Contents
1.1 Introduction
1.2 Literature Review
1.2.1 Sustainability and Sustainable Procurement
1.2.2 The âPoorâ, the Bottom of the Pyramid, and Shared Value
1.3 Research Methodology
1.3.1 Rationale for Single Case Study Method
1.3.2 Case Organization
1.3.3 Data Collection and Analysis Method
1.4 Analysis and Findings
1.5 Discussion
1.5.1 Research Implications
1.5.2 Practice and Social Implications
1.5.3 Limitations
References
1.1 Introduction
Agriculture is one of the main contributors to employment for the worldâs population. While it is appreciated that the world economy is slowly moving toward the service sector, the agricultural sector still contributes more than 26% of global employment (World Bank, 2018a). With respect to global ranking, India occupies the third position in agricultural output. Geographically, India is home to 17% of the worldâs population, i.e., approximately 1.33 billion in 2017 (World Bank, 2018b). Despite the agricultural sector being one of the major contributors to the nationâs economy, its contribution to the Indian gross domestic product (GDP) shows a declining trend. According to the Central Statistical Organization, the farm and agricultural sector made a 13.9% contribution in 2013â14 to Indiaâs GDP in comparison with 14.6% in 2010â11, which is consistent with the increase in the share of the service sector in GDP. Moreover, there has been a sharp decline in the overall workforce (11 percentage points) of the agricultural and allied sectors (FICCI, 2015). Despite the decline, more than 60% of rural households still depend on agriculture and more than 40% of the total labor force in India still works in the agricultural sector (FICCI, 2015).
In the agricultural sector, multiple issues result in the loss of yield. These problems include weed growth (An et al., 2018; Fahad et al., 2015; Mani et al., 1968), pests (Basak et al., 2017; Ghini et al., 2015; Savary et al., 1997), and excessive use of genetically modified crops (Fuganti-Pagliarini et al., 2017; Qaim and Zilberman, 2003). Furthermore, the existing process-driven efficiencies (traditional farming versus organic farming) (Kirchmann, 2018) and resource-driven inefficiencies (manual farming tools versus mechanized farming methods) (Geng et al., 2018; Rada and Fuglie, 2019; Zhang et al., 2017; Dai and Dong, 2014; Kislev and Peterson, 1981; Culpin, 1968) make farm productivity an emerging issue in developing nations. To mitigate such issues in the farming sector, organic farming has proven to be an important tool in enhancing the overall farm yield. Therefore, the adoption of organic farming practice can lead to considerable improvement in yield in the long run. Our chapter highlights the implementation of a structured sustainable procurement strategy through which organic farming can mitigate such issues in the farming sector.
India is one of the fastest emerging economies in the world (Singh, 2018; Mohanty et al., 2017), and the staggering growth is attributed to technological advancements and the revamping of business operations on short timescales. âHealth and Wellness (HW)â is one important sector of the economy in India. The pressing need for a healthy life has ensured that consumers choose healthy food to remain fit. The market trend shows that the demand for healthy and nutritious products has gained momentum over the years. The increasing knowledge about the harmful effects of pesticides and fertilizers has provided an opportunity for the organic market segment. Most of the resulting products belong to the premium segment of the market, which is reflected in their prices. The lack of awareness about the gap between the premium customer segment and the âpoorâ customer segment poses an important challenge to the manufacturers and retailers of organic products.
However, organic farming is not flourishing owing to many inherent constraints in the Indian agricultural sector (Altenbuchner et al., 2018; Ditzler et al., 2018). First, farmers are not trained to operationalize the standard operating procedures of organic farming. Second, even after operationalizing the procedures, owing to their lack of habit in organic farming practice, the farmers often fail to receive organic certifications from global certifying agencies, the conditions for which are quite stringent. Third, these certifications are quite expensive and the majority of rural farmers belong to the Bottom of the Pyramid (BoP) segment; hence, it is extremely difficult for them to acquire the certifications at their own cost. Fourth, traditional farming practice has over the years given higher yields through the use of fertilizers and pesticides. Therefore, shifting to organic farming with a long term perspective of higher yield is not viable for farmers belonging to the BoP segment. For this reason, the farmers prefer to live with a short term focus, considering that the incentives are in favor of traditional farming practice.
In this chapter, we aspire to show the role of manufacturers in the supply chain in achieving sustainable procurement practice by promoting organic farming in India. Manufacturers are introducing an innovative business model similar to the sharing economy approach for incentivizing the suppliers (marginalized farmers) to adopt organic farming (sustainable procurement) practice. Therefore, we address the following research questions through a descriptive case study approach (Baxter and Jack, 2008; Eisenhardt and Graebner, 2007; Eisenhardt, 1989) for our study.
- RQ 1a: How is procurement made sustainable through innovation in the agricultural sector (Sengupta and Shukla, 2019)?
- RQ 1b: How do manufacturers incentivize marginalized farmers to adopt organic farming practice?
- RQ 1c: What do manufacturers achieve by ensuring sustainable procurement practice in the agricultural sector?
The remaining chapter is structured as follows: Section 1.2 presents a summarized review of literature from three diverse disciplinesâaccess-based business model innovation, Bottom of the Pyramid, and social responsibilityâto narrow down the research gap for our study. Section 1.3 presents the rationale and details for conducting a descriptive case study approach. Section 1.4 presents the analysis and findings of our chapter. Section 1.5 concludes the chapter by highlighting the research and practice implications.
1.2 Literature Review
To address the research gap, we developed a social responsibility lens for viewing business operations (Sodhi, 2015). We reviewed studies from three different yet connected domains, i.e., sustainability, BoP (Sharma and Jaiswal, 2018), and shared value approaches. Under the shared value approaches, we discussed the sharing economy (Belk, 2018) and connected it with the literature on BoP by highlighting access-based business model innovation as an effective tool in mitigating risks in emerging markets such as India (Schäfers et al., 2018). Subsequently, we attempted to summarize the connections among all these domains, as it would add value to the literature on sustainability.
1.2.1 Sustainability and Sustainable Procurement
Sustainability has become a tool for large corporations to instigate sustainable initiatives as a form of corporate social responsibility, meaning achieving social responsibility through business functions (Sodhi, 2015). The existing literature on sustainability encompasses all three pillarsâsocial, environmental, and economicalâthat are responsible for sustainable development (Mota et al., 2015; Seuring and MĂźller, 2008). Operations management (OM) literature has consistently neglected the social aspects of sustainability while giving considerable importance to the environmental perspective (Carter and Rogers, 2008; Hutchins and Sutherland, 2008). The same is even true for sustainable procurement literature because procurement is normally addressed only in OM literature.
Sustainable procurement literature has been steadily gaining momentum over the last decade owing to the importance of suppliers in the overall chain (Sengupta and Shukla, 2019). However, there is a dearth of literature related to sustainable procurement in the food sector. Rimmington et al. (2006) developed the principles and performance indicators of sustainable procurement in the catering market of the United Kingdomâs public sector. Hanson and Holt (2014) evaluated the sustainable food procurement of the zoos in Britain and Ireland. Park et al. (2012) presented a comparative analysis of sustainable food procurement initiatives in Canadian universities. On similar lines, Stahlbrand (2017) demonstrated the sustainability in the procurement process of universities in Canada and the UK through value-driven food supply chains. Goggins (2018) identified the crucial contextual factors within different organizations that are instrumental in shaping the overall sustainable procurement process in the entire supply chain. The Sustainable Development Commission (2002) documented the contribution of food procurement to sustainable development and highlighted the link between procurement initiatives and their effect on health. Similar work has been carried out extensively in Western European food companies (Lacroix et al., 2015). Filippini et al. (2018) presented the factors that play a vital role in improving the adoption of organic food procurement in public schools. Our study also focuses on the health and wellness segment by presenting the ways through which organic farming practice can achieve sustainable development by positively affecting the health of the community through access-based business model innovation. We have demonstrated that the procurement strategy of the manufacturer is a key pre-requisite in ensuring organic farming practices; and hence, the strategy needs to be implemented at the field level (Sengupta and Shukla, 2019).
1.2.2 The âPoorâ, the Bottom of the Pyramid, and Shar...
