Managing sustainability tensions in global supply chains: specific investments in closed-loop technology vs ‘blood metals’

Abstract

This paper discusses how problems of eco-opportunism in metals markets escalate due to market failures because of the increasing scarcity of precious metals. Establishing the right sourcing strategy for recycled material, therefore, is crucial for supply chains and for managing corporate sustainability tensions. We analyse the transaction costs in three strategic models of sourcing from ‘make’ inside the supply chain to contract, and ‘buy’ in the grey market for metals. ‘Blood metals’ leak into the grey markets when there is lack of control, information asymmetry in global supply chains and eco-opportunism in recycling of electronic products. Consequently, the need for traceable supply encourages companies to integrate closed-loop recycling of their products. Furthermore, scarcity of valuable metals along with consumer preferences for sustainable products lead to specific investments in product design and robot technology that disassemble end-of-life products. Together, these factors provide an integrated system that reduces transaction costs and increases recycling efficiency. Therefore, specific assets designed to facilitate reuse of scarce metals like the Apple robot Daisy is a key corporate strategy to secure sustainable performance. Specific investments in disassembling technology like robots in the smartphone industry, should, according to transaction cost theory, be organised as a vertically integrated circular economy. The integrated closed-loop model presented here, control eco-opportunism and the unsustainable character of grey markets for recycled material in electronics.

Keywords:

• Eco-opportunism
• sustainable management
• global supply chain
• closed-loop technology
• linear vs circular organisations

Acknowledgements

The authors thank the editor Professor Ana Beatriz Lopes de Sousa Jabbour, the reviewers and our colleagues at Qatar University’s College of Business & Economics, at Norwegian School of Economics, the University of Oslo, and at Anambra State University, Nigeria for their comments and insights on this project. The authors are listed at random as they contributed equally to the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Nelson Oly Ndubisi

Nelson Oly Ndubisi is a Professor of Management at Qatar University. Nels has published over 70 articles in top Marketing and Management Journals, and won several awards for research excellence.

Arne Nygaard

Arne Nygaard is a professor at Kristiania University College in Oslo, Norway. He received his Dr.Oecon degree from the Norwegian School of Economics (NHH) in 1992. Professor Nygaard has published in journals like Journal of Marketing, Journal of Marketing Research, Entrepreneurship Theory and Practice, Journal of Business Venturing and many more, seven books and, comments and articles on a wide range of economic and business-related topics in the international and Norwegian press.

Gibson Chunwe N.

Gibson Chunwe is affiliated with the Anambra State University, Igbariam, Nigeria. Gibson is a multi-disciplinary researcher with background in Sociology. His research has been represented in several publications in top journals and conference proceedings.