“It's time to develop local production and supply networks,” a recent article published in the California Management Review by Dr. Rajat Panwar, Sustainable Business Director for the Walker College of Business at Appalachian State University, brings to light issues of public health and social justice stemming from global supply and production networks (GSPNs) in this time of global pandemic.
Public health challenges of GSPNs
As Panwar notes, both scholars and activists have argued that GSPNs are problematic for social and environmental reasons — with the opacity of the supply chain allowing both environmental degradation and human rights violations to occur. Now, there is a new concern to consider — that of public health.
“As consumers learn that their essential drugs and food items come from far-flung places through extended GPSNs, health concerns are legitimate, as COVID-19 has rendered GPSNs vulnerable,” notes Panwar.
With supply chain issues affected by the health of workers, by factory closings due to the virus, let alone the availability of needed drugs, testing, medical equipment and personal protective equipment needed by healthcare workers, knowing product origins becomes even more essential. But what should be done?
“Management and supply-chain scholars have long argued that any social and environmental concerns emanating from GPSNs can be addressed through collaborative efforts among members of supply networks, says Panwar. “However, such collaborative efforts are often ineffective because all members in a given network do not have the same level of commitment to addressing social and environmental problems.”
Vertical integration is no panacea
Therefore, companies have often chosen vertical integration (VI) as a simpler way to address these issues that allows more control over the whole process. VI, or the combination in one company of two or more stages of production normally operated by seperate companies, allows said companies to control upstream activities.
While this change seems a positive step, Panwar argues that it is in fact problematic from a social justice standpoint. Typically, VI is only beneficial for global corporations and can be quite harmful to those in powerless regions. For instance, food corporations who push small farmers off their land to benefit themselves as well as Indigenous communities pushed to the fringes by mining and forestry corporations. So, what is the solution?
Going local again for the first time
Panwar makes the case that it is time to consider an alternative. How local production and supply networks – as opposed to GPSNs – can be fostered.
“Business Management scholarship that focuses on GPSNs has for long served corporations. Can we be more audacious and address questions that can help protect us from the wraths of GPSNs?," challenges Panwar. "It is timely to take up such research that would bring about fundamental transformations in how economies work. Economic de-globalization should be on our research agenda, and the development of local production and supply networks on our list of objectives.”
Panwar’s work underlines the importance of applied research in the realm of sustainability and how it can inform business decisions that advance environmental protection, public health and social justice.
By: Meredith Church Pipes
Boone, NC
May 20, 2020
About the Walker College of Business
The Walker College of Business at Appalachian State University delivers transformational educational experiences that prepare and inspire students to be ethical, innovative and engaged business leaders who positively impact our community, both locally and globally. The college places emphasis on international experiences, sustainable business practices, entrepreneurial programs and real-world applications with industry. Enrolling approximately 3,000 undergraduates in 10 majors and 175 graduate students in three master's programs, the Walker College is accredited by AACSB International – the premier global accrediting body for schools of business. Learn more at https://business.appstate.edu.
About Sustainable Business at Appalachian
Appalachian’s Walker College of Business is committed to advancing sustainable business practices that promote responsible management of economic, social and natural resources. The theory and practice of sustainable business recognizes that the economy, environment and society (the triple bottom line) are interconnected and interdependent, and strives to enhance the business model so that it can flourish and thrive to benefit future generations. The college offers a sustainable business minor available to business and nonbusiness majors, a bachelor’s degree in environmental economics and policy, and an MBA concentration in sustainable business. The programs focus on student engagement, research and community involvement. For more information, visit www.business.appstate.edu/sustainability.
Rajat Panwar
Rajat Panwar