Two-dimensional Three-level Sustainability Framework for Achieving Short- and Long-term Gains: Empirical Evidence from Chinese Automotive Sector Lin WU Lecturer in Business Management SBC 10th Anniversary Conference and Inaugural Annual Conference 27th October, 2016 SBC Campus, Shanghai

Agenda Motivation and research questions Literature review and research gaps Research methodology Empirical case studies Framework and hypotheses development Survey data collection and analysis Survey results Contributions

Motivation 1) Why two-dimensional? The traditional Triple-Bottom-Line (3BL) perspective dominates the existing empirical studies on sustainability; Sustainability should concern both the present and the future (WCED 1987 definition); Standalone practices in lean, green and social management systems have been found to influence sustainability performance; A time dimension is missing.

Short- and long-term sustainability practices, capabilities, and performance Short-term sustainability practices Yang Operational innovation Operational improvement Yin Short-term sustainability practices Long-term sustainability performance

Motivation 2) Why three-level? Practice-performance relationship is well studied; Capability-performance relationship is well studied; Practice-capability relationship is not clear especially in the context of sustainability.

Motivation 3) Why Chinese automotive sector? Importance - Rapid expansion Huge contribution to national GDP Influence on related sectors Unsustainability Economic Environmental Social

Research questions How do short- and long-term sustainability practices contribute to short- and long-term sustainability performance of firms? How do operational improvement and operational innovation capabilities contribute to short- and long-term sustainability performance of firms? How do sustainability practices (short- and long-term) interact with capabilities (operational improvement and innovation) in achieving superior sustainability performance (short- and long-term)?

Literature review – theories External drivers of sustainability Stakeholder theory Institutional theory Internal drivers of sustainability Resource-based view (RBV) (static) Natural resource-based view (NRBV) (static) Practice-based view (PBV) (static) Dynamic capabilities view (DCV) (dynamic) Yinyang philosophy

Review of empirical studies and research gaps Researchers suggest that “time” should be incorporated as the 4th dimension of sustainability. However, how to incorporate it in empirical studies is not clear. Capabilities have been proven to be the real source of superior firm performance. However, in the sustainability context, how operational practices and capabilities interact with each other to achieve better performance is not clear.

Research methodology Mixed methods Qualitative – empirical case studies for framework development Quantitative – survey for framework validation Qualitative – research finding dissemination

Empirical case studies Sample: 8 automotive firms located in China Data collection: semi-structured interviews, direct observations and secondary data Results: provided supplement to theoretical information to develop the two-dimensional perspective of sustainability and the causal relationship between sustainability practices and capabilities

Research framework 1 – based on PBV Short-term sustainability practices H1 Short-term sustainability practices H2 H3 Short-term sustainability practices Short-term sustainability practices H4 -----no significant relationship P1: The implementation of short- and long-term sustainability practices significantly contributes to the improvement of short- and long-term sustainability performance of the firm.

Research framework 2 – based on RBV&DCV P2: The implementation of short- and long-term sustainability practices significantly contributes to the development of operational improvement and innovation capabilities. P3: Operational improvement and innovation capabilities are significantly associated with short- and long-term sustainability performance of the firm.

Research framework 3 P4: Operational improvement and innovation capabilities mediate the relationship between sustainability practices and performance.

Hypotheses H1 Short-term sustainability practices Short-term sustainability performance H2 Short-term sustainability practices Long-term sustainability performance H3 Long-term sustainability practices Short-term sustainability performance H4 Long-term sustainability practices Long-term sustainability performance H1a Short-term sustainability practices Operational improvement capability H1b Operational improvement capability Short-term sustainability performance H2a Short-term sustainability practices Operational innovation capability H2b Operational innovation capability Short-term sustainability performance H3a Long-term sustainability practices Operational improvement capability H3b Operational improvement capability Long-term sustainability performance H4a Long-term sustainability practices Operational innovation capability H4b Operational innovation capability Long-term sustainability performance

Hypotheses H5 Operational improvement capability mediates the effect of short-term sustainability practices and short-term sustainability performance of the firms. H6 Operational innovation capability mediates the effect of long-term sustainability practices and long-term sustainability performance of the firms. H7 Operational improvement capability mediates the effect of long-term sustainability practices and long-term sustainability performance of the firms. H8 Operational improvement capability mediates the effect of short-term sustainability practices and long-term sustainability performance of the firms. H9 Operational improvement capability mediates the effect of long-term sustainability practices on short-term sustainability performance.

Survey data collection and analysis Four ways to collect data – to increase response rate 284 usable responses Response rate: approximately 21.25% No problems of common method bias (CMB) and non-response bias (NRB) Structural Equation Modeling (SEM)

Survey results H1 Supported H5 H2 H6 H3 H7 H4 H8 H1a H9 H1b H2a Not supported H2b H3a H3b H4a H4b

Contributions This study adds, or provides a direction to add, a time dimension to empirical studies on sustainability; It contributes to the capability theory in clarifying the relationship between operational practices and capabilities in the context of sustainability; It illustrates a possibility to integrate PBV and RBV; It extends the NRBV to the context of sustainability.

Thank you very much!