How the institutional, relational and leadership factors affect the implementation of sustainable business practice within MNCs HQ in a developed country and Subsidiary in a developing country? A case study on Volvo Trucks Located in Sweden (HQ) and Malaysia (Subsidiary)

Abstract

Companies are in the transformation process from the classical or linear way of conducting business to a more sustainable model. This is necessitated by the growing societal awareness to protect the environment and resources for future living. With increasing social awareness, the field of sustainability has developed significantly in recent years. Parameters like health, income, social justice, education, etc. are now considered in its ambit in order to facilitate a good quality of life. Sustainable business practices are being ensembled under an institutional set up with corporate policies drawn for successful implementation. Though sustainability is often associated with statutory obligation to conduct the business, it has been established, of late, that Implementation of sustainable business practices is becoming a key factor that provides MNCs with a competitive edge in the markets. It leads toenhanced product quality, low cost of production, customer delight and hence sustainable profit. Sustainable business practices are thus embraced by multinational companies even though it is found to be tough and expensive to implement such practices. The socio economic, political and cultural diversities between the host and guest countries put up a lot of obstacles in its implementation. This study is to explore how sustainable business practices are embedded and diffused in a subsidiary located in a developing country, especially when the host country of the MNC is located in a developed economy. This study looks at an institutional set up for the implementation of the practices in view of long-term sustainability and profitability. Implementation has to be in alignment with the guidelines stipulated by global organizations, guest and host countries. Major challenges in implementing sustainable business practices and various factors influencing the implementation are also discussed taking Volvo Trucks subsidiary in Malaysia as a case study. We believe that our research, in addition to the key research findings, also explained theoretical aspects of the critical role of leadership in the success of sustainable practices. We are hopeful that this research report would provide a comprehensive understanding on thetopic for future studies and research.