Keywords

1 Introduction

Hart (1995) propounded the natural resource-based view (NRBV) of the firm using the argument that in the long run, businesses and markets will be constrained by and dependent upon the natural environment. Based on a firm’s relationship to natural environment, three types of sustainable manufacturing (SM) capabilities are conceptualised within the NRBV framework: pollution prevention (PP), product stewardship (PS) and sustainable development [clean technology (CT)] (Hart, 1995; Hart and Dowell 2011). These capabilities are shaped by different driving forces and provide different competitive benefits (Hart 1995; Hart and Dowell 2011; McDougall et al. 2019). Companies can employ pollution control (PC) besides PP for pollution abatement (Hart 1995). However, PC is a reactive approach which employs highly expensive, end of pipe solutions to arrest the generated effluents by a firm (Hart 1995; Baines et al. 2012). While, PP proactively aims at minimising the generation of emissions, effluents and waste through internal process improvements, resource conservation and provides a firm with low-cost competitive advantage in manufacturing (Hart 1995; Hart and Dowell 2011; Baines et al. 2012). PS considers the entire value chain to help lower the product’s life cycle cost by enhancing its use productivity, recyclability, disassembly and disposability; thus, enables a firm to gain differentiation in the market (Hart 1995; Hart and Dowell 2011; Baines et al. 2012; McDougall et al. 2019). CT is attributed to breakthrough innovations in sustainable product and process design, that create disruption in the market (Hart and Milstein 2003). These are focussed on future positioning to provide first mover advantage to the firm (Hart and Dowell 2011). These four capabilities fall into a spectrum, in the order of PC, PP, PS and CT. PC is a reactive capability and other three are proactive with CT being the most proactive of the three (Hart 1997).

In order to understand how SM capabilities are built and specifically, their possible interconnections, Hart (1995) proposes two competing but paradoxical theories, namely, path dependency and embeddedness. Path dependency indicates sequential development of capabilities, on the contrary, embeddedness reveals concurrent development of capabilities. However, research on the practical existence of NRBV resources and capabilities in general and the interconnectedness of capabilities in particular is still in its infancy (McDougall et al. 2019). Fowler and Hope (2007), McDougall et al. (2019) and Shukla and Adil (2021) make noticeable attempt towards this. These papers conduct empirical investigation of SM capabilities through a case study of an outdoor apparel company, interviews with experts from the UK agri-food sector and a case study of a paint manufacturing company, respectively. The research findings reported in the above papers, provide support for embeddedness of SM capabilities but not for path dependency. What patterns emerge in other contexts still need to be researched to generalise such findings. The current study describes the research propositions of Hart (1995) in section two. Then in section three, it analyses sustainable manufacturing practices (SMPs) implemented by two multinational firms over a period of time to investigate if capability development shows a pattern of path dependency or embeddedness. Conclusions of the study are drawn in section four.

2 Research Propositions

Two theories of NRBV, viz., path dependency and embeddedness are described next.

Path Dependency:

Path dependency indicates that acquiring one capability becomes a pre-requisite for acquiring another (Hart 1995) and it demonstrates linear orchestration of resources (McDougall et al. 2019) (see Fig. 1).

Fig. 1.
figure 1

(Adapted from Hart 1995).

Path dependency of sustainable manufacturing capabilities

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Propositions on path-dependency (see Fig. 1) restated from Hart (1995) are: Proposition 1-PS is dependent upon a firm’s prior capability in PP; Proposition 2-Development of CT is dependent upon a firm's capability in PP and PS.

2.2 Embeddedness:

Embeddedness reveals that capabilities reinforce each other and are developed in parallel (Hart 1995; Fowler and Hope 2007) (see Fig. 2).

Fig. 2.
figure 2

(Adapted from Hart 1995).

Embeddedness of sustainable manufacturing capabilities

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Propositions on embeddedness restated below from Hart (1995) are: Proposition 3-PS facilitates and accelerates capability development in PP and vice versa (see Fig. 2a); Proposition 4- Development of CT facilitates and accelerates capability development in PP and PS and vice versa (see Fig. 2b).

3 Case Study

This section presents case studies of two manufacturing firms belonging to textiles and chemical industry, examining Hart’s propositions on the interconnectedness of SM capabilities. Both the firms in this study are known for creating significant environmental impacts.

Mintzberg and Waters (1985) assert that the realised strategies in a firm are a product of its deliberate and emergent strategy. Accordingly, for the purpose of this study, implemented SMPs and those planned in future are treated as reflection of SM strategy of the case companies. The relevant data pertaining to SMPs are extracted from sustainability reports (Birla Cellulose, 2012–2021; Asian Paints 2014–2021). These SMPs are categorised into PC, PP, PS and CT as per their characteristics. Primarily, effluent treatment and discharge related SMPs were grouped under PC (see, Baines et al. 2012; Shukla and Adil 2021); SMPs employing continuous process improvements aimed at emission reduction, waste (hazardous and non-hazardous) minimisation and resource (energy, water and materials) conservation were grouped under PP (see, Rusinko 2007; McDougall et al. 2019); product life cycle design and management based SMPs were grouped under PS (see, Hart and Milstein 2003; Rusinko 2007). Further, SMPs involving breakthrough innovations in products and processes for which the firm claimed to have filed patents or be the first company in the industry to have implemented these or described as next generation solutions (implemented or planned) were grouped under CT (see, Hart and Dowell 2011; McDougall et al. 2019). For each SMP, the first time it was reported is treated as the year of implementation. In case of future SMPs, planned year is treated as year of implementation in the analysis. Analysis of each case firm in two parts: (a) its SM capability development journey; and (b) interconnectedness between SM capabilities is presented next.

3.1 Company A (Birla Cellulose):

The company is a leading producer of viscose staple fibres and other man-made cellulosic fibres in the global market. Data from available sustainability reports of the firm, covering the period between 2012–2021 (Birla Cellulose, 2012–2021), were extracted and analysed.

a) SM capability development journey

Pollution Control: Firm A’s SMPs based on “end of pipe” method include: (a) installation of effluent treatment plant (ETP) for treatment of generated waste water and cooking chemicals to meet regulatory requirements; (b) reduction in waste sent to landfill and for incineration by selling the by-product of manufacturing as a raw material for other industrial applications; (c) reduction of colour in treated effluents through physio-chemical means to improve the waste water quality; (d) installation of reverse osmosis technology to recycle waste-water to reduce freshwater consumption and (e) becoming world’s first cellulosic fibre manufacturer for implementing zero liquid discharge (ZLD) technology successfully and reaching a level of zero pollution load due to wastewater. It is to be noted that SMPs (b), (c) and (e) are sequentially developed and are undertaken to supplement SMP (a). Whereas SMPs (c) and (d) are developed in parallel. This shows traces of both path dependency and embeddedness of SMPs within the domain of PC itself.

Pollution Prevention: The firm has been proactively taking steps in waste minimisation and resource (energy, water and materials) conservation leading to significant reduction in generation of emissions. Through incremental process improvement towards emission reduction, the firm has achieved 37% reduction by the year of 2021 and 70% reduction is targeted by the year 2022, over the reference year of 2015. It is the first company in the man-made cellulosic fibre industry in the world, to have achieved carbon neutrality in scope 1 and scope 2 of greenhouse gas (GHG) emissions as per the GHG protocol corporate standard (Greenhouse Gas Protocol, no date). This is achieved through their sustained efforts in developing energy efficient processes, use of renewable energy and ensuring net growth of the forest cover managed by them. Going forward, the firm aims to achieve carbon neutrality in GHG protocol scope 3 standards by 2040. Notably, it has achieved incremental reduction in consumption of water, energy and materials through continuous process improvements along with the application of 4R principle of reduce, reuse, recycle and regenerate.

Product stewardship: The firm is a leader in PS initiatives in the man-made textile fibre industry as its products are made up of renewable forest based raw material, i.e., wood. It has been continuously innovating to create low emission and resource wise low impact products through sustainable product design and sustainable sourcing of wood and chemicals. For instance, Birla Spunshades dyed fibre is made using an advanced dyeing technique contributing to huge amounts of savings in water compared to conventional dyeing, and Liva Eco promises minimal use of water in comparison to other natural fibres in its manufacturing process and significantly lowers GHG emissions. Similarly, Liva Sno, is produced using an eco-friendly whitening process which leads to no effluent generation, serving as an example where development of PS eliminates the need for PC. The firm recently launched a circular fibre made from pre-consumer cotton waste which offers the opportunity to upcycle the waste generated in the textile value chain. Procurement of 100% sustainably sourced wood and chemicals form a part of sustainable sourcing practices of the firm. Going further in the value chain, the firm plans to assess and improve the sustainability performance of its key suppliers by 2025.

Clean technology: The firm is committed towards R&D efforts and initiatives leading to create next generation solutions. It aims at developing products made with post-consumer textile waste and increased use of alternate feedstock by 2024.

Fig. 3.
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Observed patterns of capability development in case company A

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b) Interconnectedness between SM capabilities: The progress of case company A towards SM capability development has been charted in Fig. 3 by showing the cumulative number of SMPs within each category of PC, PP, PS or CT that are in place or planned over different time period (Birla Cellulose 2012–2021).

It can be observed from the figure that while one PC based SMP is in place in the year 2012, PP and PS based SMPs start later in 2015 and that on CT is planned for 2024. The figure also shows that starting with the year 2015 till date, SMPs in PC, PP and PS are being implemented in parallel. Further, it was found that deliberate PC efforts towards installing ZLD technology in 2021 have led to significant improvement in PP capability of the firm, specifically in resource conservation, enabling 95% recycling and reuse of waste-water within the manufacturing processes. This is an example of how PC reinforces PP (though PC is not included in the scope of Hart’s framework). Similarly, PS targeted SMPs involving the development of sustainable products also reinforce PP capability of the firm through use of renewable raw materials, process improvements, resource conservation and emission reduction. These findings provide evidence in support of proposition 3 on embeddedness that PS facilitates and accelerates capability development in PP and vice versa. The firm has planned to implement CT-based initiatives much later in future, post attaining substantial PP and PS capabilities, which supports proposition 2 that adoption of CT has path dependency with PP and PS. Moreover, new SMPs of higher order capabilities are added sequentially in different time-periods within the individual domains of PC, PP and PS. The firm continues to implement all the types of SMPs till date, taking the total count from 1 in 2012 to 33 in 2021 with 2 CTs planned for 2024, 1 PS for 2025 and 1 PP for 2040. As significant efforts are directed towards acquiring higher order capabilities, it is likely that PC based SMPs will reach a saturation point in the coming years and eventually be eliminated. Thus, this case does not entirely support the proposition of path dependency or embeddedness but shows side by side existence of both.

3.2 Company B (Asian Paints):

Asian paint ranks 1 in India, 3 in Asia and 9 in the world serving 60 countries and offering a wide range of paints for decorative and industrial use. Data spanning from sustainability reports available between 2014–2021 (Asian Paints, 2014-2021)for company B are studied.

a) SM capability development journey

Pollution Control: Initial SMPs of the firm involving PC include installation of ETPs, where raw effluents are treated to a level compliant with the pollution control board norms and treated wastewater is reused to the maximum extent possible within the company premises, in production processes, for landscaping/gardening or other domestic applications. Subsequently, starting from installing ZLD technology in few units in the year 2015, the firm achieved 100% installation in all its units by 2020. The observation on path dependency between installation of ETP and ZLD used for PC is similar to that of company A.

Pollution Prevention: Sequential transition from PC to PP is observed in firm B. Over the years, through significant efforts in hazardous waste minimisation, the firm has achieved 76% reduction in specific effluent generation in 2021 from the base year 2013–2014, thus minimising the burden on implementation of PC based SMPs. The supporting SMPs include implementation of ‘3R’ strategy of reduce, reuse and recycle for waste management and energy, material and water conservation practices.

Product Stewardship: Through simultaneous attention on sustainable sourcing of raw materials and packaging materials as well as on sustainable product design, the firm continues to be a leader in creating new, innovative and sustainable products. These products are energy efficient, are free from harmful chemicals, have increased renewable content, are non-polluting, improve indoor air quality, and are safe for humans and the environment.

Clean Technology: CT based SMPs of the firm represent breakthrough innovations in the paint industry, which includes, (a) development of an environment friendly and economically viable product, Genie polish which constitutes up to 84% renewable raw materials, promises superior labour productivity, and has no exposure related risk and consequent respiratory disease threat. This has helped the firm file two patents; (b) development of Royale Health Shield, an eco-friendly product that kills 99% of infection-causing bacteria- first and only paint in India that is recommended by Indian Medical Association (IMA) and development of a paint named Nilaya Naturals which is earth-safe and formulated with over 95% materials of natural origin.

Fig. 4.
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Observed patterns of capability development in case company B

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b) Interconnectedness between SM capabilities: Fig. 4 shows the cumulative number of SMPs that have been implemented or planned over different time period in company B. Like company A, it is observed that in company B, initiation of PC activities preceded that of PP and PS, both of which started in the year 2014 and CT in the year 2015. The observed data shows concurrent development of SMPs in PC, PP, PS and CT from the year 2015 to 2020. The findings of this case provide evidence of embeddedness in SM capabilities, showing support to proposition 3 and 4, that PS can accelerate implementation of SMPs in PP and vice versa and CT can facilitate and accelerate implementation of SMPs in PS and PP and vice-versa. It is also observed that there is minimum rise in the number of PC based SMPs (i.e., from 1 to 3) and maximum rise in the number of PP based SMPs (i.e., from 4 to 34) implemented between years 2014 and 2020.

4 Conclusion

This paper analysed data from two case companies to examine the theories of path dependency and embeddedness of SM capabilities as proposed by Hart (1995). The following conclusions can be drawn from this study. Path dependencies of SMPs were observed within a specific category (e.g., between SMPs of PC) as well as those belonging to different categories (e.g., PC and PP or PS and CT). However, path dependency where all SMPs of one category were implemented before the initiation of the first SMP in higher order categories of capabilities is not observed, suggesting that development of a higher order capability does not necessarily happen after a lower order capability is fully developed. There were many instances where SMPs were implemented in parallel from different capability categories showing the plausibility of embeddedness. Also, once implemented, none of the SMPs within any of the categories was discontinued. However, their continuation gave only incremental improvement in environmental performance over the course of their journey. The findings of this study indicate that the theories of path dependency and embeddedness may not necessarily be competing in nature but can co-exist, thus differing from the previous research which provided support for embeddedness alone. This paper has analysed only two firms which is a major limitation for drawing general conclusions. Future empirical research on interconnectedness of SM capabilities may also explore the nature of interrelationships between different pairs of SMPs along with possible reasons. Further, characterisation of competitive value of SM capabilities offers another direction for research.