emerged during the inductive theory
building process. We addressed construct validity through the use of multiple sources of
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evidence, and the construction of a chain of evidence. Internal validity was ensured through
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the use of pattern matching data analysis, and addressing rival explanations in the
interpretations. External validity was addressed through analytic generalizations, and
replication logic in our interpretations (Pratt, 2008; Yin, 2013). For instance, the emerged
patterns shed light on theoretical aspects about the alignment of NGO-firms value logic
proposition, strategies, and organizational structures. Furthermore, our interpretations were
based on diverse theoretical properties such as: firm size, industry, and supply chains. We
also contrasted the interpretations with different concepts. For instance: we used the concepts
of supply base complexity and degree of job specialization for interpreting the enablers of
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inter-organizational fit. Finally, we assured reliability through the use of a case study
protocol for data collection, the use of a case study database, and the coding and
interpretation by several researchers.
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Results
The results are presented in four parts: first, we describe how the adjustment of value
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logic was achieved; second, we describe how the alignment between the missions of both
organizations was achieved; third, we describe the alignment of both organizations
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strategies; fourth, we present the description of how the previous mechanisms are related
with the achievement of inter-organizational fit, and conclude with the description of how
inter-organizational fit is related to the likelihood of resource combination in firm-NGO
partnerships.
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Poverty alleviation is one of the missions of the NGO in our study. It pursued this
mission through the implementation of projects to (1) improve the quality of low-income
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producers, (2) develop the capabilities of low-income communities, and (3) strengthen their
organizations. For instance, prior to the supplier development project the NGO had worked in
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food supply chains with farmers associations to train farmers in technical areas related to
crops, and also in the management of the farmers association. However, in these prior
experiences the NGO had faced two challenges: first, farmers and low-income communities
had difficulties generating revenue after the NGOs intervention. Second, the NGOs major
source of funding was an endowment from a European country, and since the endowment
was expected to decrease, the NGOs managers had to look for new sources of funding. The
NGO responded to this situation by adjusting their approach to achieving their mission: they
moved from implementing development projects that offered assistance to poor communities,
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to business initiatives that integrated low-income communities into markets and supply
chains. This adjustment was facilitated by the partnership between the NGO and a business
council. The aim of the partnership was to develop business initiatives that improved poor
peoples economic conditions through their incorporation into supply chains as suppliers or
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distributors. The results of these pilot initiatives with the business council were positive, and
led the NGO to recognise the potential of poverty alleviation in cooperation with the private
sector. A representative of the NGO told us the following:
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Initially, the idea of collaborating with the private sector caused internal tensions in the
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NGO. There was high uncertainty about whether this approach would generate a positive
impact for poor suppliers because firms objectives were profit-related, whereas the NGOs
aim was poverty alleviation. Additionally, firms were also seen as part of the problem that
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the NGO wanted to address. Firms profit-oriented behavior was believed to create
inequalities and exclusion. However, the cooperation with the business council and the
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positive results of the pilot projects led the NGO to see poverty alleviation and business
profits as compatible objectives. Therefore, the NGO could achieve its mission through
promoting business initiatives with poor people.
Consequently, the NGO changed its original value logic of poverty alleviation through
development projects, to a value logic of poverty alleviation through business initiatives, a
logic where firms were seen as partners (see Table 2).
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4.2 Aligning the NGOs mission to the profit-oriented behavior of firms
When the NGO received the funding from the multilateral bank, they had to figure out
how to convince firms to join the project. Although the NGO had adjusted their value logic,
they still had to send a convincing signal about the project. To do so, the project had to be
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perceived as a real business initiative instead of another philanthropic NGO venture. Thus,
the project was framed as a business initiative with positive social impacts on poor suppliers.
In this way it could be perceived as a win-win situation for both firms and poor suppliers.
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The NGO used the contacts made during the partnership with the business council to
search for partners for the project. Managers were willing to start conversations with the
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NGO because of the NGOs network of contacts that would bring otherwise inaccessible
resources to the firm. For instance, the project had funding from the multilateral bank, which
made the NGOs project business sound. Also, other managers argued that the NGOs
embeddedness with local suppliers could reduce the coordination costs of integrating poor
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suppliers into their supply chains. The integration of these poor suppliers into their supply
chains would allow buying firms to access suppliers products over the long term.
Previous research, defines structural social capital as the overall pattern of connections
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between organizations: who you reach and how you reach them (Nahapiet and Ghoshal,
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1998). Since we observed that the NGOs network of contacts enabled the signaling of the
project as business sound, we argue that the NGOs structural social capital facilitated the
signaling of the project as a real business initiative.
Once the contact was made, the representatives of the NGO had to pitch the project to
the firms managers. Hence, NGOs representatives had to speak the language of managers
and had to demonstrate a deep knowledge about the firms supply market. For instance, they
had to make the business case for integrating poor corn suppliers into supply chains, they also
had to work on a collaborative basis with small dairy farmers cooperatives, etc. To do so,
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they had to have a solid understanding about the firms business processes and the transaction
costs of doing business with poor suppliers; they also needed the competences to manage
development projects. Consequently, the professional competences of the NGOs
representatives became relevant because they were deployed to convince managers that the
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NGOs project was going to be truly aligned with the profit-oriented behavior of firms.
Previous studies in knowledge transfer suggest that receiver and communicator should
have common knowledge and the same local understanding so that information between them
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critical resources (Aldrich and Herker, 1977). In this regard, organizations have boundary
spanning agents that strategically communicate the organizations information to the
environment; use their knowledge and expertise to influence the external environment; and,
achieve compromises between their organization and the environment (Aldrich and Herker,
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NGO related issues. One of the NGOs representatives told us: you dont sell poverty
reduction, you sell business models that have some benefit to the company. I think that our
staff was formed and trained in how you deal with companies, how you sit with them in a
horizontal way, and have a conversation about their business opportunities (NGO Regional
Director). In this sense, the NGO representatives boundary spanning capabilities entailed
common knowledge with managers and strategic communication skills (see Table 2).
The common knowledge refers to the professional knowledge about business processes,
value chain analysis, business planning, and project management that the NGOs
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representatives had (see quote below). Strategic communication skills refer to the soft skills
of the NGOs representatives; their ability to have a managerial conversation and pitch the
project as a business opportunity for firms. In this regard, the representatives were
professionals with experience in projects with poor farmers, projects with trade
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The six buying firms in the supplier development project under study joined the project
in response to a sourcing need. Four out of the six firms (large agribusiness, SME
agribusiness, SME agro-manufacturer and large manufacturer) used the project to expand
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their base of local suppliers. The sourcing strategy of these firms consisted in increasing the
volume purchased from local suppliers. In the large retailers case, the project was used to
implement the sourcing strategy they needed to increase the product quality of local
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suppliers. For the SME manufacturer the project was used to increase the productivity of
their suppliers small workshops. Hence, the project offered win-win opportunities in all the
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observed instances: firms could satisfy their sourcing needs and poor suppliers could increase
their productivity and access to reliable buyers (see Table 3).
In this regard, the alignment between the objectives of the NGOs project and the
firms strategy happened when the NGO had aligned its mission to the profit-oriented
behavior of firms and when the project also satisfied a sourcing need of the firm (see Table
3).
[Insert Table 3 about here]
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4.4 Achieving inter-organizational fit
After the firms top managers had decided to join the project, middle managers had to
plan and implement it. Middle managers had to work out how to insert the project within the
structure and routines of their departments. At this stage, the inter-organizational fit occurred
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at the operational level. The activities of the project had to be aligned with the processes of
the middle managers departments. The departments varied in each instance, for example: in
the case of the SME manufacturer the project was assigned to the production department; in
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the cases of the large agribusiness, the large retailer, and the SME agribusiness it was
assigned to the purchasing department; and, in the large manufacturer and SME agri-
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manufacturer it was assigned to the supplier development program (see Table 3). Even so,
overall, the project had to be aligned with the sourcing processes of the firms.
In every instance the sourced products from poor suppliers were critical either in terms
of costs or supply risk for the firm. The difference we found across instances was the number
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of items managed by the purchasing team in charge of implementing the project. For
example, in the SME agribusiness the purchasing manager was only in charge of sourcing
milk; in the large agribusiness there were several product categories with a purchasing
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manager for each (e.g. rice, corn, etc.); however, only the corn purchasing manager had
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responsibility for implementing the project. This situation was similar in the remaining
instances except in the large retailer (see Table 3), where the purchasing manager had to
manage a higher number of items. As the large retailer case was also the one with the lowest
inter-organizational fit, we expect an association between the number of items managed by
the purchasing team and the level of inter-organizational fit achieved. Next, we further
analyze this finding. We find two concepts related to the phenomenon of the number of
items: the degree of job specialization and the supply base complexity. The degree of job
specialization is a structural property of a departments organization; that is the degree in
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which organizational tasks are subdivided (Daft, 2012; Mintzberg, 1993). Supply base
complexity is conceptualized as the number of suppliers in the supply base, the degree of
differentiation among these suppliers, and the level of inter-relationships among them (Choi
and Krause, 2006).
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We think that the logic of the degree of job specialization is more influential than the
supply base complexity because the structural property of the department attenuated the
cognitive stress about integrating the project into daily routines. Since they were specialized
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in few items, the project was more manageable. A pattern emerged in our cases that allowed
us to discard the supply base complexity logic. The large agribusiness and the large retailer
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managed thousands of transactions with hundreds of farmers in their supply base. The large
agribusiness sourced corn, rice, artichokes, fan palms and quinoa, and had agreements with
animal farmers (e.g. pigs, chicken, and fish). The large retailer sourced tomatoes, potatoes,
lettuce, and similar fresh products. But the purchasing of fresh products in the large
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agribusiness had several teams, whereas the purchasing function in the large retailer had
only one team for the category of fresh vegetables and fruits. Hence, the large agribusiness
and large retailer had high complexity in their supply base, both of them managed similar
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numbers and types of farmers, but the large agribusiness had a more specialized purchasing
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processes of the purchasing function were receptive to the incorporation of the project. For
example, the purchasing function of SME agribusiness had processes for assessing and
monitoring its milk suppliers, the purchasing function of large agribusiness had processes
that enabled collaborative relationships with corn farmers, and had a supplier development
program for medium and large farmers. In summary, these two firms had processes for
supporting collaborative and close relationships with their suppliers (see Table 3). This
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situation contrasted with the large retailer, which did not have any process to support
collaborative relationships with their poor suppliers. Farmers were second-tier suppliers and
the purchasing function had no direct relationship with them. Therefore, organizational
routines that supported collaborative relationships with poor suppliers were another
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differentiating characteristic.
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within the department and because they were context-specific to the sourced product and
became path dependent for the department (Becker, 2005). We interpret that firms with these
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routines are more likely to integrate the project because they have the tacit knowledge of
setting collaborative relationships and are better equipped to collaborate with other types of
suppliers in the same product category.
Summarizing, we suggest that inter-organizational fit occurred after strategic fit, and it
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was enabled by the following factors: (1) job specialization within the structure of the
purchasing function, and (2) organizational routines that supported collaborative
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relationships.
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resource combination. Firms and NGOs with high inter-organizational fit also had a high
resource combination. We measured resource combination as high when firms brought to the
project resources in addition to monetary resources. For instance, the large agribusiness also
contributed with its knowledge of corn crops and its biotechnology (i.e. high performance
seeds); the SME manufacturer leased its physical assets (i.e. machinery) to suppliers in order
to improve their production levels (see Table 3 for more details). Our interpretation is that
inter-organizational fit drove the combination of resources (e.g. knowledge and technology)
for the implementation of the project.
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5
Discussion
The process of inter-organizational fit that emerged from the analysis of our cases starts
with the NGOs value logic adjustment. The NGO has to consider the private sector as a
relevant source of value creation and move from an approach based on development projects
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to an approach based on business initiatives with social impact. The value logic adjustment
drives the alignment of the NGOs mission with the profit-oriented behavior of firms, which
is also enabled by the structural social capital of the NGO and the boundary spanning
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capabilities of the NGOs representatives. Furthermore, the alignment of the project to firms
strategies is driven by the NGOs mission alignment. Then, given the presence of strategic
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fit, inter-organizational fit is enabled by the job specialization of the purchasing function, and
by the organizational routines that support collaborative relationships (see Figure 1). The
horizontal arrows in Figure 1 represent the driving relationship between the concepts in the
model, whereas the vertical arrows represent the enabling relationships. Finally, the NGO
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and the firms with high inter-organizational fit also exhibit high combination of resources.
[Insert Figure 1 about here]
The theoretical model we propose makes several contributions to the field of socially
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sustainable supply chains. In the following we discuss how our findings bring insights to the
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literature on SSCM and cross-sector partnership, which in turn highlight the novelty of our
findings.
The current paradigm in SSCM approaches the relationships between firms and their
secondary stakeholders as rival, based on the pressure exerted on the firm to implement
sustainable practices (Parmigiani et al., 2011; Shafiq et al., 2014). In this sense, the field of
SSCM has not caught up with the advances of stakeholder theory, the literature on crosssector partnerships, and the latest industry best practices that embrace a collaborative
approach with secondary stakeholders (Alvarez et al., 2010; Freeman et al., 2010). Our
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research aims to move the SSCM forward and proposes a theoretical model of how
organizational differences between firms and NGOs can be overcome in order to implement
joint initiatives that create value in socially sustainable supply chains. Similar to prior
findings in the cross-sector partnership literature (Austin and Seitanidi, 2012b), our model
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proposes that prior to resource combination, firms and NGOs have to match their
organizational values, structures, and routines. Therefore, we propose the following:
P1: Inter-organizational fit between the firm and the NGO is an antecedent for the
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combination of resources for implementing activities that create value in socially sustainable
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supply chains.
Previous studies suggest that firms and NGOs overcome their differences by realigning
their organizational roles in the alliance (Le Ber and Branzei, 2010). Le Ber and Branzei
(2010) suggest that both NGOs and firms fuse their interpretations of the world, while they
preserve their distinctive resources. From another perspective, Arenas et al. (2013) suggest
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that cooperative behavior between firms and NGOs is an evolution from conflictive
relationships, and that this evolution is facilitated by third parties who have network
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resources to join both the firm and the NGO. Our research improves the understanding of
barrier removal by indicating that this is a process where several organizational
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characteristics are incrementally aligned; a process that starts at the NGO organizationallevel, moves to the firm organizational level, and ends at the inter-organizational level.
During this process, we acknowledge that there are network level (NGOs structural
social capital) and individual level factors (boundary spanning capabilities) that facilitate the
process. In this sense, our research offers a more nuanced and precise view of how firms and
NGOs cooperate than that which is offered in prior literature (Arenas et al., 2013; Le Ber and
Branzei, 2010). Therefore, our theoretical model proposes the following:
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P2: An NGOs value logic alignment drives its missions alignment with the profitoriented behavior of firms.
P3A: An NGOs structural social capital enables its mission alignment with the profit-
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P4: An NGOs mission alignment with the profit-oriented behavior of firms drives the
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Our results suggest that there are organizational characteristics that make certain types
of firms more likely to achieve inter-organizational fit. These findings improve our
understanding of how cooperation is enabled in partnerships for socially sustainable supply
chain practices and also offer an alternative explanation to the one proposed by Le Ber and
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Branzei (2010). Since Le Ber and Branzei (2010) offer a model based on organizational
behavior variables, we think our theoretical model is more suitable for supply chain managers
because the identified factors are closer to constructs in the supply chain management field.
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This also facilitates the empirical testing of the model by other scholars in the field.
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P5A: Highly specialized purchasing functions enable inter-organizational fit in
cooperative initiatives with NGOs for the creation of value in socially sustainable supply
chains.
P5B: Routines that support collaborative relationships enable inter-organizational fit in
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cooperative initiatives with NGOs for the creation of value in socially sustainable supply
chains.
Conclusion
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Our research has built on prior results suggesting that secondary stakeholders provide
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complementary resources for the creation of value (Arenas et al., 2013; Selsky and Parker,
2005). We have elaborated a theoretical model of the drivers and enablers that facilitate this
type of cooperative initiative between firms and NGOs; it emphasizes that firms and NGOs
overcome their organizational differences through a process of several alignments: a value
logic alignment, the alignment of an NGOs mission with the profit-oriented behavior of
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firms, the alignment of an NGOs operational objectives with firms strategies, and the
adjustment of firms organizational structures to an NGOs activities. The factors that enable
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this process operate at several levels of analysis: network level, organizational level, dyadic
level, and individual level. It means that this is a complex process, where managers and NGO
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on firms for the implementation of socially sustainable practices. In this sense, there is a kind
of duality in the relationships between firms and their secondary stakeholders. On the one
hand, firms have to comply with the requirements that secondary stakeholders expect from
them. On the other hand, cooperation with secondary stakeholders is a mechanism for
complying with the requirement of the same secondary stakeholders (e.g. cooperating with an
NGO that is exerting pressure) or other secondary stakeholders (e.g. cooperating with an
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NGO to comply with governmental requirements). In this way, our results inform managers
about how to configure their organizational structure and routines to engage in such
cooperative initiatives. It also has implications for NGO leaders concerning the
organizational changes they need to undertake in order to cope with the private sector,
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specifically, the alignment of the value logic and the mission to the profit-oriented behavior
of firms.
Finally, our research is not free of limitations. Since we performed case study research,
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our research emphasizes internal validity over external validity. As a consequence, any
generalization should be treated with extreme caution. Furthermore, our interpretations are
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based on the interaction between one NGO and six firms. Future research should observe
how the unfolded process changes when the organizational characteristics of the NGO are
altered (i.e. organizational culture, value logic, etc.). In a similar vein, as the companies
involved in this study are local, it would be appropriate for future research to assess the
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be interesting for future research to analyze the process of inter-organizational fitif there is
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Acknowledgements
ECO2013-47794-R from the Spanish Ministry of Science and Innovation. We would also
like to thank the participants of the 2013 EUROMA Doctoral consortia for their comments to
an earlier draft of this paper; and, also to the anonymous reviewers of this manuscript.
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Firms size
( Sales USD million)
649
17
Firms size
(Number of
employees)
7840
140
Suppliers
description
Total investment in
the project (USD
thousands)
400
SME manufacturer
SME agrimanufacturer
1400
28
77
1200
6000
300
500
110
92
65
160
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Cooperatives of small
milk farmers. Milk was
the main item for firms
production process.
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Projects objectives
Large retailer
Large manufacturer
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SME agribusiness
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Large agribusiness
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NGO-Firm Dyad
Small palm-tree
farmers between 2
and 10 Ha. that were
close to production
facilities.
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Table 2: Definition of the concepts emerged from the analysis
Concepts
Definitions
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SME manufacturer
SME agrimanufacturer
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The NGO aligned its mission by finding a configuration where profits and social value are compatible.
It refers to the NGOs network of contacts that facilitated the access to resources for the implementation of the project. It included the embeddedness of
the NGO within local communities, farmers cooperatives, inter-firm networks, and funding organizations.
It refers to the professional knowledge of NGOs representatives about business processes and supply markets; and to their communication skills of
engaging in dialogues with both the private sector and poor suppliers.
High. The project was
coherent with the strategy
of consolidating a local
base of corn farmers.
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supply management
activities of the firm:
suppliers events,
technical visits, etc.
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Routines that
support
collaborative
relationships
Large retailer
The NGO adjusted its vision of value creation by considering the private sector a valuable partner for such purposes.
Purchasing
functions
specialization
Large manufacturer
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SME agribusiness
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Value logic
alignment
NGOs mission
alignment
NGO structural
social capital
NGOs staff
boundary spanning
capabilities
NGOs and firms
strategies alignment
Large agribusiness
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NGO-Firm Dyad
High. Technical
assistance, suppliers
performance
monitoring, etc.
Medium. Lease of
equipment, visits to
firms plants.
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Resource
combination
High. Production
know-how
High. Production
know-how and
biotechnology.
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Appendix 1: Case study protocol
I.
Research purpose
II.
Conceptual framework
Relational view
Social capital theory
III.
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The aim of research of this project is to study the development of buyer-supplier relationships in
contexts of poverty alleviation through partnerships between firms and NGOs. Specifically, the
research questions we would answer are: how firms and NGOs cooperate to develop SD programs for
poverty alleviation? What resources do enable the development of such cooperation and such
programs?
Complementary resources
The role of the NGO during the creation of value in the project
Reasons for the firm to join the program
Cultural, values, visions about the cooperation with the firm (and the NGO)
Coordination and follow up of the project
CSR (if any) policy of the firm
Purchasing practices of the firm related to the category of products in question or similar
suppliers
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Social capital
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