Supply chain management and sustainability: the new boundaries of the firm

A directive on supply chain due diligence applicable to all companies operating on the European Union (EU) market is currently under consideration by the EU institutions. This project, which represents an example of harmonization at the regional level and whose presentation is expected in 2021, places the issue of enterprises’ private procurement process at the heart of the debate. Supply chain strategies are an essential element of any business ecosystem. Therefore, in order for firms to effectively address social and environmental concerns along with the economic dimension, it is necessary to adopt and spread the use of sustainable business practices across the entire supply chain. Currently, due to (i) the diffusion of the ‘triple bottom line’ approach; (ii) the reputational and economic damages arising from numerous scandals concerning the supply chain; and (iii) the growing market value of sustainability, an increasing number of firms have included sustainability requirements in their entire supply chain. This has led to the enhancement of ‘preferred procurement’ policies, such as the green, social, and sustainable procurements. After a brief analysis of the current legal framework and the best practices applied in the field of sustainable private procurement, this study offers some conclusions on (i) the impact of sustainability on the definition of the boundaries of the firm and (ii) the policy shift from self-regulation to statute law in private procurement governance and the benefit of a model statute designed to be adopted by different jurisdictions.

Making Diversity Research Matter for Social Change: New Conversations Beyond the Firm

This paper argues that, to fulfil the ambition to foster equality and social justice, diversity research should move outside the empirical and ideational boundaries of the firm, which have historically limited our knowledge production on diversity and social change. We first look back at 30 years of diversity research, reflecting on how the main theories, concepts and models of diversity are entangled with four root images of the firm – a neutral container, an economic entity, a cultural entity and a space of inequality – which have fundamentally shaped and limited our way of thinking about forms of action to achieve social change. We then present four illustrations of diversity research that broaden our empirical and ideational horizon: the global garments value chain; the gig economy; a public library; and a dance organization. These examples show new re-conceptualizations of diversity and open up possibilities for new conversations and politics of action to make diversity research matter for social change.

Mutuality and Concepts of Responsible Business

Chapter 6 places Economics of Mutuality in the context of a wider set of responsible business concepts, such as stakeholder theory. It considers whether these ideas represent fundamental ‘paradigm’ shifts in business or whether they are essentially modifications of existing theories It concludes that stakeholder theory was a significant shift away from shareholder-centric views of the firm, and, in line with stakeholder theory, Economics of Mutuality places corporate purposes other than shareholder value at the heart of the firm and derives business practices on the basis of that. But it differs from stakeholder theories in emphasizing the importance of relations with stakeholders in delivering corporate purposes not the interests of stakeholders themselves. It also differs from existing models in looking at the boundaries of the firm beyond traditional ownership rights and contractual arrangements. It is therefore a problem-solving view of the firm as against a financially or stakeholder-driven concept that embraces shareholders and stakeholders but does not put corporate purpose at the heart of either of them.

Overview

The book describes how Economics of Mutuality offers a powerful approach to putting purpose into practice. At the heart of it lies a clear articulation of corporate purposes and an alignment of different constituencies associated with the firm in the delivery of those purposes. What distinguishes it from other responsible business concepts is its recognition of the need to extend the boundaries of the firm beyond their legal and contractual limits. Ecosystem creation and mapping, and pain-point identification are critical to the internalizing of external engagements of companies. Measurement and metrics are also crucial to the fulfilment of corporate purposes. These measures should be incorporated in companies accounting systems to develop mutual profit and loss statements. The Economics of Mutuality involves not just innovative types of partnering, measurement, and accounting but also financial instruments, forms of ownership, institutional engagement, and ways of working with civil society.

The Social Responsibility of the Firm

This chapter pursues a normative approach to corporate governance, bridging economic theory on the nature of the firm and corporate management strategy. It intends to show that from a welfare economics perspective there is room for improvement if governments are willing to revisit the legal framework and redesign the institutional boundaries of the firm. In concrete, echoing concerns being put forward by the World Economic Forum and other international organisations, it is proposed that the social accountability of the modern corporation and its institutional boundaries should be revisited on legal grounds. A new role for top management is advanced in the context of principal-agent theory.

THEORY OF FIRMS: EVOLUTION AND CONTEMPORARY DEVELOPMENT PROBLEMS

Рассмотрены этапы эволюции теории фирм, как составляющей микроэкономической теории, по следующим направлениям: причины возникновения фирмы, границы деятельности фирмы, организационная структура фирмы, неоднородность действий фирмы, доказательства для различных теорий фирмы. Цель статьи состоит в оценке особенностей использования положений теории фирм в текущих экономических реалиях. Научная новизна исследования заключается в демонстрации существенных отличий условий функционирования фирм в постиндустриальную эпоху по сравнению с индустриальной и доиндустриальной эпохами, когда и были сформированы базовые положения теории фирм, что создает определенные проблемы для их использования и требует их дальнейшего развития. The stages of the evolution of the theory of firms as a component of microeconomic theory are considered in such areas as: the reasons for the emergence of the firm, the boundaries of the firm, the organizational structure of the firm, the heterogeneity of the firm's actions, evidence for various theories of the firm. The purpose of the work was to assess the features of using the provisions of the theory of firms in the current economic realities. The problems of development of the theory of firms in modern conditions are investigated. The scientific novelty of the research lies in demonstrating significant differences in the conditions for the functioning of firms in the post-industrial era compared to the industrial and pre-industrial eras, when the basic provisions of the theory of firms were formed, create certain problems for using a number of basic provisions of the theory of firms, requiring their further development.

The Aggregate Implications of Mergers and Acquisitions

This paper develops a search and matching model of mergers and acquisitions (M&A) and uses it to evaluate the implications of merger activity for aggregate economic outcomes. The theory is consistent with a rich set of facts on US M&A, including sorting among merging firms, a substantial merger premium and serial acquisition. It provides a sharp link between these facts and the nature of merger gains. At the micro-level, both complementarities between merging firms and productivity improvements of target firms are important in generating gains. At the macro-level, the model suggests a significant beneficial impact of M&A on aggregate outcomes – the contribution to steady state output is 14% and 4% for consumption – which occurs through the reallocation of resources across firms and equilibrium effects on firm selection and new entrepreneurship. Nevertheless, the economy is not efficient, suggesting a scope for policy improvements – a simple flat tax on M&A can raise steady state consumption as much as 2% relative to the laissez-faire equilibrium. In short, the boundaries of the firm can matter for macroeconomic outcomes.

STEEP

The purpose of a macro-environmental (STEEP) analysis is to capture and interpret what is happening (and what is likely to happen) in the environment in which a business operates. It accounts for the broad trends, forces, and changes beyond the boundaries of the firm, which may impact the operations and markets of the firm. STEEP stands for social, technical, economic, ecological, and political factors. This chapter discusses the underlying theory, core idea, depiction, process, insight or value created, and risks and limitations of STEEP analysis. Finally, the chapter offers the illustration of Japan Tobacco International and applies the steps of STEEP analysis to this case.

Customer-Oriented Global Supply Chains

Logistic services are central to the design and management of any supply chain. Due to recent technological advances, modern supply chains are challenging traditional market boundaries in ways that both influence and are influenced by consumer behavior (e.g., Amazon, Alibaba, or JD.com). Economically speaking, corporations are changing along the way resources are being used in production. At the firm level, management decisions follow cost efficiency and risk management principles, pursuing a cost-risk tradeoff equilibrium. Theoretically, operations organized within the boundaries of the firm are just those for which the markets are unable to offer a more efficient alternative, whereas the link between buyers and sellers (i.e., demand and supply in the market) is intermediated by logistics services, such as transport, to mention but one. As technological innovation, social transformation, and consumer behavior threaten firms' traditional boundaries, logistics need to adjust and adapt to new and emerging challenges, its costs, and risks to end consumers.

Partnerships in Supply Chain Management

This chapter considers one of the most important collaborations, namely that of partnership. In recent year's sophisticated and demanding consumer lead severe global competition between companies. So many companies seek to coordinate cross-firm activities and work mutually over time to produce outstanding performance. The main objective of the companies is to reach higher performance than would be achieved by managing individually. For any supply chain in the competitive environment, widening the boundaries of the firm via partnership formation would be the remedy and partnership creates a synergistic business environment for both sides. The objective of the chapter is to present a comprehensive and integrated view of the literature on all aspects of partnership.