Global Sustainable Production : A case study of manufacturing units in differently industrialized countries

Abstract: Introduction: Producing on a global scale is attractive for multinational corporations (MNCs) due to production cost savings and the proximity as well as simplified access to new high growth markets. In order to be successful in foreign markets it is vital for MNCs to understand the local market conditions. In particular stakeholders, also referred to institutions, and their diverse demands are likely to vary among differently industrialized country markets. Additionally, sustainability has emerged as an inevitable topic for businesses and countries alike. Purpose: Therefore, the purpose of this thesis is to describe and analyze different institutions and their demands in differently industrialized countries. Moreover, the aim is to describe and analyze capabilities that manufacturing companies can use to respond to these institutional demands in order to achieve a more sustainable production. Methodology: The research method employed is a single embedded case study consisting of one Scandinavian multinational machinery and construction equipment manufacturer with three production units located in Sweden, Bulgaria and China. Semi-structured interviews with managers, a supplementary questionnaire and a literature review on institutional and capability theory serve as sources for primary and secondary data collection. Findings: There are differences between institutional demands among differently industrialized countries. The research found that manufacturing units in developed and ECMs can respond to these institutional demands through different capabilities. Next to institutional demands there are certain institutional influences that are beyond the control of the MNC and can only be absorbed. By having a diverse set of economic-, natural- and social capabilities which are difficult to copy and that are corresponding to various institutional efficiency and legitimacy demands as well as influences manufacturing companies can create a more sustainable business. Research and practical implications: Future qualitative research could seek to explore whether the results of this study are congruent for companies operating in other industries and other countries. Next, future research could seek to explore whether there are more evident natural and social based capabilities existing in the field.Within praxis, it is critical for managers to be aware that each country has its distinctive context and that it is necessary to locally adapt in order to satisfy the prevailing market conditions. Besides it is essential not only to satisfy the customer demands but also to identify and respond to other institutional demands to create a more sustainable production. Keywords: Capabilities, institutions, efficiency and legitimacy demands as well as influences, differently industrialized country markets, sustainability, economic-, social- and natural value, imitability, manufacturing, MNC, global sustainable production