"The influence of collaboration and decision-making in sustainable

supply chain management: a case study analysis on Skechers USA Inc. "

Guerrouj, Kaoutar ; Martin, Nadia

ABSTRACT

This paper aims at discussing two elements, which contribute to greater sustainable supply chain
management (SSCM), namely collaboration and decision-making. SSCM is a relatively recent concept,
ranging from the three pillars of sustainability to the management of supply chains, that is starting to
become a priority in many organizations, both from a social awareness standpoint but also from a
governmental standpoint. In fact, consumers are becoming increasingly empowered and identify much
more with the brands they purchase and the company’s sustainability is starting to be mandated. Based on
a literature review and a case study of Skechers USA Inc., including semi-structured interviews of several
persons across lower and upper management, this paper examines a real-life example of collaboration
with stakeholders and ethical decision-making in a supply chain and more specifically in the retail industry.
This paper provides a background to better understand how collaboration and decision-making are linked
and how they influence the network and SSCM of a company. The research allowed us to identify means
that are internal and external to the network and that positively influence the collaboration between a
company and its partners. The findings of the study suggest that managers should continue to take actions
towards more collaboration, and collaboration between lower and top-management should be improved to
achieve effective decision-making. Particular attention should be paid to stakeholders' demands, actions
and processes.

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Guerrouj, Kaoutar ; Martin, Nadia. The influence of collaboration and decision-making in sustainable supply
chain management: a case study analysis on Skechers USA Inc.. Louvain School of Management, Université
catholique de Louvain, 2016. Prom. : Ehnert, Ina. http://hdl.handle.net/2078.1/thesis:4011

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 UNIVERSITE CATHOLIQUE DE LOUVAIN

LOUVAIN SCHOOL OF MANAGEMENT

The influence of collaboration and decision-making in sustainable supply chain management: a case
study analysis on Skechers USA Inc.

Supervisor: Prof. Ina Ehnert Research thesis presented by

GUERROUJ Kaoutar
MARTIN Nadia

Towards obtaining the title of

Master in Management

ACADEMIC YEAR 2015-2016



Abstract
This paper aims at discussing two elements, which contribute to greater sustainable
supply chain management (SSCM), namely collaboration and decision-making. SSCM is a
relatively recent concept, ranging from the three pillars of sustainability to the
management of supply chains, that is starting to become a priority in many
organizations, both from a social awareness standpoint but also from a governmental
standpoint. In fact, consumers are becoming increasingly empowered and identify much
more with the brands they purchase and the company’s sustainability is starting to be
mandated.

Based on a literature review and a case study of Skechers USA Inc., including semi-
structured interviews of several persons across lower and upper management, this
paper examines a real-life example of collaboration with stakeholders and ethical
decision-making in a supply chain and more specifically in the retail industry.

This paper provides a background to better understand how collaboration and decision-
making are linked and how they influence the network and SSCM of a company. The
research allowed us to identify means that are internal and external to the network and
that positively influence the collaboration between a company and its partners.

The findings of the study suggest that managers should continue to take actions towards
more collaboration, and collaboration between lower and top-management should be
improved to achieve effective decision-making. Particular attention should be paid to
stakeholders' demands, actions and processes.


We would first like to thank our thesis advisor, Mrs. Ina Ehnert for her time and her
advice.

We would also like to thank every Skechers’ employee who agreed to meet us and took
their time to answer our questions, giving us considerable input for the fulfilment of our
thesis.

We would also like to thank Georgie Barber and Nina Vafaie; for taking on their time to
proofread our work

We would like to thank our family for their support and their continuous
encouragement during the realisation of this work.

Finally, we would like to express our gratitude to everyone, who directly or indirectly,
took part in the realisation of our work.

 I.

1 Introduction ............................................................................................................................... 1
1.1 Research project ............................................................................................................................. 5

2 Literature review ..................................................................................................................... 6

2.1 Sustainable Supply Chain Management .................................................................................. 6
2.1.1 Sustainability .............................................................................................................................................. 6
2.1.2 Green Supply Chain Management ...................................................................................................... 8
2.1.3 Sustainable Supply Chain Management .......................................................................................... 8
2.1.4 Corporate Social Responsibility practices in supply chains ................................................. 10
2.2 Cooperation/collaboration ....................................................................................................... 12
2.2.1 Importance of collaboration .............................................................................................................. 12
2.2.2 Influencing the collaboration ............................................................................................................ 13
2.2.3 Outcomes of collaboration .................................................................................................................. 14
2.2.4 Actors in the collaborative network ............................................................................................... 16
2.3 Decision-making ........................................................................................................................... 16
2.3.1 Unethical decision-making ................................................................................................................. 16
2.3.2 Influencing the decision-making process ..................................................................................... 18
2.3.3 Paradoxes and dilemmas in decision-making ............................................................................ 21
2.4 Theoretical framework .............................................................................................................. 24
2.5 Propositions ................................................................................................................................... 24

3 Methodology ............................................................................................................................ 28
3.1 Research design ............................................................................................................................ 28
3.2 Data collection ............................................................................................................................... 31
3.2.1 Primary data ............................................................................................................................................. 31
3.2.2 Secondary data ......................................................................................................................................... 33
3.3 Data Analysis .................................................................................................................................. 34

4 Case study ................................................................................................................................. 35

4.1 Describing the situation ............................................................................................................. 35
4.1.1 Company overview ................................................................................................................................ 35
4.1.2 The Footwear industry ......................................................................................................................... 37
4.2 Cooperation at Skechers ............................................................................................................ 39
4.2.1 CSR actions ................................................................................................................................................ 40
4.2.2 Cooperation among employees ........................................................................................................ 42
4.2.3 Creation of a network ........................................................................................................................... 45
4.3 Decision-making at Skechers ................................................................................................... 55
 II.

4.3.1 Hierarchy .................................................................................................................................................... 55

4.3.2 Influencing the decision-making process ..................................................................................... 55
4.3.3 Paradoxes and dilemmas ..................................................................................................................... 64
4.4 Skechers supply chain ................................................................................................................ 65
4.4.1 Social concern ........................................................................................................................................... 65
4.4.2 Environmental concern ........................................................................................................................ 66
4.4.3 Economic concern .................................................................................................................................. 66
4.5 Discussion ....................................................................................................................................... 68

5 Conclusion ................................................................................................................................ 76
5.1 Limitations ...................................................................................................................................... 78
5.2 Recommendations ....................................................................................................................... 78
5.3 Future research ............................................................................................................................. 79

6 Bibliography ............................................................................................................................ 80

 1.

1 Introduction

There has been a growing concern for sustainability in both the business and the
scientific communities (Gimenez, Tachizawa, 2011). Customers are increasingly
cautious about corporate social responsibility when making their purchasing decisions
(Beske, Seuring, 2014). They care about the company’s reputation, and that the
company’s products should be environmentally friendly and socially conscious (Walker
et al., 2008). The company’s stakeholders are increasingly attentive to organizations'
management of environmental and social issues (Carter & Easton, 2011).

The integration of sustainability in the supply chain is a key concern in academic

literature but also in managerial practices (Brandenburg & Rebs, 2015). By
implementing a sustainable supply chain management (SSCM), companies seek to
improve their sustainability performance, and to comply with sustainability guidelines
(Beske & Seuring, 2014). These practices are intended as long-term changes (Ahi &
Searcy, 2013) that can develop gradually within the company (Beske & Seuring, 2014).
Organizations are now facing external pressures and incentives from various groups,
including governments, customers, non-governmental organizations, and other
stakeholders (Hassini et al., 2012; Large & Gimenez Thomsen, 2011; Seuring & Müller,
2008; Sharfman et al., 2009; Walker et al., 2008). Therefore, the importance of
sustainability as a strategic concern is growing, as customers and stakeholders take
greater interest in a company’s environmental impact (Sharfman et al., 2009).

Studies have noted positive links between an organisation’s environmental actions and
its performance (Wu & Pagell, 2011; Walker et al., 2008). Pagell and Wu (2009) also
consider the ability to be innovative as a necessity for a successful SSCM. Gimenez and
Tachizawa (2011) note that companies that implement supplier assessment tools, codes
of conduct, or collaboration with suppliers as standard practice enjoy a more
responsible supply chain. Pagell and Wu (2009) have identified practices that work as
enhancers (for example; measurement and reward systems linking employees’
behaviour to sustainability, performing well on traditional operational metrics,
proactive and committed organizations with a business model aligned with
environmental and social factors of sustainability) or as inhibitors (performing poorly
on traditional operational metrics) of sustainable outcomes.
 2.

Not all authors see environmental supply actions as utterly beneficial, as they consider
them with scepticism or as “greenwash” actions and PR exercise (Walker et al., 2008).
Indeed, as a result of the growing importance of environmental issues in the mind of the
customers, these actions can be seen as a means to increase the company’s publicity in
order to win over new customers (Walker et al., 2008).

The current challenge for organizations is to manage the trade-off between running a
viable business and not compromising the natural environment in the future (Wu &
Pagell, 2011; Zhu, Sarkis, & Lai, 2008). Making choices about the environment leads
organizations to operate in a dynamic setting, facing “information uncertainty, evolving
decision parameters and changing decision boundaries” (Wu & Pagell, 2011, p. 577).
This uncertainty and risk arising from the trade-off between short-term profitability and
long-term environmental sustainability results in a complex and ambiguous situation
(Wu & Pagell, 2011).

However, academic literature increasingly studying the cooperation within the supply
chain (Frostenson & Prenkert, 2014; Gimenez & Tachizawa, 2011) and shifting
perspectives of SSCM to a sustainable supply network and as a major element of the
sustainable approach (Frostenson & Prenkert, 2014). Sustainability should be
considered at different levels of a company (Frostenson & Prenkert, 2014) since
stakeholders ask more and more for company responsibility in both working conditions
and production circumstances (Park & Rees, 2008).

Supply chain management was originally linked to environmental management in order

to improve economic performance, and finally grew into SSCM (Beske & Seuring, 2014).
In Seuring and Müller’s (2008) definition of SSCM, information sharing between
stakeholders is key for the serious management of a sustainable supply chain.
Stakeholders are commonly defined as “any group or individual who can affect, or is
affected by, the achievement of the organization’s objectives” (Wu & Pagell, 2011, p.
577). Cooperation between the various elements of the supply chain is then a key
element for overall management and performance.

In order to consider the organisation with its new boundaries, i.e. every person who
impacts or is impacted by the organisation’s actions (Park & Rees, 2008), more
collaboration is necessary and, as stated by Alexander et al. (2014), more collaboration
asks for more important and consistent decision-making processes.
 3.

For Beske and Seuring (2014), there are indications that changes have to be made in the
supply chain and in the way it is managed in order to achieve an improvement in
sustainability performance. The implementation of a sustainable supply chain implies
the consideration of a larger part of the supply chain such as nongovernmental agencies
(NGOs) or competitors (Pagell & Wu, 2009). Therefore, Pagell and Wu (2009) suggest
that the supply chain should be reviewed in order to include the non-traditional
stakeholders. Beske and Seuring (2014) have identified SSCM practices as falling into
five distinct categories; orientation, continuity, collaboration, risk management, and
proactivity. However, Beske and Seuring (2014)'s paper is only theoretical; further
empirical research is required in order to test some features of the framework in a
practical context.

Out of the five categories represented in Figure 1, we chose to focus on collaboration.

Indeed, it is essential for a company to build partnerships in the supply chain and a
means to achieve this is collaboration (Lim & Phillips, 2008). As Nike’s example
demonstrates, building socially responsible partnerships without collaboration will only
lead to failure (Lim & Phillips, 2008).

Figure 1: SSCM practices

Source: Own elaboration based on Beske and Seuring (2014)

Moreover, the growing concern for sustainability resulted in questions about how it
should be integrated into an organization’s level of decision-making. For Alexander et al.
(2014), due to the importance of collaboration for a successful SSCM, decision-making
processes between the firms of a same supply chain are important. Global organisations
present in different cultural contexts should use ethical decisions-making processes to
manage and reduce risks (Collier & Esteban, 2007), but the different decision contexts
 4.

also ask for different decision-making methods (Alexander et al., 2014). Furthermore,
Vachon and Klassen (2008) noticed that joint planning and environmentally related
decision-making can be forms of collaboration.

Consequently, collaboration and decision-making should be seen as two complementary

elements. There has been little research done to show the consequences of necessary
conditions or specific management style (i.e. purchasing power, governance
mechanisms or collaboration) in the supplier-customer relationship and if this
relationship would impact the influence of supply requirements that are related to the
environment (Simpson et al., 2007).

Furthermore, considering Skechers USA Inc., involvement in social and environmental

matters, along with their leading position on the market and high number of
stakeholders, we decided to base this study on Skechers USA Inc., henceforth referred to
as Skechers. Skechers is a company active in the footwear and apparel industry since its
incorporation in 1992. Since then, the company has become a major player on both the
national and international stage. We chose this industry because of our genuine interest
in the complexity of retail supply chains as well as the contemporary challenges faced by
retailers. Moreover, only a few studies examine the role of a major customer in a supply
chain (Simpson et al., 2007) therefore Skechers will be studied as part of this thesis.

Skechers has demonstrated extraordinary development over the last decade, reaching
second place for the best performance footwear brand in the United States. The
company shows tremendous drive, determination and hard work in this race and aims
to catch up to its number one competitor, the giant Nike Inc. Most importantly, through
diverse corporate social responsibility actions, Skechers is strongly invested in helping
and contributing positively to the community. The brand’s popularity is also increasing
sharply, particularly through its collaboration with high-profile athletes and celebrities.

In 2012, Skechers distribution centre in California was the largest facility in the U.S.
awarded with the LEED Gold, a certification for trade facilities evaluated in terms of
sustainability performance, water and energy efficiency, use of resources and innovation
(LEED stands for Leadership in Energy & Environmental Design) (Clay, 2013). It was
rewarded for its outstanding environmental standards compliance and for the most
state-of-the-art sustainable development of its field. Skechers shows commitment to
developing its activities in a sustainable manner (Clay, 2013).
 5.

Moreover, CEO Michael Greenberg was ranked 17th best US CEO at a mid-cap company
(Skechers was the only footwear company in the top 20) by the social-network platform
ExecRank based on experience, professional success and reputation, business outcomes,
and earnings progress (Butler-Young, 2015).

With Skechers’ numerous international partners in all regions of the world, a good
management of their supply chain is crucial in their growth if issues such as the ones
faced by their competition presently or in the past (i.e. sweatshops) want to be avoided.
From all of the above, Skechers appears to be taking measures towards the
sustainability of its supply chain and this is why we chose them.

1.1 Research project

Beske and Seuring (2014) identified five SSCM practices, including collaboration.
However, their paper is only theoretical, leading us to bring a concrete example on these
practices. This thesis aims to examine collaboration practices and to better
understanding the link between collaboration and decision-making, as a supply chain
must be adapted to become more sustainable.

The academic literature on SSCM emphasizes the importance of collaboration in the

current organizational world, but also the importance and the complexity of decision-
making. Both are related: collaboration cannot be achieved without making decisions,
and decision-making is made more complicated through the development of a
collaborative network. Therefore, the research purpose is to understand how those two
elements are related and influence the SSCM. With this research we seek to understand
the link between collaboration, decision-making and the SSCM of a company.

Accordingly, our research question is “how are collaboration and decision-making

influencing each other to impact the SSCM of a company and its network?"

This paper analyses collaboration and decision-making processes occurring within an

organisation, and more specifically within Skechers. The study is based on three sources
used to build a case study. First, a literature review on SSCM, collaboration and decision-
making leading to propositions and limiting the scope of the research. Secondly, primary
data collected through semi-structured interviews of managers at Skechers head offices
in Manhattan Beach (California). Finally, we used data that could be found on the
Internet or at Skechers head office.
 6.

This research project is presented as follows: first, a literature review covering the
subjects of sustainable supply chain management, collaboration and cooperation, and
decision-making is presented. This section ends with the various related propositions
that we sought to answer with this paper. Second, the methodology used for this
research is described, followed by a case study presenting our results. Finally, in the
discussion, our results are put in relation with our propositions and our main
conclusions and limitations of this study are highlighted.

2 Literature review

2.1 Sustainable Supply Chain Management

According to Andersen and Skjoett-Larsen (2009) SCM is becoming increasingly

important in the strategy of an organization as competition is shifting towards the
supply chains. Through the maintenance of a close and durable relationship with
suppliers, a strong competitive advantage can be achieved (Andersen & Skjoett-Larsen,
2009). This topic will be more closely discussed later in this paper.

In the past, SCM theory dealt principally with integrating processes, cost-efficiency and
customer service. Today, increasing attention is shown to environmental and social
challenges related to international business (Andersen & Skjoett-Larsen, 2009). The
need for making environmentally responsible decisions while managing a supply chain
is growing (Srivastava, 2007).

Hassini et al. (2012, p. 70) defines supply chain as “all parties involved in fulfilling a
customer order” and supply chain management as “the control of the supply chain
operations, resources, information and funds in order to maximize the supply chain
profitability or surplus—the difference between the revenue generated from a
customer’s order and all the costs incurred by the supply chain while satisfying that
customer’s order”.

2.1.1 Sustainability
The World Commission on Environment and Development (1987, p.16) defines
sustainability as “development that meets the needs of the present without
compromising the ability of future generations to meet their needs”. According to
Santillo (2007), this definition states the interrelation between the three pillars of
 7.

sustainability, namely economic, social and environmental. However, companies have

difficulties interpreting this definition and taking actions accordingly (Carter & Rogers,
2008; Gimenez & Tachizawa, 2011). Therefore, a large number of definitions have
emerged, particularly in the field of environmental management. This has led to
different perceptions of the concept of the three pillars of sustainability, and has become
a way of meeting corporate interests while pretending to be environmentally friendly
(Santillo, 2007).

According to Hahn et al. (2015, p.5), “sustainable development represents a normative

concept outlining desirable development paths of societies” and is increasingly catching
managers’ attention. Similarly, Hassini et al. (2012) (p.70) define business sustainability
as "the ability to conduct business with a long term goal of maintaining the well-being of
the economy, environment and society". As the productive ability of the economy,
business is at the core of sustainable development, which has in turn generated the
concept of organizational sustainability (Hahn et al., 2015).

The SSCM literature commonly defines sustainability as “the extension of economic

aspects by social and environmental factors to the triple bottom line” (Brandenburg &
Rebs, 2015, p. 214). This means that supply chains are impacted externally by
governmental actions, customer markets and various stakeholders (Seuring & Müller,
2008; Brandenburg & Rebs, 2015). However, sustainability is often associated only with
environmental issues, when it is necessary to integrate all three dimensions, i.e.
environmental, economic and social (Seuring & Müller, 2008), but recent years have
seen the relevance of environmental concern decreasing while studies of social
sustainability have faced a strong growth (Brandenburg & Rebs, 2015). To promote a
sustainable future, we must return to the initial definition, which includes all three
dimensions (Santillo, 2007).

Indeed, “although ‘sustainability’ can refer to a firm’s capacity to effectively manage

natural and environmental resources, we use the term more broadly to encompass the
organization’s capabilities to also cultivate human, financial, and organizational
resources” (Smith et al., 2011 p.799). There are three separate dimensions to
sustainability; but organizational sustainability goes further than the triple bottom line
by responding to mutually dependent economic, environmental or social concerns
(Hahn et al., 2015). Sustainability is characterized by plurality; earnings are usually
 8.

prioritized over the two remaining dimensions (Hahn et al., 2015). However, meeting
the request of various stakeholders is also a priority (Hahn et al., 2015). In fact, social
and financial objectives can be mutually beneficial (Smith et al., 2011).

2.1.2 Green Supply Chain Management

GSCM can be defined as a combination of the following practices: green purchasing,
manufacturing/materials management, distribution and marketing, and reverse logistics
(Kumar et al., 2012). It encompasses programs developed to “green” suppliers’ practices
or to make supply guidelines more environmentally oriented (Simpson et al., 2007).

According to Seuring and Müller (2008), Green Supply Chain Management (GSCM) is one
of the three major topics of SCM, along with the economic and social dimensions. The
objective of GSCM is to reach an optimized value chain through material and information
flows (Kumar et al., 2012), but also to reduce waste (Tachizawa et al., 2015). It consists
of managerial decisions being more ecologically and socially focused (Kumar et al.,
2012), and in the desire to improve the environmental performance of a firm’s suppliers
and customers by integrating environmental issues into a SCM (Large & Gimenez
Thomsen, 2011).

Green supply chain management affects the company beyond its boundaries and calls
for collaboration between partners within a supply chain (Srivastava, 2007). The
impetus behind implementing GSCM is not only environmental protection, but also
reputation, business value and regulation (Srivastava, 2007). Green initiatives are
aimed at saving resources, reducing waste and improving productivity (Andersen &
Skjoett-Larsen, 2009; Kumar et al., 2012). They can also lead to costs reductions and to
increased efficiency and flexibility (Kumar et al., 2012).

2.1.3 Sustainable Supply Chain Management

Sustainable supply chain management refers to an environmental strategy applied to
supply chain management. The widely used Al-Odeh and Smallwood (2012) definition of
SSCM is: “the process of managing SCM activities with consideration for environmental,
economical and social issues for enhancing the long term economic goals of an
individual organization and its supply chains”. A recent definition of SSCM is “The
creation of coordinated supply chains through the voluntary integration of economic,
environmental, and social considerations with key inter-organisational business
systems designed to efficiently and effectively manage the material, information, and
 9.

capital flows associated with the procurement, production, and distribution of products
or services in order to meet stakeholder requirements and improve the profitability,
competitiveness, and resilience of the organization over the short- and long-term” (Ahi
& Searcy, 2013, p. 339).

Lean manufacturing, the procedure of waste reduction in the fabrication process, is

among the first strategies to have carried out environmental objectives to avoid
unnecessary waste and lower the cost of managing pollution, while improving the
quality of the production (Al-Odeh & Smallwood, 2012). According to Al-Odeh &
Smallwood (2012), an activity that allows implementing a sustainable production and
reduces the production costs is reverse logistics: it deals with the end of life of a product
and the management of returns. In other words, that activity closes the loop; returns
should not be managed by one department of the supply chain only but by the entire
supply chain in reverse, from the end consumer to the supplier of raw materials
(Andersen & Skjoett-Larsen, 2009). Reverse logistics is concerned by the management of
products’ end of life and the different decisions resulting from it (i.e. recycling, re-
manufacturing, fixing, and dealing with used pieces) (Govindan, Soleimani, & Kannan,
2015).

A strategy such as SSCM will create new opportunities for companies; reducing
environmental risks, pollution and costs is aimed at improving the performance of the
organization and gaining a competitive advantage (Al-Odeh & Smallwood, 2012). For
Kumar et al. (2012), sustainability brings the company various advantages including
costs saving, increased efficiency, and new customers and suppliers. It can also create a
competitive advantage and resulting profits.

The barriers to SSCM are the cost of environmental actions; and lack of management,
human resource, awareness, regulation, corporate environmental standards,
competition and fluctuating market demands (Al-Odeh & Smallwood, 2012). For Hassini
et al. (2012), a SSCM leads to more difficult to satisfy, even conflicting, goals. Other
challenges include handling multiple decision makers, and evaluating environmental
impacts and social benefits in the supply chain with numerous parties (Hassini et al.,
2012)

Carter and Rogers (2008) identified four elements that can be regarded as supporting
SSCM. The first, strategy, refers to deliberately determining individual SSCM initiatives
 10.

that are consistent with the organisation’s wider sustainability strategy (Carter & Roger,
2008). The second is risk management for the whole supply chain (upstream and
downstream), and the third is an organisational culture with excellent ethical standards,
organisational citizenship, and consideration for the society and natural environment
(Carter & Roger, 2008). The final element is the transparency in communication with
major stakeholders along with traceability and visibility into the supply chain activities
(Carter & Roger, 2008).

According to Silvestre (2014), sustainable supply chains perform systematically well on

environmental, financial and social dimensions. Every step of the supply chain should
consider, measure and/or control those three dimensions; otherwise the supply chain is
considered unsustainable (Silvestre, 2014). Moreover, the collaboration between the
members of the supply chain is of utmost importance, as it encourages innovation and
improved sustainability performance (Silvestre, 2014), as well as environmental
performance (Tachizawa et al., 2015). Collaboration is also needed with external
stakeholders because they are a source of risk (Silvestre, 2014). However, Tachizawa et
al. (2015) view risk management as a tool for monitoring actions while collaboration,
seen as a complement, is used to improve environmental performance (Tachizawa et al.,
2015). While collaboration with external stakeholders and other members of the supply
chain is important, the collaboration within the company should not be forgotten
(Silvestre, 2014). GSCM concerns all departments and crosses boundaries within and
between organisations (Zhu, Sarkis & Lai, 2008). It is just as important to maintain good
cooperation and communication within a company in order to achieve a successful
environmental management (Zhu, Sarkis & Lai, 2008).

2.1.4 Corporate Social Responsibility practices in supply chains

According to Andersen and Skjoett-Larsen (2009), CSR is a broad and largely described
concept leading to a variety of definitions. As the concept continues to change, it has
begun to encompass the entire supply chain and become more than an individual
company’s concern (Andersen & Skjoett-Larsen, 2009). CSR can be characterised as the
organisation’s actions and position regarding its obligations towards stakeholders
(Costa, Lages, & Hortinha, 2015). Multinational companies are expected to behave well
throughout the entire supply chain, and are also held responsible for third parties
behavior (Andersen & Skjoett-Larsen, 2009).
 11.

From internal and external stakeholders comes pressure in terms of product quality,
delivery time, working conditions and environmental consequences (Andersen &
Skjoett-Larsen, 2009). The amount of information available to customers and
stakeholders has made it difficult to hide unethical practices. Many multinationals have
responded to the pressure of stakeholders to ensure their suppliers meet the
expectations and comply with the environmental standards (Andersen & Skjoett-Larsen,
2009). Some well-known cases of companies that have come under attack for unethical
practices are NIKE, GAP, H&M, Walmart etc. (Andersen & Skjoett-Larsen, 2009).

The most widely used approach is the code of conduct, which is “a document stating a
number of social and environmental standards and principles that a firm’s suppliers are
expected to fulfill” (Andersen & Skjoett-Larsen, 2009, p.78). The code of conduct is
increasingly introduced in contracts between a buyer company and its suppliers
(Andersen & Skjoett-Larsen, 2009) and the objective is to guide behaviours (Collier &
Esteban, 2007). It is typically based on the values the firm wishes to be associated with
and its principles are often derived from local legislation and international conventions
such as the UN’S Global Compact, ISO 14001, ILO Declaration on Fundamental Principles
and Rights at Work etc. (Andersen & Skjoett-Larsen, 2009). Moreover, codes of conduct
are a way managing ethics (Pimentel et al., 2010) and building collaboration through
shared policies and common objectives. (Vachon & Klassen, 2008). But not all observers
have a positive attitude towards codes of conduct, considering them to be ineffective as
they cannot be enforced in the same way as legal requirements, and are not drafted in
response to the needs of the employees (Andersen & Skjoett-Larsen, 2009). Moreover,
proof exists that codes are not always integrated into the company’s practices (Collier &
Esteban, 2007).

More and more organizations are adopting practices to incorporate sustainable

practices into their supply chain but very few corporations manage to implement a truly
sustainable supply chain (Andersen & Skjoett-Larsen, 2009; Pagell & Wu, 2009). For the
staff to follow CSR demands, it requires motivation and commitment to take actions but
this cannot be forced (Collier & Esteban, 2007). Besides the difficulty of implementing
CSR, Collier and Esteban (2007) consider it to be a necessity, especially for transnational
companies that should be responsible of their actions and influence on all their
 12.

stakeholders. It should however be used correctly as CSR actions that are not related to
the business strategy are judged as cosmetic (Costa, Lages, & Hortinha, 2015).

2.2 Cooperation/collaboration

2.2.1 Importance of collaboration

Companies are becoming increasingly aware that customers, and stakeholders in
general, do not make the distinction between a company and its partners (Large &
Gimenez Thomsen, 2011). Consequently, the company should often respond to any
charge of environmental damage, be it the focal company’s, (i.e. the company directing
the supply chain, possessing bargain power over the other members of the supply chain,
and working with end consumer) or its partners’ responsibility, and must act
responsible for the environmental performance of the whole network (Large & Gimenez
Thomsen, 2011). Moreover, new activities related to SCM, consequences of the evolution
of environmental management, are not limited to the boundaries of the organisation
(e.g. green purchasing, reverse logistics, and product stewardship) and call for
interaction with the other members in the supply chain (Vachon & Klassen, 2008).

The importance of cooperation between the actors of the supply chain has been
thoroughly discussed in academic literature on the subject (e.g. Beske & Seuring, 2014;
Frostenson & Prenkert, 2014; Pagell & Wu, 2009; Seuring & Müller, 2008, Simpson et al.,
2007; Vachon & Klassen, 2008). Collaboration is defined as “working directly with
suppliers providing them with training, support or other activities” (Gimenez &
Tachizawa, 2011, p. 533). For Beske and Seuring (2014), collaboration in the supply
chain allows inter-organisational learning and can therefore be understood as
cooperation in the long term. For this paper, we will consider cooperation and
collaboration as synonyms.

According to Frostenson and Prenkert (2014), there is a need to work closely with
suppliers, but the other actors of the supply chain may also be crucial in the approach of
sustainability. Seuring and Müller (2008) consider SSCM 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” (Seuring & Müller, 2008, p. 1700). Meanwhile, Ahi and Searcy (2013)
define SSCM as a coordinated supply chain that integrates the three dimensions (i.e.
 13.

economic, environmental, and social) with inter-organisational business systems.

According to them, coordination is highly important in the implementation of a SSCM.
Moreover, it is essential to work closely with suppliers and their own suppliers, and
with customers and their own customers in order to reach the full capacity of green
supply chain (Kumar et al., 2012). The classical interpretation of the supply chain should
be extended to integrate a larger range of stakeholders (Kumar et al., 2012). However,
Vachon & Klassen (2008) found out that collaboration with suppliers is more effective
than collaboration with customers as it resulted in a broader range of benefits (i.e.
increased quality, delivery, flexibility and environmental performance). Simpson et al.
(2007) recognise the possibility of the connection between customers and suppliers in
affecting the environmental performance of supply chains and Tachizawa et al. (2015)
consider collaboration as positively influencing environmental performance and as a
means to enhance sustainability.

2.2.2 Influencing the collaboration

Seuring and Müller (2008) think of coordination efforts as a barrier to the
implementation of SSC. Beske and Seuring (2014) see trust as an additional barrier for
collaboration. Seuring and Müller (2008) also concluded that a focal company has to
look at the whole SC and to take a larger portion of the SC into account. In doing so, the
company can develop a trusting relationship with its partners and invest in the
continuity of the relationship, based on the long term (Beske & Seuring, 2014).
Continuity improves the cooperation that will consequently increase information
sharing and knowledge, since information facilitates collaboration in a business
relationship and is needed to share sustainability conditions with suppliers (Beske &
Seuring, 2014; Pagell & Wu, 2009). Reaching a relationship based on trust helps to
enhance sustainability (Gimenez & Sierra, 2013).

According to Pagell & Wu (2009), collaboration in a sustainable supply chain can be

enhanced through two behaviours: giving incentives so that suppliers face fewer risks to
implement the new required process, and educating those suppliers who will then
educate each other. Along the same lines, Large and Gimenez Thomsen (2011) note that
a supplier performance can be improved by focal companies, among others, through
incentives to improve their performance or by training them directly. Assessing
suppliers is also used by firms to improve their suppliers’ performance (Large &
 14.

Gimenez Thomsen, 2011). Gimenez and Tachizawa (2011) also recognize the usefulness
of collaboration to manage the network and qualify it as a governance mechanism, i.e. a
set of practices aiming at improving an organisation’s sustainability performance and
used by firms to manage their network and their relationships with partners. A focal
firm that evaluates its suppliers is likely to see positive development in their behaviours
concerning environmental matters (Large & Gimenez Thomsen, 2011). For Tachizawa et
al. (2015), monitoring and collaborating should be applied together in order to observe
changes in environmental performance. However, small companies face environmental
pressures especially from their customers (Walker et al., 2008), which is considered to
represent a major financial stakeholder (Simpson et al., 2007). This position gives
customers a considerable strength to convince its suppliers to adopt environmental
management practices and to collaborate for better knowledge sharing and sustainable
development (Simpson et al., 2007).

2.2.3 Outcomes of collaboration

If suppliers and customers are collaborating, Vachon and Klassen (2008) explain that
they work together for the diminution of the environmentally damaging impact of their
processes and products. They explain that with collaboration, environmental objectives
can be planned only if there is an exchange of technical knowledge and a common
willingness to learn about the other’s processes (Vachon & Klassen, 2008). Successful
coordination between the supply chain’s members and improvement in the suppliers’
performance depend heavily on the relationship between the companies (Simpson et al.,
2007).

The importance of collaboration in the supply chain results from the opportunity for
inter-organisational learning linked to the customer and supplier relationship, that can
be developed into a supply chain resource and engender further capabilities in
organisations (Vachon & Klassen, 2008). Academic research supports the idea that the
relationship between the customer and the supplier (or between two suppliers) is
strategically important in business, as it may result in positive environmental results:
e.g. waste decrease through the collaboration, cost-effective and environmentally
favourable problem-solving, innovation environmentally oriented, environmental
technologies more quickly implemented (Simpson et al., 2007). Sharfman et al. (2009)
highlighted the advantage of being cooperative: it is more effective than having an
 15.

approach where suppliers are mandated to be more social or environmental. They also
add that companies who trust their stakeholders are more likely to have environmental
management practices (Sharfman et al., 2009). For instance, they will invest more in
technologies preventing pollution (Kumar et al., 2012). Partnership is also essential
when a company wants to meet social and environmental requirements (Frostenson &
Prenkert, 2014). Collaboration is an additional mean to achieve sustainability
performance (Beske & Seuring, 2014). Collaboration is expected to drive environmental
performance improvements for both participants, i.e. the customer and the supplier firm
(Simpson et al., 2007) Moreover, literature also highlighted that implementing suppliers’
assessment, collaboration and codes of conduct improves their supply chain
sustainability (Gimenez & Tachizawa, 2011). Assessment alone is not enough;
collaboration is needed for enhanced environmental and social performance (Gimenez &
Sierra, 2013; Gimenez & Tachizawa, 2011). The involvement of customers and suppliers
is also a means to encouraging larger environmental investment (Simpson et al., 2007).
Collaboration also highly influences the supply network as its competitive advantage is
then higher, and overall costs and uncertainty are reduced (Beske & Seuring, 2014).
Husser et al. (2014) note that, for the buying company, collaborating with suppliers
means having social contacts and networks. Indeed, for the buyer to let another
company do the job in the buyer's place implies a well-developed collaboration, i.e.
exchange, interdependence, and a relationship based on the long-term (Husser et al.,
2014). Husser et al. (2014) also consider those new responsibilities in cooperation to
have impacted the purchasing functions the most. While businesses see their purchasing
function gain in importance, so does the concern for purchasing ethics (Husser et al.,
2014). Furthermore, ethics is now acknowledged as crucial for good buyer-supplier
relations (Husser et al., 2014).

For Vachon and Klassen (2008) and Gimenez and Sierra (2013), the competitive
advantage comes from the knowledge assimilation and cooperation between
organisations, and from the environment dedicated management orientation.
Cooperative companies also take greater advantage of industrial chains in comparison
to other companies (Beske & Seuring, 2014) and have also higher sales (Sharfman et al.,
2009), “more satisfied customers, fewer problems with regulators, smoother supply
systems and reduced costs” (Sharfman et al., 2009, p.11). Collaboration allows
companies to have more effective reverse logistics practices through eco-design, an
 16.

emerging GSCM practice that should address product functionality while minimizing the
environmental impacts (Zhu, Sarkis & Lai, 2008). According to Zhu et al (2008), eco-
design would be successful only if there is internal and external cooperation with the
entire supply chain. Cooperation also lowers the environmental impact resulting from
the material flows in the supply chain (Vachon & Klassen, 2008).

For Kumar et al. (2012), looking at the degree of collaboration between stakeholders is a
way to evaluate the performance of the SSC. The supply relationship is crucial in the
realisation of long-term objectives as it allows to inform the suppliers about the
customer requirements (Simpson et al., 2007). Collaboration requires excellent
knowledge of each other’s obligations and competences about environmental
management (Vachon & Klassen, 2008).

2.2.4 Actors in the collaborative network

Building a cooperative network between companies involves working with competitors
but also with non-governmental organisations, consumer groups, etc. (Frostenson &
Prenkert, 2014; Pagell & Wu, 2009) in order to “examine, define and improve working
conditions in the supply chain” (Frostenson & Prenkert, 2014, p.86). Indeed, thinking
about the supply chain as a network has consequences in the definition of the company’s
boundaries and all the companies of the network have not the same issues or objectives
(Frostenson & Prenkert, 2014). Actually, the requirements for a sustainable network
necessitates taking into account more stakeholders rather than only the one implied in
the direct value chain (Frostenson & Prenkert, 2014). Understanding the network
feature of a supply chain is central in the improvement of sustainability, otherwise the
company could fail in the process (Frostenson & Prenkert, 2014).

2.3 Decision-making

2.3.1 Unethical decision-making

Environmentally and economically viable supply chains are the results of multiple
decisions made over time in the organisation, and the link between those decisions (Wu
& Pagell, 2011). Although supply chain decision-making is already a complex matter, the
uncertainty resulting from environmental decisions or issues, and from the link between
supply chain and ecological systems, multiplies this complexity (Wu & Pagell, 2011).
Moreover, considering today’s environment, company’s decisions have to take
 17.

stakeholders expectations into account, but also dimensions where information is

limited (Wu & Pagell, 2011). It is therefore necessary to consider environmental
decisions as complicated and as occurring in an adaptive system (Thiel et al., 2012; Wu
& Pagell, 2011), often resulting in unexpected consequences (Pimentel et al., 2010). The
decisions taken are then far from optimal and therefore, companies resort to simple
rules to support them in their decision-making processes (Wu & Pagell, 2011).
Moreover, Thiel et al. (2012) suggest that leaders find it difficult to correctly assess the
dynamic environment; and considering the current organisations (i.e. less structured
and more flexible), leaders are more subject to unethical decisions to respond to
complex ethical dilemmas. Ethical dilemmas appear when a person cannot choose
between different situations that arise and that cannot be executed simultaneously
(Lurie & Albin, 2006).

In the past, supply chain managers often conducted projects in a standalone way, i.e.
with no consideration for their globality and for the strategic understanding about how
all parts of a project go together (Carter & Easton, 2011). However, scandals have shown
the importance of ethical behaviour and the damaging consequences of unethical
behaviour for an organisation (Selart & Johansen, 2011). Husser et al. (2014) define
ethics as “a science of behaviour and decision-making, in the context of conscious and
deliberate action to reach a goal. It is the basic principle of correct behaviour, especially
with reference to a specific person, profession or activity” (Husser et al., 2014, p.328).
Unethical decision-making (UDM) can be understood as the “decision that is either
illegal or morally inacceptable to the larger community” (Jones, 1991, p.367). More
precisely, UDM is related to moral issues, which is defined as “present where a person’s
actions, when freely performed, may harm or benefit other” (Jones, 1991, p. 367).
According to this definition, UDM has repercussions on others and includes a choice
from the decision-maker (Jones, 1991).

Nowadays, integrity is a growing matter while unethical behaviour is rising, considering

that 49 per cent of for-profit companies’ employees have reported observing ethical
violations (Plinion, Young & Lavery, 2010). Those violations can have a huge impact on
organisations due to their incredible costs and can be the reason of approximately 1 out
of 5 businesses failure. Moreover, the raise in visibility and importance of ethical
breaches appear even more harmful and obvious for the public (Parson & Artistico,
 18.

2014). For Parson and Artistico (2014), the accomplishment and consequences of
unethical behaviour are obvious and consist of false representation of finances, services
or products, deceitful financial reporting, and damaging behaviours. However less
explicit results of unethical behaviours can also be observed such as the global
recession, substantial job loss, or the increasing volatility in finance (Parson & Artistico,
2014).

2.3.2 Influencing the decision-making process

Several factors can influence the decision-making process, more specifically ethical
decision-making processes. Selart and Johansen (2011) mention negative stress,
organisational values, leaders, character, gender, career status, and cultural differences
and Pimentel et al. (2010), Priesmeyer and Mudge (2008) note the context has to be
taken into account. Besides decision-making is guided by an organisation’s business
model (Alexander et al., 2014; Pagell & Wu, 2009). Commitment to sustainability has to
be integrated within the company’s values and strategy, ensuring at the same time the
top-management dedication, which is key to have the best SSCM possible (Alexander et
al., 2014; Beske & Seuring, 2014). Parson and Artistico (2014) also speak about the
ethical climate in an organisation. On the one hand, the ethical tendency of an
organisation, i.e. the shared understanding of how things are usually done, influences
ethical behaviour and is partly accountable for the evolution of an organisation’s values
(Parson & Artistico, 2014). On the other hand, values highlight and support the
organisation’s expectations on how ethical decision-making and behaviours should be
(Parson & Artistico, 2014). Parson and Artistico (2014) also recognise the ethical
climate as the main determinant for the generally acknowledged ethical and unethical
attitude in the organisation. Alexander et al. (2014) consider that a company’s culture
can also influence the trade-off between sustainability decisions and costs, while Thiel et
al. (2012) point out the fact that organisational culture causes constraints on leaders
making it harder for them to manage ethical decisions. However, Martin and Johnson
(2010) believe that even though organisational culture is important, ethical behaviour is
displayed and executed through the managers’ beliefs and attitudes.

The nature of decision-making is affected by the various requirements that have been
identified as necessary for a successful SSCM, i.e. “the organisational culture, strategy,
risk management and transparency” (Alexander et al., 2014, p.505). Wu and Pagell
 19.

(2011) have identified Operating Principle and Technical Standard(s) as drivers for
decision-making. They fix boundaries and reduce uncertainties and search space for
solutions, resulting in decision-making being manageable and more efficient (Wu &
Pagell, 2011).

Ethical decision-making depends on a person’s expertise (Husser et al., 2014; Thiel et al.,
2012; Valentine & Rittenburg, 2007). For instance, older and more experienced
executives show greater ethical intents (Valentine & Rittenburg, 2007). According to
Priesmeyer and Mudge (2008), emotions are the trigger and the enabler of the decision-
making process and of the implementation of decisions. Emotions are an intrinsic
element of leadership (Thiel et al., 2012). They also make us attentive to situations
needing a decision, they give us information about the usefulness of actions, and they
contribute to the motivation required for implementing measures (Priesmeyer & Mudge,
2008). Selart and Johansen (2011) specify that stress impacts decision-makers by
lowering quality control, leading them to cover up incidents, profit from sickness days,
and delude customers. If not handled correctly it can also end in fatigue, declining
productivity and decreasing job performance (Priesmeyer & Mudge, 2008). Priesmeyer
(2011) states that the emotional state of a person needs to be considered before making
a decision as it may change as a result of the consideration of making a decision. Indeed,
Priesmeyer (2011) found out that emotional reaction happens simultaneously to the
identification of ethical outcomes and not according to the predicted outcomes.

The way people characterize themselves according to the group (i.e. self-construal) also
impacts the decision-making (Hoyt & Price, 2015). People with high interdependent self-
construal (i.e connectedness) are more concerned with fairness in their relations with
others (Hoyt & Price, 2015). They concentrate on the requirements of others and on
compatibility with others (Parson & Artistico, 2014). In opposition, people with low
interdependent self-construal concentrate solely on themselves (Parson & Artistico,
2014). Besides, Parson and Artistico (2014) research highlights the fact that low
interdependent self-construal is linked to low empathy (i.e. the extent to which people
are aware of individual’s emotions around them and of their influence on others) and
consequently leading to take decisions without taking other people into account.

Even though these factors influence the group dynamic, leaders play a crucial role, due
to their responsibilities in determining objectives and inspiring the group (Hoyt et al.,
 20.

2013; Hoyt & Price, 2015 ; Park & Rees, 2008; Zhu, Sarkis & Lai, 2008). Their central
position to transform independent action into group action (Hoyt et al., 2013), their
accountability to external and internal stakeholders (Thiel et al., 2012), and their values
flow through the whole organisation (Park & Rees, 2008; Thiel et al., 2012; Walker et al.,
2008). Associated with the fact that people's beliefs, attitudes, and behaviours are
influenced by their identity, leaders clearly impact ethical decision-making processes
(Hoyt & Price, 2015; Thiel et al., 2012). According to Hoyt et al. (2013) the importance
given to the role of the leader and the constraint of goal realisation increase the risk of
unethical behaviour, mainly because it gives confidence to leaders that using
controversial methods is moral. Indeed, leaders have more power, which has been
proved to raise positive actions and attitudes, but it is also related to offensive actions
(i.e. objectifying people and ignoring others) (Hoyt et al., 2013). Hoyt and Price (2015)
also consider leaders to be more subject to unethical behaviours than people in non-
leading roles. Hoyt et al. (2013) found out that leaders of groups having valuable
objectives are more prone to behave unethically, and to consider it right, in order to
reach those objectives. They demonstrated that unethical behaviour is more present in
leadership situations because of the link between the role of the leader and the
importance given to roles and to the actions taken to reach those goals (Hoyt et al.,
2013).

Self-construal is an additional means to predict differences in behaviours, awareness,

and affection among individuals (Hoyt & Price, 2015). For instance, interdependent self-
construal persons will give more importance to relationships and interaction with
people, as they also show a greater sensibility and attention to others (Hoyt & Price,
2015). Hoyt & Price (2015) also highlight that interdependent self-construal persons
have a greater concern for justice as they are more likely to consider any injustices as an
injustice to themselves, concluding that interdependent self-construal is crucial in
ethical decision-making.

However, according to Hoyt and Price (2015), self-construal can vary considerably
within a same culture and the leader can erode its importance seeing as a leader gives
clues and assumptions about the appropriate behaviour in a particular context. Parson
and Artistico (2014) differentiate self-construal according to the country and see
cultures as different, considering that evidence exists about Eastern cultures being more
 21.

interdependent cultures and Western cultures being more independent. However,

differences also exist within a same culture since people do not consider themselves or
the group in the exact same way (Parson & Artistico, 2014). Curtis et al. (2012) also
believe that the development of an organisation’s operations and systems should take
culture specific behaviours into consideration since effective control structures are
closely linked to the factors stimulating and pressuring employees. According to Curtis
et al. (2012), the country of origin leads to unconscious interpretations that will produce
automatic reactions to ethical dilemmas. Curtis et al. (2012) consider ethical decision-
making as an unconscious process, which relies on stereotypes often culturally derived.
The national culture is an important influencer of a person’s judgements, but even
within one country the culture could be different (Curtis et al., 2012).

Furthermore, the gender of the decision-maker influences the decisions taken. As

highlighted by Curtis et al. (2012), males are prone to make objective decisions (i.e.
based on criteria), while females prefer to assess the situation before deciding. Females
are also less disposed than males to have unethical behaviours (Cojuharenco et al., 2011;
Curtis et al., 2012; Valentine & Rittenburg, 2007).

2.3.3 Paradoxes and dilemmas in decision-making

While some authors such as Alexander et al. (2014) consider that organisations are
facing a trade-off, others like Smith (2014) see a paradox in ethical decision-making.
Smith and Lewis (2011), defined paradox “as contradictory yet interrelated elements
that exist simultaneously and persist over time". Paradoxes are everlasting and
unsolvable whereas dilemmas can be solved through a trade-off (Smith, 2014).
According to Smith (2014), top management has difficulties dealing with the increasing
paradoxes faced in their strategies such as Exploration vs. Exploitation, Global
integration vs. Local adaptation and Profit maximization vs. Social prosperity. To ensure
performance in the long run, top management needs to engage both alternatives which
is challenging and thwarting (Smith, 2014). Leaders need to decide between
contradictory requests and maximizing both of these to subsequently offer appropriate
guidance and assign resources (Smith, 2014). Moreover, to allow a firm to be successful
in the present and prosper in the future, Smith, Lewis and Tushman (2011) point out
that focus and alignment are the first elements to consider. Once the environment is
assessed by the decision-makers, their strategies can be aligned with this context (Smith
 22.

et al., 2011). Focus leads to higher performance by making interactions within the
organizations easier (Smith et al., 2011). However, focus and alignment can get firms
stuck in their success from the past and prevent them from responding to competing
objectives in the long-term, competing requests from different stakeholders or external
shifts (Smith et al., 2011).

There is little literature about how to manage strategic paradoxes while their
management strongly impacts the favourable outcome of an organization (Smith, 2014).
The main different ways to manage paradoxes are embracing them and working through
them, transforming them into synergies, understanding them through differentiation
and integration (Smith, 2014). Embracing paradoxical tensions and leveraging strategic
paradox facilitates sustainability (Smith, 2014; Smith et al., 2011). Such organizations
are efficient at present while continuing to build skills and resources to be successful
later (Smith et al., 2011). For the integrative perspective, top managers have to embrace
corporate tensions and not dismiss them, even when they appear contradictory, since
various dimensions of organizational sustainability can be addressed at the same time
(Hahn et al., 2015). The instrumental view, on the other hand, dismisses the intrinsic
tensions that could appear between the different aspects, and centres on consistency
between the three dimensions (Smith & Lewis, 2011). Tensions can only be handled
once they are spotted and clarified (Hahn et al., 2015).

Unlike paradoxes, ethical dilemmas can simply be solved by analysing the situation
thoroughly, which will highlight solutions (Lurie & Albin, 2006). However, dealing with
paradoxes is difficult and constitutes a real challenge for top managers (Smith, 2014). A
solution can be found to a dilemma by choosing one alternative whereas paradoxes
consist in a tension between two elements that cannot be resolved (Smith, 2014). Over
time, a dilemma can turn into a paradox. For instance, allocating resources requires
trade-offs but can also create a tension between stability and flexibility (Smith, 2014).
Managerial literature stipulates that the management of paradoxes requires a shift from
“either/or (i.e. considering tensions as a problem and a compromise) to “both/and”
thinking (Smith et al., 2011) while Smith (2014) advises the use of more elaborate
intellectual frameworks for managing paradoxes. The challenge is to tackle these
tensions appropriately (Smith et al., 2011). While focusing on paradox leads to
uncertainty and anxiety, it generates opportunities by allowing resilience in the present
 23.

and the renewal of future resources (Smith et al., 2011). Indeed, temporality is another
characteristic of sustainability; sustainable organizations keep track of several time
horizons and aim for both present and future success (Smith et al., 2011). A sustainable
organization will seek to support competing agendas simultaneously and look for
dominant synergies (Smith et al., 2011). Short-term performance will come out of
selecting certain tensions, but according to the paradoxical thinking, constant work to
meet the several contradictory requests is needed to achieve long-term sustainability
(Smith & Lewis, 2011).

Accommodating and accepting are the main paradox strategies; accommodating

searches for synergies between contradictory demands by engaging particular issues
and accepting engages paradoxical tensions without resolution (Smith, 2014). Many
decisions need to be made quickly, without complete comprehension of the situation.
Donovan et al. (2015) qualify the decision-making process occurring as dynamic
decision-making (DDM) and having skills in DDM should help to handle information,
develop action plans, and assess various goals. Donovan et al. (2015) define DDM as a
succession of interrelated judgments in a changing environment caused by previous
decisions or by the environment itself. DDM examines the decision pattern from
different responses to paradoxes progressively, i.e. choices have to be made that usually
result in an either/or resolution (Smith, 2014). Firms face a multitude of inconsistent
contradictory demands involving a consistent shift in backing one alternative or the
other (Smith, 2014). According to DDM model, paradoxes need to be addressed in a
dynamic way and resolved in a contradictory way therefore enabling reliability and the
support of inconsistencies (Smith, 2014). To do so, it is necessary for the firm to adopt
differentiation along with integration as business procedures in order to address
strategic paradoxes and frame decisions (Smith, 2014). These strengths together stress
synergies and simplify the shift between strategic alternative to promote responsive
decision making and sustain paradox (Smith, 2014).

According to Smith (2014), embracing paradox calls for strong and transformational
leaders known to be more authoritarian in decision making and capable of reframing
strategic issues. Leadership success relies on the good management of paradoxes, a
training to develop paradoxical thinking is needed among leaders (Smith, 2014).
Decision-makers can process complex issues, but most of the time display cognitive bias
 24.

or errors (Donovan et al., 2015). According to Donovan et al. (2015), those bias and
errors can be lowered with self-reflection, the action of assessing deliberately and
constantly its own thoughts, emotions, and attitude (Donovan et al., 2015). Self-
reflection is also a way to link more easily new information to previous knowledge and
to grasp ideas and sentiments, allowing the decision-maker to adjust the strategy to
environmental changes (Donovan et al., 2015). Therefore, self-reflection can be seen as
someone’s personality characteristic or as a state that the person will be in depending
on the situation importance (Donovan et al., 2015). Donovan et al. (2015) found out that
DDM and improved self-reflection skills can result in more effective decision-making.

Globalization, but also the increasing pace, competitiveness and complexity of

environments generate more and more competing demands (Smith & Lewis, 2011). The
way leaders will attend to these contradictions will determine the future of the
organization (Smith & Lewis, 2011).

2.4 Theoretical framework

The SSCM is influenced by the decision-making process, but also by the collaboration
happening within a network. Figure 2 gives a better understanding of the theoretical
concepts and how they influence the SSCM.

2.5 Propositions

In order to answer our research question, we divided it into two separate subjects and
into specific propositions, resulting from the literature review, that should help us stay
within feasible limits of the case study (Baxter & Jack, 2008).

Firstly, we desire to investigate how the collaboration between a company and its
stakeholders influences the overall supply chain and the focal company itself.

The growing concern for social responsibility has lead companies to care more and more
about their stakeholders, as some of them (e.g. Nike, H&M) have been held responsible
for their stakeholders' poor behaviour (Andersen & Skjoett-Larsen, 2009). Practices
were developed in order to avoid those bad events, such as the use of codes of conduct
between a company and its suppliers (Andersen & Skjoett-Larsen, 2009), and scholars
agreed that cooperation is of utmost importance to avoid issues with stakeholders


Figure 2: Theoretical framework

25.

Source: Own elaboration

 26.

(Silvestre, 2014) leading to a collaborative network conception of the supply chain (e.g.
Pagell & Wu, 2009).

Although some observers do not feel positive about codes of conducts (Andersen &
Skjoett-Larsen, 2009) and Santillo (2007) agrees that the various interpretation of
sustainability and of the three pillars has lead to faking environmental friendliness, we
can expect them, as internal means, to influence positively the level of cooperation
between two companies in the retail industry. Since multiple stakeholders are involved
such as external stakeholders including customers or governmental institutions, the
entire supply chain will be impacted (Seuring & Müller, 2008; Brandenburg & Rebs,
2015). Collaboration is considered by Beske and Seuring (2014) to be a practice of
SSCM, therefore we suppose that external means coming from those stakeholders could
impact collaboration too. This leads to our first proposition:

P1: Cooperation in the supply chain is enhanced by means internal and external to the
network

Scholars (e.g. Beske & Seuring, 2014; Gimenez & Tachizawa, 2011; Simpson et al., 2007)
agree to say that collaboration with suppliers is beneficial for companies (e.g. lowering
uncertainties and overall costs, improving the supply chain sustainability), but that it
depends on the relationship they built (Simpson et al., 2007). Andersen and Skjoett-
Larsen (2009) agree and say that competitive advantage can result from long-term
collaboration.

As current companies have to look at the whole SC, they have the opportunity to build
relationships based on continuity and trust (Husser et al., 2014). Incidentally, trusting
companies are prone to environmental practices (Sharfman et al., 2009). As cost-savings
result from collaboration, and trust can be considered as an obstacle for efficient
collaboration, we suppose that long-term relationships are required if a company wants
to benefit from collaborative advantages. Therefore it made us suppose that trust and
cooperation together allows to costs savings within the company.

P2: Overcoming barriers to collaboration enhances sustainability allowing to reap benefits

from collaboration.

Secondly, the subject of decision-making is studied, and more specifically to what extent
it is influencing the SSCM and thus the network created by the focal company. In fact,
 27.

when discussing collaboration the supply chain should be considered as a network

(Frostenson & Prenkert, 2014).

The third proposition pursues the same concept of durable relationships. We suppose
that relations build over time will lower uncertainty in decision-making since decisions
made by a company impact its stakeholders. Silvestre (2014) affirms that collaboration
with stakeholders is a necessity because they represent a possible risk for the
company. Moreover, the responsibilities of companies are growing and they are more
and more held accountable for their stakeholders’ behaviours (Andersen & Skjoett-
Larsen, 2009). Collaborating with them and consequently increasing the amount of
shared information should lower the risk they constitute. This assumption is at the
source of our third statement:

P3: Cooperation is a way to lower uncertainty in supply chain decision-making, affecting

the company’s network.

The literature review pointed out that the top-management's involvement and
commitment to sustainability is of the highest concern to reach and effectively manage a
SSC (Alexander et al., 2014; Beske & Seuring, 2014). Leaders are considered as
influencing the decision-making process, be it through their values (e.g. Walker et al.,
2008), through their expertise (e.g. Husser et al., 2014) or through their responsibilities
(e.g. Hoyt et al., 2013). The organisational culture and leadership also influence ethical
behaviour (Alexander et al, 2014) considering the importance of the leader within an
organisation and his/her influence on the decision taken.

Cooperation with stakeholders leads to the creation of a network involving more than
only suppliers (Frostenson & Prenkert, 2014; Pagell & Wu, 2009). The direction that this
network takes, i.e. ethically oriented or not, should then be the result of decisions taken
by the company. We concluded that the leader, in addition to influencing decision-
making, also influences the network that the company builds with its stakeholder:

P4: The organisation’s network and SSCM is the result of the leaders’ actions and values

As a result, we came to the supposition that both cooperation and decision-making

cannot be looked at separately in the organisation. They influence each other and impact
the internal and external stakeholders, hence the supply chain. The company cannot
 28.

build a collaborative network with its stakeholders without orienting its decision-
making towards collaboration. It leads us to our fifth and final proposition:

P5: Ethical decision-making fosters collaboration across the sustainable supply chain,
which in turn impacts decision-making processes making cooperation and decision-making
complementary.

3 Methodology

3.1 Research design

According to Yin (2009), there are different research methods namely experiment,
survey, archival analysis, history, or a case study. The method adopted in this thesis is
the case study. After analysing the available literature on sustainable supply chain
management and more specifically the topics of collaboration and decision-making, we
decided to base our research on a single case study. As our research questions are more
of the type “how” and “why”, they are more explanatory and seek for answers with links
over time (Yin, 2009; Saunders et al., 2009). A case study should provide us with
information on a phenomenon that is not yet fully understood, but for Baxter and Jack
(2008) the case study is also necessary to analyse a situation that could not be
considered without its context. For Saunders et al. (2009), using a case study is
appropriate to gain understanding of the context and processes. Baxter and Jack (2008)
add that a case study allows participants to relate their version of the situation, resulting
in a greater perception of the situation and the context. As Beske and Seuring (2014)
advise in their paper, the use of empirical research confirms if the framework is
worthwhile. Also, a common practice in carrying out SSCM research is basing them on
case studies (Brandenburg, Rebs, 2015). Therefore, the use of a case study is adapted as
it is “an empirical inquiry that investigates a contemporary phenomenon in depth and
within its real-life context, especially when the boundaries between phenomenon and
context are not clearly evident" (Yin, 2009, p.18).

The research took place in Skechers’ offices located in Manhattan Beach, California
where Kaoutar Guerrouj completed a two-months internship in the Retail Marketing
department. Her tasks consisted in planning promotional campaigns, developing
marketing collateral, analysing data, researching industry trends within the competitive
retail landscape and reporting weekly reports detailing upcoming promotions to the
 29.

entire retail division. She previously worked at the Skechers European Distribution
Centre in Belgium where she first got to discover the corporation. Even though the
internship was not directly linked to our research, it provided us with a broader insight
of the corporation and most importantly it gave us the opportunity to meet with people
in high positions and a wide range of collaborators. We therefore chose this research
setting in order to have access to information and to interview managers, directors,
executives and partners more easily. As stated by Taylor et al. (2015), the perfect setting
would be an accessible one where direct contact with the respondents is possible and
where consistent data could be gathered. Skechers met these criteria.

Various data collection methods can be used for case studies such as interviews,
observation, documentary analysis and questionnaires (Saunders et al., 2009).
Therefore, authors (e.g. Saunders et al., 2009; Taylor et al., 2015) also advise to use
triangulation, the use of different methods simultaneously, in order to ensure that the
interpretation of the collected data is accurate (Saunders et al., 2009). The main way in
which we carried out our research are individual semi-structured interviews because, in
this case, it seemed to be the most efficient way to gather a great deal of qualitative data
in order to gain a deeper understanding of the sought topics. According to Saunders
(2011), a qualitative interview is useful when there is a need to understand the
decisions, behaviours and point of views of participants. Semi-structured interviews
allow to prepare questions in advance while leaving room for additional questions
during the interview or choice to go in a different direction if needed. This way,
participants are involved and much more prone to explaining their point of views and
experiences on a subject as well as their perceptions of a situation. Moreover, managers
at Skechers seemed to agree more easily to being interviewed than completing a survey.

We conducted, as described in Figure 3, five face-to-face interviews and three telephone

interviews. This limited number of interviews is mainly due to the limited time spent in
the offices by only one of us and especially because this research was limited to one
company on one market, and focused on upper management with a defined
responsibility range; usually very busy and less available. Despite the amount, the
quality of these interviews and the adopted approach allowed us to identify critical
aspects on this research.

 30.

Figure 3: General information on the interviews

Source: Own elaboration

Since this research project is also about decision-making, and in order to grasp a better
understanding of the company, it was necessary to interview people from different
hierarchical positions and departments. As highlighted in Figure 4 not more than two
participants had the same hierarchical rank at Skechers and the spectrum of their
responsibilities varies according to their function.
Figure 4: Overview of the interview participants

Source: Own elaboration

We also examined secondary data to which it was possible to have access at the
company such as the code of conduct, the store count, the list of executives, etc.
 31.

3.2 Data collection

The five propositions stated above served as a means to guide the data collection and
data analysis. As Baxter and Jack (2008) explained, it allows us to concentrate on what is
really needed during the data collection, without deviating from the main objectives of
the study.

3.2.1 Primary data

3.2.1.1 Participants and setting

The first interview participants were selected by the internship supervisor in
collaboration with the HR department. At first, the wishes were communicated orally,
that is the subject that would be discussed, and who would be the ideal participants for
this study based on position or involvement at the company. Then, the request was
followed up through email. Ideally, we wanted to meet with someone from logistics and
supply chain, a retail specialist and a person from the top management. After that, we
used what Taylor et al. (2015) call the snowball technique, i.e. meeting new respondent
thanks to the first ones met. The interviewees would think of someone else that would
be interesting to talk to or we would ask to talk to someone from a department they
mentioned. As shown by Figure 5, these interviews have all been the outcome of
meeting two people, the HR manager and the director of Retail Marketing. These
interviewees were open to being interviewed as part of this thesis as long as we were
able to adapt to their schedule.

According to Saunders (2011), the success of an interview depends on how well it is

prepared. The interviewer needs to appear credible, inspire trust and be knowledgeable
(Saunders, 2011). The topics that would be discussed were communicated to the
interviewees beforehand. The first minutes of the meeting, before the actual start of the
interview, were used to explain the thesis and context in extended details as well as to
ask permission to record. This situation provides the opportunity for interviewees to
receive feedback and personal assurance about the way in which the given information
will be used.
 32.

Figure 5: Snowball effect experience in the primary data collection

Source: Own elaboration

In order to make it as convenient as possible for the participants, the interviews took
place in the office of the interviewee across different Skechers buildings in Manhattan
Beach (Los Angeles, USA) or via phone call in a conference room. All interviews were
conducted in US English and happened during the working hours that best suited the
participants. The dress code followed was business casual; the one generally present in
California. Particular attention was paid to posture and intonation to stimulate
discussion. The interviews were recorded and a few notes were taken during the
interview including the date, the participant's name and position, the location and
general observations about the atmosphere of the interview and the interviewee. The
interviews were transcribed and put in a presentable form shortly after.

The aim was to focus completely on the conversation to gain a good understanding of
what was said. When a clear answer was not provided to a specific question, the
question would be rephrased or it would be asked to elaborate. Responses were
carefully listened to and sufficient time was left for responses. Giving an opinion was
avoided and explanations were summarized to make sure the interpretation was
correct. A few challenges were the strong accents, the interruptions that would occur
with higher positioned interviewees, and adapting to each personality.

 33.

3.2.1.2 Material design

According to Saunders (2011), semi-structured interviews, which are usually the case
when pursuing a case study research method, do not allow generalization to the entire
population. To ensure consistency between the interviews and the validity of the
answers, the same interview guide, stating the main questions and topics to be covered
during the interview (Taylor et al., 2015), was used for every interview. The interview
guide can be found in appendix No. 1. To prevent any bias, we went for open questions
and avoided long questions or theoretical terms. Since the objective of the interviews
was to collect information on people's experiences and situations, open questions were
preferred to closed-ended questions that would only result in yes or no answers (Jacob
& Ferguson, 2012; Taylor et al., 2015). To make sure the phrasing in the interview guide
was clear and the order was logical and comprehensible, we sought feedback from the
Human Resource Manager and adapted accordingly. When needed we defined the terms
employed, to share the same understanding and facilitate accurate interpretation. For
those with less time, we went straight to the point and removed some of the questions.
As Jacob and Ferguson (2012) recommended, the interviewee needs to be kept in mind
when designing the questions and the time they could allocate to answer questions.
Similarly, with the participants who were less comfortable with answering recorded
questions, additional questions were asked and more frequently to ease the atmosphere,
as advised by Taylor et al. (2015). Moreover, as advised by Jacob and Ferguson (2012),
sensitive questions were left at the end of the interview once trust was established.
Finally, according to the experience of the participant and their responses the order of
the questions could alternate.

3.2.2 Secondary data

Documentary secondary data was used and requested from the HR department or
proposed by the interviewees. According to Saunders (2011), this type of data is reliable
depending on the source and the collection method. Moreover, the cost of procurement
of the data in time and money needs to be compared to the advantage coming out of it
(Saunders 2011). We made sure that this data covered the appropriate time period and
was relevant to the objective. Moreover, several Internet sources, e.g. online articles,
governmental websites and Skechers' official website, were used. The data was as much
as possible gathered from the original source and usually incorporated within text of
this paper to assure the validity of the research. The information was used to provide
 34.

additional information, to clarify a particular point or to illustrate what is said with

tangible examples.

3.3 Data Analysis

According to Yin (2009), the ideal case study demonstrates the appropriate evidence in
an effective and neutral way in order to keep reader interested and engaged and to
enable him or her to autonomously judge the validity of the analysis. To maintain a
certain degree of anonymity, only the job titles of the participants were disclosed in the
framework of this study. As previously mentioned, to start preparing the data for
analysis, the interviews were transcribed word by word.

Saunders (2011) stresses the interactive character of collecting and analysing data. In
order to understand and integrate the collected data, it is advised to identify main
topics, patterns and connections that will subsequently allow categorizing the available
data (Saunders, 2011). In this work, a deductive approach was used meaning existent
theory was used to define the research questions and goals, which in turn have helped
conceiving an analytical framework for organizing the data.

In this regard, we summarized each interview into key points and shorter statements
allowing us to become familiar with the contents and triggering connections between
themes. Saunders (2011) recommends to clearly define each category to ensure the
pieces are consistently assigned. Three broad categories emerge from our theoretical
framework, i.e. decision-making, collaboration, and SSCM. In fact, collaboration is
inherent to retail supply chains and the management of these supply chains generates
decisions. Once the coherent categories had been developed, pieces of data were
attached to each appropriate category. In the overall progress of the research project
and as recommended by Saunders (2011), we made use of interim summaries, self-
memos to record ideas as soon as we thought of them and checked lists with deadlines
to help oversee the development of ideas. When writing the results, Saunders (2011)
also recommends illustrating with tables and graphs, to quote the interviewees and
avoid giving one’s opinion. The discussion chapter is where the results are interpreted
and related to the questions, hypotheses and goals but also the literature revue and
extra information sought on the Internet. Moreover, the strengths and weaknesses of the
research are discussed.
 35.

4 Case study

4.1 Describing the situation

4.1.1 Company overview

American company Skechers U.S.A. was incorporated in California in 1992 and
reincorporated in 1999 in Delaware. Skechers corporate offices are located in
Manhattan Beach, California while the company business license is established in
Delaware. The company is traded under SKX on NYSE (the New York Stock exchange)
(Skechers, 2014). Co-founders Michael and Robert Greenberg built the brand from
scratch and are still taking the lead. Robert Greenberg is CEO and chairman of the board
while Michael Greenberg holds the position of President and Director. The corporate
structure of the executive management is as presented in Figure 6.

In 2016, Skechers was named company of the year for the seventh time by trade
publications in the US and the UK, it also received awards for footwear design excellence
(Business Wire, 2016). The company is active in the footwear industry and has become
one of the most popular and most diverse footwear brands in the world with 2.3 billion
dollars in annual sales (Skechers, 2014). The main product category is footwear, but in
recent years the business has grown into new categories; apparel and accessories such
as socks, bags, eyewear and more (Skechers, 2014). The footwear category can be
subdivided into a lifestyle and a performance division (Skechers, 2014).

The offer of Skechers consists in fashionable footwear focusing on the latest trends for
men, women and children (Skechers, 2014). The customer’s need that is sought to be
satisfied is active but casual (Skechers, 2014). Skechers business encompasses a diverse
mix of over 30.000 styles that pleases customers all around the world (Skechers, 2014).
The products range from athletic, casual and fashionable styles for adults and children of
all ages (Skechers, 2014). A Skechers customer is typically attracted by the youthful and
colourful image of the brand as well as its fashion-forward designs (Skechers, 2014).
Products are sold through various channels (i.e. department and specialty stores,
athletic and independent retailers, boutiques and internet retailers) (Skechers, 2014).
Skechers also sells its products via its e-commerce website and primarily through its
numerous company-owned retail stores (Skechers, 2014). The firm has over 60 offices
and showrooms and over 500 retail stores worldwide and distributes approximately a
 36.

Figure 6: Organizational chart of Skechers USA executive committee

Source: Skechers. (n.a.). Executive Officers and Board of Directors.

100 million pairs of shoes a year in the US and more than 120 countries. Skechers’
factories are located overseas among others in China, Mexico, Brazil and Romania
allowing the company to produce at low price (FundingUniverse, n.a.).

The company’s goal is to expand their product categories and grow their international
business to 50% of their sales with new stores, new markets and new opportunities
(Skechers, 2016f). Accordingly, the infrastructure is in continuous development and
 37.

aiming to sustain the continuous growth of the years to come (Skechers, 2016f).
Demand is created worldwide, products are brought to life through more commercials
than the competition and consumers are engaged through numerous events (Skechers,
2016f). The brand is present on television, in printed media, and on outdoor campaigns
for men and women; specialised campaigns were developed for children (i.e. television
campaigns with Skechers heroes and characters) but also celebrities, musicians or elite
athletes dedicated campaigns like marathons to promote the Performance Division;
donation events through the Skechers charitable footwear program; or events with
endorsers are some examples of marketing actions taken by Skechers (Skechers, 2016f).

A key strength is their speed to market from leading factories that ship the products
directly to the international distribution partners or to the European distribution centre
located in Belgium (Skechers, 2016f). The latter is now automated and is expanding to
support the growing European business. The aim is to become leader in casual and
active footwear, while securing and growing the brand name (Fundinguniverse, n.a.).
This should be achieved through the various collections, product categories, styles and
well-managed distribution channels (Fundinguniverse, n.a.).

4.1.2 The Footwear industry

4.1.2.1 Global market

The footwear industry trends vary according to the geographical area (ReportBuyer,
2015). However, some factors are considered as influencing the global market, such as
an increasing demand to innovate footwear design, the growing concern for a healthier
lifestyle, the growing population, and their disposition for increased spending
(ReportBuyer, 2015; Transparency Market Research, 2015). On the other side, the
footwear market growth is restrained by the development of environmental concern
and raw material prices (ReportBuyer, 2015; Transparency Market Research, 2015).

Globally, the market leaders are Nike, Adidas and Asics (ReportBuyer, 2015). However,
although VF Corp., Skechers, and New Balance are less popular in Europe, they are
heavily present on the American market (ReportBuyer, 2015). Men represent the
biggest part of the market (52%), mainly due to the growing population primarily
composed of the male gender (Transparency Market Research, 2015). Simultaneously,
 38.

North America stands for the greatest share in terms of value between 2014 and 2020
(Transparency Market Research, 2015).

4.1.2.2 American market

The U.S. footwear and apparel industry is at the start of globalization and has enabled
sourcing with a supply chain more global than ever before and powerful relationships
among various countries (AAFA, 2014). Sourcing refers to the entire process from the
design to the delivery (AAFA, 2014). Most companies choose a model with domestic and
international sourcing and every company features a unique sourcing model (AAFA,
2014).

The industry produces more in billions than any other product available in retail (i.e.
cars or alcoholic and soft beverages) (AAFA, 2014). Sports footwear represent the
fastest growing sales as the casual dress code is becoming the main trend (Euromonitor
International, 2016). The industry generates economic growth, employing over 4 million
workers and supporting other industries such as transportation and logistics (AAFA,
2014). In 2015, the footwear industry has experienced a 7% value growth by reaching a
value of $76.1 Billion (Euromonitor International, 2016).

Outgoings for the professional, casual and performance categories have risen in 2014
considering that the customer is in the search for comfortable, essential and useful shoes
(Rodriguez, 2015). For several years now, U.S. footwear companies have been designing,
branding and distributing in the U.S. but producing in regions of the world where lower
costs and more intensive labour is applicable (Rodriguez, 2015). These domestic
activities account for over 70% of the retail price of a piece of clothing or a pair of shoes
(Rodriguez, 2015). Relying on foreign sourcing, has allowed customers to lower their
clothing budget and get more for their money (Rodriguez, 2015).

For the year 2014, the U.S. registered a 4% increase of its footwear exports primarily to
Vietnam and Canada (Rodriguez, 2015). Vietnam accounts mostly for the export of
footwear parts as Vietnam and other Asian suppliers have become a lower-cost
relocation destination at the expense of China (Rodriguez, 2015). 98% of the demand of
the market in footwear and 97.5% in apparel are met through imports, which grew by
5% in 2014 (Rodriguez, 2015). China is still the major supplier of the U.S. footwear
market with 66% of the imports but the decline of the imports is explained by the
current challenges it is facing such as increasing costs in terms of wages, currency
 39.

fluctuation, environmental compliance and labour deficiency (Rodriguez, 2015).

However, equipped with the right infrastructure Chinese footwear production is not
expected to wear away any time soon (Rodriguez, 2015).

US footwear industry unbeatable leader Nike maintains this position with an 11%
growth, while Adidas has seen its sales drop and New balance, Under Armour, Puma and
Asics have been experiencing growth as well (Euromonitor International, 2016).
Skechers has exceeded American footwear brands Adidas and New Balance by holding
5% of the sneaker market and reached second place right behind Nike still dominating
the same market (Poppick, 2015).

At the age of the Internet, consumers can buy at any time, from anywhere and through a
multitude of channels (YouGov, 2016). Customers can search online for what they want
and buy it later in store or vice-versa (YouGov, 2016). To remain competitive, the
industry has been adopting omnichannel retailing meaning that products are sold and
distributed in a seamless way on all channels bringing the physical and the digital
together and thereby reorganizing the supply chain (YouGov, 2016). This shift is
towards smaller physical stores also called “brick and mortar”, becoming a sort of
showroom for online shoppers (Guillot, 2016). For the industry to remain globally
competitive, associations such as the AAFA work with policy makers to try to find
solutions to challenges and build consensus across the industry (AAFA, 2014).

As highlighted in the theoretical framework, cooperation and decision-making have an

impact on SSCM. Therefore, to gain a better understanding of the subject, we will look
more deeply into Skechers USA Inc. and what is concretely done regarding both
concepts.

4.2 Cooperation at Skechers

The importance of collaboration at Skechers appears obvious when we consider the

work of managers. Indeed, Skechers is present internationally and managers are
responsible for numerous countries, such as the Director of International Retail and
Franchise Operations who oversees 27 countries or the Senior VP of Global Product who
manages many different activities within Skechers. Collaboration is necessary as their
mission is to make sure that everything runs smoothly. A Senior VP stated “we are a very
 40.

collaborative group” and it is noticeable in the organisation of the company.

Collaboration is key to the international success.

4.2.1 CSR actions

Costa, Lages and Hortinha (2015) explained that taking CSR measures is a way for the
company to fulfil their obligations towards stakeholders. Skechers takes those measures
through two major means, i.e. the Code of Business Conduct and Ethics, and the Skechers
Foundation.

4.2.1.1 Code of Business Conduct and Ethics

Since the 1990's, companies began to deliberately develop codes of conduct and
supervision techniques to control working conditions in their factories (Park & Rees,
2008). Adding to the growing attention of the media towards the retail industry and
revealing working issues, companies have adapted their corporate strategy (Park &
Rees, 2008). Following the trend, Skechers created its own Code, which is now used to
ensure the right execution of Skechers standards all around the world and by every
person in the company, be it an employee, an officer or a director (Skechers, 2016b). The
Code was approved by the Board of Directors in 2004, and since 2006, the Code of
Business Conduct and Ethics is displayed on the investor relation page, on Skechers’
website, under the section corporate governance (Wikinvest, n.a.).

Skechers’ Code sets the company’s policies regarding the individual behaviour and the
way business is done (Skechers, 2016b). The Code has been written using all the
company’s rules and practices to encourage honest and ethical behaviour among the
company’s workers, and to provide rules and recommendations when facing ethical
issues (Skechers, 2016b). It covers labour requirements, e.g. no child labour or forced
labour, protection of young workers, reasonable working hours and wage, but also
safety like fire safety and protection safety. A newer concern in the Code is the
environment; the working environment and the protection of the environment.
Factories are driven to save energy, but also to care about their emissions, namely the
air, the noise and water and solid waste.

Consequently, the Code of Business Conduct and Ethics is used by the Californian
company to assess partner companies, as Skechers does not desire to do business with
suppliers without a sense of ethical thinking. Overseeing its stakeholders is fundamental
 41.

for the company’s reputation, which is valued as a strategic advantage (Park & Rees,
2008). Skechers considers its reputation to be its greatest asset and is very cautious
about it, penalizing anyone who does not comply with the Code (Skechers, 2016b). An
associate or employee not respecting the Code would be punished by Skechers on a
case-by-case basis, as well as someone not reporting a violation of the Code (Skechers,
2016b). If a collaborator is not meeting the requirements and does not show
improvement on these matters, Skechers might have to end the collaboration. Using the
Code of Conduct to assess partners is a way for Skechers to protect its business.

Figure 7: Objectives of Skechers’ Code of Business Conduct and Ethics

Source: Based on Skechers. (2016b). Skechers U.S.A., Inc. Code of Business Conduct and Ethics

The enforcement of the Code of Conduct at a partner’s factory goes against the concept
of collaboration. Collaborators have no choice but to comply with it if they want to
continue doing business with the company in question. However, when observing the
benefits brought by the compliance with the Code, e.g. employee retention, collaborators
tend to realize that these requirements are reasonable. According to the CSR Compliance
Audit manager in China, this issue is key in the collaboration as workers in China are
currently unstable, i.e. difficulties in recruiting and retaining them. For him, “this is a win
for Skechers but also for the suppliers and the workers”.

4.2.1.2 Skechers Foundation

Created in 2010 by Skechers founding family, the Greenbergs, the Skechers Foundation
aims at helping families and communities in need (Skechers, 2012). Its objective is to get
communities together around supporting children (Skechers Pier to Pier Friendship
Walk, 2016).
 42.

4.2.2 Cooperation among employees

Collaboration at Skechers is present through co-workers. The top management works
closely together because it was necessary at the beginning of the company, as there
were not many employees. When Skechers was created and the company was much
smaller than today, they had to collaborate as they were multitasking. Therefore, even if
they have to manage a lot more people today, the team from the beginning of Skechers is
still present and just as tight. Top managers know each other but they do not know all
the employees of the company anymore. However, as one of the Vice Presidents
commented on the situation, “I think now it does not really matter anymore. It used to,
but not anymore”. The company grew too big to need to know everybody. However,
collaboration is the general process within a department and there is open discussion
about issues. The Senior VP of Global Production explained that when decisions need to
be made, the CEO is always open to listen to others' views and asks a lot of questions.

Within Skechers, people work around the same terms and towards the same goal. It
makes it easier to collaborate and work together. A manager overseas even stated “I feel
the power of life of Skechers through the teamwork and so on”. The impression given by
a 2 months internship at the headquarters is that team-building activities are very much
encouraged, the management is very accessible and the working atmosphere is
delightful.

Collaboration happens also through the different departments, and just like the
relationship between co-workers, the one between departments is great. “The
relationship between the different departments is good” claimed a Vice President.
Indeed, the same feeling is also perceived by the Customs Compliance department,
which qualifies the overall atmosphere as “good” as needed information is always easily
obtained.

To illustrate collaboration at Skechers, let's take a closer look at the department

Planning and Allocation. This department works very closely with the distribution
centres, as Planning and Allocation is the one sending them the information about what
should be shipped to customers according to the orders received. The department is not
limited to this collaboration. Indeed, the VP of Planning and Allocation also works
closely with the production department since they have a whole picture of what is
needed now and in the future, and they also closely associate with customer service.
 43.

Another example would be the department of Transportation Services, which has to

work with various departments, allocation, sales, shipping, or compliance among others.
Also, the international department works very closely with both domestic marketing
departments, namely retail marketing and international marketing, as well as the
country and marketing managers for each individual country, in order to reach
businesses more easily. It is described as a win-win situation since the national
managers have knowledge of the market and opportunities and the domestic teams are
knowledgeable about the consumer.

The need for a collaborative environment at Skechers can also be understood by looking
at the relations between the departments and stakeholders. Continuity factors are also
essential to keep consistency within the company, as different departments interact
with the same stakeholders. Actually, by looking at Figure 8, the complex
interconnectivity appears clearly as every black arrow represents the interaction
between the Global Operation section and another department or with external
stakeholders. Conference calls are regularly organised between divisions to ensure the
team's needs and concerns are being addressed and to show the teams how important
they are for the bigger picture of the company.

Figure 8: Collaboration at Skechers - Focus on the Global Operations department

Source: based on interviews information

 44.

Cooperation also takes place between Skechers and the members of the supply chain.
Indeed, the footwear company developed a collaborative relationship with each of its
partners, considering the supply chain as a network. The vision of their stakeholders is
broader than the basic customer-supplier relationship. Thanks to the Chinese Office for
instance, Skechers remains closely involved in its factories. The company also works
closely with its drivers to negotiate prices and to sustain the relationship. A further
example is the relationship held with franchisees from whom genuine strategic
involvement is asked. The subject of network will be discussed later in this paper
(chapter 4.2.3).

4.2.2.1 Means to collaborate internally

4.2.2.1.1 Communication:
The international aspect of the company renders communication as vital. Issues are
faced by retail division on an everyday basis and in order to raise them, the main
challenge is maintaining clear lines of communication.

Accordingly, employees hold meetings or conference calls regularly to ensure internal

communication and solve matters involving several departments. And when meeting is
not an option, other ways are sought to communicate. The VP of Planning and Allocation
stated “we all do speak all the time when we have issues because everything affects so
many different departments”. Senior VP of Global Product mentioned that meetings
between the different departments are not regular but that the organizations'
formalised meetings are increasing. When important matters come up, they inform each
other through phone calls as it is usually less time consuming than going back and forth
by email. Meetings will mainly occur between teams but also between departments or
between upper-managers depending on the subject. That way people from different
units, but affected by the same project, can discuss it together. This situation also
illustrates the synergies happening within Skechers.

4.2.2.1.2 Electronic support:

Thanks to the electronic support, better communication is achieved. Skechers’
employees work a lot with messaging and video calls to contact people around the world
instead of sending regular emails. Indeed, English is not the primary language for most
of the contacts in international business, so it is easier to talk to them directly. One of
 45.

Skechers’ directors explained that, “when you have a conversation with someone, you
can work through a lot of the complications. It is much easier to point out what you did
not understand and to clarify it”.

The company is also tech-driven, which facilitates everyday tasks and orders are made
electronically. Skechers uses FTP (File Transfer Protocols) servers and the data is saved
on them. The purpose is to gather information that could be useful to many
collaborators within Skechers. Instead of contacting directly the person in charge,
people can consult the server and find the most current version of a new visual
directive. It facilitates the coordination within the whole group, as in the department
Global Operation most of the questions reaching them are similar and ask for
comparable answers. The system alleviates the numerous emails directed to the person
in charge, who may not respond quickly enough. This way, information is found
immediately when needed.

4.2.3 Creation of a network

In supply chain management, communication is vital to perform successfully (Zhu,
Sarkis & Lai, 2008), so is transparency in communication (Carter & Roger, 2008) as
stated by a Vice President “communication is key, definitely in business”. Moreover,
communication with external stakeholders is as important as internal communication
especially as the company is getting bigger and bigger. The management of supply
chains requires communication and when company boundaries are not set the network
becomes an extended vision of the supply chain and external stakeholders are also
included into the supply chain (Kumar et al., 2012). At Skechers, everyone is willing to
collaborate and the relation with external stakeholders is good and open. The
collaboration is “really based on a mutual respect and problem-solving capability” as
one of Skechers’ VP's explained. The Director of Retail Marketing in particular explained
that they work a lot with the field and in order to support the retail stores “we have to
be communicative with them”.

When a problem with one of the collaborators is faced, both parties involved have
always been able to sort it out together seeing as both want something from the other
one. As long as the concerned partners inform Skechers and explain the encountered
problem, Skechers will work with them to avoid making claims or generating financial
difficulty. However, if they try to hide things and Skechers finds out about it, they will
 46.

charge back as much as needed to take care of the problem. According to the Senior VP,
the reason for that is that Skechers feels betrayed by the partner. Nonetheless, if they
work together through problem solving, they will share the difficulty as partners. This
way of working has fostered good relationships where everybody feels part of the team.

The VP of Planning and Allocation also added to the general relationship with external
stakeholders: “we have very long term relationships with everyone”. Since the beginning
of Skechers, changes have occurred but the company has been working with the same
freight forwarders and custom brokers for over 17 years. There is also continuity in the
relationship. For instance, Skechers in now working with a freight forwarder that used
to be an agent of their custom broker. Although both companies are not partners
anymore, Skechers continued the collaboration and they all manage to collaborate.
Moreover, the customs broker has been bought three times over the years, but Skechers
kept working with them. “That’s the relationship” said the Planning and Allocation Vice
President.

However, collaboration with external stakeholders is limited. For instance, Skechers has
no control over the carriers that the wholesale customers work with. Since carriers
represent the highest cost for the department Planning and Allocation, and since
Skechers desires to maintain a good and durable relationship with them, negotiation
and collaboration are key in solving any issue. Another example lies in the negotiation
with external stakeholders in the Retail Marketing department. Skechers knows what it
wants and can be pretty tough to work with, unbalancing collaboration.

4.2.3.1 In the Logistics

4.2.3.1.1 Processes:
Communication is enhanced with the use of processes. Once a year, charges and rates
are renegotiated with the collaborations made by the Planning and Allocation
department. As the business is constantly changing many different things can happen
over a year. The VP of Planning and Allocation works closely with freight forwarders,
factories, custom brokers, and trucking companies to handle together at the port pricing
or any other kind of issue met.

Processes are put in place, but they do not always work correctly. For example, there is a
specific process to communicate with the field but it is rarely followed. If the stores have
 47.

a marketing opportunity that they want to seize, they have to fill in a form and submit it
to the Retail Marketing department who will review it. Then stores have to contact the
retail hotline, which goes through operations and are finally forwarded to the Retail
Marketing department. In reality, what happens is that stores and district managers
contact the department directly and constantly. All these steps slow down the process,
but at the same time it is distracting for the department's employees to handle all
proposals.

4.2.3.1.2 Standard operation procedures (SOP):

Operating procedures are provided to the people Skechers works with. However, the VP
of Planning and Allocation was convinced that more operating standards could be used
in areas such as Distribution where a lot of temporary employees are hired.

SOP are critical in the good functioning of Skechers so that everyone’s actions are
heading in the same direction and are consistent with each other. Collaboration is
present across all functional groups in order to put an effective system and to secure
consistency among all stores. Obviously there are times where deviance from SOP's and
loss of consistency are observable. In such times, the right alterations and adjustments
will be needed.

4.2.3.1.3 Routing guides:

Routing guides are necessary to develop effective logistics operations and to ensure an
easy transportation and collecting process (CCC, 2014). They are composed of routing
instructions and of commitment procedures for carrying products from suppliers to
customers (Catalano Ruriani, 2007). Besides, routing guides facilitate the interpretation
and the process of routing instructions while making sure they are followed (Catalano
Ruriani, 2007). Through precise instructions, suppliers ensure dependable relationships
with customers, while supporting the cost of the management process and selecting the
right carrier for the operation (CCC, 2014). The customer is then assured about the
service quality (CCC, 2014). Indeed, shipping constraints, e.g. time and cost, can be
tackled as routing guides recognise these constraints and provide solutions (CCC, 2014).

According to CCC (2014), routing guides improve the relationship between the supplier
and its customers, but also between the transporter and its customers. Indeed, it
considers customers' concerns, while considering shipping lanes and optimising the
 48.

shipment (CCC, 2014). Routing guides facilitate collaboration within Skechers and with
customers by establishing rules to avoid shipments from being lost or unexplained (CCC,
2014). Those rules usually need written recognition from the store manager for
instance, taking delivery of the shipment (CCC, 2014). It allows better collaboration with
stores thanks to the definition of times deliveries while taking into account expedited
shipments and store opening hours (CCC, 2014). If every condition of the routing guide
is respected, Skechers can be assured that the customer will be satisfied as goods will be
effectively delivered.

4.2.3.2 Through franchises

Skechers developed its own franchise model different from the classical model
considered by Kotler et al. (2008) as the one where the franchisee just does the financial
contribution and the recruitment to benefit from some of the franchisor's services. The
company seeks partners sincerely involved in the project and in decision-making. The
objective is to get the franchisee's participation, their support and commitment, and not
just selling them a concept.

This new model goes accordingly to the Skechers' brand, i.e. a family brand. The director
of International Retail and Franchise Operations stated “you would never want to treat
your family with disrespect. I look at franchises as part of my family. […] You want to do
right by them.”

In Skechers case (2016d), franchisees are never left alone as their actions are backed up
by a financially stable company with knowledge in marketing, merchandising, and
operations. The company supports franchisees during the set-up of the store, but also
the management through training sessions (Skechers, 2016e). The franchisee has also
access to Skechers’ data, trend research and inventory management know-how
(Skechers, 2016e).

4.2.3.3 With suppliers

According to a Senior VP, the main challenge in this industry is the quality of the people
across the entire supply chain. A difference lies in how people see the future and work
with Skechers. On the one hand, there are people with a vision for the future, who can
lead a team with the objective to build a partnership with Skechers. They bring things to
the footwear company and help them grow. On the other hand, there are mediocre
 49.

managements, who can barely sustain their business and who are always in crisis
management. They can never give a straight answer or improve their services as
mistakes keep happening even though they promise the opposite. This situation shows
that Skechers’ strength lies in the people they join forces with. The company decides to
collaborate with those who have a strong management and discussions take place with
the problematic partners to find ways of improvement. If no solutions can be reached,
Skechers prefers discontinuing the partnership. The Senior VP explained that,
“Sometimes you have to let people go and replace them with more qualified people or
people who have a vision”.

4.2.3.3.1 Illustration: the Chinese office:

The clothing and footwear industry is especially exposed to inhuman working
conditions and sweatshop issues (Park & Rees, 2008). Asian factories are far from being
free of these issues, which makes the protection of working conditions a priority for
Skechers. Moreover, most Chinese factories accommodate the workers making the
safety of the facilities a necessity as well as making sure wages are appropriate.

In China, as previously mentioned, a department is dedicated to the CSR compliance,

with the Code of Conduct, of the factories in Asia and focusing on getting them to care
about their workers, their emissions and to invest in their equipment and facilities.
Skechers’ offices in China are therefore employed as a way to collaborate directly with
factories, as these are constantly being audited and supervised to make sure compliance
requirements are met. It is of utmost importance to control the factories, since having
rules does not necessarily mean that they are followed (Ethicalconsumer, 2007).

Skechers reviews factories before customs does and works with the factories to improve
the standards in order to meet the minimum-security requirements. According to
Skechers (2016), suppliers are audited with or without announcement and it includes
interviews with the workers. During the audit, Skechers will control that there is no
child labour, that security conditions are respected, and that eco-friendly actions are
implemented (Skechers, 2016). Via Skechers’ audits, experience through observation is
gained in terms of equipment or waste management, for instance, and then used in other
organisations. In the spirit of collaboration, this knowledge is shared in order to
improve the whole network of factories.
 50.

Additionally, upper management often pays visits to its overseas factories to ensure the
working conditions are satisfactory. The Senior VP of Global Product stated, “in a year
period of time, I have been physically in all of our factories to check the working
conditions”. If the reason for the non-compliance with the basic requirements is bad
management, the factories are required to resort to consultancy services. Such services
can also be consulted by Skechers to conduct third party audits for some smaller parts of
the business, which is advised by Tachizawa and al. (2015) to monitor suppliers.
However, most factories manage to work out their sustainability issues internally.
Moreover, every 3 or 4 years, customs audits Skechers by picking one of their suppliers
or visiting their domestic facilities and reviewing them.

Skechers has an employee in charge of Quality Assurance in every factory to help the
monitoring. They are responsible for simple issues but they sometimes lack good
training for bigger issues. They will then contact Skechers, which will provide them with
feedback and the problem will be discussed during a meeting in the Chinese office.
Thanks to that, cooperation and communication is kept consistent between Skechers
and the factories in China.

4.2.3.4 For advertising purpose

4.2.3.4.1 With medias:

External stakeholders also include media. Skechers works with radio stations,
newspapers or TV. For instance, the director of Retail Marketing is consultant for the
department for special campaigns such as the one organised with MTV for the Music
Awards, or the Friendship Pier to Pier walk.

4.2.3.4.2 With celebrities:

Skechers frequently collaborates with celebrities and athletes for its marketing
campaigns. Some examples include Brooke Burke, Tommy Lasorda, Kim Kardashian,
Ashlee Simpson, or Britney Spears (Athlete Promotion, 2016). For instance, the current
TV commercials feature Demi Lovato and Meghan Trainor. The latter's recording
happened according to the Skechers family culture, i.e. Meghan Trainor’s parents and
brother were involved in the production and Skechers’ CEO was there with his daughter
(Skechers, 2016c). However, endorsement is not only about marketing as the
collaboration also aims at improving the product (Metzler, 2014). Indeed, Kara Goucher,
 51.

an American marathoner, signed with Skechers and is now giving feedback to Skechers
Performance team to improve the shoes (Metzler, 2014). The same example can be
found in the partnership between Skechers and the golfer Matt Kuchar who works with
the team to develop new footwear (Emmett, 2016).

4.2.3.5 With the Government

4.2.3.5.1 Customs-Trade Partnership against Terrorism (C-TPAT):

C-TPAT is a membership with US customs to provide a safe supply chain and was
composed of more than 10,000 certified members in 2011 (CBP, 2016). Taking part in
this program is voluntary and free for the company (CBP, 2014). Customs came up with
the program after 9/11. They wanted to get the trade involved as a stakeholder and to
put processes into place to protect each individual company's supply chain. Skechers
has recently been taking part in this program and it is fully implemented by the Customs
Compliance department.

C-TPAT is a major program of collaboration between the members and the US Customs
and Border Protection (CBP) to protect the supply chain and improve its security (CBP,
2016). Taking part in this program implies collaborating with CBP to protect the supply
chain and working with the U.S. Government to prevent terrorism (CBP, 2014). Since the
implementation was mandated by upper-management, people know that it has to be
done and collaborate willingly. The department hasn't met any issues in fulfilling C-
TPAT requirements. For instance, with countries like China and Vietnam that are high
tech oriented and aware of the program, the work is easier. However, this is not the case
for every country Skechers works with. Countries like India are less knowledgeable of
the process, but information can still be found.

Customs came up with a series of minimally required security requirements that not
only Skechers needs to fulfil, but also the carriers and the factories. It is part of Skechers
responsibilities to make sure that their supply chain partners are meeting those
requirements. If partners are not complying with the requirements, Skechers
collaborates with them to implement those specifications so that partners are as secure
as they can be. However, most of the carriers Skechers is working with are C-TPAT
certified and have been verified by customs. However, manufacturers are not eligible for
the program, mostly because they are usually located in a different country.
 52.

Then, CBP provides its partners with benefits such as reduced inspections at the port
and being part of C-TPAT is also a way of collaborating with other countries (CBP, 2014).
Indeed, the program has partnerships with various countries, which have signed a
Mutual Recognition Arrangement such as New Zealand, South Korea, Canada, or the EU
(CBP,2016).

4.2.3.5.2 Trade Facilitation and Trade Enforcement Act of 2015:

The Trade Facilitation and Trade Enforcement Act of 2015 forbid companies to import
goods from factories carrying out inhuman working conditions (Burnson, 2016). This
text allows customs to seize goods supposedly produced under inhuman conditions
(Burnson, 2016)

Laws are involving and implementing programs such as the C-TPAT to secure the supply
chain and assure the on time delivery of products to the customer. Indeed, collaborating
with the government for a voluntary program certainly leads to complying to laws such
as the Trade Facilitation and Trade Enforcement Act of 2015. Consequently, the
company's importations are less likely of being seized by customs. Collaborating with
the government is also a way of improving collaboration with other stakeholders.

4.2.3.5.3 California Transparency in Supply Chain Act of 2010:

Collaborating with the government is not always voluntary on the company’s behalf. The
California Transparency in Supply Chain Act of 2010 is enforced by the Californian law
so that companies disclose their efforts to improve their supply chain annually in order
to suppress slavery and human trafficking (Winsor, 2015). Disclosures should be
present on the company’s website and should be easily comprehensible (Winsor, 2015)
as found on Skechers’ website under the investors' tab. Among other things, Skechers
affirms taking actions by verifying and evaluating the supply chain, auditing suppliers,
or training employees (Skechers, 2016).

Even though Skechers follows this legal requirement, a study highlighted that only 6
companies scored one hundred per cent on compliance with the act and on having a
consistent behaviour (Winsor, 2015). The average score for compliance was 60 per cent
while the average for making non-deceptive statements was only 31 per cent (Winsor,
2015). Although the act is a way for companies to collaborate with the government,
most of them do not fully comply, which is also the case of Skechers.
 53.

4.2.3.6 With NGOs

Positively affecting the community, not just in the hometown, but all over the world, is
part of Skechers. A Director stressed that, “the local support teams, the country teams,
the marketing country managers, the sales representatives all look for opportunities to
participate in local events”. Working with Foundations helps the organisation to show
how family orientated the brand is and how much they care about their community. It
helps tying the stores locally in the community.

4.2.3.6.1 BOBS from Skechers:

Skechers launched a line of espadrille, BOBS, available in department stores, shoe stores
and online stores. This assortment is related to a charity from Skechers. In fact, for every
BOBS purchase, the Californian company donates a new pair of shoes to a child in need.
Their main partners are SolesforSouls and Fashion Delivers through whom the donation
is made. By the end of 2014, over 10 million pairs were donated to charity organisations
in the USA and around the world (Skechers, 2014).

This action is the biggest and most global social responsibility campaign organised by
Skechers. According to one of Skechers’ directors, the program is “both a gesture of
goodwill for the community and the world”.

The BOBS action is changing its course to move to BOBS for dogs as the new partner will
be a no kill animal shelter. Skechers joined the charity Best Friends Animal Society for
the new BOBS campaign, collecting money to end the killing of pets in shelters (Brock,
2016). According to Skechers’ CEO, this action is also a way to motivate customers to
consider the adoption of pets and to give them ways to support the charity (Brock,
2016). The company uses its BOBS collection for philanthropic acts and this new
partnership is a way to support other charities and to build the altruistic image of
Skechers (Weilheimer, 2015). Moreover, this collaboration helps Best Friends to spread
the message, as the campaign is composed of shoeboxes, special-edition shoes, in-stores
promotions, and media campaigns (Weilheimer, 2015).

4.2.3.6.2 Pier to Pier Friendship Walk:

Skechers partnered with the “Friendship Foundation”, committed to help people with
special needs, to offer the opportunity to children to meet the Dodger players before the
beginning of a game (Skechers, 2012). This event introduced the fourth Skechers “Pier
 54.

to Pier Friendship Walk” sponsored by Nickelodeon and collecting donations for the
“Friendship Foundation” and for education (Skechers, 2012).

The Friendship Walk is not only a wish of Skechers’ top management to help people in
need; it is also a commitment from the whole staff and Skechers’ partners. Indeed, the
director of Retail Marketing explained that the retail department for instance raised
$116,000 for the event. They approached the vendors of giveaways, bags and more and
asked for sponsorships or donations, they also approached friends and family. The
department was physically active at the registration of the event, which comes with a
small donation. For this event, collaboration is visible between co-workers, friends and
family members, and between the company and the Friendship Foundation. Skechers
also collaborates with big sponsors to raise as much money as possible to help people in
need.

4.2.3.6.3 Other charitable actions

Skechers actions are not only taken in California near the headquarters. For instance,
they are working on an event in the North East with Sunrise Camps, providing free of
charge day camps for children with cancer and their siblings. The collaboration with
Sunrise Camps is done through Skechers’ 78 stores in the North East, where they
organise in-store register round up donations.

Another operation occurs during the entire month October; the register round up
donations over all North American stores and over the e-store is dedicated to breast
cancer awareness. Skechers collaborates with the American Cancer Society and together
they organise, in San Francisco, the American Cancer Society Making Strides Against
Breast Cancer walk (Abbott, 2015).

Furthermore, Skechers performance division became the official sponsor of the Los
Angeles Marathon starting from the 2016 race. The Skechers Performance Los Angeles
Marathon hosts an official charity program aimed at contributing to society (Conqur
Endurance Group, 2016). The program offers non-profit organisations the possibility to
use the major event as a medium to raise money and awareness for their causes (Conqur
Endurance Group, 2016).

Collaboration with a third party business also happens outside the US, like in Ireland
where Skechers organised a campaign benefiting children with special needs.
 55.

Their philanthropic actions have increased since 2009, as no publicized charitable

actions are observable between Skechers’ creation in 1992 and the first Pier to Pier
Walk in 2009. The evolution is evident when looking at Figure 9.
Figure 9: US Charity involvement since 2009

Source: Own elaboration

4.3 Decision-making at Skechers

4.3.1 Hierarchy
At Skechers, there is obviously a chain of command (see Figure 10) that needs to be
respected. Certainly, lower positions have to report to their superiors. In general, the
interviewees have experienced push back, in a way or another, in the exercise of their
function and do not always agree with decisions taken by upper management and that
must be implemented by them. Moreover, gaps between what is asked of them to do and
the wishes of external stakeholders are also experienced at times mainly in close and
long-term relationships.

The management’s mission is to make sure a common vision is shared. The aim is
ensuring everything runs smoothly across the activities every leader is responsible for
by keeping every collaborator on track.

4.3.2 Influencing the decision-making process

4.3.2.1 Context
The decision-making process cannot be analysed without taking the context into
account (Pimentel et al., 2010; Prismeyer & Mudge, 2008). Overall, the interviewees
agree that the ultimate goal is to manufacture, ship and sell as many shoes as possible.
 56.

Figure 10: Skechers’ chain of command and responsibilities

Source: Own elaboration with interviews information

They also agree that Skechers is much more than a footwear brand; it is progressively
becoming a lifestyle brand as it is developing its activities into apparel and accessories
among other things. A common vision is definitely shared by the Skechers' management.

The interviewees have all stressed how huge and global the company has become and
the current fast growth it is experiencing despite all obstacles. The VPs and senior VP
interviewed have been able to observe the development first hand as they have been
present since the beginning or at least for a long period of time. Despite the hierarchy,
the interviewees added that the family feel of the very start could still be felt to this day
in the corporate culture. Skechers People feel like they are growing together with the
company and value teamwork and collaboration as well as experience.

A VP stated, “it’s a pretty flexible company and I think decisions are very reasonable".
According to the Senior VP Global Product, the decision process is generally
collaborative and issues can be openly discussed. The CEO “is always open to listen to
my views or other people’s views, he asks a lot questions". She continues by explaining
that although he will listen to all different views, he will usually follow his own vision.

4.3.2.2 Leadership
The literature revue highlighted the leader as a factor influencing decision-making, and
more specifically the ethical decision-making process (Selart & Johansen, 2011). Indeed,
their central place in the organisation allows them to build group actions based on
independent actions (Hoyt et al., 2013). Leaders’ values are present throughout an
organisation (e.g. Park & Rees, 2008), influencing every decision taken. Skechers leaders
 57.

play a key role in determining the business values and the ethical climate of the
company. At the source of these business values is CEO Michael Greenberg, whose
success and reputation are undeniable, as demonstrated by his ranking among best U.S.
CEO's. Indeed, Michael Greenberg was ranked 17th best US CEO at a mid-cap company
(Skechers was the only footwear company in the top 20) by the social-network platform
ExecRank based on experience, professional success and reputation, business outcomes,
and earnings progress (Butler-Young, 2015).

However, the leaders’ power can lead to abusive actions such as objectifying people or
ignoring them (Hoyt et al., 2013). According to a Director who also works on some
larger projects and the strategic vision of the company, “it is not a democracy here”
decisions come from the top-down and there is unfortunately little room for initiative.
What has been decided by upper management simply needs to be implement. And even
when it is not working, the same process starts all over again. This can be conflicting as
the network of stores referred to as the field is usually expecting something different
than what has been decided by upper-management. Unfortunately, most of the time,
what the field or the department which is constantly in contact with the field believes
should be implemented does not matter much. This shows the strong power held by the
leadership as well as the leaders’ determination, which assists them in coping with
paradoxes.

Leaders encounter paradoxes in ethical decision-making and have to find a way to

resolve them (Smith, 2014). Embracing paradoxes is one way to manage them, but it
calls for strong leaders, often strict in decision-making (Smith, 2014). A senior VP raised
a dilemma faced by the company, the cost of environmentally friendly initiatives, which
remains a significant factor in the retail industry. For instance, using recycled materials
costs in reality more than using the regular version due to the high cost of the recycling
process, the challenge is thus to balance this issue with the client's willingness to pay.
Another dilemma lies in negotiating rates with suppliers while pushing for socially
responsible practices across the entire supply chain. According to the Senior VP, the
challenge is having the partners continue to make investments to get more efficient and
grow with Skechers while at the same time still getting the best price from them: “I kind
of get stuck in the middle [...] I let them say their piece but that is how we handle things”.
Ultimately, the partners have no choice but to improve their efficiency and give the best
 58.

prices. Those dilemmas, which can be solved by analysing the situation (Lurie & Albin,
2006) can turn into paradoxes over time that cannot be solved anymore (Smith, 2014).

Finally, Smith (2014) recognised Global integration vs. Local adaptation as a paradox
that international organisations have to face. Skechers’ ambition is global continuity
with a local flavour, a way for them to embrace this paradox.

4.3.2.2.1 Illustration: Green Fleet System Case

Changes also happened within Skechers in order to create greater collaboration and to
support their partners. A clear change occurred with the trucking companies that used
to be owner operated and now changed to an employee basis. The change resulted from
strikes and demonstrations.

In 2014, Skechers faced a scandal linked to some of its partners (Dreier, 2014). About 25
per cent of Green Fleet’s drivers were wrongly categorized as “Independent
Contractors” therefore missing a part of the benefits and legal security (LAANE, 2014).
They were consequently paid by the load which could only be done once a day and their
earnings were reduced considering that they had to pay for insurance, fuel or additional
charges affecting the driver (LAANE, 2014). The Los Angeles Alliance for a New
Economy (LAANE) disclosed a report highlighting the gap between Skechers’ image and
the behaviour of its partners about working conditions, i.e. drivers were exploited,
stressed and faced harsh conditions (Dreier, 2014; Robinson, 2014).

According to Dreier (2014), this situation is representative of the logistics industry.

Retailers as big as Skechers have the power to control their suppliers and use it in order
to make them lower their costs (LAANE, 2014). Consequently, suppliers respond by
breaking the labour law and paying low wages, cutting on health and safety
specifications, and imposing harsh working conditions (LAANE, 2014). Drivers
protested in front of Skechers’ headquarters asking the company to take its
responsibilities and enforcing a Code of Conduct on its partners, following the model of
Nike or Adidas (Kirsh, 2014; Robinson, 2014). The Footwear company claimed that it
was not its role to check a subcontractor’s employees conditions, even though Skechers
and Green Fleet, for instance, have been working together for almost two decades
(Dreier, 2014). Feingold (2014) even compared the situation as the one occurring in the
1990's when Nike was accused of sweatshops and was denying the accusations.
 59.

It is necessary for Skechers to respond to such actions as it can damage their image
(Park & Rees, 2008) if they are not consistent with their external message of ethical
behaviour. Moreover, Park and Rees (2008) highlighted that top-management
dedication is important to translate such actions into real behaviours within the
organisation. The situation has improved as Skechers works to sustain their
relationships. The carriers and the departments involved grow closer as the
collaboration continues; discussions happen weekly between both parties to advise on
the priorities.

4.3.2.3 Ethical involvement

Skechers business values are reflected by the various CSR actions undertaken. From
these numerous actions, beyond the obvious ethical reasons and by tying the stores to
their local community, the company gains awareness and respect, leading to brand
establishment. Avoiding doing business with suppliers lacking ethical thinking is a way
of protecting the business, it is brand-driven but a victory for all parties involved. The
leaders understand the risks and opportunities that sustainability presents and are
increasing their interest in societal and environmental issues. Without the upper-
management devotion towards SSCM, decisions would not be taken to improve it
(Alexander et al., 2014 ; Beske & Seuring, 2014). The implication of the top-management
determines thus how decisions are taken within the company.

According to the participants, sustainability is certainly present in the distribution

centre and all encourage ecological thinking in their departments. At the headquarters,
one of the most eco-friendly buildings of Manhattan Beach area, there is no concrete
policy but, waste is recycled, motion sensor lighting and solar panels are employed,
diesel is replaced with natural gases to the maximum, recycled paper is used, double
sided printing and electronic documents is encouraged allowing a gain of time and
therefore contributing to overall efficiency. A Director stated, “there is a natural
evolution, simpler, easier, and faster”. Furthermore, it seems of interest to note that the
international side of operations does not always allow uniformity. An initiative such as
replacing paper bags by premium eco shopping bags, for instance, was inappropriate in
Brazil. In Europe and increasingly in the US, common practice promotes sustainability.
However, this is not yet the case all around the world. In this example, a balance needed
 60.

to be found between local manners and sustainability so the quality of the paper bag
was improved to allow reuse.

All the departments are not necessarily involved in a specific CSR action but among the
interviewees the desire to contribute to the community is noticeable. For instance, a VP
participates to the annual women lunch of the port of Long Beach (California, USA), one
of Skechers partners, to provide young females with insight on the different jobs they
could get at the port.

4.3.2.4 Ethical climate and organisational culture

According the Parson and Artistico (2014), the ethical climate determines how ethical
and unethical attitudes are valued in an organisation. It encompasses the common
understanding of how things should be done and the company’s expectations on ethical
decision-making and the right attitudes (Parson & Artistico, 2014). Building the
organisational culture, ethical decision-making should not be forgotten in the reflection.

A manager noted that part of Skechers' role is to audit their own processes and to
correct their mistakes such as in the case of incorrect reporting to customs. In such a
situation, the decision was made to go to customs with the mistake and a plan to fix it
instead of covering the issue. The goal is to ensure the processes are right and smooth
and to work hand in hand with authorities.

Another example lies in the particular attention paid to the factories. A manager believes
that, as continuous growth is planned for Skechers in the coming years, requirements
are becoming stricter and factories need to understand the conditions of doing business
with the company. The Senior VP adds that extended business will be done with the
partners with a strong management and discussion will take place with the problematic
partners to find ways of improvement. If no solutions can be reached, the hard part is
telling the partner that business is discontinued.

4.3.2.5 National culture

As stated before, Selart and Mudge (2008) consider various factors as influencing the
decision-making process, and one of them is the culture. The country of origin has also a
role to play in the ethical decision-making process. Indeed, Curtis et al. (2012) found out
that people have unconscious understandings based on their country of origin leading to
specific reactions towards ethical questions. Moreover, ethical decision-making uses
 61.

stereotypes, which are often dependent on the national culture (Curtis et al., 2012). The
American culture is clearly visible at Skechers and is reflected in the daily work and
decisions. To look at the American culture, we decided to base our analysis on
Hofstede’s six cultural dimensions framework, i.e. power distance, individualism,
masculinity, uncertainty avoidance, long-term orientation, and indulgence (Appendix
10).

According to Hofstede’s analysis of the American culture (see Appendix 10), the
combination of a high score of individualism and a low score of power distance results in
particular behaviours. He noted that even when there is an organisational hierarchy, it is
often only because it is more convenient and the top-management is available and
consults other employees for their judgement and knowledge. An element observed
about Skechers business culture is the availability and accessibility of the people across
the entire hierarchy. Also, the corporate office is easily reachable by the field for
questions, support or opportunities. This culture is also strongly based on collaboration
since every employee or manager expects to be asked for advices when the subject
concerns their level of expertise. Most departments at Skechers have mentioned that
they expect to be concerted for decision-making, but usually the top-management takes
decisions without hearing out the department in question. However, these decisions
usually do not work out and the solution originally thought of by the department ends
up being implemented. The sharing of information is central to culture and
communication, characterized as direct and informal. Moreover, Americans are self-
confident when inquiring information from others. This point is clearly present within
Skechers as explained in the section about collaboration. Information is regularly shared
among co-workers through meetings, phone-calls or instant messaging.

The American culture is highly individualist, meaning that people look after themselves
and their close family first, while not taking too much help from authorities. The family
concept is obviously present at Skechers. The entire network is considered as family and
treated as such. When faced with a problem, Skechers and the collaborator work it
through together and share the difficulties. Another illustration lies in the franchise
model, franchisees are treated as family members and thus treated with respect. The
Director of International Retail and Franchise Operations stated “I look at franchises as
part of my family”. The same happens goes for retail stores, colleagues or other
 62.

collaborators. In fact, Skechers treats their family members with respect and expects to
be treated with the same level of respect. Distributor DSW Footwear described the
relationship with Skechers as great and could not think of any unresolvable issues.
Moreover, the company takes actions in order to display this family feeling externally as
well, such as with the CSR actions supporting charities.

The American culture scores high on Hofstede’s masculinity factor, i.e. the culture is led
by the “best-in-the-field”. Associated with the high score in individualism, the American
attitude is driven by the idea that the winner gets everything. Therefore, Americans like
to talk about their success. It was noticeable during the interviews at Skechers. A
director from the retail department was very proud to have raised over a tenth of the
total raised by the entire company including the large sponsors for the largest CSR
action organized by the company, the Friendship Pier-to-Pier walk. The success of the
action was celebrated with all the employees at a provided luncheon to present the
collected figures, to thank everyone for their efforts and to foster motivation for the
coming years. Another illustration at Skechers is that several interviewees mentioned
the recently achieved position of second best on the American performance sneaker
market. Moreover, Skechers does not intend to stop there as it is constantly chasing the
number one competitor, Nike. According to the study, Americans display a “can-do”
attitude, as they assume that everything can always be accomplished in a better way. As
mentioned by Senior VP interviewed, Skechers mission statement is offering the most
comfortable, durable and trend right shoe. With this in mind, heavy investments are
made in testing and R&D to be at the forefront of the latest technologies.

Moreover, in the American culture, the thinking that conflicts enable improvements is
present, leading to a many court cases. This subject is not unknown to Skechers, as they
regularly face lawsuits. A recent example is their trial with Adidas, blaming Skechers for
frequently copying the brand’s designs, and the latest being the iconic Stan Smith
(Green, 2015). But Adidas is not the only one taking Skechers to court. At the beginning
of 2016, Nike charged the Californian company for imitating its Flyknit style covered by
copyright (Pamplin Media Group, 2016). This was not the first time that Nike sued
Skechers, in 2014, a legal fight occurred about the Converse shoe (Pamplin Media Group,
2016). However, lawsuits do not only happen charging Skechers. In 2015, the company
sued Steve Madden Ltd. for copying the Skechers Go Walk collection (Sutherlin, 2015).
 63.

The future is uncertain by definition, control is sought and risks are taken, culture deals
with the anxiety coming out of uncertainty in different ways. Hofstede qualifies the
American society as normative, i.e. the perceived situation influences the attitude,
leading to the acceptation of new ideas and the willingness to implement them. An
example would be the commitment of Skechers to develop the most state-of-the-art
sustainable facilities of its field, this idea was accepted at some point and successfully
implemented. Furthermore, 9/11 resulted in more dread in society driving the
government to take measure and to survey everybody. Skechers is taking part in these
monitoring processes by implementing the C-TPAT, a program controlling the supply
chain.

The US score low on the long-term orientation factor, meaning that they prefer sticking
with traditions and norms. For instance, Skechers’ management has not faced a lot of
change since the time of LA Gear, the former business of Robert Greenberg. The team is
still the same and the value of teamwork of the very start has been kept, making it one of
the strengths of the company. This cultural factor is also present in the partners
Skechers decides to do business with. As mentioned by the VP of Planning and
Allocation, they have been collaborating with the same partners for almost two decades.
The short-term orientation is heavily reflected in organisations, as they prefer to
evaluate their short-term performance rather than their long-term, issuing their profit
and loss statements quarterly. Indeed, Skechers is more focused on short-term results
rather than long-term. In the late 2000’s, the US government took environmental
initiatives offering tax breaks for that matter and companies took advantage of it.
Unfortunately, this concern is still relatively recent among US companies and at
Skechers there is has not been any long-term strategy meeting yet at the senior
management level to discuss the medium term goals, the means to accomplish those
goals or the company’s footprint on the environment. While some other companies have
long-term plans and meetings regarding these matters. Another example lies in Skechers
financial statements. Indeed, they released on the 02/21/2016 their first quarterly
results of 2016 (SA Transcripts, 2016), meaning that they are short-term oriented.

On the last dimension, The U.S. scores as indulgent meaning that the control over
impulses tends to be relatively low. The combination with the normative score leads to a
"work hard play hard" behaviour. This was noticeable at the annual retail conference in
 64.

January 2016. At the end of three days of intensive conferences and trainings, a fancy
dinner accompanied with a thank you speech from the top management, a lip sync battle
and other contests as well as a dance party were organized to close off the annual event.

4.3.2.6 Other influencing elements

Various scholars identified the gender as influencing ethical decision-making (e.g. Curtis
et al., 2012). Skechers has not yet addressed board diversity, like many U.S. companies
no women or minorities are represented among the board members (Morgenson, 2014).
Since 2011, when this issue had been raised, Skechers has not been concretely acting on
the promise to formally add diversity to its nomination policy (Morgenson, 2014). As
long as the shareholder value is maximized, the need for a diversified board does not
appear to be a priority for the company (Morgenson, 2014).

A Director believes that decision-making gets easier with experience depending on the
specificities of each department. For instance, the fact that International Business is
characterized by long implementation time makes it easier to work through challenges
and therefore eases execution. In fact, what is implemented on a global scale has usually
already been tested and retested domestically. So once it arrives in the international
department, it just needs to be moulded and applied to the different territories.

4.3.3 Paradoxes and dilemmas

Like any other company, Skechers faces paradoxes for which no perfect solution exists
(Smith, 2014). A first paradox lies in the strategy globalisation vs. localisation. On the
one hand, companies want to follow a globalised strategy and apply standardisation to
create synergies and on the other hand companies need to pay attention to local
demands allowing to better target customer needs (De Wit & Meier, 2014). To respond
to this unsolvable issue, Skechers decided to globalise with a local taste as a way to
maintain economic sustainability all around the world. The global feeling is present
through the company’s structure with departments for Global Logistics or Global
Operations. At the same time, a country manager is appointed to each individual
country, and Europe has seen the construction of a European distribution centre located
in Belgium.

Another paradox faced by Skechers lies in price competitiveness versus collaboration

with stakeholders. Low costs are necessary to face the competition therefore prices are
 65.

pushed down by fierce negotiation with suppliers for instance. Skechers is accepting this
situation and is not taking measures to change it. The situation has been manageable
until now, as some partnerships have remained the same for the last couple decades.
Simultaneously, as emphasized by the interviews, Skechers favours long term and
trusting relationships and works hard on maintaining those. However, consistently with
the American culture, Skechers has a short-term oriented strategic vision, their
quarterly results are proof.

Companies are also subject to dilemmas, solved thanks to a thorough analysis of the
situation (Lurie & Albin, 2006). An illustration at Skechers is the Green Fleet System
case, when the stakeholders' employees asked Skechers to take responsibility for their
inhuman working conditions. The footwear company was asked to make its partners
improve their working conditions. According to the literature, decision-makers have to
assess the whole situation to find a solution. The dilemma for Skechers was to figure out
if they had to take their responsibilities or not. Even though, we did not get information
on the subject, the Senior VP Global Product stated that negotiation happened with the
partner in order to solve the issue.

4.4 Skechers supply chain

4.4.1 Social concern

The footwear company has developed its supply chain in the form of a network.
Conscious of its social impact and aware that external stakeholders are not only
customers and suppliers, the company is active in cooperating with NGOs, medias and
governmental institutions. The company, by paying increasing attention to their
stakeholders’ expectations and concerns, is committed to responding to the needs of its
partners. This can be first illustrated by Skechers way of dealing with problems. When
one of their partners encounters difficulties, Skechers gets into a conversation with
them and works with them to find a solution and face the problem as partners. The
company prefers to work through the problem and maintain the relationship rather
than cutting ties and having to find a new partner. Further illustration of this behaviour
is found in Skechers Foundation and various CSR actions, such as the BOBS from
Skechers charity line, charity event sponsorships or the use of a Code of Conduct.
 66.

The Code of Business Conduct and Ethics is used by Skechers to collaborate closely with
stakeholders by making them follow and comply with the principles of the Code.
Moreover, the CSR compliance department in Asia works to assure this compliance by
supervising factories and ensuring good working conditions. Skechers’ upper-
management is also highly involved in this matter. The Californian company also shows
its social implication by integrating the governmental program C-TPAT for a safer
supply chain, free from terrorism.

4.4.2 Environmental concern

Skechers also directs its strategy towards environmental concerns. In 2012, the
company opened the doors of its new Californian distribution centre, which acquired the
LEED Gold certification for its environmental performance. Ecological thinking is also
fostered at the headquarters by using solar panels, natural gases, recycled paper, etc.

Skechers’ Code of Business Conduct and Ethics addresses social concerns, but also the
protection of the environment. It gives guidelines to factories to save energy and to be
cautious about the different kind of emissions, i.e. air, noise, and waste.

Despite several environmental friendly actions, the company does not always resort to
recycled materials. The VP of Planning and Allocation explained that recyclable papers
and cartons are used, but the Senior VP Global Product stated that no recycled materials
were used to manufacture. In fact, the cost of such materials is higher than non-recycled
materials and the footwear company would have to charge its customers more, which
they refuse to do.

4.4.3 Economic concern

Skechers promotes high ethical standards in the way of doing business. When a partner
does not display ethical behaviour, the partnership can be discontinued. In every
factory, Skechers also appointed a Quality Assurance person who helps monitoring that
quality requirements are met.

The Californian company has been constantly growing and is now second on the
American Footwear market, just behind Nike. This position gives the company
negotiating power, allowing it to drag prices down when negotiating with partners.
Through this kind of practices, the company takes part in the upholding of the
Californian logistics' system where drivers are misclassified (LAANE, 2014). Moreover,


Source: Own elaboration

67.
 68.

in its rise, Skechers displayed a tendency to copy competitors resulting in legal actions
and discrediting Skechers original designs.

4.5 Discussion

P1: “Cooperation in the supply chain is enhanced by means internal and external to the
network”

According to Park and Rees (2008), the international labour regulation has historically
been minimal and often judged as unwanted. Organisations have been facing growing
external pressures to improve working conditions and this matter is now key for the
management (Park & Rees, 2008). Santillo (2007) warns that the various interpretations
of the three pillars of sustainability can lead to using these pillars as a way to fake
environmental concerns.

The research highlighted the importance of the Code of Conduct for Skechers. Skechers
is dedicated to showing its ethical involvement and states that its reputation is its
greater asset, even mentioning how cautious they are about not staining this reputation
with partners not complying with the Code. However, Skechers has been held
responsible, in the past, for the behaviour of its partners and for not enforcing their
Code of conduct on their partners, be it a freight forwarder or a factory. In fact, having a
Code does not always ensure that it will be implemented and can sometimes be used
only for the appearance of being ethical. In 2005, Skechers was found to be working with
a Chinese factory where working conditions were inhuman (Ethicalconsumer, 2007).
Added to the Green Fleet System case of 2014, where Skechers forgot to care about their
closer stakeholders perhaps due to Skechers rapid expansion, this could lead to believe
that Skechers is more about an ethical image than genuine ethical practices. Yet,
conclusions about this situation are hard to make, it remains to be seen if Skechers will
literally apply the measures cited in its Code. Skechers ethical practices evolve with
time, this much is certain.

The size of the company and the numerous stakeholders have transformed the use of a
Code of Conduct into an absolute necessity in order to remain consistent regarding
ethics. It is used as a tool to create common ethical guidelines and as a foundation for
decision-making and assessing partner companies. Through this tool, Skechers helps
factories improve their working conditions, leading to employees’ retention, a current
 69.

major issue in China. Moreover, the footwear company is now highly involved in making
Asian factories comply with the Code as there is a branch of the Chinese office dedicated
on working on this matter, fully understanding that their stakeholders also include their
suppliers’ employees and that they have to care for them. Although the implementation
of the Code is mainly an answer to stakeholders’ demands, i.e. legal obligations and
pressures from consumers, results are visible as it has led to advancements in the
working conditions of the entire supply chain. The Chinese office is also used to enhance
the relation of trust between Skechers and its factories. Furthermore, according to
Husser et al. (2014), a company needs social contacts with its suppliers in order to get
optimal collaboration. Collaborative means are then internal to the company, even
integrated in their processes and daily activities. Upper management, from Skechers
headquarters, regularly travels all the way across the world to personally check the
working conditions at the factories. Vachon and Klassen (2008) stated that collaboration
with suppliers is the most beneficial type of collaboration for the organisation. Skechers
does seem to mainly focus its collaborative efforts on suppliers, probably due to the
usually long history between both entities.

Legal requirements illustrate that collaborative means can come from outside the
organisation. For instance, Skechers complies with The California Transparency in
Supply Chains Act of 2010. The act’s objective is to have more data available for
manufacturers and retailers in their attempt to face the supply chains’ issues of
enslavement and human trade (Skechers, 2016). The footwear company also voluntary
implemented a governmental program promoting collaboration and securing the supply
chain. Carter and Roger (2008) identified traceability and visibility throughout the
supply chain as supporting SSCM. While Skechers complies with the law, collaboration
is enhanced, as more information is available for its stakeholders, which brings
transparency to the supply chain and thus supports their SSCM.

When Skechers uses its Code, one can ask whether it is true collaboration, understood as
a one of the SSCM practices identified by Besked and Seuring (2014). Some observers
find codes of conducts to be useless as employees' needs are not always met and there is
no obligation to enforce (Andersen & Skjoett-Larsen, 2009). According to Andersen and
Skjoett-Larsen (2009) the Code is to meet the minimum-security requirements.
However, minimum requirements vary depending on the region of the world and result
 70.

in the sole compliance with the law instead of the respect and support of others. For
instance, Ethicalconsumer (2007) stresses that many companies pay the legal national
minimum salary or the standard for the industry, but it is hardly ever enough to live.
This could mean that company’s actions, which in theory should partly be social
according to the three pillars of sustainability, actually ignore people's needs and only
comply with the law in order to benefit from a positive public image.

Our study shows collaboration as an interconnected circle. In fact, for a company to

develop and implement collaborative means, actual collaboration will be needed to do
so, such as the implementation of the Code of Business Conduct and Ethics. And at the
same time, when collaboration takes place it results into reinforced collaborative
processes. On the one hand, we could highlight collaborative means developed within
the company like the Code of Business Conduct and Ethics, the different electronic
supports, the processes, or the Skechers Foundation. And on the other hand, there are
some additional collaborative means coming from outside the company such as the
California Transparency in Supply Chain Act of 2010, the voluntary C-TPAT program, or
routing guides used in freight.

This allows us to affirm our first proposition “Cooperation in the supply chain is
enhanced by means internal and external to the network” as internal and external
means bring more cooperation to a company and its network, and simultaneously
cooperation leads to a greater use of internal and external means.

P2: “Overcoming barriers to collaboration enhances sustainability allowing to reap

benefits from collaboration”

As huge as the company has become, Skechers’ corporate culture still has the original
family-owned business feel to it, this feeling was emphasized by all interviewees. The
feeling that everyone is working towards the same goals is strong. Trust and loyalty can
easily be built within and around the organisation, most probably due to the
organizational culture advocating these values.

For Pagell and Wu (2009), long-term relationships improve collaboration and increase
the amount of information shared between the partners. Long-term relationships are
preconized, which is visible on two levels. First, Skechers' management who, for the
most part, has been working with the company since its establishment. Secondly, this is
also the case with its stakeholders, the Californian company has been collaborating with
 71.

the same partners for a very long time and claims they are responsive to their
needs. However, Skechers’ analysis showed us that additionally to information sharing,
collaboration based on a long-term relationship leads to an unbalanced situation
because the strongest partner can influence negotiation while keeping a durable
partnership. If they wish to keep the collaboration going, partners have to grow at the
same pace as Skechers and sustain their business in the same way. The footwear
company holds enough power to ask for low prices while being certain that their
partners will accept them after negotiation. And this, most probably at the expense of
the collaborators' growth and consequently at the expense of investments in the
sustainability of the supply chain.

By linking Kumar et al. (2012)'s idea of sustainability allowing cost savings and Beske
and Seuring (2014)'s idea of collaboration considered as a SSCM practice, we can say
that collaboration allows to save costs, which confirms our assumption. Furthermore,
Beske and Seuring (2014) also consider trust between two partners as a barrier to
collaboration. As far as Skechers is concerned, the company has been working with the
same collaborators for almost 20 years, building a solid relationship and most likely a
trusting one, allowing them to enjoy benefits from these collaborations since the main
barrier, i.e. trust, is not a concern for them.

This outcome enables us to prove our second proposition “Overcoming barriers to

collaboration enhances sustainability allowing to reap benefits from collaboration”
also supporting Ortas and Monerva (2014)'s claim that close and long-term
relationships with strategic partners are essential to remain competitive. However, this
conclusion should be toned as the cost advantage resulting from the partnership most
certainly benefits the strongest partner in the negotiation.

P3: "Cooperation is a way to lower uncertainty in supply chain decision-making, affecting

the company’s network"

A long lasting relationship based on mutual trust allows Skechers to be reasonably

confident in the short-term future. Maintaining collaboration over the years, allows the
prediction of costs and the continuity of a well functioning relationship, which in turn
facilitates decision-making. Andersen & Skjoett-Larsen (2009) highlight the competitive
advantage resulting from long-term relationships.
 72.

Uncertainty is always present, as no company is fully safe from a scandal or accident in

its own facilities or in those of a partner company. As previously mentioned, Skechers
can be held accountable for something it did not commit itself. Incidentally, more and
more multinationals are held responsible for their partners’ behaviour (Andersen &
Skjoett-Larsen, 2009). Silvestre (2014) also considers collaboration as necessary to
manage external stakeholders, who represent a potential risk for companies. The Code
of Conduct and operating procedures have been identified as collaborative means, which
provides common guidelines and builds consistency within the organisation and with
stakeholders. By collaborating closely with internal and external stakeholders, Skechers
works towards avoiding such risks and bad events. Through collaboration, uncertainty
is lowered to its least, consequently facilitating decision-making. Andersen & Skjoett-
Larsen (2009) highlighted that internal and external stakeholders put pressure on
companies to improve labour conditions for instance. By collaborating with them,
companies like Skechers can learn more, beforehand, about their demands and
expectations and react accordingly. Therefore, decisions are reflected upon and thought
through before execution. With a thoroughly considered decision, facing critics or a
situation similar to the Green Fleet System case, for instance, becomes less likely.

A further element is the cooperating culture visibly present at Skechers. The example of
a manager reporting a mistake to customs in order to fix it shows how collaboration
affects decision-making. Indeed, when this happened it was not necessary to think about
what decision to make. The organisational culture and the will to collaborate with
authorities automatically led Skechers’ to inform customs about the mistake.
Collaborating with stakeholders makes future decisions more predictable and confirms
our third proposition “Cooperation is a way to lower uncertainty in supply chain
decision-making, affecting the company’s network”.

P4: "The organisation’s network and SSCM is the result of the leaders' actions and values"

Various elements have been identified as influencing the decision-making process.

However, the one standing out the most is the leader's influence (e.g. Alexander et al.,
2014; Beske and Seuring, 2014; Selart and Johansen, 2011). Although the American
culture is prone to hierarchy for a matter of convenience, at Skechers, the impact of top
leaders in the decision-making is significant. Decisions come from the top-down
probably due to the fact that the company is still managed by its owner-founders. In
 73.

2010, Skechers’ founders decided to create the Skechers Foundation in order to help
those in need and improve their community, attesting to the leaders’ ethical orientation
and philanthropic involvement. This goes along the same lines as Valentine and
Rittenburg (2007)'s statement, according to which older and more experienced
executives are more ethically driven. The foundation is also an evidence of the leaders'
role in the decision-making process. Indeed, through their position leaders have the
ability to federate people around a common project (Hoyt et al., 2013), which has been
achieved with the Skechers' Foundation.

Many charities are part of Skechers’ network as the company is highly involved in its
community. In recent years, as shown in Figure 9, they have been increasingly working
with charities and renewing their collaboration, which is a consequence of the top-
management's orientation. Even though Collier and Esteban (2007) consider that
collaboration with external stakeholders such as charities could be seen as
greenwashing, it really helps these organisations. Indeed, the director of American
Cancer Society (Abbott, 2015) stated that the partnership with Skechers helps them save
more lives and move their mission ahead. Moreover, partnering with competent
organisations ensures better campaign results as the NGO has the know-how and field
experience, while the company has the resources. If the collaboration is consistent with
the company’s image, it turns into a win-win situation for all parties involved.

Martin and Johnson (2010) stated that managers with a strong ethical thinking have
established trust with their partners and will increase their ethical investments.
Skechers' growing network ensues from their increasing ethical investments. Skechers
is one of the fastest growing companies in the industry and has reached second place on
the U.S. The company’s network increases as the number of partnerships with charities
expands which grows as the company itself expands. The same thing goes for the
amount of partnerships with celebrities, the fame grows together with the company’s
performance on the footwear market certainly resulting in more partnerships in the
future. Another example lies in Skechers’ decisions over unethical suppliers. If a supplier
cannot meet Skechers requirements, the footwear company will end the collaboration.
The leader's concern for ethics should influence the organisational culture since their
values flow through the whole company (e.g. Walker et al., 2008). The strong willingness
 74.

of leaders to establish ethical principles within Skechers as well as the family-type

relationships fostered with stakeholders builds the network, develops it and elevates it.

An ethical organisational culture supports SSCM (Carter & Roger, 2008). Consequently,
the ethical orientation of leaders reinforces sustainability in supply chains. In fact, the
obvious involvement of the leaders in charity work and the increasing number of
partnerships with charitable organisations justify our fourth proposition “The
organisation’s network and SSCM is the result of the leaders' actions and values”.

P5: "Ethical decision-making fosters collaboration across the sustainable supply chain,
which in turn impacts decision-making processes making cooperation and decision-making
complementary"

Skechers promotes collaboration, but at the end the founders take the final decisions
even when the concerned department, following their expertise on the subject, is
convinced that the decision is wrong. When cooperation is not respected and decisions
are taken without consideration of others, it can result in a great loss of time and lead to
frustrations on the employees' behalf since upper-management ends up blaming them
for bad results. However, Smith (2014) stressed that embracing paradoxes encountered
in ethical decision-making calls for strong and strict leadership. Collaboration and
decision-making can thus not be taken separately.

As previously mentioned, Skechers collaboration with charities has increased over the
past years. According to Collier and Esteban (2007), partnerships with NGOs with
significant contact with business culture results in the integration of the NGOs’ values.
That seems to be what is happening at Skechers as the involvement grows and the
culture slowly changes. Every year more employees are taking part in the Pier-to-Pier
Friendship Walk and the collected money increases. The management is very proud and
grateful for everyone's efforts as shown by a thank you lunch they organized.
Cooperation influences actions taken within the company such as collecting money in
stores, which is a decision that has to be taken by a manager. The decision to donate
money from the BOBS sales generates an increase in collaboration within Skechers.
Indeed, this project collaborates with the charity SolesForSouls, but also recently with
Best Friends Animal Society, extending Skechers network of partners. As implementing
ethical actions implies additional costs and administrative work for the company (Costa,
Lages, & Hortinha, 2015), managerial decisions are key in the process.
 75.

Trusting stakeholders has been identified as influencing positively environmental

corporate practices (Sharfman et al., 2009). Kumar et al. (2012) even gave the example
of investing in new technologies, which joins the example of Skechers distribution
facilities awarded with the LEED certification. The footwear company appears to have
increased its involvement in environmental projects, just like it has been developing its
charitable collaborations. These decisions were taken by the company while trust was
built through collaboration with the partners. Both concepts linked together have
resulted in the present situation.

One can say that collaboration at Skechers is closely linked to how decisions are taken.
Decision-making and collaboration oriented Skechers' strategy towards social,
economical and environmental concerns as shown in point 4.4, the three pillars of
sustainability according to the scientific literature. Skechers attempts to meet the 3
pillars of sustainability but there is still some progress to be made especially on the
economic pillar. At the social level, an urgent matter in need for improvement is
diversity among board members; incorporating women and minorities. There is also
room for improvement in the way they care for their stakeholders’ actions as shown by
the Green Fleet System case. At the economic level, the use of recycled raw materials
should not be dismissed based solely on the high cost of such materials compared to
regular materials. Skechers supply chain management can be considered as being on the
way of sustainability and, since sustainable supply chain management is a strategy and
Skechers actions seem to follow that same direction, commitment by the company for
this strategy is observed. Furthermore, it should be more than just addressing the 3
pillars individually, efforts should be made towards the integration of the pillars with
each other.

SSCM implies handling multiple decision makers (Hassini et al., 2012) and Skechers
dedication towards long-term relationships drives collaboration at the centre of every
relationship. Collaboration had already been identified as important for SSCM (Silvestre,
2014), but through this case study we show how decision-making also leads to a more
sustainable supply chain. Elements influencing the decision-making process are then
also influencing the collaborative orientation of the company, and thus the whole
network and the supply chain management.
 76.

We can then conclude with the fifth proposition “Ethical decision-making fosters
collaboration across the sustainable supply chain, which in turn impacts decision-
making processes making cooperation and decision-making complementary” as
separating both elements can results in negative consequences for employees, for
instance, and also negatively impact the sustainability of the supply chain. How
cooperation finally reinforces ethical decision-making is also illustrated in Figure 12.
Figure 12: The link between cooperation and decision-making in Skechers supply chain

Source: Own elaboration

5 Conclusion

This research project allowed us to look more deeply into elements leading to greater
SSCM, namely collaboration and decision-making. The aim was to better understand
how collaboration and decision-making are linked and how they influence the SSCM of a
company. As Beske and Seuring (2014)'s work identifying collaboration as a SSCM
practice was too theoretical, this thesis brings a concrete example of collaboration in
business and more specifically in the retail industry.

This thesis aimed to improve understanding of how collaboration influences a whole

company, including its supply chain. The case study focused on the integration of
collaboration into the company's daily actions. The study also aided the understanding
of the influence of decision-making on the network and on SSCM, with the conclusion
that every decision taken by upper-management influences the company's network, by
 77.

expanding it or narrowing it, but also the management orientation of the supply chain.
The more leaders are oriented towards ethics, the more measures towards a sustainable
supply chain will be taken.

The research allowed us to identify internal and external factors influencing positively
the collaboration between a company and its partners. We concluded that though
internal and external factors impact collaboration differently, the effect is the same: they
initiate collaboration, which in turn further promotes the use of collaborative means.
The case study shows that the Code of Conduct can be used to improve the appearance
of being ethical, but in this case study, ie. Skechers, genuine ethical involvement is
demonstrated but discrepancies can happen. The divergence between the company's
appearance of being ethical and their actual ethical intentions could ensue from the sole
purpose of complying with the law, without truly caring for others. However, this
divergence could also be the result of a rapid expansion, as currently experienced by
Skechers, and will most likely progress in the future, showing that collaborative
practices evolve with time.

Collaboration associated with a solid and trusting relationship allows cost-savings.

However, these benefits will depend on the distribution of power among the partners.
The partner with the strongest negotiating power, as is the case of Skechers, collects the
benefits and imposes its terms to the others. Combining collaboration with a durable
and trusting relationship also benefits the other organisation by helping them be more
confident in the near future and facilitating the anticipation of future decisions. It is then
possible to forecast costs or partnerships with high certainty, but also to diminish the
uncertainty coming from the association with stakeholders. Collaboration integrated in
the organisational culture seems to influence decision-making.

Highly involved leaders, with their strong influence on decision-making, impact the
network they build by taking initiative and proposing specific actions. Leaders’ actions
and values are integrated in the organisational culture and the consistency between the
company's practices and statements grows over time. Furthermore, extending the
network with ethical stakeholders is beneficial for all parties involved even when it is
partly or solely done for image purposes. Leaders influence ethical and sustainable
collaboration across the network and partnerships can influence the company's values
in the future and lead to a genuine concern on behalf of the company.
 78.

Finally, collaboration and decision-making are complementary practices of SSCM. In fact,

taking decisions without thorough consideration of collaboration can lead to
frustrations. Both practices influence each other as collaboration increases sustainable
practices, for which decisions have to be taken. Organisational culture also evolves with
greater collaboration, leading to more ethical decisions.

Skechers’ case shows how collaboration and decision-making can be interrelated and
influence the sustainability within the company’s network. However, even if the
company is acting towards more sustainability, there is still room for improvement.

5.1 Limitations

This research includes different limitations. The first one is time related, the interviews
happened on a short internship duration (i.e. two months), sometimes resulting in
rushed interviews with much occupied participants. As most of the interviewees held
high management positions, the allotted time for the interview was limited and did not
always allow in-depth discussion.

Also resulting from the lack of time, only one person from top management could be
interviewed resulting in less relevant data for the decision-making analysis, as they are
the actual decision-maker in this hierarchical company.

Then, this research is mainly based on internal information, which does not allow to
certify to the objectivity, sincerity and completeness of the answers.

Finally, the single case study analysis based on Skechers does not allow comparison with
other companies nor a deep analysis of the network to compare attitudes to
collaboration shared by the whole network. The lack of comparison also prevents us
from generalising our conclusions about decision-making processes. Indeed, our
conclusions are based on the comments of only a few managers and members of
Skechers’ upper-management. We cannot say that the situation is identical in every
company, or even within the various departments at Skechers.

5.2 Recommendations

Skechers is a good example that corporate culture evolves with time and influences
ethical collaboration and the company’s network of stakeholders. Managers should not
 79.

be afraid to take actions towards more collaboration as these actions will increase over
time.

Lower and top-management should implement more effective collaboration in order to

avoid frustrations as decisions are taken. In fact, upper-management should not take
decisions without considering their employees' opinions, and would benefit from the
advantages associated with collaboration.

The influence of the network on the company cannot be ignored as internal and external
factors influence collaboration and thus decision-making. Therefore, managers should
always carefully consider stakeholders' demands and actions. Particular attention
should also be paid to the partners' processes, considering that collaboration happens in
both ways. On the one hand, the focal company can benefit from collaboration and will
use means to improve it. On the other hand, partners can also develop ways to enhance
collaboration and their network. Both parties could then learn from each other.

5.3 Future research

As internal and external means have been identified as improving collaboration, future
study could look at building an exhaustive list of practices influencing collaboration
across the supply chain. Being aware of what improves collaboration could help
managers build a sustainable supply chain and to get the most out of their partnerships.

The negotiating power of a company has been identified as impacting partnerships and
unbalancing the collaboration with some stakeholders. Future research should then look
at identifying how much the relationship with stakeholders is impacted.

This research project is a first look into the link between collaboration and decision-
making through a concrete example. The cultural analysis based on Hofstede's work
highlighted the strong affiliation of Skechers to the American culture. Future research
should then focus on other countries and analyse the influence of culture on the
processes of decision-making and collaboration. Furthermore, comparison should also
be made with other American companies and other retail companies to see if the results
can be generalized. A comparison can also be done with organisations from other
countries, and therefore from other cultures.

 80.

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