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LAPPEENRANTA UNIVERSITY of TECHNOLOGY School of Business and Management Master's Degree Program in Supply Management Master LAPPEENRANTA UNIVERSITY OF TECHNOLOGY School of Business and Management Master’s Degree Program in Supply Management Master’s Thesis USAGE OF ORGANIC COTTON IN FINNISH TEXTILE INDUSTRY 1st Examiner: Professor Jukka Hallikas 2nd Examiner: Associate Professor Katrina Lintukangas Elina Luukkanen 2017 ABSTRACT Author: Elina Luukkanen Title: Usage of organic cotton in Finnish textile industry Faculty: School of Business and Management Major: Master’s Degree Programme in Supply Management Year: 2017 Master’s thesis: Lappeenranta University of Technology, 86 pages, 23 figures, 10 tables, 3 appendices Examiners: Professor Jukka Hallikas, Associate Professor Katrina Lintukangas Keywords: organic cotton, textile industry, competitive advantage, corporate environmental management The purpose of this thesis is to find out the future direction of organic cotton usage in Finnish textile industry. In addition to that, this research aims to find out the most important reasons why Finnish textile industry companies have chosen to use organic cotton in their cotton products and what is the biggest competitive advantage achieved by using it. The study concentrates on the ecological pillar of sustainability and thus doesn’t consider the social aspects of raw material production. The study was conducted by using quantitative research method by sending surveys for representatives in Finnish textile industry companies which are textile manufacturers, textile wholesalers, textile retailers or other textile industry companies. Growth in organic cotton and other ecological material use is a worldwide phenomenon and the results of the study show, that the same trend continues also in Finland. The most important factors that have affected the choice of using organic cotton are consumers’ growing appreciation for ecological products, creating a better brand image among consumers and better reputation on the market. Creating an ecological brand image is also the biggest competitive advantage achieved by using organic cotton in textile products. TIIVISTELMÄ Tekijä: Elina Luukkanen Opinnäytteen nimi: Usage of organic cotton in Finnish textile industry Tiedekunta: Kauppatieteiden koulutusohjelma Pääaine: Supply Management Valmistumisvuosi: 2017 Pro gradu-tutkielma: Lappeenrannan teknillinen yliopisto, 86 sivua, 23 kuvaa, 10 taulukkoa, 3 liitettä Tarkastajat: Professori Jukka Hallikas, tutkijaopettaja Katrina Lintukangas Avainsanat: luomupuuvilla, tekstiiliteollisuus, kilpailuetu, yrityksen ympäristövastuu Tämän tutkielman tavoitteena on selvittää luomupuuvillan käytön suunta suomalaisessa tekstiiliteollisuudessa. Lisäksi, tutkielman tavoitteena on selvittää tärkeimmät syyt luomupuuvillan käytölle suomalaisissa tekstiilialan yrityksissä, ja mikä on luomupuuvillan käytöstä saatava suurin kilpailuetu. Tutkimus keskittyy kestävän kehityksen ekologiseen puoleen, ja täten raaka-ainehankintoihin liittyvät sosiaaliset näkökulmat on jätetty tutkimuksesta pois. Tutkimus on toteutettu käyttäen kvantitatiivista tutkimusmenetelmää, jossa haastateltaville yritysedustajille on lähetetty sähköpostitse kyselylomake. Tutkimukseen osallistuneet yritykset ovat tekstiilien valmistajia, tukkumyyjiä, jälleen myyjiä tai muita tekstiilialalla toimivia yrityksiä. Tutkimustulokset osoittavat, että luomupuuvillan käyttö tulee tulevaisuudessa kasvamaan suomalaisessa tekstiiliteollisuudessa, ja tämä mukailee maailmanlaajuista trendiä. Tärkeimmät syyt luomupuuvillan käytölle ovat kuluttajien kasvava arvostus ekologisia tuotteita kohtaan, halu luoda hyvä brändimielikuva kuluttajien keskuudessa sekä yrityksen parempi maine markkinoilla. Suurimpana luomupuuvillan käytöstä saatavana kilpailuetuna nähdään ekologisen brändimielikuvan luominen kuluttajien keskuudessa. ACKNOWLEDGEMENTS The writing process of this thesis has been very challenging but also extremely inspiring. First, I would like to thank Lappeenranta University of Technology and especially the department of Supply Management for great teaching and inspiring atmosphere. I would also like to thank my Thesis Supervisors Professor Jukka Hallikas and Associate Professor Katrina Lintukangas for providing me valuable advice and expertise through this writing process. Also, special thanks to my fellow students who made the studying time in Lappeenranta memorable! Next, I would like to thank everyone who participated on the research and made it possible to conduct this quantitative study. I highly appreciate the time and effort that you put in the research. Finally, I would like to thank my family and friends for always encouraging me during this process. It means a lot to me that you have always supported me with my dreams and goals and encouraged me when it’s been needed the most. In Lappeenranta, 12th of November Elina Luukkanen TABLE OF CONTENTS 1 INTRODUCTION .............................................................................................................. 9 1.1 Background and objectives .................................................................................. 11 1.2 Research problem and delimitation ..................................................................... 13 1.3 Research methodology ......................................................................................... 14 1.4 Research process .................................................................................................. 14 1.5 Structure of the study ........................................................................................... 16 2 SUSTAINABILITY AND COMPETITIVE ADVANTAGE OF A FIRM ..................... 17 2.1 What is sustainability? ............................................................................................... 17 2.2 Corporate environmental management ...................................................................... 19 2.3 Textile industry and sustainability ............................................................................. 20 2.4 Sustainability and competitive advantage .................................................................. 21 3 THE IMPORTANCE OF ORGANIC COTTON IN FINNISH TEXTILE INDUSTRY 24 3.1 The biggest users of organic cotton by volume ......................................................... 26 3.2 Reasons why textile industry companies use organic cotton ..................................... 27 3.2.1 Reputation and brand .......................................................................................... 28 3.2.2 Regulations and standards .................................................................................. 30 3.2.3 Consumer behaviour ........................................................................................... 33 3.2.4 NGOs’ and communities’ pressure ..................................................................... 35 3.3 Challenges of organic cotton ..................................................................................... 37 4 METHODOLOGY AND DATA DESCRIPTION........................................................... 38 4.1 Research method ........................................................................................................ 38 4.2 Data collection ........................................................................................................... 39 4.3 Data description and analysis .................................................................................... 40 5 USAGE OF ORGANIC COTTON IN FINNISH TEXTILE INDUSTRY ...................... 48 5.1 Organic cotton usage now and in the future .............................................................. 48 5.1.1 Future direction among companies who use organic cotton ............................... 49 5.1.2 Future direction among companies who don’t use organic cotton now ............. 50 5.2 The most important factors that have affected the usage of organic cotton in Finnish textile industry companies ............................................................................................... 51 5.2.1 Reasons that affect the organic cotton usage in the future.................................. 55 5.3 Competitive advantage achieved by using organic cotton ......................................... 57 6 CONCLUSIONS .............................................................................................................. 61 6.1 Discussion of the results ............................................................................................ 61 6.2 Reliability and validity of the research ...................................................................... 65 6.3 Limitations ................................................................................................................. 66 6.4 Managerial implications ............................................................................................ 67 6.5 Suggestions for future research .................................................................................. 68 REFERENCES .................................................................................................................... 70 APPENDICES ..................................................................................................................... 79 APPENDIX 1. Results from Tests of Normality ............................................................. 79 APPENDIX 2. Factors that affect the organic cotton usage in Finnish textile industry companies. ....................................................................................................................... 80 APPENDIX
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