Environmental and Social Impact Free Stance and Consequences on the Operational Performance

Abstract

The luxury fashion industry, which used to be geographically centralized, sought growth opportunities to expand global sales. Luxury fashion businesses have significantly grown, have created a depiction of glamor and exclusiveness, and thus this global phenomenon has reached highly lucrative financial figures. Yet, this global expansion has brought noteworthy challenges including the execution of vertically integrated supply chains (SCs). Relatedly, SC complexity, rapidly changing market dynamics and growing concerns in terms of the footprint generated by global fashion operations left many people wonder: what do luxury fashion companies really do to truly embark on not only financial but also environmental as well as social sustainability? The myth of sustainability in fashion operations has been receiving attention; nevertheless the real focus must be switched from company boundaries to supply networks considering that fashion companies are held responsible for social and environmental records of their upstream suppliers. In this vein, it is vital to examine to what extent sustainability management is integrated and which capabilities are developed and deployed along upstream SCs. Using a case study method with seven upstream suppliers, including both direct and indirect suppliers of two massive luxury fashion companies, sustainability management capabilities were represented in two clusters; namely practical and interactive. It was found that the deployment of such SMCs could be positively and directly associated with performance outcomes. An integrated framework encompassing the components of capability development, sustainability practices, buyer-supplier-supplier relationship execution, and performance outcomes suggests that taking an environmental and social impact free stance could improve some operational results.