Journal of Business & Industrial Marketing

Developing competitive advantage using the triple bottom line: a conceptual framework
Steven A Schulz Rod L Flanigan
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Steven A Schulz Rod L Flanigan , (2016),"Developing competitive advantage using the triple bottom line: a conceptual
framework", Journal of Business & Industrial Marketing, Vol. 31 Iss 4 pp. -
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 Introduction

Corporate sustainability models have become increasingly fashionable in academic

research over the past 20 years. In addition to financial accountability, these sustainability

models often include some form of environmental/biophysical, ethical, and/or social

responsibility measurement. Interest in environmental, social, and ethical corporate responsibility

was corroborated and reinforced by polls such as the September, 2000 Business Week/Harris

poll that reported a full 95 percent of respondents claim that:

U.S. Corporations should have more than one purpose. They also owe something to their

workers and the communities in which they operate, and they should sometimes sacrifice
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some profit for the sake of making things better for their workers and communities”

(Business Week, 2000).

In the same poll, only four percent of respondents indicated that they believe the sole

purpose of U.S. corporations is to make the most profit for their shareholders. Further, 61 percent

of respondents believed that U.S. corporations have only fair or poor ethical business practices

(Business Week, 2000). As a result of this sort of public sentiment, customers, government

agencies, and social advocacy groups have become more assertive in holding companies

accountable for the overall consequences of their actions and outcomes. For example, protecting

the environment through regulation has often been viewed as a trade-off of ecology versus

economy (Porter and van der Linde, 1995). Initially, regulatory activities would pit business

organizations against other groups in society, when in reality, all stakeholders are

interdependent. Rather than treating corporate social responsibilities as costs or constraints,

companies have learned to leverage corporate social responsibility as a potential source of

innovation and competitive advantage by using better inputs, achieving higher quality, or
 improving product yields (Porter and Kramer, 2006). “Porter’s work in a broad range of policy

areas reflects a deep-seated belief that competition leads to better outcomes and transcends

tradeoffs between corporate interests and social welfare” (Argyres and McGahan, 2002).

But what is “sustainability” really? Over 25 years ago the Bruntland Report defined

sustainable development as “a process of change in which the exploitation of resources, the

direction of investments, the orientation of technological development, and institutional change

are made consistent with future as well as present needs” and further that sustainability must

“meet the needs and aspirations of the present without compromising the ability of future

generations to meet their own needs” (World Commission, 1987). One of the more prominent
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sustainability definitions in the literature is represented by the ‘Triple Bottom Line’ (3BL)

model. Developed in the 1990’s, the idea has gained traction in both academia as well as the

corporate world. While the mere suggestion that a company may have a “bottom line” of

something other than some sort of financial measurement may seem counterintuitive, the idea

that these other components are desirable, even critical to the sustainability of a company are not

overly controversial. Some have proposed adding additional measurements to the original ‘three

pillars’ framework of the 3BL (Hacking and Guthrie, 2007; Parkin et al., 2003; Roberts, 2003);

however, it is generally accepted that any additional dimensions would simply be ‘sub-

components’ of the primary three pillars found in the 3BL model.

As demonstrated by several Fortune 100 websites, corporate America has embraced the

sustainability discussion as they seek stakeholder/shareholder approval. Companies such as

Shell, AT & T, Dow Chemical, and many other Fortune 100 companies prominently display

components of 3BL terminology on their web sites and financial disclosures. As a result,

stakeholder approval appears to be one catalyst for firms to address the topic of sustainability. In
 addition to stakeholder approval, this paper explores other catalysts for elevating the strategic

importance of sustainability. As more firms develop sustainability programs, the opportunity to

develop a competitive advantage becomes more important. As purchasing agents and

committees have started to include criteria for sustainability in the process of supplier selection,

certification, and evaluation; a competitive advantage can be gained or lost over this issue. The

industrial purchasing process extends the focus of sustainability beyond the firm to include all

members of the supply chain (Golicic and Smith, 2013).

The foundation of the conceptual framework contained herein is derived, in part, from

leveraging the extant literature streams from Carter and Easton (2011), Carroll (1991), Elkington
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(1997, 1998), Hubbard (2009), Kaplan and Norton (1992), Markley and Davis (2007), Quinn and

Baltes (2007), and others. The purpose of this project is to utilize the aforementioned literature

on sustainability to develop a theoretical framework on sustainability metrics at the industry

level to be used as a benchmark for firm performance as well as drivers of sustainability that

extend across the supply chain. The overall goal is to establish sustainability as a potential

strategic asset for a firm.

3BL and Supply Chain Management

For the industrial market sector, opportunities to leverage corporate sustainability policy

can generally be found among three key stakeholder groups. The first group includes internal

organizational stakeholders including corporate administration, mid-level management and

employees. For example, concepts of lean manufacturing and Six Sigma quality efforts

integrated with improved working conditions, increased training and/or education, community

involvement, and career advancement can lead to opportunities in corporate social responsibility.

Likewise, there is evidence in the literature that suggests the adoption of lean principles in
 manufacturing also help the environment due to better utilization of resources and reduction of

emissions (King and Lennox, 2002). The next group of stakeholders includes all those external to

the organization. These stakeholders include all the critical upstream, downstream, and lateral

organizations in the supply chain that provide value to end users of products and services

(Golicic and Smith, 2013). Finally, the last group of stakeholders includes outside stakeholders

not directly involved in the flow of goods and services provided to the final consumer. This

group includes government agencies, regulatory bodies, advocacy groups, foundations, non-

governmental agencies, and for purposes of parsimony in this discussion, will be considered the

rest of the world (ROW).

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Extant research on corporate social and environmental responsibility has discussed

outcomes in terms of financial impact with empirical research on specific vertical markets. For

example, Perry and Towers (2013) outlined specific drivers of corporate social responsibility in

the fashion industry including customer preferences, trust in buyer-seller relationships, long-term

orientation of the firm, supply chain rationalization, and supply chain integration. On the other

hand, pricing pressure, product nature, labor intensity, retail buying practices, supply chain

complexity, and power distribution across the supply chain were identified as inhibitors of

corporate social responsibility. In the electronics industry, Bask et al. (2013) identified four

different clusters of customers with respect to preferences for sustainability features in the

selection of personal mobile phones in Finland.

The literature on corporate social responsibility, environmental responsibility, and the

3BL sustainability model has grown and evolved over the past twenty years. Since the early

2000’s, greater emphasis has been placed on a stakeholder based perspective of organizational

performance (Reich, 1998; Brown and Fraser, 2006). The overall goal of this paper is to provide
 a conceptual framework that demonstrates how development of industry specific 3BL metrics

can be implemented into corporate strategy to create competitive advantage. In addition,

propositions on the potential impact on corporate management as a catalyst in the diffusion of

3BL concepts and directions for future research are included in this article.

Literature Review

Today, many companies in the industrial market sector have adopted some sort of

sustainability framework to evaluate their performance in terms of financial, social, and

environmental dimensions, known as the Triple Bottom Line (3BL). 3BL dates back to 1997

when John Elkington coined the term (Elkington, 1997). Interest in the 3BL model has been
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growing rapidly across publicly traded companies as well as private and non-profit

organizations. Significant research has been conducted on 3BL theory and the impacts that the

financial, social, and environmental components of 3BL have on publicly traded companies.

Across all industrial markets, including supply chain management (SCM), the notion of

sustainability is receiving significant visibility at all levels of organizations.

In SCM, sustainability theory has evolved into an entirely new and separate stream of

research known as sustainable supply chain management (SSCM). SSCM is defined by Seuring

and Müller (2008) as:

The management of material, information, and capital flows as well as cooperation

among companies along the supply chain while taking goals from all three dimensions of

sustainable development, i.e., economic, environmental and social, into account which

are derived from customer and stakeholder requirements.

The common denominator with most SSCM models is 3BL. The initial idea behind the 3BL

paradigm is that a corporation’s ultimate success and/or long-term health can and should be
 measured, not by just the traditional financial bottom line alone, but also by its social and

environmental performance (Markley and Davis, 2007).

The Triple Bottom Line model is a framework for encouraging companies to become not

only sustainable in the long term, but also to be socially and environmentally responsible. Extant

research has shown that when companies add social and environmental components to their

assessment, these factors are often overshadowed by the financial dimension, financial

performance. A study by Quinn and Baltes (2007) found that 45 percent of surveyed leaders

were aware of the 3BL concept. Company leaders have found that the greatest obstacle to

overcome when implementing the triple bottom line outlook was the lack of understanding
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within the organization. Despite the aforementioned public sentiment towards corporate social

and environmental responsibility, the financial focus in most companies tends to take priority

over the other components of 3BL and leadership and organizational support tend to be

overlooked (Quinn and Baltes, 2007).

The first known public company to adopt the 3BL theory was Shell in 1998. Since that

time other prominent companies including Nike, Texaco, AT&T, IBM, Hewlett Packard, and

Dow Chemical have joined the triple bottom line movement. Corporate Social Responsibility

(CSR), a term that has many common components with 3BL, focuses on the idea that companies

need to be responsible for both financial and social outcomes for all stakeholders (Jamali, 2006).

Many companies have found that having a robust CSR program helps with both recruitment of

future employees and also the retention of intellectual capital (Quinn and Baltes, 2007).

However, as with most theoretical models, the 3BL sustainability model is not without

controversy. The controversy with the 3BL sustainability model is that the three separate

dimensions of the model cannot easily be quantified with similar metrics, meaning that it is
 problematic to measure the environmental and social impact in the same way financial data is

often collected and recorded. Based on the work by Carter and Rogers (2008) we concur with

the definition of the triple bottom line as the “strategic, transparent integration and achievement

of an organization’s social, environmental, and economic goals” for improving the performance

of the individual company. Limited research has shown there are three consistent advantages to

adopting this model: increased revenue and market share, increased employee retention, and

increased community support (Quinn and Baltes, 2007). The key challenges in adopting 3BL

strategies involve measurement of each construct and utilizing 3BL to gain a competitive

advantage in the marketplace.

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Financial Metrics of 3BL

The financial component of the 3BL focuses on different measurements of productivity

and return on assets for the company. For example, a manufacturing company may embark on a

lean manufacturing program that will reduce the cost of manufacturing through more efficient

use of resources. To be operationally sustainable, companies must engage in commercial activity

that generates enough income to support itself. Companies must also have clearly organized

financial inputs that equal or even exceed their outputs to be successful. Measurements that are

often used for financial measurement may vary by industry but often include EBITDA, ROA,

ROI and net sales (Markley and Davis, 2007). Financial success may also include variables such

as job growth, market share, and revenue by sector that contributes to the overall economy

(Slaper and Hall, 2011).

Environmental Metrics of 3BL

Past research indicates that the environmental dimension of 3BL should focus on the

firm’s impact on both living and non-living natural systems. This includes ecosystems, land, air,
 and water (Jamali, 2006). The notion of environmental sustainability, however, may have

different meanings to different industries. Environmental sustainability for a manufacturer may,

for example, be an entirely different model than for an industrial distributor in the supply chain.

Some environmental studies use the Toxic Release Inventory (TRI) scale as an indicator of

environmental performance (for example, Pagell and Gobeli, 2009), but most often the TRI data

reported is for emissions emitted during the manufacturing process. This, and similar

measurement instruments, are quite limited to only one link in the overall supply chain.

Just as the TRI scale is not a generalizable scale that can be used for all industries, other

scales have been developed to help measure environmental impact for other market sectors. For
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example, Grainger Industrial Supply, one of the largest companies in the industrial products

supply chain, in 2012 became the first industrial distributor to publicly disclose its carbon

footprint using the Carbon Disclosure Project (CDP). The CDP has developed a program

specifically for the supply chain industry to allow companies to capture the impact that the

reporting company is making on the environment.

Environmental metrics should represent measurements of the impact on natural resources

and the long-term sustainability of the firm (Slaper and Hall, 2011). Environmental

measurements can come from internal and external groups of stakeholders. In the United States,

the Environmental Protection Agency (EPA), advocacy groups, and the media have developed a

number of environmental indexes. The overall goal should be to identify and execute plans that

are sustainable for all stakeholders while creating a competitive advantage. Elkington (1998)

stated that in the world of business, environmental performance is increasingly seen as a

competitive and strategic issue for companies.

 Social Metrics of 3BL

When companies deliberate how to make a contribution to society, many consider ways

to contribute to their community that may include career retention, volunteerism, and charitable

contributions. Other measures of social impact can include employee education and training,

access to social resources, health and well-being of employees, the social performance of

suppliers, and social capital. According to Shell’s website, their social investment includes

support for community development projects, understanding local area needs, and addressing

any social and economic issues that are relevant to their business.

Norman and MacDonald (2004) state a small sample of data can be collected to develop
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the social report of a company. For example, companies can look at the diversity of their

company to see if there is a percentage of senior executives who are women, or a percent of

employees who are members of visible minorities. They can also look at the health and safety of

their company data. This may include the number of deaths in workplace per year, or the

percentage of employees who agree that their work place is safe and comfortable. One of the

most general measurements stated includes overall community involvement. This may include

the percentage of pre-tax earnings donated to the community or the existence of a policy

encouraging use of local contractors and suppliers (Norman and MacDonald, 2004). Companies

can open the door for dialogue and positive stakeholder relationships by engaging around the

community’s environmental and social impacts. By doing this, companies present themselves as

a good corporate citizen and partner to the community (Quinn and Baltes, 2007).

3BL and Competitiveness

A systematic review of literature by Carter and Easton (2011) reveals the evolution of

theories and research on sustainability over the last 20 years. Their research identifies several
 common theoretical lenses that have been used to focus on specific components of sustainable

supply chain concepts including stakeholder theory (Freeman, 1984), natural resource constraint

theory (Hart, 1995), brand equity theory (Flint and Golicic, 2009), and self-efficacy theory

(Brown, et al., 2000). In addition, resource-advantage theory provides a framework for

management in dynamic and competitive environments (Hunt 2000; Hunt and Davis, 2008).

One of the key trends in the literature has been the movement from research on specific social

issues, environmental issues, or economic performance toward models of integrated 3BL

paradigms.

A number of conceptual models have sought to integrate components of 3BL with little
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consensus in the literature. Carroll (1991) created a scorecard approach to identify stakeholder

groups including owners, customers, employees, community residents, competitors, social

activist groups, and the public at large in an effort to align corporate values with economic

mission. The scorecard quickly demonstrates the complexity of dealing with numerous

stakeholder groups. Carroll developed a corporate social responsibility pyramid with a sequence

of economic, legal, ethical, and philanthropic responsibilities. A key benefit of the pyramid was

to indicate that while the components of 3BL are distinct, taken together, they constitute the

overall area of consideration for managers.

Soon after Carroll developed the scorecard approach, Kaplan and Norton (1992)

developed what they called the Balanced Scorecard (BSC). This performance measurement

system was based on the stakeholder theory. The BSC model tried to incorporate financial

measures, market information, internal processes, and long-term learning and development

issues for a company or organization. It was during this same timeframe that the public and

media groups started to pay more attention to the responsibilities companies have to the
 environment and to the communities in which they reside. It was during this same time that

Elkington developed the 3BL model.

Kleine and von Hauff (2009) developed an integrative sustainability triangle that can be

used to evaluate the relative performance of an organization for each component of the 3BL.

Their work moved the discussion from a focus on economic performance to a normative measure

of corporate social responsibility utilizing a Gibbs triangle borrowed from the fields of

engineering and materials science. The result was an integrative sustainability triangle that

visualizes 3BL as a mixture of three components demonstrated in a two-dimensional medium.

While the results are intuitively appealing, the model relies heavily on accurate assessment of
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subjective topics across numerous stakeholder groups.

Hubbard (2009) expanded on the work of Carroll (1991), and Kaplan and Norton (1992)

by developing a Sustainable Balanced Scorecard (SBSC). Hubbard used this scorecard to capture

the environmental and social elements of sustainability, then further developed the scorecard

model by developing an Organizational Sustainable Performance Index (OSPI) in an attempt to

have a single sustainability indicator (Hubbard, 2009). This OSPI summarizes all the data in the

SBSC and then creates one single score for each category. While this single unit of measurement

is attractive, it fails to acknowledge the interdependence of each category.

We propose expanding the work of Carroll (1991), Kaplan and Norton (1992), and

Hubbard (2009) with a balanced scorecard design combined with an assessment tool that

demonstrates the interrelationship between factors in an attempt to develop corporate strategy

and gain a competitive advantage. By implementing the proposed model, organizations can also

determine the appropriate amount of resources to allocate to each component. The scorecard in
 Table 1 demonstrates a starting point for developing an appropriate scorecard that addresses key

stakeholder groups.

----------------------
Insert Table 1 about here
----------------------
Integration of the measured 3BL components is then accomplished through the

application of a three-dimensional model, as shown in Figure 1. By utilizing this model,

managers can determine 3BL performance for each component, and how each component factors

into the overall assessment. This model expands the results of the integrative sustainability

triangle into a three-dimensional representation of the results from the Modified Balanced
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Scorecard while maintaining the integrity of each component. The key advantage of this

visualization is that a trade-off assessment is not required and each component of 3BL can be

assessed with an overall score. Since economic, environmental, and societal outcomes are not

always quantifiable in financial terms, outcomes need to be addressed as individual components,

and then normalized for use in an overall assessment model.

----------------------
Insert Figure 1 about here
----------------------

Previous models of competitiveness and competitive advantage have evolved over time

(Porter, 1985; Kay, 1993; and Mintzberg, 1993). Moreover, Vilanova et al. (2009) provided an

updated model of competitiveness that includes performance, quality, productivity, innovation,

and image with an extensive discussion of tangible and intangible outcomes. During this time,

firms have learned to leverage ISO 9000 and ISO 14000 guidelines as an additional way to

achieve competitive advantage (Montabon et al., 2000; Pagell and Wu, 2009).
 Tate et al. (2010) demonstrated rapid growth in the number of firms attempting to

manage and influence stakeholder perceptions through publishing of corporate social

responsibility reports. The goal of this paper is to identify opportunities to gain competitive

advantage by integrating 3BL, in its entirety, with traditional sources of competitive advantage.

We propose a model that integrates the competitive view developed by Vilanova, et al. (2009)

using the 3BL model, in order to provide a strategic framework for managers. This model

embeds all 3BL components into the competitive framework and outlines potential areas of

strategy and influence as prescribed by Porter and Kramer (2006). Figure 2, as developed by the

authors, is a representation of the interrelationship between competitive forces, shareholders, and

Jnl of Bus & Indus Marketing 2016.31.

other stakeholders in the supply chain.

----------------------
Insert Figure 2 about here
----------------------

Competitiveness can be defined as the ability of a firm to create more stakeholder value

than its competitors (Wu, 2012). Corporate managers have the opportunity to influence

suppliers, employees, customers, and ROW through proactive engagement with each stakeholder

group. The framework of this model allows the manager to evaluate the perceptions, actions,

and potential future actions of each group. This would be consistent with the resource-advantage

view proposed by Bell et al. (2013) and dynamic capabilities identified by Reuter et al. (2010)

where the perceived state, actual state, and potential future state of resources and capabilities are

taken into consideration. Competitive forces will push shareholders to consider 3BL

opportunities as a point of differentiation.

Diffusion of 3BL Practices

 As firms seek to gain competitive advantage while managing multiple stakeholder

groups, 3BL practices may become integrated into overall corporate strategies. The diffusion of

these practices may vary by industry based on globalization, product specialization, labor

intensity of production and distribution, energy requirements, level of competitiveness, new

product innovation, and the availability of substitutes. The following propositions were

developed from the perspective of stakeholder management that addresses dynamic customer

expectations of value:

Proposition 1: Specific performance measures for 3BL assessment will be developed at the

industry level.
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Clearly, performance measures will vary depending on the industry. For example, environmental

output measures for a coal-fired power plant will be quite different than for an industrial

products distributor. Future research on vertical markets will provide insights for strategy

development and execution.

Proposition 2a: Firms in competitive industries will learn to leverage 3BL strategies based on

customer-driven choices.

Brand equity and corporate image will likely become critical components of competitiveness

with increased awareness and consideration of 3BL performance. As 3BL principles gain

exposure and extend to both the upstream and downstream sides of the supply chain, there will

be greater exposure on those companies who do not embrace 3BL principles. We believe that as

companies begin to understand the value of 3BL reporting measures, the downstream will drive

the upstream in the supply chain to continue to develop and embrace 3BL business practices.
 Proposition 2b: Regulatory agencies and special interest groups will likely drive the

integration of 3BL strategies for industries dominated by a few large producers or in

developing markets.

Regulatory efforts focused on customer activities will likely pull 3BL practices into markets

dominated by concentrated levels of competition. Regulatory guidelines on sustainable

development in emerging markets will also enhance the diffusion of 3BL practices.

Proposition 3: Competitive forces will drive integration of 3BL strategies into corporate

strategies and will likely occur more quickly in competitive industries.

Developing a competitive advantage in highly competitive markets will likely require more than
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economic outcomes as a result of influence from external and outside stakeholders. Social and

environmental corporate strategies will become increasingly important in developing competitive

strategy.

Challenges in Measurement

One of the primary reasons for controversy on the value of the 3BL sustainability model

is due to the difficulty in developing a set of standardized and accepted metrics. If financial

performance is measured in dollars, profit margin, or EBITDA, how would social capital or

environmental capital be measured and/or compared to this? There is simply no standard unit of

measurement for all three components of 3BL. As Bohringer and Jochem (2007) point out

“quantifying and comparing sustainability performance of industries across these domains has

continued to be problematic since each domain is a complex system in its own right with unique

parameters which must be analyzed individually and collectively.” Today, there are few

methods for normalizing data (to be able to compare the data), for weighting the data (to be able

to identify relational connections), as well as aggregation of the data (to understand the
 relationship). This sort of scientific modeling is necessary for the construction of a meaningful

sustainability development indices (Bohringer and Jochem, 2007).

Bohringer and Jochem (2007) analyzed eleven sustainability development indices to

determine their overall consistency and how meaningful the model was. What they found was

that there is a “high degree of arbitrariness without mentioning or systematically assessing

critical assumptions” and that most of these indices are “doomed to be useless if not misleading

with respect to concrete policy advice.” Today, with no central clearinghouse for the

establishment of 3BL measures, most of these metrics are determined by companies and/or their

industries, combined with associated stakeholders, employing the 3BL theory. We believe that,
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although there is no common assessment tool that can reach across all market segments, there are

opportunities for developing indices specific to industrial supply chain related companies.

To keep the measurement criteria symmetrical, we have selected performance categories

specific to each component of the 3BL sustainability model that best apply to companies

engaged in the industrial supply marketplace.

Financial. This unit of measurement is often very quantitatively based. Industrial supply chain

organizations often use year-over-year revenue performance, year-over-year gross margin

performance, EBITDA, and other economic dimensions to gauge the success of corporations.

Social. Some believe that the social dimension of sustainability is the most challenging of all

three components. Social dimensions can refer to individuals, communities, regions, or

organizations as a whole. The variables measured in this component may include elements of

health and well-being, education and training, employee volunteerism, quality of life, and other

measurements. For our model, we have patterned the social performance after that developed by

Hubbard (2009). There will be a measurement for company employee issues, a measurement for
 suppliers, a measurement for philanthropic efforts, and a measurement for community

involvement.

Environmental. The environmental component of sustainability should include processes and/or

procedures that allow for, or measure environmental engagement. These measurements may

include energy consumption, use of other natural resources, waste management, and other

environmental metrics. Arguably, the environmental component of sustainability has received

the most attention from researchers, as well as practitioners, and thus, a large percentage of the

sustainability literature is based on this dimension of the model (Lehtonen, 2004). One of the

leading environmental management systems in the world is the standard developed by the
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International Standards Organization (ISO), ISO 14000. The ISO 14000 family of policies

“provides practical tools for companies and organizations looking to identify and control their

environmental impact and constantly improve their environmental performance” (ISO 14000).

Developed in 1996, by 2005 over 36,000 ISO 14000 certificates had been issued to companies in

over 110 countries.

Application of the Model

Table 2 is an illustration of the application of how the data can be applied. Clearly, the

indicators to be used will vary by industry. The authors recognize that indicators may vary;

however, the goal of identifying specific measurement markers in this example is to outline a

conceptual framework for supply chain companies that will allow for consistent and equitable

measurement of 3BL metrics.

-----------------------------
Insert Table 2 about here
----------------------------
 As shown in Table 2, each category is weighted and then assigned a value of between 1

and 4, based upon the level of achievement. To allow for all stakeholders to provide input, each

category allows for shareholders, employees, customers, and ROW to provide input. Once these

scores are tabulated, a composite score is shown for each category, and then an aggregate score

can be generated based upon that date.

This data can then be plotted into a 3-dimensional chart as shown in Figure 3. This 3D

model demonstrates the interrelationship between each factor and can further demonstrate to

customers and clients how the company is performing in all three categories. This sort of

illustration can be very effective as a tool for competitive advantage in highly competitive
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industries. It will also expose areas that may need additional resources to improve performance.

------------------------------
Insert Figure 3 about here
------------------------------

Conclusion

Industry competitiveness, customer perceptions, employee perceptions, special interest

groups, and regulatory agencies will likely all play a role in the adoption of 3BL strategies.

Firms in competitive industries will likely see 3BL activities as opportunities to establish a

competitive advantage as demands from customer, employees, and external stakeholders provide

influence through purchasing activities, workforce loyalty, and public opinion. However, mere

adoption of a 3BL strategy at the corporate level means little if the strategy is not infused into the

entire organization. Ongoing 3BL research will need to examine the gaps between corporate

3BL strategies, and street-level operations.

The main contribution of this paper was to integrate the concepts and roles of

competitiveness with 3BL theory to propose changes in future strategic planning activities for
 practitioners and future research for academics. In particular, this paper illustrates the need to

move beyond a focus on the firm. Stakeholder theory provides a structure for identifying and

evaluating the perceptions of meaningful groups outside of the organization. Sustainable supply

chain management efforts will likely be measured across the entire value chain which brings us

back to the need for industry standards of performance. The need for government regulation

versus self-regulation will likely vary by industry. For example, in highly competitive

environments, firms will receive much more scrutiny from customers and end users than firms

operating in oligopolies or monopolies. In the long run, measures of firm-level performance

will become more meaningful to multiple stakeholder groups when evaluated against industry
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benchmarks.

Future research at the industry level would be useful for determining strategies and

assessments for firms operating in competitive industries versus oligopolies or monopolies. For

non-competitive industries, research on regulatory guidelines and success will be valuable for

establishing and enforcing public policy. Future research that integrates stakeholder theory and

resource advantage theory at the industry level will be especially important. Industry-specific

metrics to assess 3BL activities will be critical to establish future models and theories of

structure, conduct, and performance.

It is likely that future strategic planning will treat 3BL opportunities as complementary

rather than trade-off components of innovation, productivity, quality, performance, and corporate

image. Hewlett-Packard’s sustainability strategy, for example, has evolved over the years from a

simple pollution control program to a program that now assumes full responsibility for the entire

life-cycle of a product, from suppliers to customers (Preston, 2001). The diffusion of 3BL

practices at the street-level of any business will be driven by supply chain managers through
 supplier selection and assessment activities, consumers voting with their wallets, and regulatory

agencies exerting influence on companies in the future. Consistent with Pagell and Shevchenko

(2013), we propose that the ultimate indicator of success will be when we no longer treat 3BL as

secondary activities or efforts to meet regulatory requirements, but as consequences of firm

strategies and performance.

Sustainability issues are an increasingly important issue across the supply chain.

Industrial supply companies report specific environmental and social metrics on their annual

reports and web sites as if to say to customers and other stakeholders that they are engaged in the

process. However, until we have some systematic method of measuring and/or comparing the
Jnl of Bus & Indus Marketing 2016.31.

data, it will likely continue to be a marginalized tool for competitive advantage.

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 Table 1
3BL Modified Balanced Scorecard (MBS) for key stakeholder groups

Supply Chain Sustainability Index

Share - Re s t of Composite
Employee s Customers
holders World Scores
Economic
YOY Revenue Growth
YOY Gross Margin
Growth
EBITDA
Return on Assets
Aggregate Score
Environmental
Carbon Disclosure
Jnl of Bus & Indus Marketing 2016.31.

Project Score
Environmental Perform. of
Suppliers
Material Usage/Waste
Aggregate Score
Social
Employee Satisfaction
Community
Support/Involvement
Charitable Contributions
Social Performance of
Suppliers
Aggregate Score
 Table 2
Hypothetical model of the MBS. The aggregate scores are then plugged into the model shown in
Figure 3

Supply Chain Sustainability Index

Share - Re s t of Composite
Employee s Customers
holders World Scores
Economic
YOY Revenue Growth 4 4
YOY Gross Margin
3 3
Growth
EBITDA 2 2
Return on Assets 3 3
Aggregate Score 3.00
Environmental
Jnl of Bus & Indus Marketing 2016.31.

Carbon Disclosure 4 2 3 2 2.75

Project Score
Environmental Perform. of
3 1 2 2 2
Suppliers
Material Usage/Waste 4 2 3 3 3
Aggregate Score 2.58
Social
Employee Satisfaction 4 2 4 4 3.5
Community
4 4 4 4 4.0
Support/Involvement
Charitable Contributions 4 3 4 4 3.75
Social Performance of
3 3 3 3 3
Suppliers
Aggregate Score 3.56
 Figure 1
3BL Interrelationship Model to Evaluate Opportunities and Performance
Jnl of Bus & Indus Marketing 2016.31.
 Figure 2
Competitive Forces and the Diffusion of 3BL Practices
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 Figure 3
Hypothetical 3BL Interrelationship model using MBS data
Jnl of Bus & Indus Marketing 2016.31.

Acknowledgments:

The authors would like to acknowledge, and thank, the program partners of the Industrial
Distribution program at the University of Nebraska at Kearney who helped provide research
funding for this project.

Author Biographies:

Dr. Schulz is an Assistant Professor at the University of Nebraska at Omaha, teaching in the
areas of logistics management and supply chain management. He earned his Ph.D. at the
University of Nebraska-Lincoln and has over twenty years of industry experience.
 Dr. Flanigan is an Assistant Professor at the University of Nebraska at Kearney (UNK). He has a
wide range of research interests in small business management, specifically relating to leadership
and sustainability issues in the industrial market place. He earned his Ph.D. from Utah State
University. He spent over 25 years in the Industrial Distribution/Supply Chain industry before
joining the UNK faculty in 2011.
Jnl of Bus & Indus Marketing 2016.31.