A Framework for Inter-Firm Sustainability Collaboration: Evidence From the Global Apparel and Footwear Sector

Abstract

Corporate sustainability has matured, evolved, and expanded in scope, however social and environmental issues continue to persist globally. Many firms now recognize that inter-firm collaboration is a cost-effective way to address systemic issues that are bigger than any one firm, and unlock the shared value that comes with systemic change. There are many examples where firms have worked together in collaborative relationships, only to fall short of their goals due to competitive self-interest, a shortage of trust, and the absence of a fully shared purpose. These successes and failures beg the question as to why some collaborative groups are more effective and create more value than others.

To examine this question more deeply, we looked at collaboration in the global apparel and footwear sector. The sector’s widespread impacts are associated with rapidly changing market forces, including downward pressure on production costs, geographically dispersed production, high pricing volatility, low market predictability, and typically low profit margins. The highly integrated, complex, and competitive industry results in a downward spiral of quality, labor standards, and environmental pollution. Despite significant action and investment by firms, non-governmental organizations and the non-profit community, the sector still has a long way to go toward achieving social and environmental sustainability. The apparel industry has had over 25 collaborative groups come together since 1989 to promote shared labor standards, factory or product certifications, operational best practices, and shared tools for measurement, providing a rich history for insight on the topic.

In an industry that employs over 60 million people worldwide and will be valued at over $2.1 trillion by 2025, the potential for positive impact is enormous. The industry is considered an important driver for economic development, employing 80% women, many of which are unskilled workers in developing nations with few other employment prospects. To provide economic opportunities that elevate the standard of living in manufacturing nations, industry stakeholders must work together to create the system conditions for sustainable success. Stakeholders at all tiers (raw materials, intermediate goods, production, export and marketing) must work together to move in the same direction and ensure the right incentives and measurement systems are in place.

An industry that has traditionally been known for driving a race to the bottom is now undergoing a massive shift by creating a self-imposed race to the top. Shared data systems underpin this massive industry change, and collaborative efforts by a few brave brands. What started as a means to mitigate risk, has now evolved into an industry embracing its systemic challenges, and a collective impact approach to creating shared value.

To date, there exists a gap in prior research examining inter-firm collaboration for sustainability within the apparel and footwear sector and for sustainability challenges. This paper expands the literature on inter-firm collaboration for sustainability, with a close look at the contextual, organizational and personal factors that contribute to success with collaborations in the apparel and footwear sector. Specifically, we sought to understand: 1) The drivers for inter-firm sustainability collaboration in the apparel sector; 2) Why certain collaborative efforts have been more successful than others; 3) If a new framework can be developed that identifies the elements that lead to collaborative capacity within an industry.

To answer the three central research questions, we attended industry conferences for observation, conducted web-based evaluations of 25 multi-stakeholder initiatives in the apparel and footwear sector dating back to 1989, reviewed prior literature on collaboration, including articles specific to sustainability, and as well as broader frameworks and best practices for analysis and insights, conducted IRB-approved interviews with industry professionals, and conducted a web-based survey of sustainability professionals within the industry to understand why they are collaborating, what they are collaborating about, and they receive from their collaborative efforts.

Our research shows that firms within the industry engage in collaborative action to foster market transformation, because it aligns with company vision and values, and serves to increase reputation and brand building. Firms are collaborating on environmental issues, social issues, and the sharing of data. The Sustainable Apparel Coalition (SAC), a group in which 2/3 of our survey participants are active, was reported to be a collaborative initiative that provides the most value. We took a closer look at the SAC through the lens of organizational literature on collaboration, and with stakeholder interviews to understand its success. Our research shows that it has been more successful due to the industry’s readiness for such solution, its organizational values and tools, and the individual relationships, skills and processes. The interaction between these three has created the collaborative capacity required for success.

The literature on collaboration for sustainability does not provide a sufficiently wide lens through which to understand these successes. To build on the general literature on collaboration, and bridge the gap between the more nascent literature on collaboration for sustainability, we present a framework for creating/evaluating collaborative capacity. The framework differs from previous models in the sustainability literature by addressing contextual/industry conditions in addition to organizational and output-specific conditions, and interpersonal conditions.

Further research is required to apply the framework to other industries to test its utility outside of the apparel/footwear industry. Additionally, another research opportunity exists to examine how firms quantify the value gained from collaborative action. Results from our survey indicate that a number of firms have identified a clear internal business case for collaboration, created monitoring frameworks to track progress, developed their own metrics, and report internally on value. Understanding the processes and tools for this work can provide further insight on how collaborative groups can create additional value.